Holding

Loss of earning capacity is not synonymous with physical disability; compensation must be computed per the statutory provisions of the 1923 and 1988 Acts, interest is payable from the filing date, and awards may exceed the claimed amount where justified.

Summary

The case involved several claimants who suffered injuries in motor vehicle accidents and sought compensation under the Workmen's Compensation Act, 1923 and the Motor Vehicles Act, 1988. The insurer argued that compensation should be limited to the percentage of physical disability prescribed by the statutes and that interest should commence only after a one‑month default period. The Supreme Court held that loss of earning capacity is a distinct factor from physical disability and must be assessed according to the statutory formulas, with reasons recorded for any determination. It clarified that the multiplier in the Second Schedule of the 1988 Act applies to claims under Section 166, and that interest is payable from the date of filing of the claim until award, at the statutory rate. The Court also affirmed that compensation may exceed the amount claimed where justified by the evidence. Consequently, the High Court judgments enhancing awards were set aside and the original Commissioner awards were restored, with the appeals disposed of.

Issues considered

The applicability of the Workmen's Compensation Act, 1923 versus the Motor Vehicles Act, 1988 to claims arising from motor vehicle accidents.
Whether the percentage of loss of earning capacity is identical to the percentage of physical disability.
The correct method of calculating compensation, including the use of the multiplier in the Second Schedule of the 1988 Act.
The point from which interest under Section 4A(3) of the 1923 Act becomes payable.
Whether compensation can be awarded in excess of the amount claimed by the claimant.

Legislation cited

Motor Vehicles Act, 1988s. 140, s. 142, s. 143, s. 144, s. 163-A, s. 165, s. 166, s. 168
Workmen's Compensation Act, 1923s. 2(c), s. 2(g), s. 2(i), s. 3, s. 4, s. 4A(3)

Subjects

Workmen Compensation ActMotor Vehicles ActDisability compensationLoss of earning capacityInterest under Section 4AMultiplier schedulePermanent total disablementPermanent partial disablementStatutory interpretationBeneficent legislation

Judgment

• [2009] 8 S.C.R. 829
~

A
ORIENTAL INSURANCE CO. LTD.
v.
MOHD. NASIR AND ANR.
(Civil Appeal No.3486 of 2009)
MAY 12, 2009 B

[S.B. SINHA AND DR. MUKUNDAKAM SHARMA, JJ.]

Workmen Compensation Act, 1923/Motor Vehicle Act,
1988: c
Disability - Compensation - Both the Acts are
beneficient legislations in so far as they provide for payment
of compensation - Both the statutes provide for the mode and
manner in which the percentage of loss of earning capacity
is required to be calculated - While determining the amount D
of loss of earning capacity, the Tribunal or High Court must
record reasons for arriving at the conclusion.

Words and Phrases:
E
'permanent total disablement' and 'permanent partial
disablement' - Distinction between.

National Insurance Co. Ltd. v. Mubasir Ahmed & Anr.
(2007) 2 SCC 349; Ramprasad Balmiki v. Anil Kumar Jain
& Ors. (2008) 9 SCC 492; Shyama Devi v. Union of India & F
Anr. (2005) 12 SCC 217; Nagappa v. Gurudaya/ Singh & Ors.
(2003) 2 SCC 274; Syed Bashee Ahmed & Ors. v. Mohd.
Jameel & Anr. (2009) 2 SCC 225; National Insurance Co. Ltd.
v. Laxmi Narain Dhut (2007) 3 SCC 700; Punjab State
Electricity Board Ltd. v. Zora Singh & Others (2005) 6 SCC G
. ~ 776 and State of Haryana & Ors. v. shakuntla devi (2008) 13
SCALE 621, referred to.

829 H
830 SUPREME COURT REPORTS [~009] 8 $.C.R. '

A Case Law Reference :
(2001) 2 sec 349 Referred to Para 15
(2008) 9 sec 492 Referred to Para 17
(2oos) 12 sec 211 Referred to Para 25
B
(2003) 2 sec 214 Referred to Para 27
>~

(2009) 2 sec 225 Referred to Para 27
(2001) 3 sec 100 Referred to Para 27
c
(2005) s sec 11s Referred to Para 27
(2008) 13 SCALE 621 Referred to Para 27
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
D 3486 of 2009.

From the Judgment & Order dated 24.02.2006 of the High
Court of Judicature at Allahabad in First Appeal from order No.
516 of 2006.

E WITH

C.A. No. 3495, 3496, 3484, 3497/2009.

Dr. Meera Agarwal and Ramesh Chandra Mishra for the
Appellant.
F
A.V. Rao, Prabhakar P. Arnam, Venkateswara Rao
Anumolu, G.V.R. Choudhary, K. Shivraj Choudhuri, R. Santhana
Krishnan, P. Radha Rani P. Vijava Kumar, Praveen Kumar
Pandey, D. Mahesh Babu, K. Sarada Devi, Sushil Bahvada and
G Brij Bhusan for the Respondents.
'
The Judgment of the Court was delivered by

S.B. SINHA, J. 1. Leave granted.

