H. P. STATE FOREST CORPORATION LTD. v. SHEESH RAM — 1999 DIGILAW 204 (HP)

JUDGMENT : L.S. Panta, J. 1. The above appeal by the H.P. State Forest Corporation (for short 'appellant Corporation') u/s 30 of the Workmen's Compensation Act, 1923 is directed against the order dated 18.11.1992 of Commissioner under the Workmen's Compensation Act, 1923, Sub Division Ani, in Case No. 1 of 1990 whereby claim of Rs. 1,35,828 filed by the claimants was allowed for the death of their son Ram Chander who died while in the employment of the appellant Corporation and respondent contractor. 2. Briefly stated the facts of the case are that one Ram Chander was working along with other workmen with the appellant Corporation and respondent contractor on work for extraction of geltus and carrying them by rope-way. The agreement was entered into between the appellant Corporation and respondent contractor on 2.12.85 to execute the contract. When said Ram Chander was working on the span he fell down on a stone on 15.6.1989 at about 12.45 p.m. and thereafter he was removed to Rampur Hospital where he died at 3 p.m. due to the injuries suffered by him in the mishap. A report of the accident was lodged by Shyam Chand, brother of the deceased, in Police Station Nitmand. The claimants who were the first party before the Commissioner below are the parents of the deceased and filed claim application under Sections 4 and 4-A of the Workmen's Compensation Act ('the Act'). 3. The second party appellant Corporation herein and respondent contractor filed their separate written statements. In its written statement the appellant Corporation, second party, stated that the deceased was not their employee and there existed no relationship of employee and employer between them. It was stated that the relationship of the claimants with the deceased was not within the knowledge of the appellant Corporation. It was stated that the deceased may be under the employment of respondent contractor and if he had died while working with him, it was his obligation and duty to lodge the report with the police and to pay compensation to the dependants of the deceased. The respondent contractor had not informed the appellant Corporation regarding the employment of Ram Chander on his work. The respondent contractor had not informed the appellant Corporation regarding the employment of Ram Chander on his work. It was further stated that it was the duty of the respondent contractor to supply the names and particulars of the workmen who were engaged in the work by him as per the terms of the agreement executed by him with the appellant Corporation. The appellant Corporation denied the liability to pay the compensation to the claimants. 4. The respondent contractor in his written statement also denied the employment of Ram Chander by him on his work and contended that he was merely the labour supply mate of the appellant Corporation on commission basis and it was the appellant Corporation alone who was the employer of the labour. He also stated that the work was executed by him on behalf of the appellant Corporation who was the main employer of the labour and, therefore, he also denied the liability to pay the compensation to the claimants. 5. On the pleadings of the parties the Commissioner below framed the following issues: (1) Whether deceased Ram Chander was an employee of the second party? OPD (2) Whether the accident occurred when the deceased was in the employment? OPP (3) If issue Nos. 1 and 2 are proved in favour of the first and second party of the first party then how much compensation is to be given to them? (4) If issue No. 3 is in favour of the applicant then who out of the second party is liable to pay the amount of compensation? OP-Both. (5) Relief. 6. The parties went to trial and led their oral and documentary evidence. The Commissioner below on appreciation of the evidence came to the conclusion that the deceased Ram Chander while setting the span in order fell down and died and at the relevant time he was performing the work of the appellant Corporation, which respondent contractor was carrying on its behalf. Consequently, compensation u/s 4 of the Act was determined to the tune of Rs. 1,35,828 and was ordered to be paid to the mother of the deceased and not to the father for the reason that under Hindu Succession Act, 1956 father would not get the share of the deceased who was unmarried at the time of the death. Consequently, compensation u/s 4 of the Act was determined to the tune of Rs. 1,35,828 and was ordered to be paid to the mother of the deceased and not to the father for the reason that under Hindu Succession Act, 1956 father would not get the share of the deceased who was unmarried at the time of the death. The Commissioner below also held that if the amount of compensation determined in his order was not deposited after one month of the announcement of the order then the appellant Corporation would be liable for 50 per cent penalty and interest at the rate of 6 per cent per annum on the said amount of compensation. 7. Feeling aggrieved and dissatisfied against the order of the Commissioner below, the appellant Corporation filed the present appeal and the claimants filed Cross-objection No. 92 of 1994 praying for award of interest and penalty provided under the provisions of the Act which according to them was not awarded by the Commissioner accordingly. 