Executive Engineer, Kadana Dam v. Phebiben — 1976 DIGILAW 150 (GUJ)

JUDGMENT : D.A. DESAI, J. 1. These two appeals arise under section 30 of the Workmen's Compensation Act, 1923, from an award made by the Commissioner for Workmen's Compensation and Civil Judge, Senior Division, Godhra in Workmen's Compensation Case No. 13 of 1973 initiated by respondents Nos. 1 and 2 claiming compensation in the amount of Rs. 8,000/- payable on account of death of deceased workman Mohanlal Dipaji, who died in an accident arising out of and in the course of his employment that occurred on 26th February, 1973 at 7-30 p.m. The Commissioner awarded amount prayed for and directed original opponent no. 1 Cementation Company Limited and original opponent No. 2 the Executive Engineer, Kadana Dam Division 11 to pay the amount of Rs. 8.000/- to the original applicants within one month from the date of the award. Original opponent No. 1 the Cementation Company Limited the contractor has preferred First Appeal No. 736 of 1974 and original opponent No. 2 the executive Engineer, Kadana Dam Division II has preferred first Appeal No. 513 of 1974. Both these appeals challenge the award and each appellant denies his liability for the same. As both these appeals arise out of the same judgment, they are heard together and are being disposed of by this common judgment. 2. The facts relevant for the purpose of disposal of these two appeals lie within a narrow compass. The Government of Gujarat has undertaken construction of a dam across the river Mahisagar referred to as Kadana Project and this work is being executed on behalf of the Government of Gujarat through its Public Works Department. The department had given contracts for various civil construction works to different parties, one such party being Cementation Company Limited, original opponent No. 1, which would hereinafter be referred to as the contractor. The contractor had engaged one Mohanlal Dipaji as a workman, though of course the contractor has contended that Mohanlal was engaged by one Bhurabhai Mirabhai, original opponent No. 3 to whom a subcontract was given for transporting iron bars from Sylos to the dam site. It is the applicants' case that deceased Mohanlal was engaged to work on a tractor in the trailer on which iron bars were loaded for being transported from Sylos to the dam site. It is the applicants' case that deceased Mohanlal was engaged to work on a tractor in the trailer on which iron bars were loaded for being transported from Sylos to the dam site. This work was being done on 26th February, 1973 around 7-30 p. m. when deceased Mohanlal was employed on motor truck bearing No. GJR 9921 which met with an accident and the trailer overturned and the iron bars fell on Mohanlal and caused injuries resulting in his death. An application for compensation was made by two dependants of Mohanlal namely opponent No. 1 the mother and applicant No. 2 the widow of Mohanlal Dipaji. They claimed compensation in the amount of Rs. 8,000/-. 3. Opponent No. 1 the contractor contested the application as per its written statement Exh.6. It was contended on behalf of opponent No. 1 that opponent No. 1 is a company registered in Great Britain and that it had given it sub-contract for transporting iron bars and various other articles from Sylos where they were stored to the dam side to one Bhurabhai Hirabhai who was subsequently joined as opponent No. 3 and that, therefore, deceased Mohanlal was not the employee of opponent No. 1 and opponent No. 1 is not responsible as employer for payment of any compensation to the dependents of deceased Mohanlal. 4. Opponent No. 2 contested the application as per his written statement Exhibit-29 inter alia contending that deceased Mohanlal was not employed by opponent No. 2 the Executive Engineer to work at the dam site, and, therefore, opponent No. 2 is not responsible in any manner for the compensation claimed by the applicants. It was also denied that Mohanlal died on account of an accident arising out of and in the course of his employment. 5. Opponent No. 3 Bhurabhai Hirabhai, who was subsequently joined could not be served with the notice of the application and subsequently he was dropped. 6. The learned Commissioner held that deceased Mohanlal Dipaji was it workman within the meaning of section 2(l)(n) of the Workmen's Compensation Act and he was employed as a workman by opponent No. 1 the contractor. Opponent No. 3 Bhurabhai Hirabhai, who was subsequently joined could not be served with the notice of the application and subsequently he was dropped. 6. The learned Commissioner held that deceased Mohanlal Dipaji was it workman within the meaning of section 2(l)(n) of the Workmen's Compensation Act and he was employed as a workman by opponent No. 1 the contractor. It was further held that deceased Mohanlal died on account of the injury caused to him in an accident arising out of and in course of his employment and that the applicants are dependents of deceased Mohanlal Dipaji and they were entitled to recover compensation as claimed by them from opponent nos. 1 and 2. 7. In these two separate appeals, original opponents Nos. 1 and 2 question the correctness of the findings of the learned Commissioner. 