SHANTI Vs. NATIONAL INSURANCE COMPANY

JUDGEMENT

(1.) Leave granted.

(2.) The only question raised in the appeal is as to the interest payable under the Employee's Compensation Act 1923. The Insurance Company's argument is that when there is a default in complying with Sec. 4A (2); mandating the employer, disputing a liability, to make provisional payment based on the extent of liability, which payment has to be either deposited with the Commissioner or disbursed to the employee or legal representatives, the additional liability incurred on such failure cannot be mulcted on the insurer. Sub-sec. 3 A provides that on default to pay the compensation within one month from the date it fell due, the employer shall pay, in addition to the amount of arrears, simple interest at the rate of 12 % per annum or at such higher rate not exceeding the maximum lending rate prescribed for scheduled banks by sub- clause(a) and subclause(b) further provides a penalty not exceeding 50 % of such award amounts.

(3.) It is the submission of the learned counsel for the appellants that there is a statutory mandate to award interest under Subsection 3(a) @ 12 % per annum and the discretion conferred on the Commissioner is only to the extent of granting a higher rate, which again should not exceed the lending rate specified for scheduled banks.