PALRAJversusTHE DIVISIONAL CONTROLLER, NEKRTC

                     [2010] 11 S.C.R. 89


                           PALRAJ                                   A
                               V.
        THE DIVISIONAL CONTROLLER, NEKRTC
            (Civil Appeal No. 7430 of 2010)
                   SEPTEMBER 07, 2010
                                                                    B
       [ALTAMAS KABIR AND A.K. PATNAIK, JJ.]

     Workmen's Compensation Act, 1923:

     s.4 and Schedule I, Part II - Compensation due to              c
disability during employment - State Road Transport
Corporation bus met with accident - Appellant, the bus driver,
lost use of his legs and became disabled from driving any
bus - He claimed compensation - Held: For determining
compensation, functional disability resulting in loss of earning    D
capacity is the criteria - Although the driver became totally
disabled from driving any vehicle, he remained in a position
to earn a living other than by functioning as a driver - The
loss of earning capacity has to be computed keeping in mind
the alternate employment given to the appellant as a Peon
                                                                    E
on the same salary as he was enjoying while performing the
duty of a bus driver - On facts, the percentage of functional
disablement in respect of the appellant fixed at 35%, having
regard to his restricted mobility after the accident and a/so
because of his loss of future earnings and promotion -
Appellant directed to be provided with compensation on the          F
basis of 35% functional disability.

     s. 4A(3) - Interest under the Act - Payment of - Held:
Such interest cannot be claimed from the date of the filing of
the application, but only after a default is committed in respect   G
of the payment of compensation within 30 days from the date
on which the payment becomes due.

    A State Road Transport Corporation bus met with an
                               89                                   H
    90      SUPREME COURT REPORTS              [2010] 11 S.C.R.


A accident, due to which the driver of the bus, i.e. the
  appellant, lost the use of his legs and consequently
  became disabled from driving any bus. Subsequently, the
  respondent-Corporation provided alternative employment
  to the appellant as a Peon, on the same salary as he was
B drawing while performing the duty of a bus driver.

       The Commissioner, Workmen's Compensation
  quantified the functional disability of the appellant at 85%
  and on that basis awarded compensation alongwith
C interest @ 12% p.a ..
      Aggrieved, the respondent-Corporation filed an
  appeal whereupon the High Court held that the
  percentage of disability taken by the Commissioner was
  against the weight of the medical evidence adduced in the
D case, and ought to have been taken at 20% instead of
  85%, and, accordingly, reduced the compensation
  amount with interest@ 12% p.a. from 30 days after the
  date of the passing of the award.

         Disposing of the appeal, the Court
E
       HELD:1.1. While computing compensation for
  disabilities being suffered by a workman in the case of
  his employment, it is the functional disability resulting in
  loss of earning capacity which is the criteria which is
F followed in assessing compensation. The Workmen's
  Compensation Act, 1923 has its own formula in
  computing compensation on account of injuries su~ered
  during employment which is reproduced in Schedule I to
  the said Act. In Part II of the said Schedule, the loss of
G earning capacity in terms of percentage has been directly
  related to the loss of any of the limbs and parts thereof,
  both of the upper limbs as also the lower limbs. [Para 9]
  [96-G-H; 97-A-B]

         1.2. In the instant case, though the appellant has lost
H
  PALRAJ v. DIVISIONAL CONTROLLER, NEKRTC                91


his capacity to function as a driver, but with the help of     A
external aids, his mobility has, to some extent, been
restored and he is able to perform work which is suitable
to his physical condition after the accident. In the
appellant's case, by virtue of the injuries suffered by him,
his disablement as far as driving a vehicle is concerned       B
is 100%, but that is not the measure of loss of his earning
capacity. The Commissioner, Workmen's Compensation,
seems to have confused the issue by combining both
functional disability and permanent disability in arriving
at the figure of 85% by way of loss of earning capacity        c
and has, therefore, arrived at a sum of Rs.1, 75,970/-
towards compensation. The High Court, on the other
hand, realizing the mistake committed by the
Commissioner, assessed the loss of earning capacity as
20% instead of 85% and reduced the compensation
                                                               0
payable from Rs.1, 75,970/- to Rs.41,404.80p .. [Para 11)
[97-D-F]

