Section 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) Where the employer does not accept liability to the extent claimed, he shall be bound to make a provisional payment based on the extent of liability he accepts, deposited with the Commissioner or made to the employee, without prejudice to the employee’s right to make a further claim.
(3) Where an employer defaults in paying compensation within one month from the date it fell due, the Commissioner shall — (a) direct payment of simple interest at 12% per annum (or such higher rate, not exceeding the maximum lending rate of any scheduled bank, as the Central Government may notify) on the arrears; and (b) if satisfied there is no justification for the delay, direct payment of a further sum not exceeding fifty per cent. of that amount by way of penalty, after giving the employer a reasonable opportunity to show cause.
Explanation.—”Scheduled bank” means a bank included in the Second Schedule to the Reserve Bank of India Act, 1934.
(3A) The interest and penalty payable under sub-section (3) shall be paid to the employee or his dependant, as the case may be.