H
. ORIENTAL INSURANCE CO. LTD. v. MOHD. NASIR 831
AND ANR. [S.B. SINHA, J.]
...
2. Applicability of the respective provisions of the A
Workmen Compensation Act, 1923 (1923 Act) and Motor
Vehicles Act, 1988 (1988 Act) in respect of the claimants who
had suffered disability is the question involved in this appeal.

3. The factual matrix involved in these cases would be
B
noticed by us separately .
• SLP (C) N0.11215 OF 2006
.
First respondent in this appeal was the driver of a truck
bearing registration No.UP-21-9636. Respondent No.2 was its c
owner. An accident took place on 2.10.2004 wherein first
respondent suffered an injury in his right leg besides others. He
filed an application for award of compensation in terms of the
provisions of the 1923 Act before the Commissioner of
;
Workmen Compensation, Moradabad claiming a sum of D
Rs.1,50,000/- with interest. The Commissioner opined that
-.although the workmen had suffered 15% disability but loss of
his earning capacity was 100%. Noticing that he was aged
about 35 years and his salary was Rs. 3,200/- per month, a sum
,_
of Rs. 3,78,355.20 was awarded with interest at the rate of 12%
E
per annum from the date of accident till payment.

The High Court dismissed the appeal in limine.

SLP (C} N0.16171 OF 2006
F
Respondent No.1 was a cleaner in a truck. It collided with
a tanker on 17.7.2002 resulting in fracture of his femur right
thigh. Respondent No.1 was hospitalized from 19.7.2002 to
7.8.2002. He filed claim petition under the 1923 Act for a sum
of Rs.3,00,000/-.
G
By an order dated 8.9.2003, the Commissioner awarded
a sum of Rs.93,302/- on the premise that he was aged 22 years
and his income was Rs.2003/- per month. Although the disability
was determined at 20% to 25%, the loss of earning capacity
H
832 SUPREME COURT REPORTS [2009] 8 S.C.R.

A was de!termined at 35%. The doctor who had treated him, in
his deposition, stated that disability of the first respondent was
between 20% to 25%.

The High Court, by reason of its impugned judgment dated
14.6.2006 determined his loss of "arning capacity at 60% and
8
the amount of compensation, on the said premise, was
enhanced to Rs.2,65,865.37.

SLP (Cl N0.21012 OF 2006

c First respondent was hired as a casual labour for loading
and unloading. The truck in which he was working collided with
a stationary lorry as a result whereof he sustained injuries. He
filed claim petition under the 1923 Act claiming a sum of
Rs.1,50,000/- before the Commissioner. The Commissioner,
by an order dated 29.4.2004 assessed his disability at 40%. •
0
However, the loss of earning capacity was taken to be 80%.
An amount of Rs.2, 17, 169.83 was awarded as compensation.

An appeal preferred by the insurance company
thereagianst has been dismissed by the High Court in terms
E of the impugned judgment.

SLP (C) N0.74 OF 2007

Respondent Nos. 1 and 2 were engaged for loading and
F unloading broken rice on casual basis in a lorry which collided
with a stationary lorry resulting in sustaining injuries to
respondent No.1. He filed an application before the Workmen's
Compensation Commissioner claiming an amount of
Rs.3,00,000/- as compensation. His disability was assessed
at 40% but loss of earning capacity was assessed at 80% by
G the doctor. The Commissioner, by an order dated 29.4.2004
assessed the disability of the respondents at 80% and loss of
earning capacity at 100%. A sum of Rs.2,09,123/- was
awarded.

H
ORIENTAL INSURANCE CO. LTD. v. MOHD. NASIR 833
AND ANR. [S.S. SINHA, J.]
...
By reason of the impugned judgment the High Court A
affirmed the award.

SLP (Cl N0.2854 of 2008

Respondent No.1 on 31.5.1995 was traveling in an
Ambassador car which collided with a bus as a result whereof B
.
_
he sustained injuries. He filed an application under Section 166
of the 1988 Act claiming a sum of Rs.18,00,000/- before the
Motor Accident Claims Tribunal. He was aged about 65 years.
He is a practicing advocate. By an award dated 21.2.2002, the
Tribunal assessed the permanent disability suffered by him at c
50%. A sum of Rs.1,95,000/- was awarded keeping in view the
fact that he was unable to work for 39 months. A sum of
Rs.50,0001- was also awarded towards future loss of income.
In total, MACT awarded Rs.7,42, 191/- with 9% interest per
• annum. D

On an appeal preferred thereagainst, the High Court, by
- reason of the impugned judgment, enhanced the amount of
compensation to Rs.12,37,191/-with 9% interest per annum.

r 4. The insurance company contends that its liability is only
to the extent of percentage of disability of the person as
E

provided by Section 4 of the 1923 Act and the interest becomes
payable with effect from one month after the date of
adjudication by the Commissioner.
F
It was also stated that the insurance company had not filed
any appeal before the High Court in the case of K. Srinivas
Murthy satisfying the award given by the Tribunal. The appellant
has also deposited 50% of the amount of compensation
enhanced by the High Court. It was prayed that the said amount G
,, ; may be directed to be recovered.

