SC criticizes approach of insurance company
who Challege order under Workmen's Compensation Act 1923.
('Absolutely no basis for the High Court to reduce
the award')
The Court directed the insurance
company to pay within 1 month Rs. 2,62,164 along with an interest of 12% from
the date of accident till it is realised. The Court held the appellants to be
entitled to costs of Rs 1 lakh towards expenses of the proceedings which have
been conducted in the courts below.
The
bench of Justices D. Y. Chandrachud and A. S. Bopanna was
hearing appeals from the 2018 judgments of the Orissa High Court Single Judge
and the 2019 decision in the Review Petition. The facts of the case are as
follows: The deceased workman, who is the son of the appellants, was working as
a helper in a truck belonging to the second respondent, who was his employer.
The truck was insured with the first respondent- New India Assurance Co. Ltd.
At 11 am on 30 October 2004, when the truck was carrying goods from Paradeep to
Jadupurgoda, the driver negotiated with a person to carry back thirty bags of
rice to Chandikhol on its return trip. The driver instructed the deceased
helper to get down from the truck and make necessary arrangements for loading
of the rice bags. The driver of the truck is alleged to have lost control of
the truck and dashed into the helper who struck against a tree on the side of
the road. The workman succumbed to his injuries on 1 November 2004.
The appellants filed an application
before the Court of Commissioner claiming a compensation of Rs. 3,00,000 under
the provisions of the Workmen's Compensation Act 1923. The deceased was
twenty-four years old at the time of the accident and was receiving a salary of
Rs. 2400/- per month, and Rs. 25/- everyday towards food expenses. The amount
was admitted by the employer. The claim for workman's compensation was disposed
of on 29 February 2016. It was observed that any special expense paid to the
employee by nature of his employment is covered within the meaning of 'wages' under
Section 2(m) of the Act. Therefore, the total monthly wages at the time of the
accident were calculated to be Rs.2425/month. According to Section 4 of the
Act, where the death of a workman results from an injury, the total amount of
compensation shall be an amount equal to fifty percent of the monthly wages of
the deceased multiplied by the relevant factor. According to the IVth Schedule
of the Act, the relevant factor for 24 years is 218.47. The total computation
was calculated to be as follows: (50% of 2425) X 218.47 = Rs.2,64,898.87. The
first respondent was directed to pay a compensation of Rs. 2,64,895/- along
with interest at 12% p.a. from the date of accident till realisation.
On appeal, the High Court by its
judgment dated 30 November 2018, modified the award by reducing the
compensation to Rs 1,98,807.70 and the interest from 12% to 8% from the date of
the award till realization. The High Court has, while reducing the claim for
compensation, proceeded on the basis that there was no material on the record
to indicate that the salary of the deceased at the time of death was Rs 2,400
per month. The High Court consequently proceeded on the basis of a minimum wage
of Rs 910, to which a multiplier of 218.47 was applied resulting in a
recomputed compensation of Rs 1,98,807.70. On the point of interest, the Court
held that there is no provision in the Act to grant interest on the
compensation from the date of the accident. Subsequently, the payment of
interest was reduced from 12% to 8% from the date of award till realization.
The review filed against the judgment was dismissed by an order dated 1
February 2019.
The bench of Justices Chandrachud and
Bopanna stated, "The appeals before this Court indicate the manner in
which the litigation process can drag on for years. In consequence, a poor
farming family is lost in a long drawn out battle to secure a paltry
compensation of Rs 2,64,895 awarded by the Commissioner of Labour under the Act
for the death of their son for an accident which took place in 2004. After the
Commissioner awarded compensation, the parents of the deceased workman had to
initially defend the proceedings brought by the insurer before the High Court
and thereafter pursue their own challenge to the judgment of the High Court
before this Court...As a matter of fact, we are clearly of the view that there
was no justification for the insurer to take a matter involving such a paltry
sum of compensation based on the facts of the case to the High Court and to
allow a poor farmer and his wife who have already lost the solace of an earning
member of the family into a long drawn out litigation"
'Absolutely no basis for the High
Court to reduce the award'
The bench observed that in the
present case, the claim was on the basis that the deceased was earning an
amount of Rs 2,400 per month. The claim was not disputed by the employer. "There
was absolutely no basis for the High Court to reduce the award on the ground
that there was no material to establish the salary that the deceased was
earning at the time of the accident. There was no ground to proceed on the
basis of the minimum wage, particularly when there was nothing untoward or
exaggerated in the claim for compensation based on the salary which was earned
by the deceased", declared the bench.
"The second respondent has in
his written statement and affidavit, stated that the deceased helper was
receiving a salary of Rs 2400/month. This statement has not been discredited.
The deceased was an informal worker, who was working as a helper in a transport
business under the second respondent, earning a meagre wage of Rs. 2400 at the
time of the accident. Such employees are not provided receipts on the payment
of wages, nor can it be reasonably assumed that the employer would maintain
receipts for the payment of wages to his employees. There was no reason for the
High Court to observe that there was no material to establish the wages
paid," asserted
the bench.
Expressing the view that the judgment
and order of the High Court would have to be set aside, the bench noted that
Section 2(m) of the Act defines 'wages' to include "any privilege or
benefit which is capable of being estimated in money, other than a travelling
allowance or the value of any travelling concession or a contribution paid by
the employer of a *[employee] towards any pension or provident fund or a sum
paid to a *[employee] to cover any special expenses entailed on him by the
nature of his employment". "Therefore, Rs 25 that was paid by as food
expense by the employer would fall within the 'special expenses that he is
entitled to by the nature of his employment' which is specifically excluded by
the provision. Therefore, the total compensation to be paid is as follows: (50%
of 2400) x 218.47= Rs. 2,62,164", said the bench.
It directed the first respondent to
pay Rs. 2,62,164 along with an interest of 12% from the date of accident till
it is realised. "In the event that the insurer has paid any part of the
compensation that has fallen due in pursuance of the order of the Commissioner
of Labour, that shall be given due credit for in computing the balance which is
due and payable. The balance shall be paid over to the appellants within a
period of one month from the date of this order. The Commissioner shall
personally ensure that the amount is paid over to the appellants. In addition,
the appellants shall be entitled to costs quantified at Rs 1 lakh towards for
meeting their costs and expenses of the proceedings which have been conducted
in the courts below."
Case Title: Shantilata
Sethy and Another v. M/s Divisional Manager, The New India India Assurance
Company Limited and Anr.
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