Workmen Compensation Act | Loss Of Earning Capacity Upon Amputation Can't Be Equated To Percentage Of Physical Disability: Andhra Pradesh High Court
Compensation under the Act becomes payable from date of accident, Court held.
The Andhra Pradesh High Court has held that where an on-site accident leads to loss of limb of a workman, he is entitled to compensation under the Workmen's Compensation Act, 1923, for loss of 100% earning capacity. Justice Ravi Nath Tilhari observed that in such cases, loss of earning capacity cannot be taken to be the same as the percentage of physical disability. It also held that...
The Andhra Pradesh High Court has held that where an on-site accident leads to loss of limb of a workman, he is entitled to compensation under the Workmen's Compensation Act, 1923, for loss of 100% earning capacity.
Justice Ravi Nath Tilhari observed that in such cases, loss of earning capacity cannot be taken to be the same as the percentage of physical disability. It also held that compensation under the Act becomes payable from the date of accident and hence, interest on compensation is calculated from the date of accident till actual realization.
The observation was made in an appeal filed by M/S United India Insurance Company Limited through its Divisional Manager (hereinafter, 'Insurance Company') challenging a judgment and award by which the application filed by the applicant/first respondent under Section 22 of the WC Act was allowed for compensation of Rs. 2,36,688 with interest at the rate of 12% per annum, along with costs. The opposite parties – the appellant company and the second respondent – were held jointly and severally liable to pay the amount.
The first respondent was employed as a cleaner by the second respondent and one evening, while he was checking the diesel tank of a lorry stopped in the middle of the road, he met an accident. His left leg was crushed between the lorry and bullock cart. His injury did not heal and the doctors advised amputation of the leg up to the thigh. The petitioner was aged 23 years at the time and acquired permanent disability viz. the amputation.
The second respondent filed a counter affidavit in which he stated that the lorry was insured by the Insuring Company, the appellant. The Insurance Company also filed a counter affidavit denying all allegations of the first respondent and claiming that the driver and owner were necessary parties to the application.
The Commissioner for Workmen's Compensation found the Insurance Company and the second respondent jointly and severally liable to compensate the first respondent. The Insurance Company challenger the award to the extent of grant of compensation with interest.
The only substantial questions of law framed in the appeal were: if the Commissioner had erred in law in passing the award when a) there is no provision making the applicant liable to pay the compensation by taking the loss of earning capacity as 100% as against the evidence of 40% physical disability by the medical board and; b) interest from the date of accident when the claim was filed after two years of the accident.
The appellant submitted that the first respondent had suffered 40% physical disability and thus, loss of earning capacity could not be determined above 40% as the injury incurred by the first respondent was not specified in Schedule-I, in view of the Section 4 (1)(c)(ii) of the WC Act.
The appellant also submitted that on the compensation amount, no interest could be awarded as there is no provision for awarding of interest on the compensation amount. The interest could be awarded only if the amount of compensation determined in the award is not paid within one month from the date it fell due. He submitted that there should be determination of compensation without awarding any interest and if the employer defaults in payment within 30 days of its determination, and only then interest could be awarded at the rate of 12% per annum under the Section 4 (1)(c)(ii) of the WC Act.
Section 3(1) of the WC Act provides that if personal injury is caused to a workman arising out of and in course of his employment, his employer shall be liable to pay compensation in accordance with the provisions of Chapter II. Section 4 (in Chapter 2) provides that subject to the provisions of the Act, the amount of compensation shall be given there under and in the cases where there is permanent partial disablement resulting from the injury. Section 4 (1)(c)(ii) of the WC Act provides that, in cases of injuries not specified in Schedule I, such percentage of the compensation payable in the case of permanent total disablement, as is proportionate to the loss of earning capacity, as accessed by qualified medical practitioner.
The Court noted the case of Raj Kumar, in which the Supreme Court had held that where the claimant suffers a permanent disability as a result of injuries, the assessment of compensation under the head 'loss of future earnings' would depend upon the effect and impact of such permanent disability on his earning capacity. The percentage of the permanent disability cannot be mechanically applied as percentage of economic loss or loss of earning capacity. Equating the percentage of disability and percentage of economic loss would result in either too high or too low computations of compensation. The Court had noted the need to assess the effect of the permanent disability on the earning capacity of the injured; and, after assessing the loss of earning capacity in terms of a percentage of the income, it has to be quantified in terms of money to arrive at the future loss of earnings by applying the standard multiplier method used to determine loss of dependency.
The Court pointed out that the Commissioner had recorded that the first respondent's injury had yet not healed and the extent of permanent disability was such that he required assistance in every basic action.
The Court noted that the appellant had submitted that – since the first respondent was assessed at 40% disability – he could take up a source of livelihood that does not require physical activity. The Court also pointed out that the appellant had not been able to suggest what alternate work the first respondent could take up.
The Court cited the case of Mohan Soni v. Ram Avtar Tomar, in which the Supreme Court held that any scaling down of the compensation should require something more tangible than a hypothetical conjecture; that, notwithstanding his disability, the victim should make up for the loss of income by changing his vocation or by adopting other means of livelihood. The party advocating for a lower amount of compensation for that reason must plead and show before the Tribunal that the victim enjoyed some legal protection, as in the case of persons covered under the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995, and, in case of the vast multitude of people who work in the unorganised sector, by leading cogent evidence that the victim had, in fact, changed his vocation and was deriving an income.
The Court noted that nothing had been brought on record to submit that the first respondent could work in a particular job or has worked in a particular job, making certain income. Indeterminate factors could not be considered in computing compensation, the Court held.
Hence, the Court rejected the appellant's submission that the percentage of permanent disability should be taken as the percentage of loss of income.
On the issue of interest, the Court noted that Section 4-A (3) of the WC Act provides for payment of compensation, as determined under the award, as also the penalty if there is no justification for delay. The appellant submitted that the compensation determined under the award must be without interest and no interest could be imposed with affect from the date of accident, unless the appellant defaults in the payment of compensation awarded.
The Court found itself unconvinced with this argument. In Pratap Narain Singh Deo v. Srinivas Sabata, the Supreme Court had held that the employer becomes liable to pay the compensation as soon as the injury, which arose in the course of employment, is caused. The appellant had relied on the cause of National Insurance Co. Ltd. V. Mubasir Ahmed to submit that the starting point of payment of interest is on completion of one month from the date on which the compensation fell due. The Court pointed out that Mubasir Ahmed case and the case of Oriental Insurance Company Ltd. V. Mohd. Nasir considered by the Supreme Court in the case of Oriental Insurance Co. Lts. V. Siby George. In Siby George, it was held that earlier decisions like Pratap Narain Singh Deo were not brought to the notice of the Supreme Court in later decisions like Mubasis Ahmed and Mohd. Nasir. Mubasis Ahmed and Mohd. Nasir, therefor, do not express the correct view and do not make binding precedents.
Finding no illegality in the judgment and the award by the Commissioner, the Court, thus, upheld that the liability for payment of compensation arises on the date of the accident and the claimant is entitled for interest on compensation from the date of the accident, till its payment.
CASE TITLE: The Divisional Manager, M/s. United India Insurance Company Ltd. v. Harijana P. Israil & P. Mabu
Citation: 2022 LiveLaw (AP) 89