It is also contended that the amount of compensation could
not have exceeded the amount claimed.

H
834 SUPREME COURT REPORTS [2009] 8 S.C.R.
..
A 5. A question has been raised as to whether the
percentage of loss of earning capacity and the physical
disability shall be the same.

A question has furthermore been raised as regards
applicability of the multiplier specified in the Second Schedule
B
appended to the 1988 Act on the premise that the same would
not be applicable in respect of the claim petition which is filed •
under Section 166 of the Act.

6. Before adverting to the questions raised before us, we
c may notice the statutory provisions contained in the 1923 Act
and 1988 Act.

The 1923 Act was enacted to provide for the payment by
certain classes of employers to their workmen of compensation
D for injury by accident. •
'Compensation' has been defined in Section 2(c) of the
1923 Act to mean 'compensation as provided therein.

'Partial disability' has been defined in Section 2(g) as
E under:

" 'Partial disablement' means, where the disablement is
of a temporary nature, such disablement as reduces the
earning capacity of a workman in any employment in which
he was engaged at the time of the accident resulting in the.
F
disablement, and, where the disablement is of a
permanent nature, such disablement as reduces his
earning capacity in every employment which he was
capable of undertaking at that time : provided that every
injury specified (in Part II of Schedule I] shall be deemed
G to result in permanent partial disablement;"
< .
'Qualified medical practitioner' has been defined in
Section 2(i) to mean :

H " 'qualified medical practitioner' means any person
ORIENTAL INSURANCE CO. LTD. v. MOHD. NASIR 835
AND ANR. [S.B. SINHA, J.]
registered under any Central Act, Provincial Act, or an Act A
of the Legislature of a State providing for the maintenance
of a register of medical practitioners, or, in any area where
no such last-mentioned Act is in force, any person
declared by the State Government, by notification in the
Official Gazette: to be a qualified medical practitioner for B
the purposes of this Act;"

Section 3 provides for the employer's liability for
compensation. Section 4 deals with the amount of
compensation, clauses (a), (b) and (c) of sub-section (1) C
Whereof read as under :

"a) Where death results an amount equal to fifty
from the injury per cent of the monthly
wages of the deceased
workman multiplied by D
the relevant factor;

or

an amount of eighty
thousand rupees, E
whichever is more;

(b) Where permanent an amount equal to sixty
total disablement per cent of the monthly
results from the injury · wages of the injured F
workmant multiplied by
the relevant factor;

or

an amount of ninety G
thousand rupees,
whichever is more;

Explanation 1.--For the purposes of clause (a) and clause
(b) "relevant factor" in relation to a workman means the H
836 SUPREME COURT REPORTS [2009] 8 S.C.R.

A factor specified in the second column of Schedule IV
against the entry in the first column of that Schedule
specifying the number of years which are the same as the
completed years of the age of the workman on his last
birthday immediately preceding the date on which the
s compensation fell due.

Explanation 11.--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;
c
(c) Where permanent (i) in the specified in Part II of
partial disablement result from the injury Schedule I,
case of an injury such percentage of the
compensation which would have
D been payable in the case of ...
permanent total disablement as is
specified therein as being the
percentage of the loss of earning
capacity caused by that injury; and
E (ii) in the case of an injury not
specified in Schedule I, such
percentage of the compensation
payable in the case of
permanent total disablement as is
F proportionate to the loss of earning
capacity (as assessed by the
qualified medical practitioner)
permanently caused by the injury;
Explanation 1.-Where more injuries than one are caused
G by the same accident, the amount of compensation
payable under this head shall be aggregated but not so in
l ...
any case as to exceed the amount which would have been
payable if permanent total disablement had resulted from
the injuries.
H
ORIENTAL INSURANCE:. CO. LTD. v. MOHD. NASIR 837
AND ANR. [S.S. SINHA. J.]

