1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

Civil Appeal No. 9046 of 2019

(Arising out of SLP (C) No 18110 of 2019)

K Sivaraman & Ors .... Appellants

Versus

P Sathishkumar & Anr ....Respondents

J U D G M E N T

Dr Dhananjaya Y Chandrachud, J

1 This appeal arises from a judgment of a Division Bench of the Madurai Bench of

the Madras High Court dated 1 June 2017. In an appeal arising from a decision of the

Deputy Commissioner for Employee‘s Compensation, the High Court enhanced the

compensation payable under the Employee‘s Compensation Act 1923

1

from Rs

4,33,060 to Rs 8,86,120. The High Court has awarded interest at the rate of 12% per

annum from the date of the accident.

2 In the present proceedings which have been instituted under Article 136 of the

Constitution, notice was issued on 26 July 2019. Since the appellants were

1

―1923 Act‖

2

represented by the first appellant in person, this Court, by its order dated 26 July 2019,

directed that an amicus curiae be nominated by the Supreme Court Legal Services

Committee. Accordingly, Mr S Mahendran, learned counsel, has been nominated as

the amicus curiae, whom we have heard in support of the appeal.

3 The appellants are the father, mother, sister and brother of Dinesh Kumar, who

died in the course of an accident on 31 January 2008. On the date of the incident, the

deceased was 26 years of age and was engaged as a driver of a trailor lorry. While the

vehicle was being driven on NH 12 in Kota, Rajasthan, a truck bearing registration No

MH 19 Z 1696 came from the opposite direction and dashed against the trailor,

resulting in the death of Dinesh Kumar. At the time of the accident, the deceased was

in the employment of the first respondent. A claim under the 1923 Act was lodged

before the Deputy Commissioner for Employee‘s Compensation, Madurai on 29 April

2013. On 26 March 2014, the claim was allowed by an award in the amount of Rs

4,33,060. The Deputy Commissioner had proceeded ex parte. The appellants filed an

appeal

2

before the Madras High Court for enhancement of the compensation.

4 The High Court, by its judgment dated 23 November 2015, remanded the

proceedings to the Deputy Commissioner for determination afresh. While remanding

the proceedings, the High Court noted that though the appellants had filed a salary

certificate as Exhibit P5 to establish that the monthly income of the deceased was Rs

32,000, no witness was examined on behalf of the employer to prove the salary

certificate. However, acceding to the request of the appellants that they should be

furnished with an opportunity to examine the employer‘s witness in support of Exhibit

2

CMA (MD) 344 of 2014

3

P5, the High Court considered it in the interests of justice to remand the proceedings.

5 On remand, the Commissioner for Workmen‘s Compensation, Madurai, by an

order dated 4 March 2016, maintained the award of compensation in the amount of Rs

4,33,060. Before the Commissioner, on remand, the appellants examined PW2, the

owner of the vehicle which was being driven by the deceased. During the course of

his evidence, he stated as follows:

―I am the 1

st

respondent in this case under W.C. Case

No.74/2011 is under tail in this court is known to me. I

received summons 3 times from the court. For the last two

summons, as my own lorries were working in the other states

and I also have to go there, I was unable to come and adduce

witness for the court summon. The accident platform trailor

lorry TN 28 AB 1933 belongs to Sathishkumar. The

deceased Dinesh Kumar S/o Sivaraman worked as a driver.

In 2008, (31.1.2008) when going to Pandicheri to Rajasthan

Sironi before Kotta town the opposite coming tarras lorry

dashed face to face and caused accident. As soon as the

accident occurred in the same occurrence place Dineshkumar

died. Before accident he worked for about 3 years. He was

having proper driving license. He was having license for

driving heavy vehicles. The Ex.P.5 monthly pay certificate

was issued by me. In it, for deceased Dinesh Kumar I was

paying Rs 32,000 per month (including food expenses) but

pay of Rs 25,000. The vehicle involved in the accident has

been properly insured with 2

nd

respondent company of M/s

Reliance General Insurance Company. At the t ime of

accident, the insurance was in current.‖

6 The Commissioner, however, proceeded on the basis that in terms of the

notification issued under Section 4(1B) of the 1923 Act, whatever be the monthly pay

received by a person, the jurisdiction of the adjudicating authority was subject to a

ceiling of Rs 4,000 per month in computing the monthly wages of the employee.