8. We have heard learned counsel on both sides. 9. Mr. Neel Kamal Sood, learned counsel for the appellant Corporation vehemently contended that the work for extracting and carrying the geltus was entrusted to the respondent contractor by the appellant Corporation under the agreement Exh. RA and according to Clause 10 of the said agreement it was the duty of the contractor to furnish to the Divisional Manager a written statement of the names and particulars of his agents/servants/labourers whom he proposed to employ and that in the present case no such statement was made by the respondent contractor to the appellant Corporation. He next contended that the respondent contractor also has not complied with the terms of Clause 14 under which he was required to maintain a roll call register to make daily attendance of the labour force present on the works and would produce the same to the Divisional Manager or the official incharge of the works as and when required to do so. He next contended that under Clauses 18 and 19 it was the obligation of the respondent contractor to pay any compensation awarded under the Act and Rules framed thereunder and not that of the appellant Corporation and, therefore, the finding of the Commissioner holding the appellant Corporation liable to pay amount of compensation is not sustainable in the facts and circumstances of the case. 10. 10. Per contra, Ms. Devyani Sharma, learned counsel for the claimants contended that u/s 12(1) of the Act, primary liability to pay the compensation is that of the principal employer and in case the contractor is found liable, the liability can be indemnified u/s 12 (2) of the Act. She next contended that the Commissioner below has erred in granting the interest and penalty for default of payment of the amount of compensation by the appellant Corporation within one month from the date of the order and not from the date the amount fell due and, therefore, the order has to be modified to that extent. 11. Mr. Jagdish Vats, learned counsel for the respondent contractor contended that Clauses 18 and 19 incorporated in the agreement are per se not applicable in view of the provisions of Section 12 (1) of the Act whereunder the principal employer is primarily liable to pay to any workman in the execution of work any compensation and, therefore, reasoning of the Tribunal below holding the appellant Corporation to pay the amount of compensation is correct. He next contended that the appellant Corporation was negligent in not informing the cause of the accident to the police or the Commissioner below and, therefore, the liability to pay the interest and penalty is that of the appellant Corporation and not of the respondent contractor. 12. We have given our best consideration to the rival contentions of the learned counsel on both sides. In order to appreciate the reasoning of the Commissioner below we have reappraised the entire evidence on record and the provisions of the Act. 13. Claimant Sheesh Ram appeared as PW 1 and deposed that his son Ram Chander was not married when he died and his age at the time of death was about 19 years. He stated that Ram Chander was working with the appellant Corporation and respondent contractor at Bagi Pul and he used to send sometimes Rs. 200 or Rs. 500 to him and his mother, the claimant No. 2. Some papers were demanded from him with regard to the insurance amount but no compensation was given to them. In his cross-examination, he pleaded his ignorance whether his son was employed by the appellant Corporation or by the respondent contractor. 200 or Rs. 500 to him and his mother, the claimant No. 2. Some papers were demanded from him with regard to the insurance amount but no compensation was given to them. In his cross-examination, he pleaded his ignorance whether his son was employed by the appellant Corporation or by the respondent contractor. He also stated that notice was served upon the appellant Corporation and respondent contractor about the death of his son and seeking compensation. Bansi Lal, PW 2, deposed that he knew Ram Chander who was the son of the claimants. Ram Chander was engaged on the Corporation work on span and when wire got entangled then he was asked to set it right or unfold it. Ram Chander fell down while doing the repair work of the span. It has been admitted by this witness in his cross-examination that when Ram Chander was repairing the wire he along with other workmen were pulling out wood in the span. He has categorically admitted that the respondent contractor deputed Ram Chander for doing the repair work on the wire. The witness categorically denied the suggestion of the opposite parties that Ram Chander died because he took liquor on the relevant day. It has also been admitted by him that respondent contractor used to make payment of wages to them and mark the attendance of the labourers. 14. Daulat Ram, PW 3, is Up-Pradhan of the panchayat. He deposed that Ram Chander was working on the span and a wire suddenly stopped and when Ram Chander tried to pull out the wire with the help of a rod, resultantly the wire struck in his chest and thereafter Ram Chander fell on the stone. He also denied the suggestion of the second party that Ram Chander at the relevant time was drunk and he died after taking liquor. 