Explanation 11.--ln assessing the loss of earning capacity A
for the purpose of sub-clause (ii), the qualified medical
practitioner shall have due regard to the percentages of
loss of earning capacity in relation to different injuries
specified in Schedule I."
8
We may notice that the First Schedule specified under
Section 1(g) and Section 4 is in two parts. Part I specifies the
list of injuries deemed to result in permanent total disablement
and Part II specifies list of injuries deemed to result in permanent
partial disablement. The note appended thereto reads as C
under:

"Note.-Complete and permanent loss of the use of any
limb or member referred to in the Schedule shall be
deemed to be equivalent of the loss of that limb or
mem~r." D

The Fourth Schedule appended to the 1923 Act provides
for th.e factors for working out lump sum equivalent of
compensation amount in case of permanent disablement and
death.
E
7. The 1988 Act was enacted to consolidate and amend
the law relating to motor vehicles. Chapter X provides for the
liability without fault in certain cases. Subsection (1) of Section
140, Section 142 and Section 143 read as under:
F
"140-Liability to pay compensation in certain cases on
the principle of no fault-(1) Where death or permanent
disablement of any person has resulted from an accident
arising out of the use of a motor vehicle or motor vehicles,
the owner of the vehicle shall, or, as the case may be, the G
owners of the vehicles shall, jointly and severally, be liable
to pay compensation in respect of such death or
disablement in accordance with the provisions of this
section.

xxx xxx xxx H
838 SUPREME COURT REPORTS [2009] 8 S.C.R.

"
A 142 - Permanent disablement-For the purposes of this
Chapter, permanent disablement of a person shall be
deemed to have resulted from an accident of the nature
referred to in sub-section (1) of section 140 if such person
has suffered by reason of the accident, any injury or injuries
8 involving:-

(a) permanent privation of the sight of either eye or the
hearing of either ear, or privation of any member or joint;
or
c (b) destruction or permanent impairing of the powers of any
member or joint; or

(c) permanent disfiguration of the head or face.

143 - Applicability of Chapter to certain claims under Act
D
8 of 1923--The provisions of this Chapter shall also apply
in relation to any claim for compensation in respect of
death or permanent disablement of any person under the
Workmen's Compensation Act, 1923 resulting from an
accident of the nature referred to in subsection (1) of
E section 140 and for this purpose, the said provisions shall,
with necessary modifications, be deemed to form part of
that Act."

Section 144 of the Act provides for a non obstante clause.
F
.Chapter XI deals with insurance of motor vehicles against
third party risks. Chapter XII of the Act provides for constitution
of claims tribunal. Explanation appended to sub-section (1) of
Section 165 provides that the expression 'claims for
compensation in respect of accidents involving death of or
G bodily injury to persons arising out of the use of motor vehicles'
l ...
includes claims for compensation under section 140 and
Section 163-A of the 1988 Act. The Second Schedule
appended thereto framed in terms of Section 163-A thereof
provides for compensation for third party fatal accidents/injury
H cases claims. It specifies the amount of compensation in case
ORIENTAL INSURANCE CO. LTD. v. MOHD. NASIR 839
AND ANR. [S.B. SINHA, J.]

of death on the basis of :nccime of the deceased as also the A
age group. It also provides for applicability of multiplier. The note
appended thereto reads as under :

"5. Disability in non-fatal accidents :

The following compensation shall be payable in case of B
disability to the victim arising out of non-fatal accidents:

Loss of income, if any, for actual period of disablement not
exceeding fifty two weeks.

PLUS either of the following:--
c
(a) In case of permanent total disablement the amount
payable shall be arrived at by multiplying the annual
loss of income by the Multiplier applicable to the
age on the date of determining the compensation, D
or

(b) In case of permanent partial disablement such
percentage of compensation which would have
been payable in the case of permanent total E
disablement as specified under item (a) above.

Injuries deemed to result in Permanent Total Disablement
/Permanent Partial Disablement and percentage of loss
of earning capacity shall be as per Schedule I under
Workmen's Compensation Act, 1923. F

6. Notional income for compensation to those who had
no income prior to accident.-

Fatal and disability in non-fatal accidents: --
G

.. > (a) Non-earning persons - Rs.15,000 p.a .

(b) Spouse -- Rs. I/3rd of income of the
earning/surviving spouse.
H
840 SUPREME COURT REPORTS [2009] 8 S.C.R.

A In case of other injuries only "general damage" as
applicable."

8. Both, the 1923 Act and 1988 Act are beneficent
legislation insofar as they provide for payment of compensation
to the workmen employed by the employers and/or by use of
B
motor vehicle by the owner thereof and/or the insurer to the
claimants suffering permanent disability.

9. The amount of compensation is to be determined in
terms of the provisions of the respective Acts. Whereas in terms
c of the 1923 Act, the Commissioner who is a quasi judicial
authority, is bound to apply the principles and the factors laid
down in the Act for the purpose of determining the
compensation, Section 168 of the 1988 Act enjoins the Tribunal
to make an award determining the amount of compensation
D which appears to be just.
10. Both the Acts aim at providing for expeditious relief to
the victims of accident. In these cases, the accidents took place
by reason of use of motor vehicles.
E Both the statutes are beneficial ones for the workmen as
also the third parties. The benefits thereof are available only to
the persons specified under the Act besides under the Contract
of Insurance.