Taking the monthly salary at Rs 4,000, the Commissioner applied a multiplicand of

215.28 in terms of Schedule IV (the deceased being 26 years of age) and arrived at a

4

figure of Rs 4,30,560 to which an additional amount of Rs 2,500 was added towards

funeral expenses. A total award in the amount of Rs 4,33,060 was decreed as the

compensation payable to the appellants.

7 In an appeal filed before the High Court, the Division Bench took note of the fact

that in pursuance of the order of remand, the salary of deceased employee had been

proved to be Rs 32,000 per month. The High Court noticed that though the accident

had taken place on 31 January 2008, the petition for compensation had been lodged

on 28 January 2011 and was decided by the Commissioner on 4 March 2016.

8 In the meantime, a notification was issued by the Central Government on 31

May 2010 in the following terms:

―S.O.1258(E) – In exercise of the powers conferred by sub-

section (1B) of Section 4 of the Employee's Compensation

Act, 1923, (g of 1923), the Central Government hereby

specified, for the purpose of Sub-Section (1) of the said

section, the following amount as monthly wages, with effect

from the date of publication of this notification in the official

gazette, namely – Eight thousand rupees.‖

9 The High Court was of the view that having due regard to the fact that the

legislation in question is a social welfare legislation, the enhanced income of Rs 8,000

per month should form the basis of the computation. Thus, applying the multiplicand in

terms of Schedule IV, the High Court enhanced the compensation to Rs 8,86,120.

10 In appeal before this Court, the learned amicus curiae urged that both the

Commissioner and the High Court have erred - the Commissioner having adopted a

figure of Rs 4,000 per month and the High Court, Rs 8,000 per month. The learned

amicus curiae submitted that in terms of the provisions of Section 4(1)(a) of the 1923

5

Act, where death has resulted from injury, the compensation payable is an amount

equal to fifty per cent of the monthly wages of the deceased employee multiplied by

the relevant factor. The relevant factor is specified in Schedule IV and for the

deceased who was 26 years old on the date of the accident, the multiplicand would be

215.28. The learned amicus curiae submitted that under sub-section (1B) of Section 4,

the Central Government is empowered to issue a notification specifying, for the

purposes of sub-section (1), the monthly wages in relation to an employee as it may

consider necessary. However, it was submitted that the notification does not impose a

cap or ceiling on the monthly wages which form the basis of calculating the

compensation due and payable. Where the actual wages of an employee are proved

to be in excess of the amount which is specified in the notification, there is no bar in

adopting the monthly wages so proved in terms of Section 4(1)(a). The learned

counsel buttressed this submission by adverting to Act 45 of 2009, which took effect

from 18 January 2010 and deleted the deeming provision in Explanation II to Section

4

3

. Moreover, it was urged by the learned amicus curiae that the method of calculating

wages is specified in Section 5. It was urged that clause (a) of Section 5 will be

attracted to the present case where the employee was, during a continuous period of

not less than twelve months immediately preceding the accident, in the service of the

employer.

11 The learned amicus curiae, at a belated stage, sought to distinguish the

judgments of this Court in Pratap Narain Singh Deo v Srinivas Sabata

4

(―Pratap

3

―Explanation II – Where the monthly wages of a workman exceed four thousand rupees, his monthly wages for the

purposes of clause(a) and clause(b) shall be deemed to be four thousand rupees only.‖

4

(1976) 1 SCC 289

6

Narain Singh‖) and Kerala State Electricity Board v Valsala K

5

(―Valsala‖) in which

it was held that the date relevant for the determination of compensation payable under

the 1923 Act is the date of the accident and that the benefit of an amendment

enhancing the amount of compensation shall not apply to accidents that take place

prior to its coming into force. To support this, the amicus curiae relied on the judgments

of this Court in New India Assurance Company Ltd . v Neelakandan

(―Neelakandan‖),

6

and National Insurance Co Ltd. v Mubasir Ahmed

7

(―Mubasir

Ahmed‖).