15. Paras Ram, PW 4, was at the relevant time working as Station House Officer at Nirmand who received a wireless message from Police Station, Rampur on 15.6.89 informing him that Ram Chander, son of Sheesh Ram fell down from span and was injured. He sent his brief report of the investigation and placed a copy thereof on record marked as Exh.PW-4/B. 16. Mangat Singh, the Sub Divisional Manager of the appellant Corporation has appeared as RW 1 and placed on record a photostat copy of the agreement Exh. He sent his brief report of the investigation and placed a copy thereof on record marked as Exh.PW-4/B. 16. Mangat Singh, the Sub Divisional Manager of the appellant Corporation has appeared as RW 1 and placed on record a photostat copy of the agreement Exh. RA entered into between the appellant Corporation and respondent contractor. He deposed that Ram Chander was not on the rolls of the Corporation and he was not insured whereas employees of the Corporation are always insured. He has stated that the respondent contractor has not complied with the terms and conditions of the agreement. 17. The respondent contractor did not appear on 29.8.1992 before the Commissioner below and he was proceeded ex parte nor he adduced any evidence. 18. We have perused all the relevant clauses of the agreement Exh. RA. Under Clause 10 the contractor was under obligation to furnish to the Divisional Manager written statement of the names and particulars of his agents, servants/labourers whom he propose to employ within the stipulation of the agreement before they were so employed. Under Clause 14 it was the duty of the contractor to maintain a roll call register to mark daily attendance of the labour force present on the works and would produce the same to the Divisional Manager or the official incharge of the works as and when required to do so. Clauses 18 and 19 are similar and identical and contemplate that contractors and not the H.P. State Forest Corporation shall be liable to pay the compensation to the labour employed by them under the Workmen's Compensation Act and the Rules framed thereunder and the contractors shall also bear the liabilities as a result of implementation of the labour laws. 19. Clause 25 provides that the contractors will engage requisite strength of labourers as mentioned in Clause 11 and shall pay to the labour regularly and payments shall not be delayed for a period of more than 13 days of the following month and on their failure to do so the Divisional Manager, Forest Working Division, Rampur will be at liberty to deduct the amount from the dues payable to the contractors/ or from their security and disburse to the labour. Though there is a specific clause in the agreement providing to pay the amount of compensation to the workmen or the dependants of the workmen, notwithstanding the terms of the agreement, it is the statutory duty of the principal employer u/s 12 (1) 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 the principal employer and the amount of compensation shall be calculated with reference to the wages of the workman under the employment with whom he is immediately employed. Under Sub-section (2) of Section 12 of the Act where the principal is liable to pay compensation u/s 12 (1) he shall be entitled to be indemnified by the contractor 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. Under the Act the appellant Corporation is under the statutory duty and obligation to pay the amount of compensation to the claimants and it shall be entitled to be indemnified by the respondent contractor. The respondent contractor has not challenged the evidence of the claimants that deceased Ram Chander was not his employee. The work of extraction and carrying geltus was entrusted to the respondent by the appellant Corporation and deceased Ram Chander at the relevant time was working on the span which was established for carrying geltus. The respondent contractor has not reported the matter to the police nor to the Commissioner which was his legal duty under the Act. It has come in the evidence of PW 2 Bansi Lai that Ram Chander was deputed on span work by respondent contractor who paid him advance payment as well. He has also admitted that it was respondent contractor who used to pay wages to the labourers. 20. We have perused the provisions of Section 12 of the Act and interpreting the provisions thereof, four essential conditions have to be satisfied before Section 12 can be applied. The four conditions are thus: (i) That the person (called the principal) is carrying on a trade or business and, in the course of or for the purpose of that trade or business, engages a contractor to execute the work. (ii) That work is ordinarily a part of the trade or business of the principal. The four conditions are thus: (i) That the person (called the principal) is carrying on a trade or business and, in the course of or for the purpose of that trade or business, engages a contractor to execute the work. (ii) That work is ordinarily a part of the trade or business of the principal. (iii) The accident which gives rise to the liability for compensation must have 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. (iv) The accident must have occurred while the workman was in the course of his employment in executing the work. 21. The finding recorded by the Commissioner would show that the above conditions are satisfied in this case. The employee Ram Chander was doing the work of repairing the span which was established for carrying the geltus and the said work was assigned to the respondent contractor by appellant Corporation and, therefore, the appellant Corporation was the principal employer of the deceased. 