Partly allowed

Senior Divisional Personnel Officer v. Smt.Lakshmi @ Lakshmamma

Karnataka HC5 Nov 2024MFA/6570/2022

Case brief

AI extract

What is this about?

The High Court allowed appeals in part, modifying an ex-gratia compensation award under the Employees' Compensation Act. The Court reduced the amount from Rs.17.37 lakhs to Rs.15.31 lakhs by excluding allowances from the wage calculation and adjusting the age multiplier, while enhancing the penalty for delayed payment from Rs.5,000 to Rs.25,000.

What did the court decide?

The original award of Rs.17,37,079 was reduced to Rs.15,31,447, and the penalty for delay was increased to Rs.25,000.

Senior Divisional Personnel Officer Vs… — Pension and Retirement Benefits | Karnataka HC (2024)

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NC: 2024:KHC:44546-DB MFA No.6570/2022 C/w MFA No.8629/2022

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 5^TH DAY OF NOVEMBER, 2024

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PRESENT

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THE HON'BLE MRS JUSTICE K.S.MUDAGAL

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AND

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THE HON'BLE MR JUSTICE VIJAYKUMAR A. PATIL MISCELLANEOUS FIRST APPEAL NO.6570/2022 (ECA)

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C/W

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MISCELLANEOUS FIRST APPEAL NO. 8629/2022 (ECA)

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MFA No.6570/2022:

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BETWEEN:

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SENIOR DIVISIONAL PERSONNEL OFFICER SOUTH WESTERN RAILWAY DIVISIONAL OFFICE

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BENGALURU CITY RAILWAY

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STATION COMPLEX

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BENGALURU – 560 023

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Digitally signed by K S RENUKAMBA Location: High Court of Karnataka

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THE DIVISIONAL RAILWAY MANAGER SOUTH WESTERN RAILWAY DIVISIONAL OFFICE BENGALURU CITY RAILWAY STATION COMPLEX BENGALURU – 560 023

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THE C.A.O SOUTH WESTERN RAILWAY OFFICE FA AND CAO, HUBLI – 580 020 KARNATAKA …APPELLANTS

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(BY SRI CHANDRACHUD A, ADVOCATE)

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AND:

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SMT.LAKSHMI @ LAKSHMAMMA W/O LATE RAJ @ P RAJA @ RAJU @ C P RAJU AGED ABOUT 59 YEARS R/AT NO.08, 1^ST A CROSS BEHIND NATIONAL ENGLISH SCHOOL

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NC: 2024:KHC:44546-DB MFA No.6570/2022 C/w MFA No.8629/2022

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8 FEET MAIN ROAD, M K NAGAR YESHWANTHAPUR BENGALURU – 560 022

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…RESPONDENT

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(BY SRI MALLIKARJUNA N S, ADVOCATE)

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THIS MISCELLANEOUS FIRST APPEAL IS FILED UNDER SECTION 30(1) OF THE EMPLOYEES’ COMPENSATION ACT, 1923 PRAYING TO SET ASIDE THE JUDGMENT AND AWARD DATED 23.06.2022 PASSED IN E.C.A.NO.121/2018 ON THE FILE OF THE VI ADDITIONAL JUDGE, COURT OF SMALL CAUSES AND ADDITIONAL CHIEF METROPOLITAN MAGISTRATE & MACT, BENGALURU (SCCH-2).

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MFA No.8629/2022:

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BETWEEN:

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SMT.LAKSHMI @ SMT.LAKSHMAMMA W/O LATE RAJ @ P RAJA @ RAJU @ C P RAJU AGED ABOUT 60 YEARS R/AT NO.08, 1^ST A CROSS BEHIND NATIONAL ENGLISH SCHOOL 8 FEET MAIN ROAD, M K NAGAR YESHWANTHAPUR BENGALURU – 560 022 …APPELLANT

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(BY SRI MALLIKARJUNA N S, ADVOCATE)

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AND:

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SENIOR DIVISIONAL PERSONNEL OFFICER SOUTH WESTERN RAILWAY DIVISIONAL OFFICE BENGALURU CITY RAILWAY STATION COMPLEX BENGALURU - 560 023