12 Section 4(1)(a) of the Act contains the following provision:

―4. Amount of compensation.—(1) Subject to the provisions of this Act,

the amount of compensation shall be as follows, namely:—

(a) where death results

from the injury

an amount equal to fifty per cent of the

monthly wages of the deceased

employee multiplied by the relevant

factor;

or

an amount of one lakh and twenty

thousand rupees, whichever is more;‖

13 The proviso to the above provision stipulates that the Central Government may,

by notification in the Official Gazette, from time to time, enhance the amount of

compensation mentioned in clauses (a) and (b). Clause (b) deals with a case involving

permanent total disablement resulting from the injury. The expression ―relevant factor‖

is defined in Explanation I to be the factor specified in Schedule IV. Prior to Act 45 of

5

(1999) 8 SCC 254

6

Civil Appeal Nos. 16904-09 of 1996

7

(2007) 2 SCC 349

7

2009, Section 4 contained Explanation II, which was in the following terms:

―Explanation II – Where the monthly wages of a workman

exceed four thousand rupees, his monthly wages for the

purposes of clause(a) and clause(b) shall be deemed to be

four thousand rupees only.‖

14 By Act 45 of 2009, which came into force on 18 January 2010, Explanation II

came to be deleted. Sub-section (1B) was introduced in Section 4 to read as follows:

―(1-B) The Central Government may, by notification in the

Official Gazette, specify, for the purposes of sub-section (1),

such monthly wages in relation to an employee as it may

consider necessary.‖

15 The question before this Court is whether the benefit of Act 45 of 2009 deleting

the deeming provision in Explanation II which capped the monthly wages of an

employee at Rs 4,000 would also apply to accidents which took place prior to the

coming into force of its provisions i.e. 18 January 2010 and where final adjudication is

pending. In assessing whether the Act 45 of 2009 applies retrospectively, it is

necessary to analyze the relevant precedents of this Court. In Pratap Narain Singh,

the first respondent was in the employment of the appellant and suffered injuries which

arose out of and in the course of employment. It was contended that the Commissioner

committed an error of law in imposing a penalty on the appellant under Section 4A(3)

of the 1923 Act as the compensation payable had not fallen due until it was ‗settled‘ by

the Commissioner under Section 19 of the 1923 Act. Section 4A reads:

―4A. Compensation to be paid when due and penalty for default.-

(1) Compensation under section 4 shall be paid as soon as it

falls due.

(2) In cases where the employer does not accept the liability

for compensation to the extent claimed, he shall be bound

to make provisional payment based on the extent of

liability which he accepts, and, such payment shall be

deposited with the Commissioner or made to the

8

employee, as the case may be, without prejudice to the

right of the employee to make any further claim.

(3) Where any employer is in default in paying the

compensation due under the Act within one month from

the date it fell due, the Commissioner shall –

(a) Direct that the employer shall, in addition to the

amount of the arrears, pay simple interest thereon at

the rate of twelve percent per annum or at such higher

rate not exceeding the maximum of the lending rates

of any scheduled bank as may be specified by the

Central Government, by notification in the Official

Gazette, on the amount due; and

(b) If, in his opinion, there is no justification for the delay,

direct that the employer shall, in addition to the

amount of arrears and interest thereon, pay a further

sum not exceeding fifty per cent of such amount by

way of penalty…‖

16 In terms of Section 4A(1), compensation under Section 4 is payable ―as soon as

it falls due.‖ Section 4A(2) contemplates a situation wherein the employer, though

accepting the liability to pay compensation to the injured employee, disputes the

quantum of compensation payable. In such cases, sub-section (2) enjoins the

employer to make a provisional payment based on the extent of accepted liability by

depositing it with the Commissioner or by paying it directly to the employee. Section

4A(3) stipulates that where an employer defaults in paying compensation within one

month from the date on which it falls due, the Commissioner is empowered to direct

the payment of interest as well as an additional amount as arrears for an unjustifiable

delay in making payment. Section 19 of the Act reads:

―19. Reference to Commissioners.- (1) If any question arises

in any proceedings under this Act as to the liability of any

person to pay compensation (including any question as to

whether a person injured is or is not an employee or as to the

amount or duration of compensation (including any question

as to the nature or extent of disablement), the question shall,

in default of agreement be settled by a Commissioner…‖

17 Section 19 stipulates that any question arising in any proceeding under the Act

shall, in the default of an agreement, be settled by the Commissioner. A four judge