     2.1. Section 4(1 )(c) of the Workmen's Compensation
Act, 1923 indicates that where a workman suffers injury
which is not specified in Schedule I to the Act,               E
compensation is to be assessed on such percentage of
the compensation payable in the case of permanent total
disablement as is proportionate to the loss of earning
capacity, permanently caused by the injury as assessed
by a qualified medical practitioner. Since, in the instant     F
case, the nature of injury suffered by the appellant is not
specified in Schedule I to the Act, the compensation has
necessarily to be assessed on the basis of the loss of
earning capacity caused by the injury which could
amount to 100% disablement in a given case. However,           G
although the appellant has lost the use of his legs for the
purpose of driving a vehicle, which could be said to be
total disablement so far as driving of a vehicle is
concerned, he is in a position to earn a living other than
by functioning as a driver, which, in fact, he is currently    H
    92      SUPREME COURT REPORTS               [201 OJ 11 S.C.R.

A   doing, having been posted as a Peon by the respondent-
    corporation. [Para 13] [98-G-H; 99-A-C]

         2.2. Apart from the fact that the Commissioner,
    Workmen's Compensation, had confused the concept of
    functional disablement with permanent disablement in
8
    arriving at the figure of 85% loss of earning capacity, one
    also has to take into consideration the fact that the injury
    suffered by the appellant did not disable him permanently
    from earning his living other than as a driver. Therefore,
    the percentage of functional disablement has to be
C   modified, since the appellant is permanently disabled as
    far as earning a livelihood as a driver is concerned. [Para
    14] [99-D-E]
       3. The impugned order of the High Court was only
D an attempt to correct the erroneous interpretation of Part
  II of Schedule I of the Workmen's Compensation Act,
  1923, by the Commissioner, Workmen's Compensation.
  The loss of earning capacity has to be computed keeping
  in mind the alternate employment given to the appellant
E on the same salary as he was enjoying while performing
  the duty of a bus driver. The same cannot be ignored in
  computing the amount of compensation which the
  appellant was entitled to. In that view of the matter, the
  order passed by the High Court is acceptable, but the
F
  percentage of functional disablement has to be modified
  from 20% to at least 35%, having regard to the appellant's
  mobility on account of the medical treatment received
  after the accident and also because of the appellant's
  loss of future earnings and also promotion. The order of
G the High Court is maintained and the appellant is directed
  to be provided with compensation on the basis of
  functional disability to the extent of 35% and not 20% as
  indicated by the High Court. [Paras 17, 18, 19] [101-C-G]

         4. On the question of payment of interest, it is evident
H   that compensation assessed under Section 4 of the 1923
  PALRAJ v. DIVISIONAL CONTROLLER, NEKRTC                 93


Act is to be paid as soon as it falls due and in case of        A
default in payment of the compensation due under the
Act within one month from the date when it falls due, the
Commissioner would be -entitled to direct payment of
simple interest on the amount of the arrears @12% per
annum or at such higher rates which do not exceed the           B
maximum lending rates of any scheduled Bank as may
be specified by the Central Government. Both the
Commissioner, Workmen's Compensation, as also the
High Court, therefore, rightly held that interest under the
1923 Act cannot be claimed from the date of the filing of       c
the application, but only after a default is committed in
respect of the payment of compensation with~n 30 days
from the date on which the payment becomes due. (Para
16) (100-G-H; 101-A-B]

    CIVIL APPELLATE JURISDICTION : Civil Appeal No.             D
7430 of 2010.

    From the Judgment & Order dated 14.01.2008 of the High
Court of Karnataka at Bangalore in M.F.A. No. 3771 of 2003
(WC).                                                           E

     Basava Prabhu S. Patil, Ajay Kumar M., B. Subrahmanya,
V.N. Raghupathy for the Appellant.

    Hetu Arora for the Respondent.
                                                                F
    The Judgment of the Court was delivered by

    ALTAMAS KABIR, J. 1. Leave granted.

     2. The sole respondent who is the Divisional Controller,
North East Karnataka Road Transport Corpor-ation, being duly    G
represented and having regard to the facts involved in the
appeal, the same was taken up for final disposal at the stage
of admission itself. ·

    3. The Appellant was employed as a Bus Driver in the        H
    94      SUPREME COURT REPORTS               [2010] 11 S.C.R.