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THE DIVISIONAL RAILWAY MANAGER SOUTH WESTERN RAILWAY DIVISIONAL OFFICE BENGALURU CITY RAILWAY STATION COMPLEX BENGALURU - 560 023

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THE C.A.O SOUTH WESTERN RAILWAY OFFICE

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FA AND CAO HUBLI - 580 020 KARNATAKA …RESPONDENTS

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(BY SRI CHANDRACHUD A, ADVOCATE)

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THIS MISCELLANEOUS FIRST APPEAL IS FILED UNDER SECTION 30(1) OF THE EMPLOYEES’ COMPENSATION ACT, 1923 PRAYING TO MODIFY THE JUDGMENT AND AWARD DATED 23.06.2022 PASSED IN ECA NO.121/2018 ON THE FILE OF THE VI ADDITIONAL JUDGE, COURT OF SMALL CAUSES AND ADDITIONAL CHIEF METROPOLITAN MAGISTRATE & MACT, BENGALURU (SCCH-2) ALLOWING THE CLAIM PETITION FOR COMPENSATION.

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THESE MISCELLANEOUS FIRST APPEALS COMING ON FOR FURTHER HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:

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CORAM: HON'BLE MRS JUSTICE K.S.MUDAGAL AND

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HON'BLE MR JUSTICE VIJAYKUMAR A. PATIL

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ORAL JUDGMENT

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(PER: HON'BLE MRS JUSTICE K.S.MUDAGAL)

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These appeals arise out of judgment and award in E.C.A.No.121/2018 passed by VI Additional Judge, Court of Small Causes and Additional Chief Metropolitan Magistrate & MACT, Bengaluru (SCCH-2) (for short ‘the Commissioner’) under the Employee’s Compensation Act, 1923 (‘the Act’ for short).

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The appellants in M.F.A.No.6570/2022 were respondent Nos.1 to 3 and the respondent in the said appeal was the claimant before the Commissioner in E.C.A.No.121/2018. For the purpose of convenience, the

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NC: 2024:KHC:44546-DB MFA No.6570/2022 C/w MFA No.8629/2022

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parties are referred to henceforth according to their ranks before the Commissioner.

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Claimant is the wife of deceased Raja S/o. Joseph. He was working in South Western Railways as Technician Grade-III in the office of Senior Section Engineer, Carriage & Wagon Depot, Yeshwanthapur, Bengaluru. He had joined the services on 01.08.1983. On 10.03.2014, when Raja was working in second shift, a train which was running in the reverse mode on the railway track hit him and due to the fatal injuries suffered in the accident, he died at the spot. On internal investigation by the department of respondent No.1, it was held that death occurred during the course of employment.

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The claimant made petition before the Commissioner under Section 22 of the Act claiming compensation of Rs.25,00,000/- on the ground that the accident and death occurred during the course of employment and as such she has lost her bread winner. It was alleged that despite demand of the claimant, the respondents deposited only Rs.5,42,240/- on 16.03.2018 after long delay of 4 years from the date of the incident. She further claimed that the deceased was earning basic salary of Rs.11,740/- in addition

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NC: 2024:KHC:44546-DB MFA No.6570/2022 C/w MFA No.8629/2022

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to other components of salary and the respondents are liable

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to pay Rs.25,00,000/- with interest at 18% per annum.

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Respondents denied exact time of the death of the employee claiming that there were no eyewitnesses. They contended that they are not liable to pay the compensation, on the humanitarian ground they have already deposited Rs.5,42,240/-. Therefore the claimant is not entitled to compensation of Rs.25,00,000/- nor interest, thus sought dismissal of the petition.

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The Commissioner on framing necessary issues, recorded evidence of both parties. On behalf of the claimant, her son as Special Power of Attorney holder was examined as PW.1 and got marked Exs.P1 to P26. On behalf of the respondents, Smt.Uma Sharma, Senior Divisional Personnel Officer-II was examined as RW.1. No documents were marked on their behalf.