9

Bench of this Court rejected the contention urged by the appellant and held that

compensation ―falls due‖ on the date of the accident. Consequently, the Commissioner

was empowered to impose interest or penalty for the duration prior to the settling of the

claim or where there was unjustified delay in making good the payment of

compensation. The Court held:

―18…The employer therefore became liable to pay the

compensation as soon as the aforesaid personal injury was

caused to the workman by the accident which admittedly

arose out of and in the course of the employment. It is

therefore futile to contend that the compensation did not fall

due with after the Commissioner's order dated May 6, 1969

under section 19. What the section provides is that if any

question arises in any proceeding under the Act as to the

liability of any person to pay compensation or as to the

amount or duration of the compensation it shall, in default of

an agreement, be settled by the Commissioner. There is

therefore nothing to justify the argument that the employer's

liability to pay compensation under section 3, in respect of the

injury, was suspended until after the settlement contemplated

by section…

19. The appellant was thus liable to pay compensation as

soon as the aforesaid personal injury was caused to the

appellant, and there is no justification for the argument to the

contrary. It was the duty of the appellant, under section

4A(1) of the Act, to pay the compensation at the rate provided

by section 4 as soon as the personal injury was caused to the

respondent. He failed to do so. What is worse, he did not

even make a provisional payment under sub-section (2)

of section 4 for, as has been stated, he went to the extent of

taking the false pleas that the respondent was a casual

contractor and that the accident occurred solely because of

his negligence. Then there is the further fact that he paid no

heed to the respondent's personal approach for obtaining the

compensation. It will be recalled that the respondent was

driven to the necessity of making and application to the

Commissioner for settling the claim, and even there the

appellant raised a frivolous objection as to the jurisdiction of

the Commissioner and prevailed on the respondent to file a

memorandum of agreement setting the claim for a sum which

was so grossly inadequate that it was rejected by the

Commissioner. In these facts and circumstances, we have no

doubt that the Commissioner was fully justified in making an

order for the payment of interest and the penalty.‖

10

18 The Court held that though Section 19 empowered the Commissioner to decide

claims or objections under the Act, the obligation to pay compensation to an injured

employee was not suspended until the Commissioner settled the amount payable in

the case of a dispute between the employer and the employee. Section 4A deals with

when the obligation for the payment of compensation as required under the 1923 Act

arises. For the purposes of Section 4A of the 1923 Act, the obligation to pay

compensation arises on the date of the accident. Where an employer disputes the

quantum of compensation payable, it is enjoined to make a provisional payment to the

Commissioner or the employee pending the settlement of the claim. This is in order to

ensure that an employer does not escape its obligation to make good the payment of

compensation or unduly delay its payment on frivolous grounds.

19 In Neelakandan, the accident had taken place prior to the coming into force of

an amendment to the 1923 Act whereunder the deemed income had been increased

from Rs 1000 to Rs 2000. The question before the Court was whether the benefit of

the amendment would extend to accidents which took place prior to its coming into

force and where the final adjudication of the amount payable was pending. A two

judge Bench of this Court held that though the accident in question took place in 1981,

the benefit of the amendment would apply to accidents that took place prior to the

coming into force of the amendment in the following terms:

―It is not disputed that Section 4 of the Act was amended in

1995 by Amendment Act 30 whereunder the deemed income

has been increased from Rs 1000 to Rs 2000. Learned

counsel for the Insurance Company has vehemently

contended that since the accident took place in the year

1981, the law operating on that date is applicable and as such

the workmen are not entitled to the benefit of the amendment.

We do not agree with the learned counsel. We are finally

determining the right of workmen today. The Act is a

special legislation for the benefit of the labour. Keeping

in view the scheme of the Act we are of the view that the

11

only interpretation which can be given to the amendment

is that is any benefit is conferred on the workmen and the

said benefit is available on the date when the case is

finally adjudicated, the said benefit should be extended

to the workmen. We, therefore, hold that the compensation

to be paid to the heirs of the workmen has to be calculated on

the basis of the actual wages – Rs 1800 – drawn by them…‖

(Emphasis supplied)

20 The Court noted that the 1923 Act is a social welfare legislation for the benefit of

employees. Consequently, taking into account the scheme of the Act, the court must

adopt an interpretation which extends a benefit to the employee on the date of the final

adjudication of the claim. Where a case is pending final adjudication and an

amendment is enacted increasing the amount of compensation payable, the enhanced

amount would be applicable in the determination of the quantum of compensation

payable. Conspicuous in its absence in the submission advanced by the learned

amicus curiae is how a subsequent Bench of this Court dealt with the position of law

laid down in Neelakandan.