A Karnataka State Road Transport Corporation. On 10th October,
  1998, the vehicle being driven by the Appellant, met with an
  accident in which he sustained grievous injuries. The Medical
  Officer who examined the Appellant came to the conclusion that
  the Appellant had suffered 65% of total body disability and 20%
B of functional disability. The Commissioner, Workmen's
  Compensation, however, took 85% as functional disability for
  quantifying the compensation payable to the Appellant, who was
  admittedly drawing a salary of Rs.15,000/- per month on the
  date of the accident.
c      4. It was also admitted that on account of the injuries
  suffered by him, the Appellant was no longer able to drive a
  vehicle and the Corporation accordingly appointed him as a
  Peon in the Corporation where he is drawing the same salary.
  Taking the above percentage of disability, both permanent and
D functional, the Commissioner made an Award granting
  compensation amounting to Rs.1,75,970/-, together with
  interest @12% per annum from 10.11.1998 till the date of
  deposit, to the Appellant.

E      5. Aggrieved by the compensation awarded by the
  Commissioner to the Appellant herein, the Corporation through
  its Divisional Controller filed Misc. First Appeal No.3771 of
  2003 in the Karnataka High Court. The only question which was
  raised in the appeal was whether the percentage of disability
F taken by the Commissioner, Workmen's Compensation,
  Gulbarga, at 85% was against the weight of medical evidence
  adduced in the case. The appeal was heard by the learned
  Single Judge of the Karnataka High Court who agreed with the
  case of the Respondent herein that the Commissioner,
G Workmen's Compensation, had erroneously taken 85% to be
  the extent of disability suffered by the Appellant and that the
  same ought to have been 20% instead. On such basis, the
  learned Single Judge modified the Award passed by the
  Commissioner, Workmen's Compensation, and reduced the
  amount of compensation from Rs.1, 75,970/- together with
H
   PALRAJ v. DIVISIONAL CONTROLLER, NEKRTC                     95
               [ALTAMAS KABIR. \J.]
                                       I
interest at the @12% per annum, to ~.41,404.80p. It was also         A
 held that the Commissioner had committed an error in awarding
 interest from the date of filing of the claim petition and the
Appellant was entitled to interest on the compensation amount
only after 30 days from the date of passing of the Award. The
appeal was, accordingly, allowed ih part, and the Award              B
passed by the Commissioner, Workm~n·s Compensation, was
modified and reduced from Rs.1,75,970/- to Rs.41,405/-
together with interest @12% per annwm on the said amount
from 30 days after the date of the passing of the Award. The
amount which was in deposit before the Court was directed to         c
be transferred to the Commissioner, Workmen's
Compensation, Gulbarga, for disbursement. It is the said order
of the learned Single Judge, which has been challenged in this
appeal.
                                      . I                            D
      6. On behalf of the Appellant 1t was contended that the
doctors had certified that the Appellant was 100% disabled as
far as his functioning as a Driver was ck>ncerned and that his
total disability had been found to be 65P/o while his functional
disability was assessed at 20%. Takin~ the two together the
Commissioner, Workmen's Compens~tion had found the                   E
Appellant to have acquired 85% disat;>ilifY that entitled him to
a sum of Rs.1, 75,970/- in accordance w~h Schedule IV of the
Workmen's Compensation Act, 1923; y taking his monthly
income as Rs.2,000/- in view of Explana ion 2 to Section 4 of
the above Act and multiplying it with the 1-nultiplier of 172.52.    F
                                           I
     7. Mr. Basava Prabhu S. Patil, learn;d Senior counsel for
the Appellant, also submitted that, in fact, 1the limit imposed by
way of Explanation 2 to Section 4 had tjeen increased from
Rs.2,000/- to Rs.4,000/- with effect from Sth December, 2000,        G
and the amount of compensation awarded to the Appellant
should have been computed on the basis of his monthly wages
being Rs.4,000/-. It was contended that fhe High Court had
wrongly interfered with the compensation of the Commissioner,
Workmen's Compensation, Gulbarga, and the compensation               'H
    96      SUPREME COURT REPORTS                 [2010) 11 S.C.R.


A assessed by him. It was submitted that the High Court had erred
  in granting compensation on the basis of 20% functional
  disability thereby reducing the figure from Rs.1, 75,970/- to
  Rs.41,404.80p. Learned counsel for the Appellant submitted
  that the order of the Commissioner, Workmen's Compensation,
B Gulbarga, was liable to be restored.

