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Supreme Court of India
K.Sivaraman vs P.Sathishkumar on 13 February, 2020Author: Hon’Ble Dr. Chandrachud
Bench: Hon’Ble Dr. Chandrachud, Ajay Rastogi
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
Civil Appeal No. 9046 of 2019
(Arising out of SLP (C) No 18110 of 2019)
K Sivaraman & Ors …. Appellants
Versus
P Sathishkumar & Anr ….Respondents
JUDGMENT
Dr Dhananjaya Y Chandrachud, J
1 This appeal arises from a judgment of a Division Bench of the Madurai Bench of
the Madras High Court dated 1 June 2017. In an appeal arising from a decision of the
Deputy Commissioner for Employee‘s Compensation, the High Court enhanced the
compensation payable under the Employee‘s Compensation Act 1923 1 from Rs
4,33,060 to Rs 8,86,120. The High Court has awarded interest at the rate of 12% per
annum from the date of the accident.
2
Signature Not Verified In the present proceedings which have been instituted under Article 136 of the
Digitally signed by
SANJAY KUMAR
Date: 2020.02.13
Constitution, notice was issued on 26 July 2019. Since the appellants were
12:36:17 IST
Reason:
1
―1923 Act‖
1
represented by the first appellant in person, this Court, by its order dated 26 July 2019,
directed that an amicus curiae be nominated by the Supreme Court Legal Services
Committee. Accordingly, Mr S Mahendran, learned counsel, has been nominated as
the amicus curiae, whom we have heard in support of the appeal.
3 The appellants are the father, mother, sister and brother of Dinesh Kumar, who
died in the course of an accident on 31 January 2008. On the date of the incident, the
deceased was 26 years of age and was engaged as a driver of a trailor lorry. While the
vehicle was being driven on NH 12 in Kota, Rajasthan, a truck bearing registration No
MH 19 Z 1696 came from the opposite direction and dashed against the trailor,
resulting in the death of Dinesh Kumar. At the time of the accident, the deceased was
in the employment of the first respondent. A claim under the 1923 Act was lodged
before the Deputy Commissioner for Employee‘s Compensation, Madurai on 29 April
2013. On 26 March 2014, the claim was allowed by an award in the amount of Rs
4,33,060. The Deputy Commissioner had proceeded ex parte. The appellants filed an
appeal2 before the Madras High Court for enhancement of the compensation.
4 The High Court, by its judgment dated 23 November 2015, remanded the
proceedings to the Deputy Commissioner for determination afresh. While remanding
the proceedings, the High Court noted that though the appellants had filed a salary
certificate as Exhibit P5 to establish that the monthly income of the deceased was Rs
32,000, no witness was examined on behalf of the employer to prove the salary
certificate. However, acceding to the request of the appellants that they should be
furnished with an opportunity to examine the employer‘s witness in support of Exhibit
2
CMA (MD) 344 of 2014
2
P5, the High Court considered it in the interests of justice to remand the proceedings.
5 On remand, the Commissioner for Workmen‘s Compensation, Madurai, by an
order dated 4 March 2016, maintained the award of compensation in the amount of Rs
4,33,060. Before the Commissioner, on remand, the appellants examined PW2, the
owner of the vehicle which was being driven by the deceased. During the course of
his evidence, he stated as follows:
―I am the 1st respondent in this case under W.C. Case
No.74/2011 is under tail in this court is known to me. I
received summons 3 times from the court. For the last two
summons, as my own lorries were working in the other states
and I also have to go there, I was unable to come and adduce
witness for the court summon. The accident platform trailor
lorry TN 28 AB 1933 belongs to Sathishkumar. The
deceased Dinesh Kumar S/o Sivaraman worked as a driver.
In 2008, (31.1.2008) when going to Pandicheri to Rajasthan
Sironi before Kotta town the opposite coming tarras lorry
dashed face to face and caused accident. As soon as the
accident occurred in the same occurrence place Dineshkumar
died. Before accident he worked for about 3 years. He was
having proper driving license. He was having license for
driving heavy vehicles. The Ex.P.5 monthly pay certificate
was issued by me. In it, for deceased Dinesh Kumar I was
paying Rs 32,000 per month (including food expenses) but
pay of Rs 25,000. The vehicle involved in the accident has
been properly insured with 2nd respondent company of M/s
Reliance General Insurance Company. At the time of
accident, the insurance was in current.‖
6 The Commissioner, however, proceeded on the basis that in terms of the
notification issued under Section 4(1B) of the 1923 Act, whatever be the monthly pay
received by a person, the jurisdiction of the adjudicating authority was subject to a
ceiling of Rs 4,000 per month in computing the monthly wages of the employee.