F The statutes, therefore, deserve liberal construction. The
legislative intent contained therein is required to be interpreted
with a view to give effect thereto.

11. With the aforementioned backdrop, we may analyse
the contentions raised before us by the learned counsel for the
G parties.
.
Both the statutes provide for the mode and manner in '
which the percentage of laws of earning capacity is required
to be calculated. They provide that the amount of compensation
H in cases of this nature would be directly relatable to the
ORIENTAL IN$URANCE CO. LTD. v. MOHD. NASIR 841
AND ANR, (S.~, SINHA, J.]
'
percentage of physical disability s~ffered by the injured vis-a- A
vis the injuries specified in the First Schedule of the 1923 Act.
Indisputably where injuries are specified in the First Schedule,
the mode and manner provided for the purpose of calculating
the amount of compensation would be applicable.
B
12. The statutes provide for determination of the extent of
physical disability suffered by a qualified medical practitioner
so as to enable him to assess the loss of earning capacity.
Explanation 1 appended to clause (c) of sub-section (1) of
Section 4 provides that where there are more injuries than one,
the aggregate amount of compensation has to be taken but the
c
same should not exceed the amount which would have been
payable in case of permanent total disablement.

It is also beyond any doubt or dispute that while
determining the amount of loss of earning capacity, the Tribunal D
or the High Court must record reasons for arriving attheir
conclusion.

The 1923 Act would also be applicable to the claims
applicable to applications arising out of use of motor vehicles
E
in terms of the provisions of 1988 Act for the purpose of
determination of the amount of compensation where the victim
of the accident suffers from disability in the cases coming within
the purview thereof. The Note appended to the Second
Schedule of the 1988 Act r~ises a legal fiction, stating that
F
'injuries deemed to result in Perm;ment Total DisablemenU
Permanent Partial Disablement and percentage of loss of
earning capacity shall be as per Schedule I under the
Workmen's Compensation Act, 1923'. Permanent disability,
therefore, for certain purposes have been co-related with
functional disability. G

• >
13. As to what, therefore, in our opinion, would be relevant
is to find out the nature of injuries and as to whether the same
" falls within the purview of Part I or Part II thereof. We have
noticed hereinbefore that whereas Part I specifies the injuries H
842 SUPREME COURT REPORTS [2009] 8 S.C.R.

A which would deem to result i~ permanent total disablement, Part
II specifies injuries which would be deemed to result in
permanent partial disablement. The distinction between the
'permanent total disablement' and 'permanent partial
disablement' is that whereas in the former it is 100%
B disablement, in the latter it is only the disablement to the extent
specified in the Schedule.

14. Similar terms have been used in clauses (a) and (b)
of paragraph 5 of the Second Schedule of the Motor Vehicles
Act. It, by reference, incorporates the provisions of the First
c Schedule of the 1923 Act. Indisputably, therefore, the Note
appended thereto would not only be applicable to the cases
falling under the 1923 Act but apply to the cases which fall under
the 1988 Act as well.

D 15. Our attention, however, has been drawn to a decision
of this Court in National Insurance Co. Ltd. v. Mubasir Ahmed
& Anr. [(2007) 2 SCC 349], wherein it was held :

"8. Loss of earning capacity is, therefore, not a substitute
for percentage of the physical disablement. It is one of the
E
factors taken into account. In the instant case the doctor
who examined the claimant also noted about the functional
disablement. In other words, the doctor had taken note of
the relevant factors relating to loss of earning capacity.
Without indicating any reason or basis the High Court held
F that there was 100%. loss of earning capacity. Since no
basis was indicated in support of the conclusion, same
cannot be maintained. Therefore, we set aside that part
of the High Court's order and restore that of the
Commissioner, in view of the facts situation. Coming to the
G question of liability to pay interest, Section 4-A(3) deals
with that question. The provision has been quoted above." •
16. In determining the amount of compensation, several
factors are required to be taken into consideration having
H regard to the Note. Functional disability, thus, has a direct
Of.!ENTAL INSURANCE CO. LTD. v. MOHD. NASIR 843
AND ANR. [S.B. SINHA, J.]

relationship with the loss of limb. A
. Mohd. Nasir was a driver. A driver of a vehicle must be
able to make use of both his feet. It was the case of the claimant
that he would not be in a position to drive the vehicle and
furthermore would not be able to do any other work. He was
B
incapable of taking load on his body. It, however, appears that
in his cross-examination, he categorically stated that only Chief
Medical Officer had checked him in his office. No disability
certificate had been granted. He admitted that he had not
suffered any permanent disability. He, even according to the
Chief Medical Officer who had not been examined, suffered only
c
15% disability. The Tribunal has arrived at the following findings:

"On page 16 original of disability certificate the prescription
of medicine X-Ray report of Sarvodaya and of Mohan X-
Rays have been produced which reveals the fracture of D
right leg. CMO certificate O/M 9/2003 dated 21.3.2005 has
also been produced which is alleged to be false by
insurance Co. I have perused them carefully which bears
signature of Deputy CMO officer of disability Board,
Moradabad had it shown that the applicant had appeared E
before them for medical check up and whose examination
was done by senior orthopedics surgeon Dr. R.K. Singh
on the basis of recommendation of Dr. Bansal operation
. .¥
was done on 2.10.2004 the applicant walk with the help
of the support and is not competent to drive the heavy F
motor vehicle the said certificate was issued with
recommendation that after six months his condition is to
be reviewed.