21 In Valsala, the question before a three judge Bench of this Court was whether

an amendment to Section 4 and 4A of the 1923 Act enhancing the amount of

compensation and the rate of interest would be applicable to cases where the accident

took place prior to the coming into force of the amendment. This Court noted that

various High Courts in the country had taken the uniform position that the relevant date

for determining the rights and liabilities of the parties is the date of the accident.

Relying on the judgment of this Court in Pratap Narain Singh, the Court overruled the

judgment in Neelakandan and held that the benefit of an amendment whereunder the

compensation payable was increased, would not apply to accidents that took place

prior to its coming into force. The Court held:

―4. A two-judge Bench of this Court in New India Assurance

Co Ltd. v. V.K. Neelakandan however, took the view that the

12

Workmen‘s Compensation Act being a special legislation for

the benefit of the workmen, the benefit as available on the

date of adjudication should be extended to the workmen and

not the compensation which was payable on the date of the

accident. The two-judge Bench in Neelakandan case

however, did not take notice of the judgment in Pratap Narain

Singh Deo case as it presumably was not brought to the

notice of their Lordships. Be that as it may, in view of the

categorial law laid down by the larger Bench in Pratap Singh

Deo case the view expressed by the two-judge Bench in

Neelakandan case is not correct.‖

22 In the course of the judgment in Valsala, the three judge Bench also affirmed

the full judge Bench judgment of the Kerala High Court in Alavi ―to the extent it is in

accord with the judgment of the larger bench‖ in Pratap Narain Singh. The Court held:

―5. Our attention has also been drawn to a judgment of the

Full Bench of the Kerala High Court in United India Insurance

Co. Ltd v. Alavi wherein the Full Bench precisely considered

the same question and examined both the above-noted

jugdments. It took the view that the injured workman becomes

entitled to get compensation the moment he suffers personal

injuries of the types contemplated by the provisions of the

Workmen‘s Compensation Act and it is the amount of

compensation payable on the date of the accident and not the

amount of compensation payable on account of the

amendment made in 1995, which is relevant. The decision of

the Full Bench of the Kerala High Court, to the extent it is on

accord with the judgment of the larger Bench of this Court in

Pratap Narain Singh Deo v Srinivas Sabata lays down the

correct law and we approve it.‖

23 In Alavi, a full judge Bench of the Kerala High Court was required to adjudicate

whether Sections 4 and 4A of the 1923 Act as amended in 1995 enhancing the amount

of compensation and rate of interest would be applicable to claims in respect of death

and permanent disablement resulting from accidents which occurred prior to 15

September 1995 i.e. the date on which the amended provisions came into force. In all

the appeals before the Court, the accident as well as settling of the claims by the

Commissioner took place prior to the coming into force of the amending provisions

13

enhancing the quantum of compensation payable. The Court relied on the decision of

this Court in Pratap Narain Singh and held that the Amending act enhancing

compensation would apply only to accidents that took place after the coming into force

of the amendment. The Court held:

―17. Right to claim compensation as well as the obligation to

pay the same are created by the statute itself. It is well-settled

rule of interpretation that if the law is procedural, there is, no

doubt, a presumption that it applies to pending proceedings. If

the law is substantive in nature, the normal presumption

against retrospectivity still holds good, subject to the principle

that the Court must look to the question whether the rights of

the parties at the commencements of the proceedings were

intended to be modified either expressly or by necessary

implication: Neeli v. Narayana Pilla [(1992) 2 K.L.J. 937, 950].