Taking the monthly salary at Rs 4,000, the Commissioner applied a multiplicand of
215.28 in terms of Schedule IV (the deceased being 26 years of age) and arrived at a
3
figure of Rs 4,30,560 to which an additional amount of Rs 2,500 was added towards
funeral expenses. A total award in the amount of Rs 4,33,060 was decreed as the
compensation payable to the appellants.
7 In an appeal filed before the High Court, the Division Bench took note of the fact
that in pursuance of the order of remand, the salary of deceased employee had been
proved to be Rs 32,000 per month. The High Court noticed that though the accident
had taken place on 31 January 2008, the petition for compensation had been lodged
on 28 January 2011 and was decided by the Commissioner on 4 March 2016.
8 In the meantime, a notification was issued by the Central Government on 31
May 2010 in the following terms:
―S.O.1258(E) – In exercise of the powers conferred by sub-
section (1B) of Section 4 of the Employee’s Compensation
Act, 1923, (g of 1923), the Central Government hereby
specified, for the purpose of Sub-Section (1) of the said
section, the following amount as monthly wages, with effect
from the date of publication of this notification in the official
gazette, namely – Eight thousand rupees.‖
9 The High Court was of the view that having due regard to the fact that the
legislation in question is a social welfare legislation, the enhanced income of Rs 8,000
per month should form the basis of the computation. Thus, applying the multiplicand in
terms of Schedule IV, the High Court enhanced the compensation to Rs 8,86,120.
10 In appeal before this Court, the learned amicus curiae urged that both the
Commissioner and the High Court have erred – the Commissioner having adopted a
figure of Rs 4,000 per month and the High Court, Rs 8,000 per month. The learned
amicus curiae submitted that in terms of the provisions of Section 4(1)(a) of the 1923
4
Act, where death has resulted from injury, the compensation payable is an amount
equal to fifty per cent of the monthly wages of the deceased employee multiplied by
the relevant factor. The relevant factor is specified in Schedule IV and for the
deceased who was 26 years old on the date of the accident, the multiplicand would be
215.28. The learned amicus curiae submitted that under sub-section (1B) of Section 4,
the Central Government is empowered to issue a notification specifying, for the
purposes of sub-section (1), the monthly wages in relation to an employee as it may
consider necessary. However, it was submitted that the notification does not impose a
cap or ceiling on the monthly wages which form the basis of calculating the
compensation due and payable. Where the actual wages of an employee are proved
to be in excess of the amount which is specified in the notification, there is no bar in
adopting the monthly wages so proved in terms of Section 4(1)(a). The learned
counsel buttressed this submission by adverting to Act 45 of 2009, which took effect
from 18 January 2010 and deleted the deeming provision in Explanation II to Section
43. Moreover, it was urged by the learned amicus curiae that the method of calculating
wages is specified in Section 5. It was urged that clause (a) of Section 5 will be
attracted to the present case where the employee was, during a continuous period of
not less than twelve months immediately preceding the accident, in the service of the
employer.
11 The learned amicus curiae, at a belated stage, sought to distinguish the
judgments of this Court in Pratap Narain Singh Deo v Srinivas Sabata4 (―Pratap
3
―Explanation II – Where the monthly wages of a workman exceed four thousand rupees, his monthly wages for the
purposes of clause(a) and clause(b) shall be deemed to be four thousand rupees only.‖
4
(1976) 1 SCC 289
5
Narain Singh‖) and Kerala State Electricity Board v Valsala K5 (―Valsala‖) in which
it was held that the date relevant for the determination of compensation payable under
the 1923 Act is the date of the accident and that the benefit of an amendment
enhancing the amount of compensation shall not apply to accidents that take place
prior to its coming into force. To support this, the amicus curiae relied on the judgments
of this Court in New India Assurance Company Ltd. v Neelakandan
(―Neelakandan‖),6 and National Insurance Co Ltd. v Mubasir Ahmed7 (―Mubasir
Ahmed‖).