That document was filed on 29.3.2005. Insurance company
has stated the doctor who has issued disability certificate G
~
has not been produced in the court. But looking into the
aftermath situation the plea of insurance company that the
said certificate is forged and the same has not been
issued by any MBBS doctor, carries no force."
H
''
844 SUPREME COURT REPORTS [2009] 8 S.C.R.

A 17. The learned Tribunal had held that there has been a
15% disability but thsin there was nothing to show that he
suffered 100% loss of earning capacity. The Commissioner has
applied the 197-06 as the relevant factor, his age being 35. He,
-
therefore, proceeded on the basis that it was a case of
B permanent total disablement. However, his income was taken
to be at Rs.1,920/- per month. There is nothing on record to
show that the qualified medical practitioner opined that there
was a permanent and complete loss of use of his right leg or
that he became totally unfit to work as a driver. In that situation,
C the High Court, in our opinion, was not correct in determining
the loss of income at 100%.

In Ramprasad Balmiki v. Anil Kumar Jain & Ors. [(2008)
9 sec 492], wherein upon referring to the evidence of the
Doctor who did not say that any permanent disability had been
D caused, this Court held :

"Be that as it may, the High Court, in our opinion, correctly
proceeded on the assumption that the extent of permanent
disability suffered by the appellant is only 40% and not
E 100%."

We, therefore, are of the opinion that the extent of disability
should have been determined at 15% and not 100%. The
appeal is allowed to the aforementioned extent.

F CA@ SLP (C) N0.16171 OF 2006

18. Shaik Baji was a cleaner of a truck. He suffered an
injury on the leg. The disability was determined at 20% to 25%.
The disablement was partial and not total. There was no basis
G for the High Court to assess the loss of earning capacity at
60%. Respondent No.1 being a cleaner, a frature in the leg
suffered by him would not amount to loss of permanent use of
•
the limb, i.e., the entire foot. The note appended to the Second
Schedule, therefore, has no application.
H

1
ORIENTAL INSURANCE CO. LTD. v. MOHD. NASIR 845
AND ANR. [S.B. SINHA, J.]
....
Therefore, the judgment of the High Court is set aside and A
that of the Commissioner, Workmen Compensation is restored.
- Appeal is allowed accordingly.

CA@ SLP {C} N0.21012 OF 2006

19. Accident occurred in this case by reason of the use of B
a vehicle. Both the claimants were casual workmen. Whereas
in the former case the disability was assessed at 40%, the loss
of earning capacity was .taken to be 80%. We do not know on
what basis, the same was arrived at. According to the doctor,
he suffered injury. The doctor having found the disability to the c
extent of 40% could not have determined the loss of earning
capacity to 80%.

Therefore, the judgment and order of the High Court as well
.. as the Commissioner to that extent cannot be sustained. It is D
set aside accordingly. Appeal is allowed and the amount of
compensation may be calculated on the said basis.

CA@ SLP {C) N0.74 OF 2007

20. In this case, respondent No.1 was engaged as a cas!Jal E
labour for loading and unloading the broken rice from a lorry.
Th~ said lorry collided with a stationed lorry as a result whereof
respondent No.1 received injuries. The doctor assessed his
.J
·~
physical disability at 40% and the loss of earning capacity as
80%. F
The learned Commissioner, in his award, assessed the
physical disability at 80% and loss of earning capacity at 100%.
The High Court confirmed the award. No reason has been
assigned therefor.
G
, The impugned judgment and order of the High Court and
award passed by the learned Commissioner, thus, cannot be
sustained and set aside accordingly. Appeal is allowed to the
said extent
H
846 SUPREME COURT REPORTS [2009] 8 S.C.R. ,

A CA @ SLP (C) N0.2854 of 2008 OF 2008
21. Respondent No.1 in this case met with an accident
while traveling in an Ambassador Car which collided with a bus.
He sustained injuries. He was a practicing advocate. Whereas
his income was determined at Rs.5.'100/- per month. For the
8 purpose of awarding compensation as he had been out of
practice for 39 months, the High Court determined it at
Rs.10, 0001- per month. It is on that basis multiplier of 5 had
been applied. On what basis, the High Court came to the said
conclusion has not been disclosed. No reason has been
C assigned in support thereof.