If the amended provisions are given effect to in the matter of

awarding enhanced compensation even with regard to the

accident which occurred prior to 15 September 1995, and the

claim was decided prior to the same date, the law applicable

is the unamended provisions of the Workmen‘s

Compensation Act, 1923. But if the claim could not be settled

prior to 15 September 1995 going by the Division Bench

decision in Asokan case (vide supra), those claimants would

get the benefit of the Amendment Act. In other words, the

benefit would depend on when the case is decided either

prior to 15 September 1995 or subsequent. This was never

the intention of the Legislature…‖

24 The question before the Bench in Valsala was clearly whether an amendment to

Section 4 and 4A of the 1923 Act enhancing the amount of compensation and the rate

of interest would be applicable to cases where the accident took place prior to the

coming into force of the amendment. The Bench held that the benefit of an Amending

act enhancing the quantum of compensation would not apply to accidents that took

place prior to the coming into force of the amendment. Though the learned amicus

curiae sought to rely on the two judge Bench judgment of this Court in Mubasir

Ahmed, it is sufficient at this stage to note that the subsequent judgment of this Court

14

in Oriental Insurance Company v Siby George

8

noted that the judgment in Mubasir

Ahmed is contrary to the judgments of this Court in Pratap Narain Singh and Valsala

and hence not a binding precedent.

25 The 1923 Act is a social beneficial legislation and its provisions and

amendments thereto must be interpreted in a manner so as to not deprive the

employees of the benefit of the legislation. The object of enacting the Act was to

ameliorate the hardship of economically poor employees who were exposed to risks in

work, or occupational hazards by providing a cheaper and quicker machinery for

compensating them with pecuniary benefits. The amendments to the 1923 Act have

been enacted to further this salient purpose by either streamlining the compensation

process or enhancing the amount of compensation payable to the employee.

26 Prior to Act 45 of 2009, by virtue of the deeming provision in Explanation II to

Section 4, the monthly wages of an employee were capped at Rs 4000 even where an

employee was able to prove the payment of a monthly wage in excess of Rs 4,000.

The legislature, in its wisdom and keeping in mind the purpose of the 1923 Act as a

social welfare legislation did not enhance the quantum in the deeming provision, but

deleted it altogether. The amendment is in furtherance of the salient purpose which

underlies the 1923 Act of providing to all employees compensation for accidents which

occur in the course of and arising out of employment. The objective of the amendment

is to remove a deeming cap on the monthly income of an employee and extend to

them compensation on the basis of the actual monthly wages drawn by them.

However, there is nothing to indicate that the Legislature intended for the benefit to

8

(2012) 12 SCC 540

15

extend to accidents that took place prior to the coming into force of the amendment.

27 The learned amicus curiae relied on the judgment of this Court in

Commissioner of Income Tax v Vatika Township Private Limited

9

to contend that

amendments that confer a benefit upon individuals must be given retrospective

application. In that case, the question before a Constitution Bench of this Court

concerned whether the proviso to Section 113 which was inserted by the Finance Act

2002 applied retrospectively. The scheme for block assessment was introduced in

Chapter XIV-B to the Finance Act (w.e.f 1 July 1995) to curb tax evasion and expedite

as well as simplify the assessments in such search cases. By virtue of the proviso, a

date was specified with reference to which the rate of surcharge is payable upon block

assessments. This Court noted that the chapter for block assessment was a self-

contained code and that the effect of the proviso was to impose an additional burden

on the assessee. Consequently, it was held that the proviso did not operate

retrospectively. In the course of the judgment, this Court held:

―30. We would also like to point out, for the sake of

completeness, that where a benefit is conferred by a

legislation, the rule against a retrospective construction is

different. If a legislation confers a benefit on some persons

but without inflicting a corresponding detriment on some other

person or on the public generally, and where to confer such

benefit appears to have been the legislators' object, then the

presumption would be that such a legislation, giving it a

purposive construction, would warrant it to be given a

retrospective effect. This exactly is the justification to treat

procedural provisions as retrospective. In Govt. of India v.

Indian Tobacco Assn. [(2005) 7 SCC 396], the doctrine of

fairness was held to be relevant factor to construe a statute

conferring a benefit, in the context of it to be given a

retrospective operation. The same doctrine of fairness, to hold

that a statute was retrospective in nature, was applied in Vijay

v. State of Maharashtra [(2006) 6 SCC 289]. It was held that

where a law is enacted for the benefit of community as a

whole, even in the absence of a provision the statute may be

held to be retrospective in nature. However, we are (sic not)

9

(2015) 1 SCC 1

16

confronted with any such situation here.‖

28 This Court held, in line with settled precedent of this Court, that where (i) a

legislation confers a benefit on some persons, (ii) without inflicting a corresponding

detriment on some other persons or the public generally and (iii) where the conferral of

such benefit appears to be the intention of the legislature, the presumption of

prospective application may stand displaced. Though amendments enhancing the

compensation payable under the 1923 Act confer a benefit upon employees, a

corresponding burden is imposed on employers to pay a higher rate of compensation.