12 Section 4(1)(a) of the Act contains the following provision:
―4. Amount of compensation.—(1) Subject to the provisions of this Act,
the amount of compensation shall be as follows, namely:—
(a) where death results an amount equal to fifty per cent of the
monthly wages of the deceased
from the injury employee multiplied by the relevant
factor;
or
an amount of one lakh and twenty
thousand rupees, whichever is more;‖
13 The proviso to the above provision stipulates that the Central Government may,
by notification in the Official Gazette, from time to time, enhance the amount of
compensation mentioned in clauses (a) and (b). Clause (b) deals with a case involving
permanent total disablement resulting from the injury. The expression ―relevant factor‖
is defined in Explanation I to be the factor specified in Schedule IV. Prior to Act 45 of
5
(1999) 8 SCC 254
6
Civil Appeal Nos. 16904-09 of 1996
7
(2007) 2 SCC 349
6
2009, Section 4 contained Explanation II, which was in the following terms:
―Explanation II – Where the monthly wages of a workman
exceed four thousand rupees, his monthly wages for the
purposes of clause(a) and clause(b) shall be deemed to be
four thousand rupees only.‖
14 By Act 45 of 2009, which came into force on 18 January 2010, Explanation II
came to be deleted. Sub-section (1B) was introduced in Section 4 to read as follows:
―(1-B) The Central Government may, by notification in the
Official Gazette, specify, for the purposes of sub-section (1),
such monthly wages in relation to an employee as it may
consider necessary.‖
15 The question before this Court is whether the benefit of Act 45 of 2009 deleting
the deeming provision in Explanation II which capped the monthly wages of an
employee at Rs 4,000 would also apply to accidents which took place prior to the
coming into force of its provisions i.e. 18 January 2010 and where final adjudication is
pending. In assessing whether the Act 45 of 2009 applies retrospectively, it is
necessary to analyze the relevant precedents of this Court. In Pratap Narain Singh,
the first respondent was in the employment of the appellant and suffered injuries which
arose out of and in the course of employment. It was contended that the Commissioner
committed an error of law in imposing a penalty on the appellant under Section 4A(3)
of the 1923 Act as the compensation payable had not fallen due until it was ‗settled‘ by
the Commissioner under Section 19 of the 1923 Act. Section 4A reads:
―4A. Compensation to be paid when due and penalty for default.-
(1) Compensation under section 4 shall be paid as soon as it
falls due.
(2) In cases where the employer does not accept the liability
for compensation to the extent claimed, he shall be bound
to make provisional payment based on the extent of
liability which he accepts, and, such payment shall be
deposited with the Commissioner or made to the
7
employee, as the case may be, without prejudice to the
right of the employee to make any further claim.
(3) Where any employer is in default in paying the
compensation due under the Act within one month from
the date it fell due, the Commissioner shall –
(a) Direct that the employer shall, in addition to the
amount of the arrears, pay simple interest thereon at
the rate of twelve percent per annum or at such higher
rate not exceeding the maximum of the lending rates
of any scheduled bank as may be specified by the
Central Government, by notification in the Official
Gazette, on the amount due; and
(b) If, in his opinion, there is no justification for the delay,
direct that the employer shall, in addition to the
amount of arrears and interest thereon, pay a further
sum not exceeding fifty per cent of such amount by
way of penalty…‖
16 In terms of Section 4A(1), compensation under Section 4 is payable ―as soon as
it falls due.‖ Section 4A(2) contemplates a situation wherein the employer, though
accepting the liability to pay compensation to the injured employee, disputes the
quantum of compensation payable. In such cases, sub-section (2) enjoins the
employer to make a provisional payment based on the extent of accepted liability by
depositing it with the Commissioner or by paying it directly to the employee. Section
4A(3) stipulates that where an employer defaults in paying compensation within one
month from the date on which it falls due, the Commissioner is empowered to direct
the payment of interest as well as an additional amount as arrears for an unjustifiable
delay in making payment. Section 19 of the Act reads:
―19. Reference to Commissioners.- (1) If any question arises
in any proceedings under this Act as to the liability of any
person to pay compensation (including any question as to
whether a person injured is or is not an employee or as to the
amount or duration of compensation (including any question
as to the nature or extent of disablement), the question shall,
in default of agreement be settled by a Commissioner…‖
17 Section 19 stipulates that any question arising in any proceeding under the Act
shall, in the default of an agreement, be settled by the Commissioner. A four judge
8
Bench of this Court rejected the contention urged by the appellant and held that
compensation ―falls due‖ on the date of the accident. Consequently, the Commissioner
was empowered to impose interest or penalty for the duration prior to the settling of the
claim or where there was unjustified delay in making good the payment of
compensation. The Court held:
―18…The employer therefore became liable to pay the
compensation as soon as the aforesaid personal injury was
caused to the workman by the accident which admittedly
arose out of and in the course of the employment. It is
therefore futile to contend that the compensation did not fall
due with after the Commissioner’s order dated May 6, 1969
under section 19. What the section provides is that if any
question arises in any proceeding under the Act as to the
liability of any person to pay compensation or as to the
amount or duration of the compensation it shall, in default of
an agreement, be settled by the Commissioner. There is
therefore nothing to justify the argument that the employer’s
liability to pay compensation under section 3, in respect of the
injury, was suspended until after the settlement contemplated
by section…
19. The appellant was thus liable to pay compensation as
soon as the aforesaid personal injury was caused to the
appellant, and there is no justification for the argument to the
contrary. It was the duty of the appellant, under section
4A(1) of the Act, to pay the compensation at the rate provided
by section 4 as soon as the personal injury was caused to the
respondent. He failed to do so. What is worse, he did not
even make a provisional payment under sub-section (2)
of section 4 for, as has been stated, he went to the extent of
taking the false pleas that the respondent was a casual
contractor and that the accident occurred solely because of
his negligence. Then there is the further fact that he paid no
heed to the respondent’s personal approach for obtaining the
compensation. It will be recalled that the respondent was
driven to the necessity of making and application to the
Commissioner for settling the claim, and even there the
appellant raised a frivolous objection as to the jurisdiction of
the Commissioner and prevailed on the respondent to file a
memorandum of agreement setting the claim for a sum which
was so grossly inadequate that it was rejected by the
Commissioner. In these facts and circumstances, we have no
doubt that the Commissioner was fully justified in making an
order for the payment of interest and the penalty.‖
9
18 The Court held that though Section 19 empowered the Commissioner to decide
claims or objections under the Act, the obligation to pay compensation to an injured
employee was not suspended until the Commissioner settled the amount payable in
the case of a dispute between the employer and the employee. Section 4A deals with
when the obligation for the payment of compensation as required under the 1923 Act
arises. For the purposes of Section 4A of the 1923 Act, the obligation to pay
compensation arises on the date of the accident. Where an employer disputes the
quantum of compensation payable, it is enjoined to make a provisional payment to the
Commissioner or the employee pending the settlement of the claim. This is in order to
ensure that an employer does not escape its obligation to make good the payment of
compensation or unduly delay its payment on frivolous grounds.
19 In Neelakandan, the accident had taken place prior to the coming into force of
an amendment to the 1923 Act whereunder the deemed income had been increased
from Rs 1000 to Rs 2000. The question before the Court was whether the benefit of
the amendment would extend to accidents which took place prior to its coming into
force and where the final adjudication of the amount payable was pending. A two
judge Bench of this Court held that though the accident in question took place in 1981,
the benefit of the amendment would apply to accidents that took place prior to the
coming into force of the amendment in the following terms:
―It is not disputed that Section 4 of the Act was amended in
1995 by Amendment Act 30 whereunder the deemed income
has been increased from Rs 1000 to Rs 2000. Learned
counsel for the Insurance Company has vehemently
contended that since the accident took place in the year
1981, the law operating on that date is applicable and as such
the workmen are not entitled to the benefit of the amendment.
We do not agree with the learned counsel. We are finally
determining the right of workmen today. The Act is a
special legislation for the benefit of the labour. Keeping
in view the scheme of the Act we are of the view that the
10
only interpretation which can be given to the amendment
is that is any benefit is conferred on the workmen and the
said benefit is available on the date when the case is
finally adjudicated, the said benefit should be extended
to the workmen. We, therefore, hold that the compensation
to be paid to the heirs of the workmen has to be calculated on
the basis of the actual wages – Rs 1800 – drawn by them…‖
(Emphasis supplied)
20 The Court noted that the 1923 Act is a social welfare legislation for the benefit of
employees. Consequently, taking into account the scheme of the Act, the court must
adopt an interpretation which extends a benefit to the employee on the date of the final
adjudication of the claim. Where a case is pending final adjudication and an
amendment is enacted increasing the amount of compensation payable, the enhanced
amount would be applicable in the determination of the quantum of compensation
payable. Conspicuous in its absence in the submission advanced by the learned
amicus curiae is how a subsequent Bench of this Court dealt with the position of law
laid down in Neelakandan.
