High Court
Legal Reasoning
(1) fa-642-2024.odtIN THE HIGH COURT OF JUDICATURE AT BOMBAYBENCH AT AURANGABADFIRST APPEAL NO.642 OF 2024The Managing Director,Natural Sugar & Allied Industries Ltd.Sai Nagar, Ranjani Ta. Kallamb,District Osmanabad..Appellant(Orig. Respondent No.1.)Versus1.Manisha w/o Ramdhan Jadhav,Age 50 yrs Occ. H.H.R/o. Bhosa Ta. Latur Dist. Latur.2.The Branch Manager,The United India Insurance Co. Ltd.Ambajogai Road, Latur Ta. Latur,Dist. Latur...Respondents (Res. No.1 is Orig. Applicant)…Mr. N. D. Kendre, Advocate for the Appellant.Mr. P. S. Chavan, Advocate for Respondent No.1.Mr. V. R. Mundada, Advocate for the Respondent No.2.…WITHCROSS OBJECTIONS NO.59 OF 2024INFIRST APPEAL ST. NO.23325 OF 2023Manisha w/o Ramdhan Jadhav,Age 50 yrs Occ. HouseholdR/o. Bhosa Tq. & Dist. Latur. ..Objection Petitioner(Orig. Claimant)Versus1.The Managing Director,Natural Sugar & Allied Industries Ltd.Sai Nagar, Ranjani Ta. Kallamb,District Osmanabad..Respondent (Orig. Appellant)2.Branch Manager,United India Insurance Company Ltd.Ambajogai Road, Latur ..Respondent (Orig. Respondent No.2) (2) fa-642-2024.odt…Mr. P. S. Chavan, Advocate for Objection Petitioner.Mr. N. D. Kendre, Advocate for Respondent No.1.Mr. V. R. Mundada, Advocate for Respondent No.2.… CORAM : S. G. CHAPALGAONKAR, J. DATE : 03rd MARCH, 2025.JUDGMENT:-1.The appellant impugns judgment and order dated 08.05.2023passed by Commissioner for Employees Compensation and JudgeLabour Court at Latur in Application (W.C.A.) No.111/2017. Therespondent no.1 has also filed Cross Objection assailing findings ofCommissioner recorded in impugned judgment. (Hereinafter,parties are referred to by their original status for the sake ofconvenience and brevity). 2.Brief facts of case are as under:The respondent no.1/original claimant instituted proceedingbefore Commissioner for Employees Compensation and JudgeLabour Court at Latur contending that her husband RamdhanJadhav was retired soldier. He was appointed as watchman atNatural Sugar and Allied Industries Ltd, Sai Nagar, Ranjani, Tq.Kalamb, Dist. Osmanabad. He was getting monthly salary ofRs.11,351/-. On 10.05.2016, he was assigned night duty. On10.05.2016, when he was proceeding towards Sugar Factor onmotorcycle bearing Registration No.MH-24-L-0805, anothermotorcycle bearing Registration No.MH-29-AP-9511 gave forceful (3) fa-642-2024.odtdash to motorcycle of deceased. Due to such accident, he sufferedfatal injuries and took his last breath on 17.05.2016. The accidentwas reported to police station. Eventually, offences was registered.According to the applicant, the deceased died during the course ofor arising out of employment. The respondent is under obligationto pay compensation. 3.The respondent no.1-Natural Sugar and Allied IndustriesLtd. filed written statement contending that on 10.05.2016,Ramdhan was absent from duty. There is no causal connectionbetween his accidental death and employment. In alternate, theycontend that they had obtained Employees Compensation Coverfrom respondent no.2-Insurance Company, who accepted liability topay compensation. 4.The respondent no.2-Insurance Company denied allaverments in claim application and submitted that they have noliability. 5.The learned Commissioner framed issues, recorded evidenceof the parties and finally concluded that respondent no.1 is liable topay compensation amount of Rs.6,25,880/- to claimant alongwithwith interest @ 12% per annum.6.Aggrieved employer filed present Appeal assailing judgmentand award passed by the Commissioner. The applicant has filed (4) fa-642-2024.odtCross Objection on the ground that Commissioner failed to awardpenalty. Secondly, compensation is not assessed as per actualsalary. The cap of earning is wrongly imposed.7.By order dated 19.01.2024 notices were issued to respondentsindicating that First Appeal would be heard finally at the stage ofadmission and record and proceeding was also called for.Accordingly, heard finally at admission stage by consent of partieson following substantial questions of law:(A)Whether Late Ramdhan died during course of and arisingout of employment with respondent-Sugar Factory,particularly when accident took place beforecommencement of his duty hours, outside place ofemployment between his motorcycle and third partyvehicle?(B)Whether insurer could have been made liable to paycompensation based on Employees Compensation Policyobtained by appellant?