It is presumably for this reason that the three judge Bench of this Court in Valsala and

the Kerala High Court in Alavi held that the benefit of an amendment enhancing the

rate of compensation does not have retrospective application to accidents that took

place prior to the coming into force of the amendment. Further, as we have already

noted, there is nothing in Act 45 of 2009, either express or implied, to denote an

intention of the legislature to confer the benefit of the amendment to accidents that

took place prior to its coming into force.

29 We also briefly note the position of law regarding the date relevant for the

determination of compensation payable under the Railways Act 1989

10

. Chapter XIII of

the 1989 Act titled ‗Liability of Railway Administration for Death and Injury to

Passengers due to accidents‘ stipulates an obligation on the railway administration to

pay compensation to such extent ―as may be prescribed‖ on the account of untoward

accidents. In Rathi Menon v Union of India

11

, the question before a two judge Bench

10

1989 Act

11

(2001) 3 SCC 714

17

of this Court was whether the benefit of an amendment enhancing the rate of

compensation can be extended to accidents that took place prior to the coming into

force of the amendment. The Court assessed the scheme of the 1989 Act and held

that the date relevant for the determination of compensation payable shall be the date

of adjudication. Consequently, the benefit of an amendment enhancing compensation

would be extended to accidents that took place prior to the coming into force of the

amendment. In the course of the judgment, this Court differentiated between the

scheme of the 1923 Act and the 1989 Act and addressed the contention raised on the

basis of the judgments of this Court in Pratap Narain Singh and Valsala in the

following terms:

―…The scheme of the provision under the W.C. Act is

materially different from the scheme indicated in Chapter XIII

of the Railways Act. In the former, compensation payable is

fixed in the Act itself through the schedule incorporated

thereto. Section 4 of the W.C. Act shows that such

compensation is to be linked with the monthly wages of the

workman concerned. It also provides that the liability to pay

compensation on the employer would arise not when the

Commissioner passes the order but on the date of sustaining

the injury itself. A provision is made in Section 4A of W.C. Act

that where any employer is in default of paying the

compensation due within one month the Commissioner shall

direct the employer to pay not only interest but in appropriate

cases a penalty ranging up to 50% of the amount payable.

The said scheme cannot be equated with the scheme in

Chapter XIII of the Railways Act, as the principles involved

have differences…‖

Having distinguished the scheme of the 1923 Act and the 1989 Act, the Court held that

the judgments in Pratap Narain Singh and Valsala have no bearing on claims under

the 1989 Act.

18

30 Recently, a two judge Bench of this Court in Union of India v Rina Devi

12

,

considered an apparent conflict between the judgments in Rathi Menon and Kalandi

Charan Sahoo v General Manager, South-East Central Railway, Bilaspur

13

(―Kalandi‖) regarding the date relevant for the determination of compensation under

the 1989 Act. It was contended that the judgment in Rathi Menon was premised on

the basis that there was no provision for the payment of interest under the 1989 Act

and that there would be injustice if compensation is paid at money value prevalent at

the time of the accident. It was on this basis that the judgment in Pratap Narain Singh

was distinguished. This Court noted that in Thazhathe Purayil Sarabi v Union of

India

14

(―Thazhathe‖), it was held that under the 1989 Act, a claimant is also entitled to

the payment of interest which accrues from the date of the incident. The decision in

Thazhathe was subsequently followed by this Court in Kalandi and Mohamadi v

Union of India.