21 In Valsala, the question before a three judge Bench of this Court was whether
an amendment to Section 4 and 4A of the 1923 Act enhancing the amount of
compensation and the rate of interest would be applicable to cases where the accident
took place prior to the coming into force of the amendment. This Court noted that
various High Courts in the country had taken the uniform position that the relevant date
for determining the rights and liabilities of the parties is the date of the accident.
Relying on the judgment of this Court in Pratap Narain Singh, the Court overruled the
judgment in Neelakandan and held that the benefit of an amendment whereunder the
compensation payable was increased, would not apply to accidents that took place
prior to its coming into force. The Court held:
―4. A two-judge Bench of this Court in New India Assurance
Co Ltd. v. V.K. Neelakandan however, took the view that the
11
Workmen‘s Compensation Act being a special legislation for
the benefit of the workmen, the benefit as available on the
date of adjudication should be extended to the workmen and
not the compensation which was payable on the date of the
accident. The two-judge Bench in Neelakandan case
however, did not take notice of the judgment in Pratap Narain
Singh Deo case as it presumably was not brought to the
notice of their Lordships. Be that as it may, in view of the
categorial law laid down by the larger Bench in Pratap Singh
Deo case the view expressed by the two-judge Bench in
Neelakandan case is not correct.‖
22 In the course of the judgment in Valsala, the three judge Bench also affirmed
the full judge Bench judgment of the Kerala High Court in Alavi ―to the extent it is in
accord with the judgment of the larger bench‖ in Pratap Narain Singh. The Court held:
―5. Our attention has also been drawn to a judgment of the
Full Bench of the Kerala High Court in United India Insurance
Co. Ltd v. Alavi wherein the Full Bench precisely considered
the same question and examined both the above-noted
jugdments. It took the view that the injured workman becomes
entitled to get compensation the moment he suffers personal
injuries of the types contemplated by the provisions of the
Workmen‘s Compensation Act and it is the amount of
compensation payable on the date of the accident and not the
amount of compensation payable on account of the
amendment made in 1995, which is relevant. The decision of
the Full Bench of the Kerala High Court, to the extent it is on
accord with the judgment of the larger Bench of this Court in
Pratap Narain Singh Deo v Srinivas Sabata lays down the
correct law and we approve it.‖
23 In Alavi, a full judge Bench of the Kerala High Court was required to adjudicate
whether Sections 4 and 4A of the 1923 Act as amended in 1995 enhancing the amount
of compensation and rate of interest would be applicable to claims in respect of death
and permanent disablement resulting from accidents which occurred prior to 15
September 1995 i.e. the date on which the amended provisions came into force. In all
the appeals before the Court, the accident as well as settling of the claims by the
Commissioner took place prior to the coming into force of the amending provisions
12
enhancing the quantum of compensation payable. The Court relied on the decision of
this Court in Pratap Narain Singh and held that the Amending act enhancing
compensation would apply only to accidents that took place after the coming into force
of the amendment. The Court held:
―17. Right to claim compensation as well as the obligation to
pay the same are created by the statute itself. It is well-settled
rule of interpretation that if the law is procedural, there is, no
doubt, a presumption that it applies to pending proceedings. If
the law is substantive in nature, the normal presumption
against retrospectivity still holds good, subject to the principle
that the Court must look to the question whether the rights of
the parties at the commencements of the proceedings were
intended to be modified either expressly or by necessary
implication: Neeli v. Narayana Pilla [(1992) 2 K.L.J. 937, 950].