8. Mr. G.N. Desai, learned Government Pleader, who appeared on behalf of the appellant (original opponent No. 2) in First Appeal No 513 of 1974 contended that once it is satisfactorily proved that the deceased workman was a workman employed by original opponent No. 1, the contractor, original opponent No. 2, the Executive Engineer, would not be liable for payment of compensation. In any case, Section 12 would not be attracted in the facts of this case, because construction of a dam across a river is not ordinarily part of the trade or business of the Government of Gujarat who is the principal. 9. Mr. G.P. Vyas, learned Advocate, who appeared for the contractor in First Appeal No. 736 of 1974 contended that the learned Commissioner was in error in holding that the deceased workman was employed as a workman by the contractor. 10. In the original application filed by the dependents of the deceased workman, they preferred their claim against opponent No. 1 the contractor and opponent No. 2 the principal, namely, the Executive Engineer, Public Works Department, Kadana Dam Project. It became manifestly clear that the dependents of the deceased workman preferred claim against the contractor and the principal for compensation on account of the death of the deceased workman by an accident arising out of and in the course of his employment. 11. It became manifestly clear that the dependents of the deceased workman preferred claim against the contractor and the principal for compensation on account of the death of the deceased workman by an accident arising out of and in the course of his employment. 11. There is no controversy that deceased Mohanlal was a workman and he met with an accident in which he suffered personal injury and this injury was caused to him in an accident arising out of and in the course of his employment. There is no dispute about this jurisdictional fact and it is concluded by a reasoned judgment of the Commissioner, which is not questioned in the appeal preferred by the principal. 12. Turning to the appeal preferred by original opponent No. 2, namely, the Executive Engineer, the contention of the learned Government Pleader is that original opponent No. 2 is in no way responsible for the compensation claimed by the original applicants. The Kadana Dam Project was undertaken by the Government of Gujarat. The project consisted of constructing a dam across the river Mahisagar near Kadana. The object behind the project was to store water to be utilised for irrigation and generation of electricity the project was undertaken by the State of Gujarat. It was being executed through its Public Works Department, the Project being a big one was divided into several sections. The scene of the accident is located in Kadana Dam Division II, which was in charge of the Executive Engineer. It is an admitted position that for certain civil construction works, such as drilling, grouting consolidation and anchor-bars etc., the contractor, namely, opponent No. was employed and it has undertaken to execute that part of the work under a contract, and, if at all any one had employed the deceased workman, it was by the contractor and, therefore, original opponent No. 2 is in no way responsible for the compensation. I will take these facts as well established and not in dispute. The question is whether in law original opponent No. 2 is liable for the compensation or not. 13. Section 2 (I)(e) of the Workmen's Compensation Act defines 'employer'. I will take these facts as well established and not in dispute. The question is whether in law original opponent No. 2 is liable for the compensation or not. 13. Section 2 (I)(e) of the Workmen's Compensation Act defines 'employer'. It reads as under: "(e) 'employer' includes any body of persons whether incorporated or not and any managing agent of an employer and the legal representative of a deceased employer and, when the services of a workman are temporarily lent or let on hire to another person by the person with whom the workman has entered into a contract of service or apprenticeship, means such other person while the workman is working for him." Section 2 (1)(n) defines 'workman' to mean any person (other than a person whose employment is of a casual nature and who is employed otherwise than for the purpose of the employer's trade or business) who is (i) a railway servant as defined in section 3 of the Indian Railways Act, 1890, not permanently employed in any administrative, district or sub-divisional office of a railway and not employed in any such capacity as is specified in Schedule II, or (ii) employed on monthly wages not exceeding one thousand rupees in any such capacity as is specified in Schedule II whether the contract of employment was made before or after the passing of this Act and whether such contract is expressed or implied, oral or in writing but does not include any person working in the capacity of a member of the Armed Forces of the Union and any reference to a workman who has been injured shall, where the workman is dead, include a reference to his dependents or any of them." Section 2 (2) which is relevant for the purpose reads thus: "The exercise and performance of the powers and duties of a local authority or of any department acting on behalf of the Government shall, for the purpose of this Act, unless a contrary intention appears, be deemed to be the trade or business of such authority or department." 