(C)Whether compensation could have been assessed relyingupon actual monthly wages of deceased ignoringNotification issued under Section 4(1)(1-B) by CentralGovernment? (5) fa-642-2024.odt(D)Whether employer could have been made liable for penaltyunder Section 4-A(2) for making default in deposit ofcompensation amount?8.Mr. Kendre, learned Advocate appearing for the appellantsubmits that accident took place before time of duty hours ofdeceased. It was a motor vehicular accident outside premises ofemployer. There is no causal connection between employment anddeath of the deceased. In support of his contentions he relies uponjudgment of this Court in case of Meenakshi Gas Agencies,Warora Vs. Ramaji Kusum Yerme and Ors.1. He would furthersubmit that insurer has accepted risk of employees under workmencompensation policy, but Commissioner wrongly exonerated him.9.Per contra, Mr. Chavan, learned Advocate appearing forrespondent no.1 submits that accident took place opposite tofactory gate while deceased was on his way towards factory forattending duty. Therefore, by applying theory of notionalextension, his accidental death must be treated as arising out ofand during course of employment. In support of his contentions herelies upon judgments of the Supreme Court of India in cases ofGeneral Manager, B.E.S.T. Undertaking, Bombay Vs. Mrs.Agnes2 and Poonam Devi and Ors. Vs. Oriental Insurance Co.Ltd.3. 1AIROnline 2019 Bom 2910.2AIR 1964 SC 193.3AIR 2020 SC 1305. (6) fa-642-2024.odt10.Having considered submissions advanced by learnedadvocates appearing for respective parties, first question thatarises for consideration is as to whether subject accident occurredduring course of and arising out of the employment. It is not indispute that deceased was employed as watchman at the NaturalSugar and Allied Industries Limited, Sainagar. He was posted atUnit No.2 situated at Gunj, Tq. Pusad, District-Yavatmal. On10.05.2016, while he was proceeding on his motorcycle to attendduty, another motorcycle gave forceful dash to his motorcycle.Eventually, he suffered fatal injuries. The place of accident is infront of factory gate.11.FIR clearly shows that deceased was moving towards Factoryon his motorcycle at the time of accident. The spot panchnamashows spot of accident on road in front of factory. In thisbackground, although accident does not occur while deceased wasactually on duty or during his duty hours, question as to whenemployment begin would depend upon the facts of each case. Incase of General Manager, B.E.S.T. Undertaking Bombay Vs.Mrs. Agnes4 in reference to law laid down in case of SaurashtraSalt Manufacturing Co. Vs. Bai Valu Raja5, wherein doctrineof “Notional Extension” of employer’s premises in the context of anaccident to an employee has been elaborated thus : -4AIR 1964 SC 193.5AIR 1985 SC 881. (7) fa-642-2024.odt“As a rule, the employment of a workman does notcommence until he has reached the place ofemployment and does not continue when he has left theplace of employment, the journey to and from the placeof employment being excluded. It is now well-settled,however, that this is subject to the theory of notionalextension of the employer's premises so as to include anarea which the workman passes and repasses in goingto and in leaving the actual place of work. There maybe some reasonable extension in both time and placeand a workman may be regarded as in the course ofhis employment even though he had not reached or hadleft his employer's premises. The facts andcircumstances of each case will have to be examinedvery carefully in order to determine whether theaccident arose out of and in the course of theemployment of a workman, keeping in view at all timesthis theory of notional extension.”12.In light of the aforesaid observations, Section 3(1) of theEmployees’ Compensation Act has been interpreted to hold thatemployment does not necessarily end when “down tool” signal isgiven or when workman leaves actual workshop where he isworking. There is notional extension at both entry and exit by timeand space. The scope of such extension must necessarily depend oncircumstances of a given case. 13.Recently, in case of Poonam Devi and ors. Vs. OrientalInsurance Company Ltd.6, again rule of Notional Extension hasbeen reiterated and it is observed that employees compensation is apiece of socially beneficial legislation. The provisions will,therefore, have to be interpreted in a manner to advance a purposeof legislation, rather than to stultify it.62020 Supreme Court 1305. (8) fa-642-2024.odt14.Similarly, in