If the amended provisions are given effect to in the matter of
awarding enhanced compensation even with regard to the
accident which occurred prior to 15 September 1995, and the
claim was decided prior to the same date, the law applicable
is the unamended provisions of the Workmen‘s
Compensation Act, 1923. But if the claim could not be settled
prior to 15 September 1995 going by the Division Bench
decision in Asokan case (vide supra), those claimants would
get the benefit of the Amendment Act. In other words, the
benefit would depend on when the case is decided either
prior to 15 September 1995 or subsequent. This was never
the intention of the Legislature…‖
24 The question before the Bench in Valsala was clearly whether an amendment to
Section 4 and 4A of the 1923 Act enhancing the amount of compensation and the rate
of interest would be applicable to cases where the accident took place prior to the
coming into force of the amendment. The Bench held that the benefit of an Amending
act enhancing the quantum of compensation would not apply to accidents that took
place prior to the coming into force of the amendment. Though the learned amicus
curiae sought to rely on the two judge Bench judgment of this Court in Mubasir
Ahmed, it is sufficient at this stage to note that the subsequent judgment of this Court
13
in Oriental Insurance Company v Siby George8 noted that the judgment in Mubasir
Ahmed is contrary to the judgments of this Court in Pratap Narain Singh and Valsala
and hence not a binding precedent.
25 The 1923 Act is a social beneficial legislation and its provisions and
amendments thereto must be interpreted in a manner so as to not deprive the
employees of the benefit of the legislation. The object of enacting the Act was to
ameliorate the hardship of economically poor employees who were exposed to risks in
work, or occupational hazards by providing a cheaper and quicker machinery for
compensating them with pecuniary benefits. The amendments to the 1923 Act have
been enacted to further this salient purpose by either streamlining the compensation
process or enhancing the amount of compensation payable to the employee.
26 Prior to Act 45 of 2009, by virtue of the deeming provision in Explanation II to
Section 4, the monthly wages of an employee were capped at Rs 4000 even where an
employee was able to prove the payment of a monthly wage in excess of Rs 4,000.
The legislature, in its wisdom and keeping in mind the purpose of the 1923 Act as a
social welfare legislation did not enhance the quantum in the deeming provision, but
deleted it altogether. The amendment is in furtherance of the salient purpose which
underlies the 1923 Act of providing to all employees compensation for accidents which
occur in the course of and arising out of employment. The objective of the amendment
is to remove a deeming cap on the monthly income of an employee and extend to
them compensation on the basis of the actual monthly wages drawn by them.
However, there is nothing to indicate that the Legislature intended for the benefit to
8
(2012) 12 SCC 540
14
extend to accidents that took place prior to the coming into force of the amendment.
27 The learned amicus curiae relied on the judgment of this Court in
Commissioner of Income Tax v Vatika Township Private Limited9 to contend that
amendments that confer a benefit upon individuals must be given retrospective
application. In that case, the question before a Constitution Bench of this Court
concerned whether the proviso to Section 113 which was inserted by the Finance Act
2002 applied retrospectively. The scheme for block assessment was introduced in
Chapter XIV-B to the Finance Act (w.e.f 1 July 1995) to curb tax evasion and expedite
as well as simplify the assessments in such search cases. By virtue of the proviso, a
date was specified with reference to which the rate of surcharge is payable upon block
assessments. This Court noted that the chapter for block assessment was a self-
contained code and that the effect of the proviso was to impose an additional burden
on the assessee. Consequently, it was held that the proviso did not operate
retrospectively. In the course of the judgment, this Court held:
―30. We would also like to point out, for the sake of
completeness, that where a benefit is conferred by a
legislation, the rule against a retrospective construction is
different. If a legislation confers a benefit on some persons
but without inflicting a corresponding detriment on some other
person or on the public generally, and where to confer such
benefit appears to have been the legislators’ object, then the
presumption would be that such a legislation, giving it a
purposive construction, would warrant it to be given a
retrospective effect. This exactly is the justification to treat
procedural provisions as retrospective. In Govt. of India v.
Indian Tobacco Assn. [(2005) 7 SCC 396], the doctrine of
fairness was held to be relevant factor to construe a statute
conferring a benefit, in the context of it to be given a
retrospective operation. The same doctrine of fairness, to hold
that a statute was retrospective in nature, was applied in Vijay
v. State of Maharashtra [(2006) 6 SCC 289]. It was held that
where a law is enacted for the benefit of community as a
whole, even in the absence of a provision the statute may be
held to be retrospective in nature. However, we are (sic not)
9
(2015) 1 SCC 1
15
confronted with any such situation here.‖
28 This Court held, in line with settled precedent of this Court, that where (i) a
legislation confers a benefit on some persons, (ii) without inflicting a corresponding
detriment on some other persons or the public generally and (iii) where the conferral of
such benefit appears to be the intention of the legislature, the presumption of
prospective application may stand displaced. Though amendments enhancing the
compensation payable under the 1923 Act confer a benefit upon employees, a
corresponding burden is imposed on employers to pay a higher rate of compensation.