14. Mr. Desai urged that construction of a dam across the river is a sovereign function of the State and when an activity is undertaken for discharging, carrying out or performing such sovereign function, such activity can neither be said to be business or trade activity of the State. Mr. Desai urged that construction of a dam across the river is a sovereign function of the State and when an activity is undertaken for discharging, carrying out or performing such sovereign function, such activity can neither be said to be business or trade activity of the State. It may be that right to construct a dam across the river may be referable to sovereign functions of the State but the act of construction of a dam is an activity that can be undertaken as a business activity. The right to construct a dam and construction or execution of the work for the construction of a dam stand on a different footing. It may be that no private individual can undertake construction of a dam across a river, because he has no right to construct such a dam across the river. That is the function of the State and may be aptly described as one of the sovereign functions of the State. Such a function can be said to be referable to the sovereign power of the State. But if an activity is undertaken for the exercise and performance of that power, by any Department of the Government, acting on behalf of the Government, even for the purpose of the Workmen's Compensation Act, unless a contrary intention appears, such activity shall be deemed to be trade or business of the Government or one of its Departments. If the Government decides to build a dam across a river, it has a right to build such a dam to the exclusion of any one else and may be referable to its sovereign function. But once the Government decides to exercise the power to build a dam and undertakes an activity through one of its Departments, namely the Public Works Department, then that activity becomes business or trade activity of the Government. That indisputably appears from the language employed in sub-section (2) of section 2 and the purpose behind enacting this sub-section is clearly manifested. It seeks to bring within its sweep all Government Departments and all local authorities within the operation of the Act, because in the absence of such a provision, it was likely to be argued at some point of time and it was in fact argued that the activity carried out by the State Government could never be said to be either trade or business activity. Undoubtedly, it is true that the State exercises its powers and performs its duties. Entry 17 in the State List in the Seventh Schedule of the constitution reads as: "Water, that is to say, water supplies, irrigation and canals, drainage and embankments, water storage and water power subject to the provisions of entry 56 of List I." Entry 56 in the Union List reads: "Regulation and development of interstate rivers and rivers valleys to the extent to which such regulation and development under the control of the Union is declared by Parliament by law to be expedient in the public interest." Reading these two entries together, it is crystal clear that right to construct a dam across the river would vest in the State Government, and when the State Government exercises that power through its Public Works Department for the purpose of the Act, it would at least be a business activity of the State. Section 2 (2) enacts a wholesome provision to grant protection to the workman employed even by the State Government while executing some of the works which it undertakes through its various Departments because if such a work is undertaken by a private individual, the workman so employed would have the protection of the Workmen's Cumpensation Act. The State, seeking to be a welfare State, must grant such a protection and it has been rightly granted by the provision contained in sub-section (2) of section 2, which seeks to bring the Departments of the State within the purview of the Act. 15. Exactly an identical question in slightly different context came before me in First Appeals Nos. 440 and 441 of 1971 decided by me on 9/10th February, 1973. In that case, the facts were that the Government of Gujarat had undertaken construction of a dam across the river Tapti styled as the Ukai project. As usual various several construction works were being executed through the contractors and the workman employed by one such contractor died in an accident and the dependents of the workman claimed compensation both from the contractor and the State Government under the Motor Vehicles Act. As usual various several construction works were being executed through the contractors and the workman employed by one such contractor died in an accident and the dependents of the workman claimed compensation both from the contractor and the State Government under the Motor Vehicles Act. It was strenuously contended on behalf of the State Government that the Ukai Project was undertaken in connection with construction of a dam across the river Tapti and the dam was being constructed by the Government as a part of its sovereign functions and, therefore, no action for damage can be brought against the State for the tortious act of