Furthermore, if the principle laid down in the Second
Schedule was to be applied, the loss of income could not have
exceeded 52 weeks.
D
He had suffered 50% disability. The amount of
compensation, therefore, should have been calculated by
applying the multiplier of 5.

· We, therefore, are of the opinion that the matter should go
E back to the Tribunal for determination of the matter afresh. The
judgment of the High Court is set aside.

The matter, therefore, ls remitted back to the Tribunal for
deciding the matter afresh.
F 22. The second question which arises for consideration is
with regard to the payment of interest. There cannot be any
doubt whatsoever that interest would be from the date of default
and not from the date of award of compensation.

G Section 4A(3) of the 1923 Act reads as under :

"4A. Compensation to be paid when due and penalty for
default.-(1) and (2) ...

H
(3) Where any employer is in default in paying the
-
.
<

ORIENTAL INSURANCE CO. LTD. v. MOHD. NASIR 847
AND ANR. [S.B. SINHA, J.]
~

compensation due under this Act within one month from A
·~
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 per cent per annum or at such
B
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 c
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:
.~
D
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.

Explanation.--For the purposes of this sub-section, E
"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)."
... ,I

23. The said provision, as it appears from a plain reading, F
is penal in nature. It, however, does not take into consideration
the chargeability of interest on various other grounds including
the amount which the claimant would have earned if the amount
of compensation would have been determined as on the date
of filing of tre claim petition. Workmen Compensation Act does
G
not prohibit grant of interest at a reasonable rate from the date
> ....
of filing of the claim petition till an order is passed. Only when
sub-section (3) of Section 4A would be attracted, a higher rate
of interest would be payable wherefor a finding of fact as
envisaged therein has to be arrived at. Only because in a given
H
848 SUPREME COURT REPORTS [2009] 8 S.C.R.

A case, penalty may not be held to be leviable, by itself may not
be a ground not to award reasonable interest.

Reliance has been placed on Mubasir Ahmed (surpa},
wherein it was held :

B "8. Interest is payable under Section 4-A(3) if there is
default in paying the compensation due under this Act
within one month from the date it fell due. The question of
liability under Section 4A was dealt with by this Court in
Maghar Singh v. Jashwant Singh [(998) 9 SCC 134]. By
c Amending Act, 14 of 1995, Section 4A of the Act was
amended, inter alia, fixing the minimum rate of interest to
be simple interest@ 12%. In the instant case, the accident
took place after the amendment and, therefore, the rate of
12% as fixed by the High Court cannot be faulted. But the
D period as fixed by it is wrong. The starting point is on
completion of one month from the date on which it fell due.
Obviously it cannot be the date of accident. Since no
indication is there as when it becomes due, it has to be
taken to be the date of adjudication of the claim. This
appears to be so because Section 4A(1) prescribes that
E
compensation under Section 4 shall be paid as soon as
it falls due. The compensation becomes due on the basis
of adjudication of the claim made. The adjudication under
Section 4 in some cases involves the assessment of loss ...
of earning capacity by a qualified medical practitioner.
F
Unless adjudication is done, question of compensation
becoming due does not arise. The position becomes
clearer on a reading of Sub-section (2) of Section 4A. It
provides that provisional payment to the extent of admitted
liability has to be made when employer does not accept
G the liability for compensation to the extent claimed. The
crucial expression is "falls due". Significantly, legislature .. .'
has not used the expression "from the date of accident".
Unless there is an adjudication, the question of an amount
falling due does not arise."
H
ORIENTAL INSURANCE CO. LTD. v. MOHD. NASIR 849
AND ANR. [S.B. SINHA, J.]

As therein this aspect of the matter has not be·en A
considered, we are of the opinion that interest will also payable
at the rate of 7Yi % per annum from the date of filing of the
application till the date of award. The rate of interest thereafter
shall be payable in terms of the order passed by the
Commissioner. B

24. However, in the cases determined under the Motor
Vehicles Act, interest stipulated therein shall become payable.

25. The third question which had been raised is as to
whether any amount could be directed to be paid in excess of C
the amount claimed. We have noticed hereinbefore that the Act
is a beneficent legislation. It imposes a statutory duty upon the
Commissiohet ahd/or the Tribunal.

Reliance has been placed in this behalf on a decision of D
this Court in Shyama Devi v. Union of India & Anr. [(2005) 12
sec 217], wherein it was held :
"6. So far as quantum of compensation is concerned, the
Presiding Officer has recorded a finding that the deceased
was earning Rs 1600 and was aged 56 years at the time E
of his death. On the basis of his last wages and age,
according to Schedule IV of the Workmen's
Compensation Act, 1923, a total sum of Rs 1 , 0 5 , 5 6 0
was payable as compensation on the death of the
deceased but since the claim was made for Rs F
84,448, we will restrict the award for the aforesaid sum as
has been claimed in the claim petition. Apart from the
above quantum of compensation, the appellant would be
entitled to statutory interest payable on this sum. The
appeal is accordingly allowed. The·appellant is awarded G
compensation in the sum of Rs 84,448 with statutory
interest under Section 4-A(3) of the Workmen's
Compensation Act. The amount shall be paid by the
Railways within a period of eight weeks."
H
850 SUPREME COURT REPORTS [2009] 8 S.C.R.

