Jharkhand High Court Condemns ‘Perversity’ in Non-Award of Interest, Modifies Original Employee Compensation

In a significant ruling, the Hon’ble Mr. Justice Pradeep Kumar Srivastava of the High Court has ordered the addition of simple interest at 12% per annum to the original award amount in an employee compensation case.

The case involved the legal heirs of a deceased employee who had been awarded compensation without interest. The original award had been made under Section 4 of the Employee’s Compensation Act, 1923, but failed to include the statutorily mandated interest under Section 4A(3)(a) of the same act.

The Hon’ble Justice remarked, “The lack of interest in the original award is contrary to the statutory mandate of Section 4A(3)(a) and thus suffers from perversity.”

The Court’s decision came after the appellant appealed solely for the non-award of interest. The appellant cited that the original ruling was a violation of the mandatory provision of Section 4A of the Employee’s Compensation Act.

Respondent No.2-Insurance Company contested its liability, claiming that they were only responsible for covering the principal award amount, not the interest or penalty. However, the Court dismissed the insurance company’s argument and upheld the statutory rights of the deceased’s legal heirs.

The ruling has been lauded as a win for the safeguarding of employee rights and sets a precedent for future compensation cases.

The case was represented by Mr. Arvind Kr. Lall for the appellant and Mr. Manish Kumar for the respondent No.2-Insurance Company.

Legal experts point out that this judgment aligns with earlier rulings like “Shobha Vs. The Chairman, Vitthal Rao Shinde” and “Kamla Chaturvedi Vs. National Insurance Co. Ltd,” thereby reinforcing the importance of strictly following statutory mandates when awarding employee compensation.

Date of Decision: 05.09.2023

Jugal Kishor Ray vs Ashok Prasad Yadav