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Wednesday, March 4, 2020

WC Act - functional fulfillment as Social engineering - Wages !!

Misfortunes can occur at any workplace harming those at work. Duty is cast on the  Employer to pay compensation arising out of  personal injury  / death  caused to a workman at such workplace.  Employees Compensation Act  [ Workmen Compensation Act 1923 earlier ] – 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.   The beneficial enactment  aims not at compensating the workmen the wages,  but provides for  compensation for the injury or death.  The amount of compensation depends on the nature of the injury and the average monthly wages and age of workmen.

WC Insurance ie., providing coverage to the Employer against liability towards their workmen has been in vogue for decades.  The Insurance Policies can cover only the liability under WC Act or can cover the Act liability, Fatal Accidents Act and Common Law.  Recently, by  gazette notification CG-DL-E-04012020-215147 of 3rd Jan 2020 –Central Government hereby specified that for the purposes of sub-section (1) of the said section, the monthly wages,  would be “Fifteen thousand rupees”, thereby increasing manifold the value of compensation payable. -   perhaps not many of us would have noticed and fully understood the implications of one earlier  notification done with the assent of President on 22.12.2009 known as The Workmen’s Compensation (Amendment) Act 2009.

Here is some excerpts of judgment of Madras High Court in Dec 2014 in a case between United India Insurance Vs Seethammal pronounced by Hon’ble Justice Mr S Vaidyanathan. 

In fact there had been two appeals – on the order made  in W.C.No.80 of 2011 by the Deputy Commissioner of Labour II, Chennai in 2012  awarding sum  of Rs.8,66,120/- together with interest at 12% p.a. from the date of expiry of 30 days from the date of occurrence till the date of payment. The cause of action arose on 12.12.2010 when deceased V Krishnamurthy working as a driver for a trailer lorry loaded with container came into contact with a live electric wire and died  – the dependents claimed 10 lakhs towards compensation.

                On hearing both oral and documentary evidence, reckoning the  earning of the deceased at 8000/- per month, the Commissioner awarded a sum of Rs.8,66,120/- with interest at 12% p.a.  Questioning the quantum of compensation awarded by the Deputy Commissioner of Labour, the United India Insurance Company Ltd., filed an application while the petitioners too filed an appeal seeking enhancement of the award.

Section 30 of the Employees Compensation Act, 1923 provides that no appeal by an employer shall lie to High Court unless the memorandum of appeal is accompanied by a certificate issued by the Commissioner to the effect that the appellant has deposited with him the amount payable under the order appealed against.  In this case, the Insurers deposited a cheque for a sum of Rs.8,66,120/- It was stated that an  acknowledgment that a cheque   cannot be equated with a certificate issued by the Commissioner for Workmens Compensation that the amount awarded as compensation has been deposited.  The  counsel for the petitioners pointed out the fact that even otherwise what was deposited by the appellant in the CMA was only the principal component awarded by the Commissioner and interest component was not  deposited.  The Court considered that the appellant (Insurer) had not complied with the requirement of proviso 3 to Section 30(1) of the Employees Compensation Act since interest component has not been deposited. 

Citing reference to some similar cases, the Court held that appeal in hand is not accompanied by the requisite certificate and therefore, instead of certificate, a letter addressed to the Commissioner enclosing a cheque accompanying the memorandum of appeal cannot be termed to be the compliance to the requirement of third proviso to Section 30(1) of the Act, 1923.  The Court held that in the absence of payment of interest – it is not sufficient compliance and hence the appeal filed by the Insurer is not maintenable. 