case of Manu Sarkar and ors. Vs. MabishMiah and ors.7, Supreme Court has further observed that there isa notional extension at both the entry and exit by time and space.The scope of such extension must necessarily depending on thecircumstances of a given case. As employment may end or maybegin not only when employee begins to work or leaves his tools,but also when he used the means of access and, egress to and fromthe place of employment.15.Yet in another judgment in case of Daya Kishan Joshi andAnr. Vs. Dyemech Systems Pvt. Ltd.8, employee working for salesand installation of products while returning from field work metwith an accident, it is held that the injury caused to him wasduring currency of the employment and arising out of employment.16.The aforesaid exposition of law squarely covers present case.Hence, there is no room to interfere in findings recorded byCommissioner that accident and consequential death of deceasedwas during the course of and arising out of the employment, so alsothere was causal connection between death and his employment.17.Now, turning to the second submission advanced on behalf ofthe appellant that risk of employees was covered under validinsurance policy issued by Respondent no.2-Insurance Company7(2014) 14 SCC 21.8(2018) 11 SCC 642
Legal Reasoning
(9) fa-642-2024.odtand, therefore, it could have been shouldered on them. Perusal ofthe insurance policy shows that it was issued to M/s. NaturalSugar and Allied Industries Limited, Sainagar, Ranjani, Kallamb,District Osmanabad. The clause regarding location of riskstipulates as Natural Sugar and Allied Industries LimitedSainagar, Ranjani, Tq. Kallamb. The clause regarding details ofemployees cover depicts that skilled, unskilled and administrativeemployees working under Natural Sugar and Allied Industries,various Divisions at Ranjani are covered. The place of employmentis shown as Natural Sugar and Allied Industries at Ranjani.18.The cross-examination of witness Ashok Dama examined onbehalf of the appellant/employer shows that deceased wasemployed at Unit No.2 at village Gunj, Savna, Tq. Mahagaon,District Yavatmal. The insurance policy on record covers the riskof employees at Unit No.1 in Village Ranjani, District Osmanabad.Therefore, even if it is accepted that Unit No.1 and Unit No.2 aresister concerns of the same group of industries, the insurancepolicy obtained for one unit would not extend its coverage toemployees appointed at another unit, particularly when the policyexplicitly restricts its coverage to a specific unit. Therefore, secondcontention as raised by the appellant is not acceptable.19.Now, turning to cross-objection filed by original claimantsseeking enhancement of compensation. Mr. Chavan, learned (10) fa-642-2024.odtadvocate submits that salary certificate of deceased shows that hisgross salary was Rs.11,351/- for April 2016. However, learnedCommissioner erroneously worked out compensation taking hissalary @ Rs.8,000/- p.m. applying ceiling under the Act of 1923.Mr. Chavan submits that ceiling of monthly wages has beenremoved by amendment of 2009. The Explanation (II) to Section 4has been replaced by clause (1-B), which states that CentralGovernment may, by notification in Official Gazette specify forpurpose of sub-section (1) such monthly wages in relation to anemployees as it may consider necessary. According to him,Commissioner ought to have considered actual monthly salary ofdeceased for the purpose of determining compensation. Mr.Chavan further submits that the learned Commissioner could haveimposed a penalty at the rate of 50% of the compensation amount.Mr. Chavan relies upon judgment of Supreme Court in case of K.Sivaraman and Ors. Vs. P Sathishkuar and another9.20.The provisions of Employees’ Compensation Act prior toamendment of 2009 shows that Explanation (II) to Section 4 was inthe nature of cap of Rs.4,000/-, even for workman having wagesabove Rs.4,000/-. However, by Act of 45 of 2009, which came intoforce on 18.1.2010 Explanation (II) has been deleted and clause(1-B) has been added, which reads thus :-“(1-B) Central Government may, by notification in the9AIR ONLINE 2020 SC 221. (11) fa-642-2024.odtofficial Gazette, specify, for the purpose of sub-section (I),such monthly wages in relation to an employee as it mayconsider necessary.21.In light of the aforesaid amendment, Supreme Court of Indiain case of K. Sivraman (supra) observed in paragraph no.26,which reads thus ;-“26. Prior to Act 45 of 2009, by virtue