Sargeras Unkar Jadhav vs Gurindar Singh and Another

T.D. Sugla, J.—The appellant is the original applicant. He has challenged the judgment and order dated l0th May 1984 in Application No. (WCA)659/C.118 of 1979 paised by the Commissioner for Workmen''s Compensation, Bombay.

Main grounds of challenge are: (1) loss of earning capacity estimated by the Commissioner at 20 per cent is very much on the low side. The loss of earning capacity should have been Judged not with reference to physical incapacity but with reference to the loss of earning capacity and that too in the context of the nature of the job he was engaged in. In support of the contention reliance was placed on a Supreme Court decision in the case of Pratap Narain Singh Deo Vs. Srinivas Sabata and Another, .

(2) Penalty of Rs. 250/- awarded was grossly inadequate. The defense put up by his immediate employer, i.e. the Contractor, respondent No. 1 herein and opposite party No. 1 before the Labour Court was not bonafide. Reliance in this regard was placed on the Supreme Court decision (supra) and the decision of this Court in (Parvatiammal Dharamlingam v. Divisional Superintendent, Central Railway) 1988 A.CJ. 732; and,

(3) The Commissioner was not at all justified in exoncruting respondent No. 2 herein and opposite party No. 2 before the Labour Court from its liability to pay compensation in terms of Section 12(1) of the Workmen''s Compensation Act.

None appeared on behalf of respondent No. 1 Contractor. Shri Chadrachud, the learned Counsel appearing for respondent No. 2, supports the order of the Commissioner. It was pointed out that respondent No. 2 was admittedly not an immediate employer of the workman. The liability could be fastened on it if at all u/s 12(1)of the said Act only. That sub-section inter alia provided that a person to be liable u/s 12(1) has to be a person who is carrying on trade or business as principal and, in the course of or for the purposes of his trade or business, engages a contractor to execute the work who employs the workmen and the work is ordinarily a part of the trade or business of the principal. It is stated that the workman was employed by the contractor for painting electric poles. The business of respondent No. 2 was to supply electricity. It was certainly not painting the electric poles. Therefore, though the contractor was engaged for the purpose of the business which was carried on, the work of painting was not and could not be held to be a part of that business. Under Sub-section (2) of Section 12 of the said Act, Shri Chandrachud further stated the respondent No. 2 was indemnified so much so that the liability became exclusively that of the contractor and not of the principal. In support of his contentions Shri Chandrachud relied on Calcutta High Court decisions in (1) (S.M. Chose v. National Sheet & Metal Works) AIR 19S0 Cal 548 (2) ( New India Tannis Ltd. Vs. Aurora Singh Mojbi and Another, , and (3) (Carrison Engineer v. Guttamna Hanmntdas) 1978 Lab. I.C. 878 . Alternatively, Shri Chandrachud contended that assuming that the respondent No. 2 was liable for compensation u/s 12(1) of the Act, it was certainly not liable for interest and penalty. For this purpose reference was made to the pro visions of Section 2(1) (e) and Section 4 A of the Act to show that the legislature had in its wisdom recognised the difference between the words compensation, interest and penalty. Liability u/s 12 (1) was fastened with regard to compensation only. Therefore, even if it was hold that respondent No. 2 was liable for compensation, it would certainly be not liable for penalty and interest.

In reply to an objection taken on behalf of the appellant that respondent No. 2 having not filed an appeal nor cross-objections, it was not open to it to resist the claim on the grounds urged before this Court for the first time. Shri Chandrachud stated that his clients had succeeded before the Commissioner. No appeal or cross-objections could have been filed by it All the same as laid down under Order XLI, Rule 22 of the Civil Procedure Code, it could certainly contest the findings given against it in an appeal filed by the other side. It was pointed out on behalf of the appellant that the CPC is not applicable to the Workmen''s Compensation Act. Reference in this regard was mode to section 96 of the Civil Procedure Code.

So far as the first ground is concerned, the appellant is entitled to succeed. In view of the Supreme Court decision in Pratap Narain Singh Deo Vs. Srinivas Sabata and Another, , compensation Is required to be awarded not with reference to the loss of physical incapacity but to the loss of earning capacity which is to be examined with reference to the nature of job the workman was doing. In the present case, the workman was employed for the job of painting electric poles. For that purpose he was required to climb the Ladder cart to do painting work. When he is injured to the extent that he cannot walk without crutches, it will certainly be not possible for him to climb the ladder-cut and undertake the painting job. In the above view of the matter, the loss of earning capacity estimated at 20 per cent by the Commissioner is on the low side. In my Judgment, it will be fair and reasonable to estimate the loss of earning capacity of the workman at 50 per cent of 20 per cent estimated by the Commissioner.

As regards penalty, tho fact is that tho contractor donipd his liability altogether which is on the face of it without any valid reason. After all the workman was in his employ when he suffered injury. The liability of the employer to deposit the amount of compensation commences from the time the workman suffered injury, unless there arc good and valid reasons for not doing IO. In the circumstances, the imposition of penalty of Rs. 2S(V working out to loss than S per cent of the amount of compensation is grossly insignificant. The case is a fit case for imposition of penalty at 50 per cent of the amount of compensation to be calculated on the basis of 50 per cent of the loss of earning capacity.