          8. As opposed to the aforesaid submissions made on
    behalf of the Appellant, it was submitted by Ms. Hetu Arora,
    learned counsel appearing on behalf of the Respondent-
    Corporation, that in addition to the compensation awarded to
C   the Appellant, he had also been given alternative employment
    as Peon in the establishment of the Corporation and was also
    being paid the same salary which he would have drawn if he
    had continued to be a Driver, so that despite his accident, the
    Appellant did not face any loss-of earnings. She also submitted
D   that since the Commissioner, Workmen's Compensation, had
    erroneously confused the amount of functional disability of the
    Appellant as against his permanent disability, the
    Commissioner ought to have taken the percentage of the
    disability of the accident of 20% and not 85%, after taking into
E   consideration the fact that the Appellant had been provided with
    employment as a Peon in the Respondent-Corporation, where
    he was drawing the same salary as earlier. Learned counsel
    for the Respondent submitted that the Appellant was also
    entitled to interest as awarded on the reduced amount only after
F   30 days from the date of the passing of the Award. On the
    aforesaid findings, the learned Single Judge allowed the appeal
    in part and modified the Award passed by the Commissioner,
    Workmen's Compensation, Gulbarga from Rs.1,75,970/-
    awarded by the Commissioner to Rs.41,405/- awarded by the
G   High Court.

          9. While computing compensation for disabilities being
    suffered by a workman in the case of his employment, it is the
    functional disability resulting in loss of earning capacity which
    is the criteria which is followed in assessing compensation. The
H
  PALRAJ v. DIVISIONAL CONTROLLER, NEKRTC                        97
              [ALTAMAS KABIR, J.]
Workmen's Compensation Act, 1923, hereinafter referred to as           A
"the 1923 Act", has its own formula in computing compensation
on account of injuries suffered during employment which is
reproduced in Schedule I to the said Act. In Part II ofthe said
Schedule the loss of earning capacity in terms of percentage
has been directly related to the loss of any of the limbs and          B
parts thereof, both of the upper limbs as also the lower limbs.
Loss of earning capacity is commensurate to the injuries
suffered and the loss of earning capacity as a result thereof.

     10. In the instant case, it is no doubt true that the Appellant
has lost his capacity to function as a driver, but with the help of    C
external aids his mobility has, to some extent, beeil restored
and he is able to perform work which is suitable to his physical
condition after the accident.

     11. In the Appellant's case, by virtue of the injuries suffered   D
by him, his disablement as far as driving a vehicle is concerned
is 100%, but that is not the measure of loss of his earning
capacity. The Commissioner, Workmen's Compensation,
seems to have confused the issue by combining both functional
disability and permanent disability in arriving at the figure of       E
85% by way of loss of earning capacity and has, therefore,
arrived at a sum of Rs.1,75,970/- towards compensation. The
High Court, on the other hand, realizing the mistake committed
by the Commissioner, assessed the loss of earning capacity
as 20% instead of 85% and reduced the compensation                     F
payable from Rs.1, 75,970/- to Rs.41,404.80p. and awarded
interest on the compensation amount only after 30 days of
passing of the Award.

     12. Section 4 of the 1923 Act which had been referred to
by Mr. Basava Prabhu S. Patil, learned Senior Counsel for the          G
Appellant, provides for the amount of compensation payable
to a workman in different contingencies. Section 4(1)(c)(ii)
provides as follows :

    "4. Amount of compensation. - (1) Subject to the provisions        H
    98        SUPREME COURT REPORTS                  [2010) 11 S.C.R.


A        of this Act, the amount of compensation shall be as follows,
         namely:-

         (a) ....................... .

