1. The appellant has challenged the judgment and award dated 25.9.2007 passed by the Commissioner under Workmen’s Compensation Act at Vadodara in Workmen’s Compensation Application No. 77 of 1999. Such claim petition was filed by respondent No. 1 as injured workman against the present appellant as opponent No. 2, for which the applicant was working through its contractor, being original opponent No. 1, who is respondent No. 2 herein. Such contractor, namely V. Vijayan, Proprietor of Getco Engineers has chosen to remain absent throughout the proceedings before the Trial Court so also in this appeal.
2. By the impugned judgment, the Commissioner has awarded an amount of Rs. 1,58,615.43 ps. as compensation with 12% interest and 25% penalty to be recovered from both the opponents jointly and severally. The claimant has claimed compensation of Rs. 2,44,023.75 ps. for amputation of four fingers of his right hand. When he was an employee of opponent No. 1 contractor, he was repairing a machinery of the present appellant. Therefore, basic contention in this appeal by the appellant is to the effect that since the injured claimant was not in its employment and pay-roll, they cannot be held liable and responsible to pay compensation as per the impugned judgment. To substantiate their claim or their submission, the appellant is relying upon commentary of Workmen’s Compensation Act, 1923 by Suranjan Chakraverti in its Fourth Edition by The Law Book Company (P) Ltd., wherein on page 366, relating to principle embodied in the provisions of Section 12, it is stated under the heading of ‘Report of Select Committee’, as under:-
"Under this section as originally drafted, the liability to pay compensation was thrown primarily upon the employer. Sub-clause (2) which gave him a statutory right of indemnity against a contractor applied only to contracts made before the commencement of the Act. The effect of this was that, in the case of a contract made after the passing of the Act, the employer would not be entitled to be indemnified by the contractor unless he had inserted in the contract a special stipulation to this effect. In most cases written contracts are not entered into and the employer would have little or no protection against collusion between the contractor and the workman. In other cases, the contractors are themselves men of substance and it would be more convenient for all parties concerned if the workmen were able to recover compensation from the contractor in the first instance. We have accordingly modified this clause to bring it into line with the principle followed in Section 5 of the English Act. The workman is thus enabled to proceed against the contractors or against the employer, and the contractor is liable to indemnify the employer in all cases. We have, at the same time, made the application of the section somewhat clearer by substituting the words "which is ordinarily part of the trade or business of the principal" for the words "which has been or is ordinarily undertaken by the principal in the course of or for the purpose of his trade or business. We have further eliminated the provision in the Bill as introduced, exempted the Government and local authorities from the liability imposed by this clause. These authorities are liable just in the same manner as private individuals."
3. However, it cannot be ignored that in the same commentary, statement of objects and reasons for such Act as published in Gazette of India dated 16.9.1992, at page 314-316 reads as under:-
"Where an employer does his work through contractors, special provision is necessary. In some cases, the employer can reasonably beheld responsible for the conditions of employer; in other cases, he cannot. The distinction made here is between contractors who are employed in the course of, or for the purpose of, the original employer’s trade or business and those who are not. Only in the latter cases, will the contractor be liable to pay the compensation; in all other cases, the original employer will be liable. Thus, for example, if a mine-owner engages labour by means of contractors who supervise these men while at work, the mine-owner will be responsible. But if the owner of a cotton mill employs an engineering firm to erect an extension to his mill, the engineering firm will be liable to pay compensation to the men they employ.
The exceptions are made. If a contractor does his work elsewhere than in or about the original employer’s premises, the latter has no real control over the safety of the workman, and he is, therefore, relieved from responsibility."
If any workman suffers an injury as a result of an accident arising out of or in the course of the employment, the employer is liable to pay compensation to the workman under Section 3. There must be an employer and employee relationship between the workman and the person against whom the compensation is asked for. But in many cases, the persons who want to get work done, try to avoid this liability by contracting with someone else to provide labour or to execute the work and then contend that as there is no employer and employee relationship between the workman who suffered an injury and themselves, they are not liable to pay any compensation. To prevent such escape from liability to pay compensation, Section 12 has been enacted.
So long as Section 12(1) does not make specifically subject to any contract to the contrary the section would have application in all cases where the conditions specified therein are satisfied. At the best, the agreements entered into between the principal and contractor can govern only their inter se rights and liabilities and cannot affect the rights of workmen or their dependents to get compensation either from the principal or from the contractor at their option.
In Kale Mansukh Rana v. Patel Natha Ramji, [(1993) 1 ACC 240 (Guj)] the Gujarat High Court held that under section 12, an option is given to the victim of employment injuries to claim compensation either from the principal or from the employer."