More importantly on the quantum of compensation awarded by the Deputy Commissioner, Insurers contended that  Commissioner had erroneously fixed the wages of the deceased at Rs.8000/- by invoking the amended provision of Section 4(i) Explanation II of Workmen Compensation Act, 1923 in the absence of any material evidence produced either by the employer/owner of the vehicle or the workman.  The Commissioner ought not to have invoked the provisions of Minimum Wages Act for the purpose of fixing the wages.  The counsel for claimants contended that by the proviso of the Act with explanation II of Section 4(1) of the Act been subsequently removed by amendment Act 45 of 2009 with effect from 31.05.2010 the prescribed wages @  Rs.8000/-,  should be construed and interpreted as minimum, meaning  not less than Rs.8000/-, and sought the  Court  to liberally consider the case of the claimants who are aged persons and lost their bread-winner, by taking into the account of Rs.12,000/- as monthly wages of the deceased for the purpose of arriving at just compensation.   It was contended that the deceased workman was a driver and earning Rs.12,000/- p.m. which was  established in the evidence.
The judgement of the High Court reads :  A statute is best understood if we know the reason for it. The reason for a statute is the safest guide to its interpretation. The words of a statute take their colour from the reason for it. How do we discover the reason for a statute? There are external and internal aids. The external aids are Statement of Objects and Reasons when the Bill is presented to Parliament, the reports of committees which preceded the Bill and the reports of Parliamentary Committees. Occasional excursions into the debates of Parliament are permitted. Internal aids are the preamble, the scheme and the provisions of the Act. Having discovered the reason for the statute and so having set the sail to the wind, the interpreter may proceed ahead. No provision in the statute and no word of the statute may be construed in isolation. Every provision and every word must be looked at generally before any provision or word is attempted to be construed. The setting and the pattern are important.  .. .. ...the fact that general words are used in a statute is not in itself a conclusive reason why every case falling literally within them should be governed by that statute, and the context of an Act may well indicate that wide or general words should be given a restrictive meaning.

In an earlier instance in  AIR 1977 SC 965, the Apex Court had held :Law is meant to serve the living and does not beat its abstract wings in the jural void. Its functional fulfilment as social engineering depends on its sensitized response to situation, subject-matter and the complex of realities which require ordered control. A holistic understanding is simple justice to the meaning of all legislations. Fragmentary grasp of rules can misfire or even backfire, as in this case. The counsel for petitioner contended that the wages @ 8000 should only be construed as minimum and not as maximum, when evidence established the wages to be 12000 p.m.

The Honble Court concluded that -  it is not in dispute that the workman died while he was in the employment.  It is the specific contention of the claimants that the deceased workman was earning a sum of Rs.12,000/- per month as a Driver and  Deputy Commissioner of Labour II, for the purpose of calculating and arriving at compensation, has considered the wages at Rs.8,000/- based on the Notification, dated 31.5.2010. 

Madras High Court directed the appellant / Insurance Company  to deposit the entire compensation amount now awarded together with interest at 12% p.a. thereon from the date of accident less the amount already deposited if any, within a period of six weeks from the date of receipt of copy of this order.

There are many learning for the Insurer in this – however, a very recent judgment on WC Insurance, this time by the Apex Court on 13.2.2020 is of direct relevance and significance for the Insurer, Employer and others.

In case, you still remember 2nd para on that Amendment Act of 2009 – here is something more on that : the underlying thread is on the interpretation of calculation of wages as envisaged on the Act.   :  Sec 4 of the WC Act deals with  Amount of compensation- mentions the methodology in calculation in %, relevant factor and monetary value, whichever is more.   The explanation II which was in vogue and which was omitted by the Act  45 of 2009,  ‘where the monthly wages of a workman exceed one thousand rupees, his monthly wages for the purpose of clause (a) and clause (b) shall be deemed to be one thousand rupees only. [* this 1000 was amended to 2000 / 4000 / 8000 and now 15000]

With regards – S. Sampathkumar
4th Mar 2020.
PS : don’t jump to any conclusions ~ would post another one in detail sooner – this time recent judgment (13.2.2020) of Supreme Court of India in Civil Appeal no. 9046 of 2019


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  2. It is ridiculous for United India to have not only filed an appeal but worse still the way they did.Both the wages as taken by the WC Commissioner and grant of interest are in order.Maybe the HC Advocate from whom an opinion was sought misled them but still the company should have known better .It is indeed very pathetic