THE ORIENTAL INSURANCE CO. LTD. versus SIBY GEORGE & ORS.

Citation: [2012] 6 S.C.R. 1079 · Decided: 31-07-2012 · Supreme Court of India · Bench: AFTAB ALAM · Disposal: Dismissed
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Judgment (excerpt)

[2012) 6 S.C.R. 1079 
THE ORIENTAL INSURANCE CO. LTD. 
v. 
SIBY GEORGE & ORS. 
(Civil Appeal No.5669 of 2012) 
JULY 31, 2012 
[AFTAB ALAM AND RANJANA PRAKASH DESAI, JJ.] 
WORKMAN'S COMPENSA T/ON ACT, 1923: 
A 
B 
ss. 3 and 4-A - Liability to pay compensation and interest c 
on delayed payment - Relevant date - Held: Is the date of 
accident and not the date of adjudication of the claim nor the 
date of filing of the claim petition - Compensation becomes 
payable as soon as the injury is caused. 
The instant appeal was fiied by the Insurance 
11 
Company challenging the order of the Commissioner 
directing it to pay simple interest@ 12% per annum ·from 
the date of accident Relying upon the decision in Mubasir 
Ahmad1 and Mohd. Nasir2 , it was contended for the 
appellant that the Commissioner erred in directing for 
E 
payment of interest from the date of the accident and not 
from the date of the order. 
Dismissing the appeal, the Court 
HELD: 1.1. As has been held by this Court in Pratap 
F 
Narain Singh Deo's* case and Valsala's** case the relevant 
date for determination of the rate of compensation is the 
date of the accident and not the date of adjudication of 
the claim. Compensation becomes payable as soon as 
G 
1. 
National Insurance Co. Ltd. vs. Mubasir Ahmed and Anr. 2007 (2) SCR 
117. 
2. 
Oriental Insurance Company Limited vs. Mohd. Nasir and Anr. 2009 (8) 
SCR 829. 
1079 
H 
1080 
SUPREME COURT REPORTS 
[2012) 6 S.C.R. 
A the injury is caused. It cannot be said that the payment 
of compensation would fall due only after the 
Commissioner's order or with reference to the date on 
which the claim application is made. The decisions in 
Mubasir Ahmed and Mohd. Nasir insofar as they took a 
s contrary view to the earlier decisions in Pratap Narain 
Singh Deo and Valsa/a do not express the correct view 
and do not make binding precedents. [para 8, 9 and 12] 
[1088-A-B; 1088-E-F] 
*Pratap ·Narain Singh Deo. Vs. Shrinivas Sabata and 
C Anr., 1976 (2) SCR 872: AIR 1976 SC 222; **Kera/a State 
Electricity Board vs. Valsala K., . 1999 (2) 
Suppl. · 
SCR 657 = AIR 1999 SC 3502 - relied on 
United India Insurance Co. Ltd. vs. Alavi, 1998(1) KerLT 
0 951 (FB) - stood approved 
E 
National Insurance Co. Ltd. vs. Mubasir Ahmed and Anr. 
2007 (2) SCR 117 = (2007) 2 SCC 349 Oriental Insurance 
Company Limited vs. Mohd. Nasir and Anr. 2009 
(8) SCR 829 = (2009) 6 SCC 280 - stood disapproved. 
1.2. Sub-s. (3) of s. 4-A of the Workman's 
Compensation Act, 1923 is in two parts, separately 
dealing with interest and penalty in clauses (a) and (b) 
respectively. Clause (a) makes the levy of interest, with 
no option, in case of default in payment of compensation, 
F without going into the question regarding the reasons for 
the default. Clause (b) provides for imposition of penalty 
in case, in the opinion of the Commissioner, there was 
no justification for the delay. On a plain reading of th.e 
provisions of sub-s. (3) it becomes clear that payment of 
G interest is a consequence of default in payment without 
going into the reasons for the delay and it is only in case 
where the delay is without justification, the employer 
might also be held liable to penalty after giving him a 
show cause. Therefore, a _finding to the effect that the 
H delay in payment of the amount due was unjustified is 
ORIENTAL INSURANCE CO. LTD. v. SIBY GEORGE 1081 
& ORS. 
required to be recorded only in case of imposition of 
A 
penalty and no such finding is required in case of 
interest which is to be levied on default per se. [Para 7] 
(1085-A-E] 
Case Law Reference: 
2007 (2) SCR 117 
2009 (8 ) SCR 829 
1976 ( 2) SCR 872 
stood disapproved para 4 
stood disapproved para 5 
relied on 
1999 (2 ) Suppl. SCR 657 relied on 
1998 (1) Ker LT 951 (FB) 
approved 
Para 8 
para 9 
para 10 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 
B 
c 
5669 of 2012. 
D 
From the Judgment & Order dated 22.7.2009 of the High 
Court of Kerala at Ernakulam in MFA No. 172 of 2009. 
Vishnu Mehra, Sakshi Gupta (for Pramod Dayal) for the 
Appellant. 
E 
Renjith B. Marar (for Sajith P .) for the Respondents. 
The Judgment of the Court was delivered by 
AFTAB ALAM, J. 1. Leave granted. 
F 
2. ·The short question that arises for consideration in this 
appeal is when does the payment of compensation under the 
Workmen's Compensation Act, 1923 (hereinafter the Act) 
become due and consequently what is the point in time from 
G 
which interest would be payable on the amount o
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