This takes me to the third question, viz, whether and to, what extent the respondent No. 2 is liable u/s 12(1) of the workmen''s Compensation Act. Since the dispute was also raised on the basis of Sub-section (2) of Section 12, it is desirable 10 refer to both the sub-sections of Section 12 which read as under:

(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 workmen 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 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.

It is evident that the applicability of Section 12(1) depends upon the following conditions: (1) The person called the principal is carrying on trade or business and in the course of or for the purposes of that trade or business engages a contractor to execute the work. (2) The work is ordinarily a part of the trade or business of the principal. (3) The accident has occurred on, in or about the premises on which the principal has undertaken or usually undertakes to execute the work or which is in his control or management; and (4) the accident occurred while the workman was in the course of his employment in executing the work.

The dispute in this case is regarding the second condition only, there being no dispute that the supply of electricity is the trade or business of respondent No. 2 and the contractor was engaged for the purpose of that trade or business. Therefore, what is required to be considered is whether painting electric poles is work which is ordinarily a part of the trade or business of respondent No. 2 and this requires to be examined in the context of the three decisions relied upon by Shri Chandrachud. No doubt, the Legislature has in its wisdom used the expression "trade or business" in Sub-section (1) of Section 12 at two places which could not be without any purpose. In fact, the purpose has been brought out very succinctly in the three decisions relied upon by Shri Chandrachud. However, the safer test would be that if it is ordinarily a part of business of the principal to execute certain work, then ordinarily he will do that work by his own servants and he cannot escape the liability for accident that takes place merely because he has engaged a contractor. Now, in the present case, the trade or business of respondent No. 2 is to supply electricity. One cannot supply electricity without having electric poles. Electric poles arc not one or two in number. They arc hundreds and thousands having regard to the area of operation of respondent No. 2. In Bombay climate, the poles arc likely to get rusted unless painted frequently. It will thus be an ordinary part of respondent No. 2''s business to paint the poles if it is interested in supplying electricity continuously and properly. It is for this reason that I am inclined to hold that the contractor was engaged not only for the purpose of respondent No. 2''s trade or business, but the activity in which the workman was engaged was ordinarily a part of its trade or business. Accordingly I further hold respondent No. 2 responsible and liable for compensation u/s 12(1) of the Workmen''s Compensation Act.

As regards Sub-section (2) of Section 12 of the Act, it was suggested at one stage by Shri Chandrachud that by the statutory provisions the respondent No. 2 is indemnified and therefore the amount of compensation cannot be recovered from it. In my view, the purpose and effect of subsection (2) of Section 12 of the Act is that the principal who is made primarily liable for payment of compensation lo the workman or to his dependents is entitled to be reimbursed or indemnified by the person, i.e., his contractor who directly employed the workman. By the amendment, this right is extended against a sub-contractor, if any engaged by the contractor for doing the work. I do not think that a principal employer can derive any further support from this provision. In any event, the principal employer cannot ordinarily refuse to make the payment of compensation to the workman on the basis of some agreement of indemnity between him and the contractor. That will essentially be a matter between him and his contractor. Needless to mention that respondent No. 2 is entitled to enforce his rights under Sub-section (2) of Section 12 against the contractor even though he did not appear before the Court.

Next question is whether respondent No. 2 is liable only for compensation or whether the liability extends to Interest and penalty as well. For this purpose it is desirable to refer to the provisions of Sections 3, 4 and 4-A of the Workmen''s Compensation Act. Section 3 of the said Act provides that if personal injury is caused to a workman by accident...his employer shall be liable to pay compensation. In accordance with the provisions of thi s Chapter, I.e. Chapter II. Section 4 of the Act provides the manner and extent in and to which the amount of compensation is to be awarded vis-avis different kinds of injuries or loss of earning capacity. Section 4-A, on the other hand, provides for payment of compensation u/s 4 as soon as it fulls due. Sub-section (2) of Section 4-A provides for payment of admitted liability when there is some dispute. However, this Court is not concerned with Sub-section (2) of Section 4-A in this case. Sub-section (3) of Section 4-A provides for payment of interest if the employer is in default in making the payment simplidter and for payment of penalty to the extent of 50 per cent it there is no justification for the delay in making the payment It is, thus, evident that the statute has recognised compensation; interest and penalty as three different concepts. The definition of the word "compensation" in Section (2) (1) (c) of the Act provides that "compensation" means compensation as provided for by the said Act. This would mean and refer to compensation payable u/s 3 as awarded u/s 4. In the circumstances, the argument of Shri Chandruchud to the extent that Section 12(1) of the Act makes the principal employer liable for compensation and compensation docs not include interest, and penalty appears to be correct Accordingly, it is held that though the principal employer, i.e., the respondent No. 2, is liable for compensation u/s 12(1), it is not liable for interest and penally.

In the result, the appeal is partly allowed. The order of the Commissioner for the Workmen''s Compensation is modified as under:

Both the respondents arc directed to deposit in the trial Court an amount of Rs. 13, 440/- which has been determined us un amount payable by them jointly and severally as compensation. Interest at the rate of 6 per cent per annum is also payable thereon from 28th June 1979 till the date of deposit, but for that the respondent No. 1 alone is liable. The penalty payable determined at Rs. 6, 720/- is also payable by respondent No. 1 alone. The amounts arc to be deposited within three months from this dote.