Employees’ Compensation Act | There Can Be A Departure From The Schedule In Deciding Functional Disability: Supreme Court Increases Extent Of Disability Suffered By Employee
The appeal before the Supreme Court was filed against the reduction of the disability as per the Employees’ Compensation Act, 1923.
The Supreme Court increased the disability extent from 34% to 50% for an employee whose working hand was seriously mutilated due to the loss of one or more phalanges of four fingers. The Apex Court observed that there can be a departure from the Schedule of the Employees’ Compensation Act, 1923, in deciding the functional disability.
The appeal before the Apex Court was filed against the reduction of the disability as per the Employees’ Compensation Act, 1923.
Referring to the judgment in Oriental Insurance Co. Ltd. v. Mohd. Nasir (2009), the Division Bench of Justice Sudhanshu Dhulia and Justice K. Vinod Chandran said, “After noticing Explanation 1 to Section 4 of the Act of 1923, this Court, in the cited case, also held that ‘It is also beyond any doubt or dispute that while determining the amount of loss of earning capacity, the Tribunal or the High Court must record reasons for arriving at their conclusion.’(sic-para27). Hence it is not as if there can never be a departure from the Schedule in deciding the functional disability, which it has been recognised would in certain cases have a corelation with the physical disability.”
AOR Vidya Vijaysinh Pawar represented the Appellant, while Advocate Amol Chitale represented the Respondent.
Factual Background
The appellant was an employee from April 5, 2002, and at the relevant time was engaged to operate a forging machine. The employee was also paid a salary of Rs 2,500 p.m. as recorded in the registers maintained by the employer. However, on November 6, 2004, late in the night,while operating the machine, a part of the machine fell on his hand, and while he was removing the band of the handle lock, his right hand was caught in the machine. He was admitted to a hospital and underwent surgery. He ended up losing one phalanx of the little finger, two phalanges of the ring finger, three phalanges of the middle finger and two and a half phalanges of the index finger.
The Commissioner under the Act allowed 100% disability and adopted the factor of 213.57, thus determining the total compensation to be Rs 3,20,355. The Commissioner also awarded 12% interest from the date of the accident and 50% penalty i.e. Rs 1,60,178 for the reason that the employer had not paid the compensation within one month from the accident. The High Court found that the disability was only to the extent of 34%.
Reasoning
The Bench, at the outset, noted that the present matter was a case where not one but four fingers of the same hand were affected. Reference was made to Explanation 1 to sub-Section (1) (c) of Section 4 which provides that when more than one injury is caused in the same accident the amount of compensation payable under the Act shall be aggregated, but not to the extent of such aggregation exceeding the amount which would have been payable if permanent total disablement had resulted from the injuries.
It was further explained that the disability, as determined by the statute, is for the specific loss of a phalanx or a finger, and in the event of more than one such loss, it cannot be said that a mere aggregation would determine the actual loss. “The appellant's working hand has been seriously mutilated by the loss of one or more phalanges of four fingers. The middle and index finger having been disabled completely, and the ring finger and the little finger having lost two phalanges and one phalanx respectively, Functionally it is difficult for the right hand to be used with the same grip as available prior to the accident. Though a 100% disability cannot be assessed, insofar as the mutilation of the one hand, which is also the operational hand, the right hand, we are inclined to determine the loss at 50%.”
The Apex Court assessed the loss at Rs 2,500 x 60% x 213.57, which came to Rs 3,20,355. “Fifty percent of the same would come to ₹ 1,60,177.5. The employee would also be entitled to 12% interest from the date of accident and 50% of the penalty, i.e. ₹ 80,088.75/- as penalty. If the amounts as directed by the High Court has been paid, then the excess amount shall be paid with interest at 12% from the date of the accident and half of the enhanced amount as a penalty”, it held.
Thus, the Bench allowed the appeal along with the aforementioned directions.
Cause Title: Kamal Dev Prasad v. Mahesh Forge (Neutral Citation: 2025 INSC 591)
Appearance:
Appellant: AOR Vidya Vijaysinh Pawar
Respondent: Advocates Amol Chitale, Sarthak Sharma, AOR Pragya Baghel