North East Karnataka Road Transport Corporation v. Smt. Sujatha

On November 2, 2018, the Hon’ble Supreme Court passed a judgment in North East Karnataka Road Transport Corporation v. Smt. Sujatha (Civil Appeal No. 7470 of 2009) setting aside a judgment dated November 29, 2006, passed by the Hon’ble High Court of Karnataka. The appeal to the Hon’ble Supreme Court was filed by the wife of a deceased employee (“the Respondent”) of North East Karnataka Road Transport Corporation (“the Appellant”). The Respondent had obtained an award of compensation by the Workmen’s Compensation Commissioner (and Labour Court), Bellary (the “Commissioner”) against the Appellant, for the death of her husband in the course of Appellant’s employment. The High Court of Karnataka, on the Appellant’s appeal before it, dismissed the appeal, upheld the order passed by the Commissioner, and directed the appellant to deposit the awarded sum within 45 (forty five) days, failing which, interest at the rate of 12% per annum would be applicable. The question which arose for consideration before the Hon’ble Supreme Court was, inter alia, whether the High Court’s direction for payment of interest only upon the Appellant’s failure to pay the awarded amount within 45 (forty five) days of the order, is correct? In other words, the Appellant contended that the relevant date for determination of the rate of interest on the compensation amount should be the date of the accident and not the date of adjudication of claim? Supreme Court’s observations and findings The Supreme Court, relying upon Pratap Narain Singh Deo v. Srinivas Sabata ((1976) 1 SCC 289), which held that an employer becomes liable to pay compensation as soon as the personal injury is caused to the workman in the accident which, arose out of and during the course of, employment, held that it is the date of accident and not the date of adjudication of the claim, which is material. Further, the Court, taking note of the judgment in Kerala State Electricity Board v. Valsala K. ((1999) 8 SCC 254), which also held that the relevant date from which interest would be due is the date of the accident and not the date of adjudication of the claim. The Supreme Court held that the decisions in National Insurance Company Limited v. Mubashir Ahmed ((2007) 2 SCC 349) and Oriental Insurance Company Limited v. Mohmad Nasir ((2009) 6 SCC 280), which had expressed contrary views and held that payment of compensation would fall due only after the Commissioner’s order or with reference to the date on which the claim application is filed, were per incuriam, as noticed in Oriental Insurance Company Limited v. Siby George ((2012) 12 SCC 540) where the Court (i) noticed the conflict of law in the above decisions; (ii) reaffirmed the decisions rendered in Pratap Narain Singh Deo v. Srinivas Sabata and Kerala State Electricity Board v. Valsala K. and; (iii) held that the principles of law set out in the aforesaid cases ought to be treated as binding precedent. In view of this, the Supreme Court held (i) that the direction of the Commissioner in awarding interest on the awarded sum is contrary to the law set down by the Supreme Court; and (ii) modified the order passed by the Commissioner and directed the appellant to pay interest on the awarded sum from the date of the accident. Download Pdf