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Jharkhand High Court Rules on Interest in Workmen’s Compensation Case

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Published on: 17 September 2023 at 14:18 IST

The Jharkhand High Court, in a recent verdict, has mandated the payment of interest in a Workmen’s Compensation case. The case in question centered around an appeal filed by Jugal Kishor Ray, the appellant, against respondents Ashok Prasad Yadav and United India Insurance Company Limited.

Case Background:

The case’s core issue revolved around the tragic demise of Lakhan Ray, who worked as a driver and met with a fatal accident while employed by Ashok Prasad Yadav, respondent No.1. Seeking compensation for this tragic incident, the appellant contended that the deceased had been earning a monthly salary of Rs.6,000. Consequently, the appellant sought a compensation award of Rs.8 lakhs, along with an additional Rs.25,000 for cremation expenses, and interest at a rate of 12% per annum from the date of the accident.

Trial Court Decision:

The trial court, based on the presented evidence, determined the compensation amount, resulting in a net compensation figure of Rs.3,29,597. However, a crucial aspect was omitted in the original judgment – the inclusion of interest on the awarded amount, as mandated by Section 4(A) of the Workmen’s Compensation Act, 1923.

Substantial Question of Law:

The central legal issue in this appeal centered on whether the Commissioner, Employee’s Compensation, had erred in not awarding any interest to the claimant on the compensation amount, despite the legal requirement stipulated in Section 4A of the Workmen’s Compensation Act.

Court’s Analysis and Decision:

In the verdict, Justice Pradeep Kumar Srivastava, presiding over the case, relied on pertinent legal precedents to justify the decision.

Justice Pradeep Kumar Srivastava, articulated, “The amount of compensation can be said to be ‘falling due’ on the death of the employee/deceased, and the liability to pay the compensation would arise immediately from the date of death of the deceased.”

Furthermore, Justice Srivastava cited a specific case, Kamla Chaturvedi Vs. National Insurance Co. Ltd., to underscore the insurance company’s liability.

Justice underscored, “The insurance company is liable to pay not only the principal amount of compensation payable by the insured/employer but also interest thereon if ordered by the Commissioner to be paid by the insured/employee.”

As a result, the court allowed the appeal, amending the original order to incorporate the payment of simple interest at a rate of 12% per annum from the date of the deceased’s demise on January 28, 2009, until the date of the actual payment, calculated on the original award amount of Rs.3,29,597.

United India Insurance Company Limited (respondent) was instructed to deposit the interest amount within two months, with non-compliance subject to legal action for recovery.

Case Name: Jugal Kishor Ray Vs Ashok Prasad Yadav