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Thursday, February 6, 2014

compensation under WC Act .... interest from the date of ... ????

Roads are packed – more vehicles and more people driving mad… and in the melee – accidents do occur.  The ordeal of the victims is pathetic….. in India, the Motor Vehicles Act provides that any vehicle plying on road is liable to Third parties.  The legal heirs of the victims file for compensation before the Motor Accident Claims Tribunals (MACT)….  ~ the compensation is reckoned based on the loss of earning, age of the deceased, of legal heirs and more.  besides there are some other heads under which compensation is awarded – the award also carries interest at nominal rates from the date of filing of claim application till the date of payment.  

There is another Act – the WC Act 1923 [Employees Compensation Act now ..] which provides for payment of compensation by the employer to his employees (or their dependents in the event of fatal accidents) in respect of personal injury due to accidents arising out of and in the course of their employment. Here is something from a recent judgment of the Apex Court in Civil Appeal no. 8 of 2014

The appellants are the wife and the relatives of  deceased driver who died in a road  accident.  In Nov. 1997, Gulambhi Shaikh aged 36 at that time died driving a truck.  The appellants  raised   a   claim of  compensation for a sum of Rs.2,15,280/- and 12% interest therein from the date of accident by filing a claim  application  before WC Commissioner / Labour Court and that has taken more than 16 years to see the light.  

Respondent  No.1 – the Insurers contested  the compensation application.  In Dec 2010 (after 14 years) the learned Commissioner awarded compensation of Rs.213570/- with 12% interest from the date of accident. The learned Commissioner also awarded Rs.1,06,785/- as penalty. Aggrieved and dissatisfied with the aforesaid judgment and award passed, the Insurers filed an appeal before the High Court.   

By judgment and order issued in Jan 2012, the  High Court partly allowed  the  First  Appeal. The High Court directed the Insurers to pay interest  on the amount   of   compensation   from   the   date   of adjudication of claim application i.e. Dec 2010 and not from one month after from the date  of  accident  which was Aug 1996. A further direction was issued  that  the  excess amount towards interest, if any, deposited  by  them be refunded.    

In arriving at such conclusion, the High Court relied upon the judgment of Apex Court in Uttar Pradesh State  Road  Transport  Corporation  versus Satnam Singh, (2011) 14 SCC 758, wherein it was held that interest was payable under the WC Act from the date of award and not from the date of accident. Aggrieved by the aforesaid judgment of the High Court,  the appellants filed before the Apex Court

The Counsel for the appellants submitted that the judgment of High Court is contrary to law laid down by Supreme Court in the case of Oriental Insurance Vs Siby George and others [(2012) 12 SCC 540].

In the present case, the Court concluded that in the light of the decisions in Pratap  NarainSingh Deo and Valsala K., it is not open  to  contend  that the payment of compensation would fall due only  after the Commissioner's order or with reference to the date on which  the claim application is made. 

The Court allowed the appeal setting aside the judgment and order of the  High  Court.  The Apex Court held that the appellants shall be entitled to  interest at the rate of 12% from the date of the accident.

There are learning from every judgment … quite unfortunate that the victims had to wait long years to receive the compensation. This would have far-reaching impact on the way Insurers calculate the premium for such risks. WC Policies generally exclude compensation for penalties and interests …

With regards – S. Sampathkumar.

6th Feb 2014.

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