its servants employed in connection with the sovereign functions. This contention was negatived. It was held that even if right to construct a dam may be referable to the sovereign functions of the State, once power to build a dam is exercised and activity is undertaken through the Public Works Department of the State Government, that activity of the Public Works Department would be a business activity and if the workmen employed by the State suffers injury attributable to the negligence of another employee of the State, the State as principal would certainly be liable for damages. The ratio of that decision would mutatis mutandis apply here. 16. Mr. Desai next contended that, even if the activity is treated as business activity of the State, once the State has employed a contractor to carry out the work which it wanted to do and if the workman is employed by the contractor, the contractor would be liable for the compensation under the Act, if other conditions for grant are satisfied. If a contractor is employed to do some work which the principal could himself undertake to do and if it is shown that the work entrusted to the contractor was ordinarily part of the trade or business of the principal, apart from the contractor as employer, the principal will be equally responsible for the compensation payable under the Act in view of the provision contained in section 12 of the Act. Section 12 of the Act is material for this purpose. Section 12 of the Act is material for this purpose. It reads as under: "12 (1) Where any person (hereinafter in this section referred to as the principal) in the course of or for the purpose 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 submitted 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 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 than 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." 17. Mr. (4) This section shall not apply in any case where the accident occurred elsewhere than 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." 17. Mr. Desai contended that in order to attract application of section 12 it must be shown that there is a person to be styled as principal: (i) who is carrying on some trade or business (ii) for the purpose of trade or business, (iii) for the purpose of trade or business he enteres into a contract with other persons for the execution by or under the contract of the whole or any part of any work called the contractor and (iv) work which the contractor has to do is ordinarily part of the trade or business of the principal. It was said that when all these three conditions are satisfied, the principal along with the contractor would be liable under section 12. 18. In this case, the Government of Gujarat, through its Public Works Department had undertaken the Kadana Dam Project. Once construction of the dam project was undertaken by the Government of Gujarat through its Public Works Department, it became the business activity of the State Government [vide section 2(2)]. In order to execute this work the State Government employed a contractor, namely Cementation Company Limited. That company is indisputably the contractor. So the first two conditions are satisfied. 19. The controversy is that the work, which was given to the contractor was not ordinarily part of the trade or business of the principal and, therefore, the third condition for invoking application of section 12 is not satisfied. There is absolutely no substance in this contention. In view of the provision contained in sub-section (2) of section 2. Once the power to build a dam across the river was sought to be exercised by undertaking the Kadana Dam Project. to be executed through the Public Works Department, the activity connected with the execution of the Kadana Dam Project, became the business or trade activity of the State Government and the activity of the Public Works Department is ordinarily the activity of putting up construction, may be roads, may be canals, may he embankment, may be dam. to be executed through the Public Works Department, the activity connected with the execution of the Kadana Dam Project, became the business or trade activity of the State Government and the activity of the Public Works Department is ordinarily the activity of putting up construction, may be roads, may be canals, may he embankment, may be dam. Once it became the activity of the State Government, and in order to carry out this activity, it engaged a contractor, the contractor was engaged for execution of the work, which was ordinarily part of the business activity of the principal. The principal wanted to build a dam, and it is the business activity of the principal. The principal employed a contractor to carry out part of the construction of the dam work which was business activity of the principal. It does appear that the principal, namely, the State Government through its Public Works Department undertook the activity of construction of a dam in exercise of its sovereign function. But once it decided to perform the duty of (arming out its sovereign function, it became the business activity of the Public Works Department through which it decided to construct the dam, and section 2(2) would be attracted. It is universally known that the Public Works Department entrusts its business activity or part of it to a contractor. 