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The Supreme Court observed that interest on compensation under the Workmen’s Compensation Act 1923, shall be paid from the date of the accident and not the date of adjudication of the claim.

Ajaya Kumar Das, was working as a labourer. Due to an accident, he suffered multiple injuries in his abdomen and kidney. A claim for compensation was lodged before the Workmen compensation-cum Assistant Labour Commissioner, Odisha. 

Allowing his claim, the Commissioner directed that a compensation of Rs 2,78,926 must be paid together with interest at the rate of 12 per cent per annum on the principal sum awarded from the date of accident till the deposit. 

Though the High Court refused to interfere with the compensation amount, it held that Das is not entitled to any interest on the compensation awarded except the accrued interest.

In appeal, the bench comprising Justices DY Chandrachud and Dinesh Maheshwari noted that Section 4A of the Workmen’s Compensation Act stipulates that the Commissioner shall direct the employer to pay interest of 12% or at a higher rate, not exceeding the lending rates of any scheduled banks specified, if the employer does not pay the compensation within one month from the date it fell due. 

“In Saberabibi Yakubhai Shaikh v. National Insurance Co. Ltd. , this Court held that interest shall be paid on the compensation awarded from the date of the accident and not the date of adjudication of the claim in view of the decision of this Court in Oriental Insurance Co. Ltd. v. Siby George where it was held that compensation would fall due from the date of the accident. Further, in the recent decision in P. Meenaraj v. P. Adigurusamy & Anr. , this Court reiterated that the applicant is entitled to interest from the date of accident while rejecting the submission that the award of interest should be after the expiry of 30 days from the date of accident. Thus, there was no legal basis for the High Court to delete the order of payment of interest.”, the bench observed.

The court also directed that, in addition to the compensation and interest which have been awarded, the appellants shall be entitled to costs quantified at Rs 50,000.

“Though the first respondent has not appeared in these proceedings, despite service of notice, we are of the view that an award of costs is necessary since the appellants have been compelled to move this Court against a palpably erroneous order of the High Court passed in an appeal filed beyond limitation by the respondent. The insurer took the contest to the High Court in an appeal barred by limitation. A well-resourced insurance company has used its position of dominance to evade the cause of justice. Such strategies must be eschewed.”, the bench said.

Case name  : Ajaya Kumar Das Vs. Divisional Manager

Citation  :  2022 LiveLaw (SC) 102

Case no./date : CA 5797 OF 2009 | 24 Jan 2022

Coram  :  Justices DY Chandrachud and Dinesh Maheshwari

Counsel  :  Adv Chitta Ranjan Mishra for appellants

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