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The Commissioner on hearing the parties, by the impugned judgment and award held that the accident occurred during the course of employment and relying on Ex.P6 service certificate, considered his date of birth as 30.12.1958 and his age as 56 years. Based on Ex.P20 salary slip his monthly

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NC: 2024:KHC:44546-DB MFA No.6570/2022 C/w MFA No.8629/2022

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income was considered at Rs.26,102/-. In view of Section 4 of the Act, considering his age, the Commissioner deducted 50% of Rs.26,102/- for the purpose of compensation, applied relevant factor of 131.95/- and awarded compensation at Rs.17,22,079/- on the head of loss of dependency. The Commissioner in all awarded Rs.17,37,079/- with interest at

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12% per annum on different heads as follows:

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Sl. No.	Head of compensation	Amount/Rs.
1	Loss of dependency	17,22,079.00
2	Funeral Expenses	5,000.00.00
3	Interest	12% p.a., from the date of accident i.e., 10.03.2014 till its realization
4	Cost	5,000.00
5	Penalty	5,000.00
	TOTAL	17,37,079.00

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Challenging the award, the employer has preferred M.F.A.No.6570/2022 and the claimant has preferred M.F.A.No.8629/2022.

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This Court on hearing the parties, admitted the appeals to consider the following substantial questions of law:

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M.F.A.No.6570/2022:

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In considering the income of the deceased workman at Rs.26,102/- without giving deduction to Rs.3,040/paid to the employee towards transportation/G, whether the Commissioner acted

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contrary to Section 2(m) of the Employee’s Compensation Act, 1923?

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M.F.A.No.8629/2022:

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(i) In determining the age of the deceased at 56 years despite entry in Ex.P6- the Service Register in that regard, whether the Commissioner has committed perversity?

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(ii) In awarding penalty of only Rs.5,000/- under the impugned award, whether the Commissioner acted contrary to the provision of Section 4A(3)(b) of the Employee’s Compensation Act, 1923?

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Heard both side on the above framed substantial questions of law.

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Sri Chandrachud.A, learned Counsel for the respondent/employer submits that in assessing the income of the deceased, the Commissioner ought to have deducted the allowances given towards transportation and night duty allowance as that does not constitute regular income of the employee. He further submits that since the employer has deposited Rs.5,42,240/- on 16.03.2018, the Commissioner ought not to have awarded any penalty.

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NC: 2024:KHC:44546-DB MFA No.6570/2022 C/w MFA No.8629/2022

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Per contra, Sri Mallikarjuna.N.S., learned Counsel

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for the claimant justifies the income taken on the ground that all those components were part of regular salary of the deceased/employee. He further submits that even according to Ex.P6/Service Register, the age of the deceased was 55 and not 56 years. Therefore the order of the Commissioner in that regard is perverse. He further submits that the Commissioner ought to have awarded 50% of compensation as penalty, in addition to such compensation..

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In support of his submissions, he relies on the judgment of the Hon’ble Supreme Court in Shobha v. Vithalrao Shinde Sahakari Sakhar Karkhana Ltd.¹

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Analysis

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Reg. Compliance of Section 2(m) of the Act/Substantial Question of law in M.F.A.No.6570/2022:

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In Ex.P20 salary slip, monthly salary of

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Rs.26,102/- of the deceased is shown as follows:

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Basic Salary : Rs.11,620/DA : Rs.10,458/Transport/G : Rs. 3,040/Night Duty Allowance : Rs. 984/_________________ Total Salary : Rs.26,102/-

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1 (2022) 13 SCC 172

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NC: 2024:KHC:44546-DB MFA No.6570/2022 C/w MFA No.8629/2022

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There is no dispute that in considering the compensation, total wages of the employee has to be taken into consideration. Section 2(1)(m) of the Act defines wages which reads as follows:

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“ (m) “wages”, includes any privilege or benefit which is capable of being estimated in money, other than a travelling allowance or the value of any travelling concession or a contribution paid by the employer of an employee towards any pension or provident fund or a sum paid to an employee to cover any special expenses entailed on him by the nature of his employment ;”

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Reading of the above provision clearly shows that

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wages do not include travelling allowances or value of any travelling concession or contribution paid by the employer to an employee towards any pension or provident fund or sum paid to an employee to cover any special expenses. Therefore the Commissioner was in error in including transportation charges in the income. Further the night duty allowance is not regular salary. That he acquired whenever he performs night duty. Therefore the Commissioner ought not to have included that also in the wage components. Therefore on deduction of the same, the wage of the employer comes to (Rs.26,102/- - (Rs.3,040 + Rs.984) Rs.4,024) = Rs.22,078/-.

