HC remands compensation case for consideration of penalty against employer

06/10/2026

JAMMU, Oct 5: The High Court of Jammu and Kashmir and Ladakh has partly allowed an appeal against an Employees' Compensation award, upholding the compensation of Rs. 93,000 and interest of Rs. 47,400, while remanding the issue of penalty against the employer to the Commissioner for fresh consideration.
Justice Shahzad Azeem passed the judgment on October 5 in MA No. 370/2011, filed by Mohi Ud Din of Shagan, Banihal, against the Union of India and others. The appellant was represented by Mr. O.P. Thakur, Senior Advocate, with Ms. Anandita Thakur, Advocate, while Mr. Suneel Malhotra, CGSC, appeared for the respondents.
The appeal arose from an award dated January 10, 2011 passed by the Assistant Labour Commissioner, Jammu, acting as Commissioner, awarding Rs. 93,000 as compensation along with simple interest at 12 per cent per annum from September 20, 2006 to January 10, 2011, quantified at Rs. 47,400.
The appellant, who was working as a casual labourer on the Nachalana-Hingni-Bhata road, had suffered an injury when a rolling boulder struck his right leg on September 20, 2006. His permanent disability was assessed at 30 per cent. He was being paid Rs. 3,170 per month, including wages and payment for operating a drilling machine/jackhammer.
Before the High Court, the appellant argued that despite the medical disability being assessed at 30 per cent, he had suffered 100 per cent loss of earning capacity. He also claimed that compensation should have been Rs. 2,58,465 and sought an additional penalty under Section 4-A of the Employees' Compensation Act, 1923.
Justice Azeem held that the admitted wages, age of 47 years and permanent disability of 30 per cent supported the compensation calculated by the Commissioner. Applying the relevant factor of 163.07, the Court noted that the amount payable for permanent total disablement was Rs. 3,10,159, of which 30 per cent came to Rs. 93,047.74, rounded to Rs. 93,048. The Commissioner had awarded Rs. 93,000, with the difference attributable only to rounding.
The Court also upheld the interest of Rs. 47,400, observing that it was consistent with Section 4-A(3)(a) of the Act. It rejected the claim for Rs. 2,58,465, holding that the calculation relied upon by the appellant was applicable to death under Section 4(1)(a) and had no application to permanent partial disablement.
On the question of loss of earning capacity, the Court held that the appellant did not dispute the medical assessment of 30 per cent. For a non-scheduled injury, compensation follows the percentage of loss of earning capacity, while the assessment of the qualified medical practitioner constitutes the statutory starting point. The Court found no perversity in the Commissioner's assessment and held that re-appreciation of that percentage was outside its jurisdiction under Section 30 of the Act.
However, the Court found that the issue of penalty required consideration by the Commissioner. It noted that Section 4-A(3)(a) makes interest a consequence of default, while Section 4-A(3)(b) permits an additional sum of up to 50 per cent where the Commissioner forms an opinion that there was no justification for the delay, after giving the employer an opportunity to show cause.
The Court observed that the compensation had not been deposited within one month of the accident and that, once the employee raised the issue, the Commissioner was required to deal with the question of penalty, subject to determining whether there was justification for the delay.
Justice Azeem further noted that no show-cause notice had been issued to the employer and no evidence had been led regarding whether the delay was without justification. Since the High Court, exercising jurisdiction under Section 30, could not itself form the necessary opinion and impose penalty for the first time, the matter was required to be remitted to the Commissioner.
Accordingly, the High Court upheld the compensation award except on the issue of penalty and remitted that limited question to the Commissioner for consideration after hearing both sides and following the procedure prescribed under Section 4-A(3)(b) of the Act. The Commissioner was directed to dispose of the matter within three months from receipt of the certified copy of the judgment.

Photo Gallery

BSE Sensex

NSE Nifty