1 2025:CGHC:53519 NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR MAC No. 465 of 2020 1 - Rakesh @ Raku Vishwakarma S/o Pitamber Vishkarma Aged About 28 Years R/o Gourinagar, Ward No. 12, Rajnandgaon, District Rajnandgaon Chhattisgarh ... Appellant versus 1 - Manager, Abis Broiler Private Limited R/o Head Office-Baldevbag, Rajnandgaon, District Rajnandgaon Chhattisgarh 2 - Branch Manager, Bhartiya Axa General Insurance Company Limited, Office At Khichariya Complex, Second Floor, Nehru Parishar, Bhilai Nagar, Bhilai, Durg District Durg Chhattisgarh ... Respondents For Appellant : Mr. Yogesh Pandey, Advocate For Respondent No.1: None though served For Respondent No.2: None. Since the said respondent refused to accept the registered notice, service of notice to him is deemed to be complete. Hon'ble Shri Justice Deepak Kumar Tiwari Order On Board 03/11/2025 PRIYANKA VERMA Digitally signed by PRIYANKA VERMA Date: 2025.11.03 16:40:04 +0530 2 1. This Miscellaneous Appeal was admitted for hearing on 02.03.2020 by formulating the following substantial question of law:- “Whether finding of the Commissioner for Employee’s Compensation-cum-Labour Court, Rajnandgaon refusing to award the amount of penalty as required under clause (b) of sub-section (3) of Section 4-A of the Employee’s Compensation Act, 1923, is perverse?” 2. Brief facts of the case are that learned Commissioner for Employees’ Compensation-cum-Labour Court, Rajnandgaon in Case No.135/W.C. Act/2013/Non-Fatal (Rakesh @ Raku Vishwakarma vs. Manager, Abis Broiler Private Limited and another) passed the award/judgment dated 24.12.2019, with regard to an accident involving the injured/appellant, which occurred on 15.07.2011 during the course of his employment. The appellant by making an averment inter alia stated that respondent No.1/employer neither accepted liability for compensation nor made any provisional payment. Therefore, an application for compensation was filed by the appellant herein under Section 4A of the Employee’s Compensation Act, 1923 (hereinafter referred to as “the Act, 1923”) and he also claimed penalty under Section 4A (3) (b) of the Act, 1923. Ultimately, learned Commissioner awarded compensation of Rs.3,88,504/- along with simple interest @ 12% per annum from the date of the accident till realization, directing that the amount be deposited by the insurer/respondent No.2 herein. However, learned Commissioner exonerated the employer from liability for payment of penalty solely on 3 the ground that the employer had raised an objection that he had already insured the workmen. Based on this, the Commissioner held that there was no liability on the part of the employer to pay the penalty. Hence, this Appeal. 3. Learned counsel for the appellant submits that Section 4A (3) (b) of the Act, 1923, clearly stipulates that if the employer has defaulted in payment of compensation due under the Act, 1923 within one month from the date it fell due and the Commissioner is of the opinion that there is no justification for the delay, the Commissioner shall 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. He would submit that even when there is insurance, it remains a statutory liability of the employer to make provisional payment and if there is a default, the statutory penalty ought to be imposed and the employer is duty-bound to deposit at least some amount due to the family of the injured employee within a period of one month from the date of the accident, which is the spirit of the law. Lastly, he would submit that as the Commissioner has erred in non-granting the penalty and further, it has also not issued any show cause notice to the employer in this regard, the matter may be remitted to the learned Commissioner to decide the said issue. For the above submission, he would place reliance on the matter of Smt. Asha B vs. M/s S.K. Build Works Pvt. Ltd. and another decided by this Court on 04.10.2017 in MA (Civil) No.232 of 2010. 4 4. Heard learned counsel for the appellant and also perused the documents annexed with the Appeal carefully. 5. Section 4A (3) (b) of the Act, 1923, stipulates the legal provision for imposing the statutory penalty if the employer does not accept the liability for compensation to the extent claimed and he shall also be bound to make provisional payment based on the extent of liability which he accepts, within one month from the date it fell due. For the sake of brevity, Section 4A of the Act, 1923 read thus:- “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. (2) In cases where the employer does not accept the liability for compensation to 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 Commissioner or made to the employee, as the case may be, without prejudice to the right of the employee 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- (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 of the 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 5 (b) if, in his opinion, there is no justification for the 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 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, "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 employee or his dependant, as the case may be.]” 6. From reading of the aforesaid provision, it is explicit that the liability to pay the penalty amount is fixed upon the employer, as the employer is required to deposit some amount. In the present case, the Commissioner has not issued any show-cause notice to the employer, as required under the proviso to Section 4A (3) (b) of the Act, 1923, thereby providing a reasonable opportunity to the employer to show-cause as to why an order for payment of penalty should not be passed. 7. For the foregoing, this Court is of the opinion that the matter requires to be remitted for deciding the said issue, in order to afford a fair opportunity of hearing to the employer. It is pertinent to note that in a recent decision rendered in the matter of Sheela Devi & another vs. Oriental Insurance Company Limited & another, 2025 INSC 516, a 6 separate penalty was imposed upon the employer, so the imposition of statutory penalty under the Act, 1923 squarely falls upon the employer, and in the event of default in payment of compensation due, the said provision is attracted. 8. In view of the aforesaid discussion, the matter is remitted to the learned Commissioner for Employee’s Compensation-cum-Labour Court, Rajnandgaon, for issuance of a fresh notice to respondent No.1/employer, and thereafter, proceed to decide the matter afresh with regard to the imposition of statutory penalty in light of the facts and circumstances of the case, and also to determine whether the claimant is entitled to penalty under Section 4A of the Act, 1923, or not. 9. With the aforesaid observations, the Appeal of the claimant stands allowed. Accordingly, the substantial question of law is answered in favour of the claimant. 10.There shall be no order as to cost(s). 11.Registry is directed to send the record of the Court below forthwith and the concerned Court is directed to proceed with the matter expeditiously, in accordance with law. Sd/- (Deepak Kumar Tiwari) Judge Priyanka