It is presumably for this reason that the three judge Bench of this Court in Valsala and
the Kerala High Court in Alavi held that the benefit of an amendment enhancing the
rate of compensation does not have retrospective application to accidents that took
place prior to the coming into force of the amendment. Further, as we have already
noted, there is nothing in Act 45 of 2009, either express or implied, to denote an
intention of the legislature to confer the benefit of the amendment to accidents that
took place prior to its coming into force.
29 We also briefly note the position of law regarding the date relevant for the
determination of compensation payable under the Railways Act 198910. Chapter XIII of
the 1989 Act titled ‗Liability of Railway Administration for Death and Injury to
Passengers due to accidents‘ stipulates an obligation on the railway administration to
pay compensation to such extent ―as may be prescribed‖ on the account of untoward
accidents. In Rathi Menon v Union of India11, the question before a two judge Bench
10
1989 Act
11
(2001) 3 SCC 714
16
of this Court was whether the benefit of an amendment enhancing the rate of
compensation can be extended to accidents that took place prior to the coming into
force of the amendment. The Court assessed the scheme of the 1989 Act and held
that the date relevant for the determination of compensation payable shall be the date
of adjudication. Consequently, the benefit of an amendment enhancing compensation
would be extended to accidents that took place prior to the coming into force of the
amendment. In the course of the judgment, this Court differentiated between the
scheme of the 1923 Act and the 1989 Act and addressed the contention raised on the
basis of the judgments of this Court in Pratap Narain Singh and Valsala in the
following terms:
―…The scheme of the provision under the W.C. Act is
materially different from the scheme indicated in Chapter XIII
of the Railways Act. In the former, compensation payable is
fixed in the Act itself through the schedule incorporated
thereto. Section 4 of the W.C. Act shows that such
compensation is to be linked with the monthly wages of the
workman concerned. It also provides that the liability to pay
compensation on the employer would arise not when the
Commissioner passes the order but on the date of sustaining
the injury itself. A provision is made in Section 4A of W.C. Act
that where any employer is in default of paying the
compensation due within one month the Commissioner shall
direct the employer to pay not only interest but in appropriate
cases a penalty ranging up to 50% of the amount payable.
The said scheme cannot be equated with the scheme in
Chapter XIII of the Railways Act, as the principles involved
have differences…‖
Having distinguished the scheme of the 1923 Act and the 1989 Act, the Court held that
the judgments in Pratap Narain Singh and Valsala have no bearing on claims under
the 1989 Act.
17
30 Recently, a two judge Bench of this Court in Union of India v Rina Devi12,
considered an apparent conflict between the judgments in Rathi Menon and Kalandi
Charan Sahoo v General Manager, South-East Central Railway, Bilaspur13
(―Kalandi‖) regarding the date relevant for the determination of compensation under
the 1989 Act. It was contended that the judgment in Rathi Menon was premised on
the basis that there was no provision for the payment of interest under the 1989 Act
and that there would be injustice if compensation is paid at money value prevalent at
the time of the accident. It was on this basis that the judgment in Pratap Narain Singh
was distinguished. This Court noted that in Thazhathe Purayil Sarabi v Union of
India14 (―Thazhathe‖), it was held that under the 1989 Act, a claimant is also entitled to
the payment of interest which accrues from the date of the incident. The decision in
Thazhathe was subsequently followed by this Court in Kalandi and Mohamadi v
Union of India.15 Consequently, this Court held that since interest is now payable
under the 1989 Act, the basis of the judgment in Rathi Menon has changed. The
Court held:
―15.3…We are of the view that law in the present context
should be taken to be that the liability will accrue on the date
of the accident and the amount applicable as on that date will
be the amount recoverable but the claimant will get interest
from the date of accident till the payment at such rate as may
be considered just and fair from time to time. In this context,
rate of interest applicable in motor accident claim cases can
be held to be reasonable and fair. Once concept of interest
has been introduced, principles of Workmen
Compensation Act can certainly be applied and judgment
of 4- Judge Bench in Pratap Narain Singh Deo (supra) will