         (b) ....................... .
B
         (c) Where permanent partial disablement result from the
         injury

         (i) in the case of an injury specified in Part II of Schedule
         I, such percentage of the compen-sation which would have
c        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

         (ii) in the case of an injury not specified in Schedule I, such
D        percentage of the compensation payable in the case of
         permanent total disablement as is proportionate to the loss
         of earning capacity (as assessed by the qualified medical
         practitioner) permanently caused by the injury;

E               Explanation I.- Where more injuries than one are
         caused by the same accident, the amount of compensation
         payable under this head shall be aggregated but not so in
         any case as to exceed the amount which would have been
         payable if permanent total disablement had resulted from
         the inJuries.
F
                 Explanation II.- In assessing the loss of earning
          capacity 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
G         different injuries specified in Schedule I;"

       13. The aforesaid provision would indicate that where a
  workman suffers injury which is not specified in Schedule I to
  the Act, compensation is to be assessed on such percentage
H of the compensation payable in the case of permanent total
  PALRAJ v. DIVISIONAL CONTROLLER, NEKRTC                      99
              [ALTAMAS KABIR, J.]
disablement as is proportionate to the loss of earning capacity,     A
permanently caused by the injury as assessed by a qualified
medical practitioner. Since in the instant case, the nature of
injury suffered by the Appellant is not specified in Schedule I,
the compensation has necessarily to be assessed on the basis
of the loss of earning capacity caused by the injury which could     B
amount to 100% disablement in a given case. In the instant
case, however, although the Appellant has lost the use of his
legs for the purpose of driving a vehicle, which could be said
to be total disablement so far as driving of a vehicle is
concerned, he is in a position to earn a living other than by        c
functioning as a driver, which, in fact, he is currently doing,
having been posted as a Peon by the Respondent.

      14. Accordingly, apart from the fact that the Commissioner,
Workmen's Compensation, had confused the concept of
functional disablement with permanent disablement in arriving        D
at the figure of 85% loss of earning capacity, we also have to
take into consideration the fact that the injury suffered by the
Appellant did not disable him permanently from earning his
living other than as a driver. We, therefore, are of the view that
the percentage of functional disablement has to be modified,         E
since the Appellant is permanently disabled as far as earning
a livelihood as a driver is concerned.

     15. As far as the question of payment of interest is
concerned, reference may be made to Section 4-A of the 1923          F
Act, which is reproduced hereinbelow:

    "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.
                                                                     G
            (2) In cases where the employer does not accept the
    liability for compensation lo 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 Commissf(foer or made to the                  H
    100      SUPREME COURT REPORTS                    [2010] 11 S.C.R.


A         workman, as the case may be, without prejudice to the right
          of the workman to make any further claim.

                (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 -
B
                 (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 9f the
c                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
D                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 :

                Provided that an order for the payment of Penalty
E         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,
F         "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).

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

       16. It will be evident that compensation assessed under
  Section 4 is to be paid as soon as it falls due and in case of
  default in payment of the compensation due under the Act within
H one month from the date when it falls due, the Commissioner
  PALRAJ v. DIVISIONAL CONTROLLER, NEKRTC                 101
              [ALTAMAS KABIR, J.]
would be entitled to direct payment of simple interest on the A
amount of the arrears @12% per annum or at such higher rates
which do not exceed the maximum lending rates of any
scheduled Bank as may be specified by the Central
Government. Both the Com"!issioner, Workmen's
Compensation, as also the High Court, therefore, rightly held B
that interest under the 1923 Act cannot be claimed from the date
of the filing of the application, but only after a default is
committed in respect of the payment of compensation within
30 days from the date on which the payment becomes due.

     17. We are satisfied that the impugned order of the High C
Court was only an attempt to correct the erroneous
interpretation of Part II of Schedule I of the Workmen's
Compensation Act, 1923, by the Commissioner, Workmen's
Compensation. The loss of earning capacity has to be
computed keeping in mind the alternate employment given to D
the Appellant on the same salary as he was enjoying while
performing the duty of a bus driver. The same cannot be
ignored in computing the amount of compensation which the
Appellant was entitled to.
                                                                  E
     18. In that view of the matter, we are in agreement with the
order passed by the High Court, but we are of the view that the
percentage of functional disablement has to be modified from
20% to at least 35%, having regard to the Appellant's mobility
on account of the medical treatment received after the accident F
and also because of the Appellant's loss of future earnings and
also promotion.

     19. We, therefore, maintain the order of the High Court and
direct that the Appellant be provided with compensation on the
basis of functional disability to the extent of 35% and not 20% G
as indicated by the High Court.

    20. The appeal is, accordingly, disposed of. There will be
no order as to costs.
                                                                 H
8.8.8.                                   Appeal disposed of.