A 26. No principle of law has been laid down therein. No
reason has been assigned in support of the said conclusion.
The said decision, therefore, must be held to have been
rendered in the facts and circumstance of the case and not as
a law laid down in terms of Article 141 of the Constitution of
B India.
27. The function of Commissioner is to determine the
amount of compensation as laid down under the Act. Even if
..
no amount is claimed, the Commissioner must determine the
amount which is found payable to the workman. Even in the
c cases arising out of the 1988 Act, it is the duty of the Tribunal
to arrive at a just compensation having regard to the provisions
contained in Section 168 thereof.

In Nagappa v. Gurudayal Singh & Ors. [(2003) 2 SCC
D 274], it is held:

"20. Similarly, the High Court of Punjab and Haryana in
Devki Nandan Bangur and Ors. v. State of Haryana and
Ors. [1995 ACJ 1288] observed that the grant of just and
fair compensation is statutory responsibility of the Court
E
and if, on the facts, the Court finds that the claimant is
entitled to higher compensation, the Court should allow the
claimant to amend his prayer and allow proper
compensation.

F 21. For the reasons discussed above, in our view, under
the M.V. Act, there is no restriction that Tribunal/Court
cannot award compensation amount exceeding the
claimed amount. The function of the Tribunal/Court is to
award 'Just' compensation which is reasonable on the
G basis of evidence produced on record. Further, in such
cases there is no question of claim becoming time barred
or it cannot be contended that by enhancing the claim there "
would be change of cause of action. It is also to be stated
that as provided under Sub-section (4) to Section 166,
H even report submitted to the Claims Tribunal under Sub-
ORIENTAL INSURANCE CO. LTD. v. MOHD. NASIR 851
AND ANR. [S.B. SINHA, J.]
section (6) of Section 158 can be treated as an application A
for compensation under the M.V. Act. If required, in
appropriate cases, Court may permit amendment to the
Claim Petition."

In Syed Basheer Ahmed & Ors. v. Mohd. Jameel & Anr.
B
[(2009) 2 SCC 225], this Court held :

-~
"9. Section 168 of the Act enjoins the Tribunal to make an
award determining "the amount of compensation which
appears to be just." However, the objective factors, which
may constitute the basis of compensation appearing as c
1 just, have not been indicated in the Act. Thus, the
expression "which appears to the just" vests a wide
discretion in the Tribunal in the matter of determination of
compensation. Nevertheless, the wide amplitude of such
power does not empower the Tribunal to determine the D
compensation arbitrarily, or to ignore settled principles
relating to determination of compensation."

In National Insurance Co. Ltd. v. Laxmi Narain Dhut
[(2007) 3 SCC 700], this Court held :
E
"24. In the background of the statutory provisions, one thing
is crystal clear i.e. the statute is beneficial one qua the third
party. But that benefit cannot be extended to the owner of
the offending vehicle. The logic of fake licence has to be
considered differently in respect of the third party and in F
respect of own damage claims."

In Punjab State Electricity Board Ltd. v. Zora Singh and
Others [(2005) 6 SCC 776]. this Court held:

"22. The administrative circulars as thence existed as also G
the regulations indisputably require supply of electrical
energy to the agriculturists within a period of two months
from the date of receipt of the amount asked for in terms
of the demand notice. It may be true that the note
H
852 SUPREME COURT REPORTS [2009] 8 S.C.R.

A appended thereto provides that the period specified
therein shall be subject to availability of requisite material
but the same does not absolve the appellant from
performing its statutory duties.

23. In A.P. SRTC v. STAT a Full Bench of the Andhra
B Pradesh High Court has noticed thus: (An LT p.544, para
31)

"31[24]. The meaning of 'note' as per P. Ramanatha
Aiyar's Law Lexicon, 1997 Edn. is 'a brief statement of
c particulars of some fact', a passage or explanation."

24. The note, therefore, was merely explanatory in nature
and thereby the rigour of the main provision was not
diluted."

D {[See also State of Haryana & Ors. v. Shakuntla Devi
[2008 (13) SCALE 621]}.

28. For the reasons aforementioned, the Commissioner/
Tribunal should determine the amount of compensation in the
E respective cases in the light of the observations made herein.
29. The appeals are accordingly disposed· of. In the facts
and circumstances of the case, there shall be no order as to
costs.
•
F G.N. Appeals disposed of.