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As per Section 4(a) of the Act in assessing compensation, what has to be taken into consideration is the amount equal to fifty percent of the monthly wages. Therefore to deduct 50% of the monthly wages of the deceased and apply multiplier with relevant factor, the Commissioner ought to have taken income at Rs.11,039/- (22,078x50%). Thus the substantial question of law is answered accordingly.

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Reg. Substantial Question Nos. 1 & 2 in M.F.A.No.8629/2022:

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As per the service certificate Ex.P6, the date of birth of the deceased was 30.12.1958. Incident in question took place on 10.03.2014. As per the date of the said incident, the employee had completed age of 55 years. Therefore consideration of age at 56 years by the Commissioner is erroneous. The age ought to have been considered at 55 years. For the age of 55, the relevant factor as per Schedule IV of the Act is Rs.135.56/-. Therefore total compensation is Rs.11,039 x 135.56/- = Rs.14,96,446.84/- rounded off to Rs.14,96,447/-.

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The accident in question took place on 10.03.2014. As per Section 4A(3) of the Act, such compensation ought to have been paid within one month from the date it falls due. Thus compensation fell due on 09.04.2014. Whereas the

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employer deposited Rs.5,42,240/- before the Commissioner on 16.03.2018 i.e., close to four years after it fell due. Section 4A(3) of the Act which contemplates penalty in case of default, reads as follows:

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“ 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 .

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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 the Commissioner or made to the employee, as the case may be, without prejudice to the right of the 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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Explanation.- For the purposes of this sub-section, "scheduled bank" means a bank for the time being included in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934).

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3A. The interest and the penalty payable under sub-section (3) shall be paid to the employee or his dependant, as the case may be.”

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Learned Counsel for the claimant relying on the above provision and the judgment of the Hon’ble Supreme Court in Shobha’s case referred to supra submits that the Commissioner ought to have levied penalty of 50%. First of all the provision itself clearly states that the Commissioner can impose penalty not exceeding 50%. Therefore 50% is not the rate fixed, but is the upper limit for awarding penalty. The Commissioner has to appreciate justification offered by the employer. Only justification offered by RW.1 was that they found the death to be suspicious and therefore they held enquiry. Only after receiving Enquiry Committee’s report, they can deposit the amount. To show that they had independent enquiry and that occupied four years time, nothing was placed on record. Therefore the Commissioner was not justified in

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imposing penalty of Rs.5,000/- for such inordinate delay. It is true the deceased was employee of Railways itself and it should have empathy for their employee and his family. But at the same time, funds of the railways are also public funds. For

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the lapses on the part of some administrative officers, railways should not be unduly penalized. Balance has to be struck between both. Therefore, we find awarding penalty of Rs.25,000/- on that head meets the ends of justice. The judgment of the Hon’ble Supreme Court in Shobha’s case referred to supra is not applicable to the facts of the present case and the just compensation payable is as follows:

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Sl. No.	Particulars	Compensation in Rs.
1.	Compensation under Section 4	14,96,447/-
2.	Penalty	25,000/-
3.	Funeral expenses	5,000/-
4.	Costs	5,000/-
	Total	15,31,447/-

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Therefore the total compensation awarded is Rs.15,31,447/-. The compensation awarded by the Commissioner is Rs.17,37,079/-. Therefore, the compensation payable is reduced by Rs.2,05,632/-(17,37,079 - 15,31,447). The aforesaid compensation shall carry interest at 12% per annum from the date of the accident till its deposit.

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