4. However, the law is quite clear and well settled as provided under Section 12 of the Workmen’s Compensation Act, which is now known as Employee’s Compensation Act, 1923. Section 12 reads as under:-
12. Contracting - (1) Where any person (hereinafter in this section referred to as the principal) in the course of or for the purposes of his trade or business contracts with any other person (hereinafter in this section referred to as the contractor for the execution by or under the contractor of the whole or any part of any work which is ordinarily part of the trade or business of the principal, the principal shall be liable to pay to any workman employed in the execution of the work any compensation which he would have been liable to pay if that workman had been immediately employed by him; and where compensation is claimed from the principal, this Act shall apply as if references to the principal were substituted for references to the employer except that the amount of compensation shall be calculated with reference to the wages of the workman under the employer by whom he is immediately employed.
(2) Where the principal is liable to pay compensation under this section, he shall be entitled to be indemnified by the contractor, [or any other person from whom the workman could have recovered compensation and where a contractor who is himself a principal is liable to a pay compensation or to indemnify a principal under this section, he shall be entitled to be indemnified by any person standing to him in the relation of a contractor from whom the workman could have recovered compensation] and all questions as to the right to and the amount of any such indemnity shall, in default of agreement, be settled by the Commissioner.
(3) Nothing in this section shall be construed as preventing a workman from recovering compensation from the contractor instead of the principal.
(4) This section shall not apply in any case where the accident occurred elsewhere that on, in or about the premises on which the principal has undertaken or usually undertakes, as the case may be, to execute the work or which are otherwise under his control or management.
5. Therefore, the only issue which remains to be answered is to the effect that whether the Commissioner has confirmed that the present appellant is entitled to be indemnified by the contractor or not. Impugned judgment shows that the Commissioner has failed to confirm such condition which is mandatory because of the provisions of sub-section (2) of Section 12 of the Act. In view of such fact, the appeal needs to be partly allowed by modifying the award only to the effect that if the appellant has to pay compensation as per the award, then it shall be entitled to be indemnified by the contractor, i.e. respondent No. 2.
6. For such determination, reference of following judgments would be material, which are relied upon by the original claimant-opponent No. 1:-
(1) In the case of Vimlaben Vashrambhai v. Gujarat Housing Board, reported in 1975 ACJ 84;
(2) In the case of Executive Engineer, Kadana Dam v. Phebiben reported in 1977 ACJ 204;
(3) In the case of Bhutabhai Angadbhai and Another v. Guj. Elec. Board and others reported in 1986 GLH 993;
(4) In the case of Manager, Century Minerals & Chemicals Pvt. Ltd., Jamnagar v. Koli Gordhan Laxmanbhai & Another reported in 1991(1) GLR 299;
(5) In the case of Koli Mansukh Rana v. Patel Natha Ramji reported in 1992(1) GLR 37;
(6) In the case of Bala Mallamma v. Registrar, Osmania University, Hyderabad and Another reported in 2001-IILLJ 268;
(7) In the case of Union of India and Another v. Bhojraj @ Poojraj Vachha & Another reported in 2009(3) GLR 2710;
7. Since the law is well settled, I do not wish to discuss all such judgments in detail. Whereas, the appellant has relied upon two old judgments, i.e. in the case of Rabia Mamomed Tahir v. G.I.P. Railway reported in AIR 1929 Bombay 179, and in the case of New India Tannis Ltd. v. Aurora Singh Mojbi and Another reported in AIR 1957 Calcutta 613, submitting that the work of principal company cannot be considered as ordinary work of that company for awarding compensation to the injured workman of a contractor. In the case of R.M. Tahir (supra), the employee of a contractor was knocked down by running train when work of laying down cable line for the railway was carried out by the contractor. Bombay High Court had held that laying down of cable by the contractor cannot be treated as ordinary work of Railway and therefore, Railway was held not liable to pay compensation. With due respect, all other judgments are contrary to such principle, whereas latest judgments are against the appellant. I am also of the clear view that the law is well settled whereby it cannot be said that repairing work of a machine of a company cannot be treated as its ordinary work of the company and therefore, benefit of Section 12 cannot be extended to the injured claimant. Whereas, in the case of New India Tannis Ltd. (supra), Calcutta High Court has dealt with the issue regarding the contract of service and contract for service. Wherein, because the principal has asked for an order of indemnification, when t
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he trial Court has held it responsible, the High Court has confirmed that it cannot be held liable. However, this cannot be the settled legal position in view of the other judgments cited herein above, more particularly when Section itself provides for indemnifying the principal where he is liable to pay compensation and when sub-section (1) specifically provides that principal shall be liable to pay compensation to any employee employed in execution of the work. 8. In view of above facts and circumstances, I do not find any substance in the appeal except to modify the final award only to clarify that pursuant to sub-section (2) of Section 12 of the Workmen’s Compensation Act, the appellant is entitled to be indemnified by respondent No.2 for the amount of compensation which it has paid or yet to pay as per the impugned award. Decree be modified accordingly. Interim relief granted earlier shall stand vacated. Thereby appellant has to pay the amount of difference, if any, with above condition. Amount that may be lying with the Commissioner pursuant to the directions of this Court shall be disbursed in favour of the original claimant in accordance with law. 9. The appeal is therefore, partly allowed to the aforesaid extent.