Shanti vs National Insurance Company 2025 INSC 234 - Employee’s Compensation Act - Interest

Employee’s Compensation Act 1923 - Section 4A(3) - The interest liability arises on default of the employer, in paying the admitted compensation due under the Act within one month from the date it fell due and if there is such default, necessarily interest shall run at the rate provided. That the interest runs from the date of the accident -The interest statutorily provided is 12 % comes out from the provision itself. The discretion is only in so far as awarding a higher rate of interest; exceeding the prescribed lending rates applicable to scheduled banks. The discretion is only in so far as applying a higher rate, ensuring that it does not exceed the lending rate prescribed for scheduled banks. Hence 12 % simple interest per annum necessarily has to be applied. The legislative intent is very clear insofar as Sub­clause b) of Section 4A(3) conferring a discretion on the Commissioner/Authority to impose a penalty not exceeding 50 % of the amounts awarded while no such discretion is available under clause (a). (Para 5-6)