15

Consequently, this Court held that since interest is now payable

under the 1989 Act, the basis of the judgment in Rathi Menon has changed. The

Court held:

―15.3…We are of the view that law in the present context

should be taken to be that the liability will accrue on the date

of the accident and the amount applicable as on that date will

be the amount recoverable but the claimant will get interest

from the date of accident till the payment at such rate as may

be considered just and fair from time to time. In this context,

rate of interest applicable in motor accident claim cases can

be held to be reasonable and fair. Once concept of interest

has been introduced, principles of Workmen

Compensation Act can certainly be applied and judgment

of 4- Judge Bench in Pratap Narain Singh Deo (supra) will

fully apply. Wherever it is found that the revised amount of

applicable compensation as on the date of award of the

Tribunal is less than the prescribed amount of compensation

12

(2019) 3 SCC 572

13

(2019) 12 SCC 387

14

(2009) 7 SCC 372

15

(2019) 12 SCC 389

19

as on the date of accident with interest, higher of the two

amounts ought to be awarded on the principle of beneficial

legislation…

15.4 Accordingly, we conclude that compensation will be

payable as applicable on the date of the accident with interest

as may be considered reasonable from time to time on the

same pattern as in accident claim cases. If the amount so

calculated is less than the amount prescribed as on the date

of the award of the Tribunal, the claimant will be entitled to

higher of the two amounts…The 4-Judge Bench judgment

in Pratap Narain Singh Deo (supra) holds the field on the

subject and squarely applies to the present situation.‖

(Emphasis supplied)

This Court held that compensation under the 1989 Act would be calculated with

reference to the date of the accident along with interest payable. However, if the

amount calculated is less than the amount prescribed as on the date of the award of the

Tribunal under the 1989 Act, the claimant will be entitled to higher of the two amounts.

31 The judgment in Rathi Menon and Rina Devi were both rendered by a Bench of

two judges of this Court. In Rina Devi, this Court resolved the apparent conflict

between Rathi Menon and Kalandi by taking into account the judgment in Rathi

Menon as well as the change in the position of law following the judgment. The

position of law under the 1989 Act has thus been brought closer to the judgment of this

Court in Pratap Narain Singh which held that the date relevant for the determination

of compensation would be the date of the accident. The judgment in Rina Devi was

recently followed by this Court in Union of India v Radha Yadav

16

.

32 It is pertinent to note that no similar position of law for the determination of the

higher amount of compensation payable was adopted under the 1923 Act by this Court

in Pratap Narain Singh and Valsala. This Court, being a Bench of two judges, is

16

(2019) 3 SCC 410

20

bound by the categorical position of law laid down in Pratap Narain Singh and

Valsala, both being judgments rendered by larger Benches of this Court .

Consequently, we hold that the relevant date for the determination of compensation

payable is the date of the accident and the benefit of Act 45 of 2009 does not apply to

accidents that took place prior to its coming into force.

33 In the present case, the accident occurred on 31 January 2008 i.e. prior to the

coming into force of Act 45 of 2009. Consequently, the High Court erred in extending

the benefit of Act 45 of 2009 which deleted Explanation II to Section 4 to the present

case. The High Court was required to determine the compensation payable on the

date of the accident on which date, the deemed cap of Rs 4000 as monthly wages was

applicable.

34 Though the accident took place in 2008, the appeal is being decided over 12

years later. We take note of the fact that following the order of remand by the High

Court, the employer deposed as PW2 and stated that the deceased had worked in his

establishment for about three years. The employer duly proved Exhibit P5 in the

course of his evidence which was the monthly pay certificate indicating that the

deceased was drawing a monthly wage of Rs 32,000, including expenses towards

food. Significantly, no appeal was filed by the respondents against the judgment of the

High Court enhancing the compensation. In this view of the matter, we are not inclined

to interfere with the award of compensation ordered by the High Court in exercise of

the inherent jurisdiction of this Court to do complete justice under Article 142 of the

Constitution. Having clarified the law as noted above, the appeal shall stand

dismissed.

21

35 Before concluding the judgment, it would be necessary to note that in the office

report dated 14 October 2019 and 18 November 2019, it has been stated that service

is complete on the respondents.

36 The total compensation payable to the appellant shall stand quantified at Rs

8,86,120 on which interest shall be payable at 12% per annum from the date of the

accident. The liability for the payment of compensation shall be joint and several. The

compensation shall be payable to the first and the second appellants jointly and

severally by the respondents. The compensation shall be paid over within a period of

two months from the receipt of a certified copy of the order. There shall be no order as

to costs.

………… ...…...….......………………........J.

[Dr Dhananjaya Y Chandrachud]

…..…..…....…........……………….…........J.

[Ajay Rastogi]

New Delhi;

February 13, 2020.