fully apply. Wherever it is found that the revised amount of
applicable compensation as on the date of award of the
Tribunal is less than the prescribed amount of compensation
12
(2019) 3 SCC 572
13
(2019) 12 SCC 387
14
(2009) 7 SCC 372
15
(2019) 12 SCC 389
18
as on the date of accident with interest, higher of the two
amounts ought to be awarded on the principle of beneficial
legislation…
15.4 Accordingly, we conclude that compensation will be
payable as applicable on the date of the accident with interest
as may be considered reasonable from time to time on the
same pattern as in accident claim cases. If the amount so
calculated is less than the amount prescribed as on the date
of the award of the Tribunal, the claimant will be entitled to
higher of the two amounts…The 4-Judge Bench judgment
in Pratap Narain Singh Deo (supra) holds the field on the
subject and squarely applies to the present situation.‖
(Emphasis supplied)
This Court held that compensation under the 1989 Act would be calculated with
reference to the date of the accident along with interest payable. However, if the
amount calculated is less than the amount prescribed as on the date of the award of the
Tribunal under the 1989 Act, the claimant will be entitled to higher of the two amounts.
31 The judgment in Rathi Menon and Rina Devi were both rendered by a Bench of
two judges of this Court. In Rina Devi, this Court resolved the apparent conflict
between Rathi Menon and Kalandi by taking into account the judgment in Rathi
Menon as well as the change in the position of law following the judgment. The
position of law under the 1989 Act has thus been brought closer to the judgment of this
Court in Pratap Narain Singh which held that the date relevant for the determination
of compensation would be the date of the accident. The judgment in Rina Devi was
recently followed by this Court in Union of India v Radha Yadav16.
32 It is pertinent to note that no similar position of law for the determination of the
higher amount of compensation payable was adopted under the 1923 Act by this Court
in Pratap Narain Singh and Valsala. This Court, being a Bench of two judges, is
16
(2019) 3 SCC 410
19
bound by the categorical position of law laid down in Pratap Narain Singh and
Valsala, both being judgments rendered by larger Benches of this Court.
Consequently, we hold that the relevant date for the determination of compensation
payable is the date of the accident and the benefit of Act 45 of 2009 does not apply to
accidents that took place prior to its coming into force.
33 In the present case, the accident occurred on 31 January 2008 i.e. prior to the
coming into force of Act 45 of 2009. Consequently, the High Court erred in extending
the benefit of Act 45 of 2009 which deleted Explanation II to Section 4 to the present
case. The High Court was required to determine the compensation payable on the
date of the accident on which date, the deemed cap of Rs 4000 as monthly wages was
applicable.
34 Though the accident took place in 2008, the appeal is being decided over 12
years later. We take note of the fact that following the order of remand by the High
Court, the employer deposed as PW2 and stated that the deceased had worked in his
establishment for about three years. The employer duly proved Exhibit P5 in the
course of his evidence which was the monthly pay certificate indicating that the
deceased was drawing a monthly wage of Rs 32,000, including expenses towards
food. Significantly, no appeal was filed by the respondents against the judgment of the
High Court enhancing the compensation. In this view of the matter, we are not inclined
to interfere with the award of compensation ordered by the High Court in exercise of
the inherent jurisdiction of this Court to do complete justice under Article 142 of the
Constitution. Having clarified the law as noted above, the appeal shall stand
dismissed.
20
35 Before concluding the judgment, it would be necessary to note that in the office
report dated 14 October 2019 and 18 November 2019, it has been stated that service
is complete on the respondents.
36 The total compensation payable to the appellant shall stand quantified at Rs
8,86,120 on which interest shall be payable at 12% per annum from the date of the
accident. The liability for the payment of compensation shall be joint and several. The
compensation shall be payable to the first and the second appellants jointly and
severally by the respondents. The compensation shall be paid over within a period of
two months from the receipt of a certified copy of the order. There shall be no order as
to costs.
………………………….……………………..J.
[Dr Dhananjaya Y Chandrachud]
…..…..…….………..……………….………..J.
[Ajay Rastogi]
New Delhi;
February 13, 2020.
21
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