of the deemingprovision in Explanation II to Section 4, the monthly wagesof an employee were capped at Rs.4000 even where anemployee was able to prove the payment of a monthly wagein excess of Rs.4,000. The legislature, in its wisdom andkeeping in mind the purpose of the 1923 Act as a socialwelfare legislation did not enhance the quantum in thedeeming provision, but deleted it altogether. Theamendment is in furtherance of the salient purpose whichunderlies the 1923 Act of providing to all employeescompensation for accidents which occur in the course ofand arising out of employment. The objective of theamendment is to remove a deeming cap on the monthlyincome of an employee and extend to them compensation onthe basis of the actual monthly wages drawn by them.However, there is nothing to indicate that the Legislatureintended for the benefit to extend to accidents that tookplace prior to the coming into force of the amendment.”22.It is, therefore, evident that when monthly wages of employeeare proved on the basis of acceptable evidence, his salary @Rs.11,351/- as per actual will have to be considered for the purposeof determining compensation. However, in case where employee isnot in a position to prove his salary, notification issued by theCentral Government as to monthly wages, under clause (1-B) ofSection 4 would be relevant. Therefore, cap of Rs.8,000/- applied bythe Commissioner while determining compensation cannot becountenanced. The compensation amount will have to be re- (12) fa-642-2024.odtdetermined by taking actual monthly wages of deceased at the timeof his death.23.Mr. Chavan further submits that employer committeddefault in making deposit within statutory period as contemplatedunder Section 4-A of the Act. Per contra, Mr. Kendre, learnedAdvocate submits that entire medical expenses have been borne byemployer. There was no intention to deny the liability. There wasbonafide dispute as regards to liability. Therefore, there is no casefor imposing penalty in addition to interest. Section 4-A of theEmployees’ Compensation Act provides for penalty for default indepositing compensation under Section 4 as soon as it falls due.Sub-section (2) of Section 4-A mandates that where employer doesnot accept liability for compensation to the extent of claim, he shallbe bound to make provisional payment based on extent of liability,which he accepts. In case of default in paying the compensationdue within one month from the date it fell due in addition to theamount of compensation, penalty and interest can be directed to bepaid by the employer.24.In the present case, it is admitted position that employer hasborne medical expenses for hospitalization of deceased, butcompensation amount was not deposited. Only justification fornon-payment is given that medical expenses were already incurredby employer. (13) fa-642-2024.odt25.It is true that, employer has incurred medical expenses,possibility that they were not sure about their liability and underbelief that they had valid insurance policy covering risk ofemployees, they protracted to deposit amount. However, lawmandates that in case of dispute as to liability, they could havedeposited admitted amount of compensation or atleast could haveraised claim to the insurer. Evidence on record do not state anysuch steps taken by employer. Apparently, they are defaulters interms of Section 4(A) of the Employees’ Compensation Act.26.Looking to the totality of circumstances, this Court finds thatemployer is liable to pay penalty @ 20% of compensation amount inaddition to the interest, as directed by Commissioner. In theresult, following order is passed.ORDERi.First Appeal No.642 of 2024 is dismissed.ii.Cross Objection No.59 of 2024 filed by therespondent-claimant is partly allowed.iii.The respondent no.1 shall pay compensationamount of Rs.8,88,045/- (Rs. Eight Lakh EightyEight Thousand and Forty Five only) to applicantalongwith simple interest @ 12% p.a. from the dateof accident till actual realization of compensationamount. (14) fa-642-2024.odtiv.In addition to the compensation amount,respondent no.1 shall pay 20% penalty i.e.Rs.1,77,609/- (Rs. One Lakh Seventy SevenThousand Six Hundred and Nine) overcompensation amount to applicant.v.The respondent no.1 shall pay Rs.5,000/- (Rs. FiveThousand) towards funeral expenses to applicant.vi.First Appeal and Cross Objection stand disposedoff. Pending civil application, if any, also standsdisposed off.(S. G. CHAPALGAONKAR)JUDGEDevendra/March-2025