20. It was, however, contended that a particular activity may be trade or business activity of the principal, but before section 12 could be attracted, it must be established that work entrusted to the contractor is ordinarily part of the trade or business of the principal. A distinction was sought to be made between trade or business activity and ordinary trade or business activity. If the principal himself engages a workman, and if the workman satisfies all the ingredients of the definition of workman and requirements of section 3, the principal would be directly liable to the workman for compensation under the Act. But it was said that where the principal, for the purpose of his trade or business, contracts with any other person for the execution of the whole or part of any work that work must ordinarily be part of the trade or business of the principal and only then the principal would be liable. But it was said that where the principal, for the purpose of his trade or business, contracts with any other person for the execution of the whole or part of any work that work must ordinarily be part of the trade or business of the principal and only then the principal would be liable. An illustration was given that a shop-keeper wants to start a shop and his ordinary activity consisted of carrying on trade in the shop. But for commencing business in the shop, he had to undertake construction of a room, and construction of room is not ordinarily part of the trade activity of the shop keeper who wants to start a shop, and if someone engaged in construction by the contractor suffers an injury but if work of construction of shop is undertaken through a contractor, the principal shop-keeper would not he liable for compensation. To substantiate this submission, reliance was first placed on Rabia Mohamed Tahir vs. G.I.P. Railway, AIR 1929 Bom. 179. In that case, the G.I.P. Railway in connection with the electrification of their line were building a Power Station near Kalyan and constructing a transmission line to carry electric power to various sub-stations on the railway. This work of constructing this transmission line had been entrusted on a contract to Messers. Henlay's Telegraph Works and the deceased was employed as a fitter by Messers. Henlay's. The workman met with an accident and died. The dependents claimed compensation from the G.I.P. Railway. Contention of the G.I.P. Railway was that erection of towers which will carry overhead cable was not the ordinary part of business or trade of the G.I.P. Railway. It was said that ordinary business or trade of the G.I.P. Railway was to provide passenger and goods transport service but the construction of towers which will carry over-head cable seas not part of its ordinary business or trade activity, and, therefore, it was contended that section 12 would not he attracted and the G I.P. Railway would not be liable to pay compensation. This contention found favour with the Division Bench. This contention found favour with the Division Bench. After referring to parallel provisions of section 4 of the English Workmen's Compensation Act, it was said that construction of steel towers over the railway line was not part of the ordinary trade or business of the G.I.P. Railway, and, if it was not so, section 12 would not be attracted and the G.I.P. Railway would not be liable to pay compensation as an employer. The Division Bench referred to some of the English decisions bearing on the interpretation of section 4 of the English Workmen's Compensation Act 1897 and drew distinction between the ordinary activity of the principal and his other activity as has been done in the judgment. This approach came in for criticism by a larger Bench of the Bombay High Court in Kokilabai vs. Keshavlal Mangaldas and Co. AIR 1972 Bom. 18. The Full Bench presided over by Beamont C.J. after referring to the G.I.P. Railway case (supra), observed that "to construe an Indian Act in the light of cases decided under an English Act differently worded is much more likely to cause confusion than to render assistance, and I think that the English cases have caused some confusion." Beamont C.J. expressed an opinion that he is unable to agree with the view expressed in the G.I.P. Railway case (supra) and further observed that the work, which is ancillary or incidental to a business, may or may not ordinarily form part of that business. Mr. Desai, however said that apart from the criticism of the earlier case by the Full Bench of the Bombay High Court, it has not overruled the ratio of the case, wherein it is observed that in order to make the principal liable, the work entrusted to the contractor must ordinarily form part of the business or trade of the principal. Assuming that to be the ratio, it is a question of fact to be determined whether the work entrusted to the contractor was ordinarily part of the business or trade of the principal which he could have undertaken himself. Assuming that to be the ratio, it is a question of fact to be determined whether the work entrusted to the contractor was ordinarily part of the business or trade of the principal which he could have undertaken himself. Even approaching the matter from this angle, if the Public Works Department could have undertaken