Divisional Railway Manager (S.E.C.R) Vs Smt. Bina Kaushik

Learned counsel for the appellant submits that the delay occurred due to circumstances beyond the control of the appellant and not on account of any deliberate inaction or negligence. It is further submitted that the appellant has a strong prima facie case on merits and that, if the delay is not condoned, the appellant shall suffer irreparable loss. It is also contended that the delay was bona fide and not intentional.

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On due consideration, I.A. No. 01/2023 is allowed. Delay in fling the appeal is condoned.

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The present appeal has been preferred by the appellant/Railways under Section 30 of the Workmen’s Compensation Act, 1923 against the award dated 17/10/2022 passed by the learned Commissioner under the Employees’ Compensation Act, Labour Court No. 1, Raipur in Case No. 144/E.C. Act/2022/Fatal. By the impugned award, the learned Commissioner, while allowing the claim petition preferred by the claimants, awarded a sum of Rs. 12,70,000/- in their favour and directed the non-applicant/appellant herein to deposit the said amount within 30 days, failing which interest @ 12% per annum was to be payable. The non-applicant/appellant was further directed to pay 50% penalty

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MAC No. 220/2023

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amounting to Rs. 6,35,400/- to the claimants within the aforesaid period.

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At the very outset, learned counsel for respondent No. 1 submits that the issue involved in the present appeal is no longer res integra and stands concluded by the decision of the Hon’ble Supreme Court in Daivshala & Ors. v. Oriental Insurance Company Ltd.. , 2025 LiveLaw (SC) 748, It is submitted that the Hon’ble Supreme Court has held that an accident occurring while the employee was proceeding towards the place of work would be treated as an accident arising out of and in the course of employment.

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This submission is not disputed by the learned counsel for the appellant, who fairly submits that the aforesaid issue stands covered by the decision of the Hon’ble Supreme Court. However, it is contended that in so far as the imposition of 50% penalty is concerned, the employer was not afforded any opportunity of hearing prior to passing the order of penalty.

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Having considered the submissions advanced by learned counsel for the parties and upon perusal of the material available on record, this Court is of the view that, so far as the award of Rs. 12,70,000/- in favour of the claimants is concerned, the same is just and proper. The finding recorded by the learned Commissioner that the deceased died in the course of employment does not warrant interference and is accordingly affirmed.

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However, the appeal is admitted on the following substantial question of law, which arises for consideration:

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“Whether the learned Commissioner was justified in imposing 50% penalty without affording an opportunity of hearing to the appellant?”

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Learned counsel for the appellant submits that the imposition of 50% penalty by the learned Commissioner is wholly unsustainable in law. It is contended that no specific show-cause notice was issued to the appellant, nor was any opportunity of hearing afforded before imposing the penalty. It is further submitted that the imposition of the 50% penalty is in complete violation of sub-section (3)(b) of Section 4A of the Employees’ Compensation Act, 1923.

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Learned counsel for respondent No. 1 has failed to point out that any opportunity of hearing was afforded to the appellant as prescribed under sub-section (3)(b) of Section 4A of the Employees’ Compensation Act, 1923.

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I have heard learned counsel for the parties and perused the pleadings as well as the material available on record.

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Section 4A of The Employees Compensation Act, 1923 is reproduced hereunder:-

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“ Compensation to be paid when due and penalty for default.--(1) Compensation under section 4 shall be paid as soon as it falls due.

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(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

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the Commissioner or made to the¹ [employee], as the case may be, without prejudice to the right of the¹ [employee] to make any further claim.

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(3) Where any employer is in default in paying the compensation due under this Act within one month from the date it fell due, the Commissioner shall-

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(a) direct that the employer shall, in addition to the amount of the arrears, pay simple interest thereon at the rate of twelve per cent. 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

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(b) if, in his opinion, there is no justification for the delay, direct that the employer shall, in addition to the amount of the arrears and interest thereon, pay a further sum not exceeding fifty per cent. of such amount by way of penalty:

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Provided that an order for the payment of penalty shall not be passed under clause (b) without giving a reasonable opportunity to the employer to show cause why it should not be passed.

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This Court has considered the provisions contained in Section 4A of the Employees’ Compensation Act, 1923, which mandates that before imposing penalty, the employer must be afforded a reasonable opportunity of showing cause. The requirement of affording opportunity is not an empty formality but a condition precedent for levy of penalty.

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In the present case, as discussed hereinabove, there is nothing on record

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to indicate that any specific show-cause notice was issued to the appellant or that an opportunity of hearing was granted prior to imposition of the 50% penalty. In absence of compliance with the mandatory requirement under Section 4A of the Act, the order imposing penalty cannot be sustained.

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Accordingly, the impugned award, in so far as it relates to imposition of 50% penalty, is set aside. The matter is remanded to the learned Commissioner under the Employees’ Compensation Act, Labour Court No. 1, Raipur, for fresh consideration on the question of penalty, after affording adequate opportunity of hearing to the appellant, in accordance with law. It is directed that the learned Commissioner shall decide the aforesaid issue expeditiously and, preferably, within a period of 60 days from the date of receipt of a certified copy of this order.

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16. In result, the appeal is partly allowed.

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Rahul/Gowri

Divisional Railway Manager (S.E.C.R) v. Smt. Bina Kaushik

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Divisional Railway Manager (S.E.C.R) v. Smt. Bina Kaushik

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