the work of construction directly by employing labourers, in that event, it would be its ordinary business because construction work is ordinary business activity of the Public Works Department whether it is construction of road, or tank, reservoir or dam, makes no difference. Ordinary business activity of the Public Works Department is construction work its name is onomatopoetic namely sound echoes the sense (Public Works Department) and works include all sorts of work which require construction. Once dichotomy between power and performance of an activity in exercise of power is recognised, confusion arising out of sovereign function disappears, because activity undertaken becomes the business activity such as construction of work, may be dam or anything else and it becomes ordinary business activity of the Public Works Department. Therefore, the G.I.P. Railway case (supra) and Kokilabai's case (supra) would not be of any assistance in this case. 21. Similarly reliance was also placed on Karani Industrial Bank vs. Banian, AIR 1933 Cal. 63. In that case, the Bank had given a contract to one Kamil Sardar to do a work of putting up certain joists in a building in Park Street. The Bank was getting this house constructed through different contractors one of the workmen employed by the contractor brought an action under the Workmen's Compensation Act, against Karani Industrial Bank Limited and the application was resisted on the ground that section 12 is not attracted. Referring to section 12 it was observed as under: "The general notion of section 12 is that, if it is ordinarily part of the business bf a person to execute certain work, then ordinarily he will do that work by his own servants he is not to escape liability for any accident that takes place merely by interposing a contractor, the contractor undertaking to do what ordinarily the principal would do for himself." The ratio of this decision, even if accepted in its entirety, would not come in the way of the original applicants from recovering compensation from the principal for the reasons herein before stated. 22. 22. Having, therefore, examined the case both on principle and authority, it is crystal clear that once the State Government decided to exercise its power of building a dam, through its Public Works Department, acting on behalf of the Government, activity for construction of the dam would be its trade or business activity but more especially business activity. It is not necessary in this connection to cut down the meaning of business by referring to trade which precedes it, as was sought to be urged. Both the words have been advisedly used in their wider connotation and once construction of dam becomes business activity of the Public Works Department, as it is undertaken through that department, one has to ascertain what are the ordinary activities of the Public Works Department. Construction of all sorts of work indisputably is the ordinary activity of the Public Works Department and one such ordinary activity was sought to be carried out through the contractor. Therefore, all conditions for attracting section 12 are satisfied and the Executive Engineer has been rightly held liable for the compensation claimed by the original applicants. 23. This was the only contention raised in First Appeal No. 513 of 1974 and as there is no merit in the same, the appeal is liable to be dismissed with costs. 24. First Appeal No. 736 of 1974 is preferred by original opponent No. 1 contractor. Mr. G.P. Vyas, learned Advocate who appeared for the appellant, urged that the Commissioner was in error in holding that the deceased workman was employed by the contractor and in fact, on a proper appreciation of evidence, it would indisputably appear that he was employed by one Bhurabhai Hirabhai who, though joined as opponent No. 3, could not be served and was subsequently deleted. Before examining this contention, I must keep in mind the provisions contained in section 30 of the Act. It provides that no appeal shall lie against any order unless a substantial question of law is involved in the appeal. Mr. Vyas, when confronted with this provision, urged that if the finding is perverse it raises a substantial question of law. He, however, fairly conceded that the contention is based upon appreciation of evidence. It is not necessary for me to undertake that exercise. Mr. Vyas, when confronted with this provision, urged that if the finding is perverse it raises a substantial question of law. He, however, fairly conceded that the contention is based upon appreciation of evidence. It is not necessary for me to undertake that exercise. The learned Commissioner has exhaustively discussed the evidence and as the authority who is entitled to record a finding of fact on appreciation of evidence, it was open to him to accept one or the other set of evidence. That cannot be re-agitated in appeal because of the limitation contained in the first proviso to section 30. I do not propose, therefore, to re-appreciate the evidence. Suffice it to say that the finding cannot be styled as perverse or based on no evidence. Therefore, Appeal No. 736 of 1974 preferred by opponent No. 2 namely, the contractor fails and is dismissed with costs. Accordingly, both the appeals are dismissed with costs in one set.