22. In the circumstances, we are of the view that Section 12 of the Act is applicable to the facts of the case and there cannot be any doubt about the legal position that the opposite party No. 1, i.e., the appellant Corporation is also responsible to pay compensation payable under the Act to the workman even if the workman was engaged actually by the second party, i.e., the respondent contractor. 23. Section 12 (2) in unambiguous terms confers a right on the principal who is made liable to pay compensation under the said section to get himself indemnified by the contractor. As such we would hold that the opposite party No. 1, appellant Corporation, as principal employer would be entitled to be indemnified by the respondent contractor by virtue of Section 12 (2) of the Act and to recover the amount of compensation, if any, paid to the claimants from the opposite party No. 2 in execution of the order passed in the case. We say so because in this case the opposite party No. 1, appellant Corporation, has specifically contended that as per Clauses 18 and 19 of the agreement entered into in between the Corporation and the contractor, the contractor has expressly undertaken the responsibility for payment of compensation to the labour employed by him. 24. We say so because in this case the opposite party No. 1, appellant Corporation, has specifically contended that as per Clauses 18 and 19 of the agreement entered into in between the Corporation and the contractor, the contractor has expressly undertaken the responsibility for payment of compensation to the labour employed by him. 24. We do not think that there is any merit in the contentions of the learned counsel for the appellant Corporation that in the light of the contract entered into between two opposite parties regarding the liability to pay compensation as per Clauses 18 and 19 of the agreement and these clauses will override the provisions of Section 12. The avowed object with which Section 12 was enacted as part of the Act as seen is to enable the workman to proceed against the contractor or against the principal or both and to make the contractor liable to indemnify the principal in all cases in the absence of any agreement to the contrary. If these were the avowed objects with which Section 12 of the Act was incorporated in an enactment which itself is a beneficial legislation intended to confer benefits on the workmen, we are of the view that the provisions in Section 12 (1) would apply notwithstanding the agreement or contract entered into between the principal and contractor regarding their liability for payment of compensation under the Act. At best agreements or contracts entered into between the principal and contractor can govern only their inter se rights and liabilities and cannot affect the right of the workmen or their dependants to get compensation either from the principal or from the contractor at their option. Right to get indemnified from the contractor specifically conferred on the principal u/s 12 (2) of the Act sufficiently safeguards the interest of the principal who has entrusted the work to the contractor stipulating a term in the agreement entered into between them regarding the liability under the Act. 25. Right to get indemnified from the contractor specifically conferred on the principal u/s 12 (2) of the Act sufficiently safeguards the interest of the principal who has entrusted the work to the contractor stipulating a term in the agreement entered into between them regarding the liability under the Act. 25. It is manifest that in the present case the duty to pay compensation at the rate provided in Section 4 arose under Sub-section (1) of Section 4-A of the Act as soon as the accident resulting in the injuries to the deceased workman and in his consequential death occurred and that the appellant Corporation and the respondent contractor both being in default in paying the compensation due under the Act within one month from the said date, the discretion conferred on the Commissioner under Sub-section (3) of Section 4-A to award interest on the compensation amount in accordance with law was required to be exercised reasonably and in a judicial manner after taking into consideration all the relevant factors and that, in his considered opinion there was no justification for the delay, the penalty was also required to be ordered to be recovered. The Commissioner committed serious error of law in awarding the interest and penalty if the award amount of compensation was not deposited before him within one month of the order. To this extent, the finding of the Commissioner is wholly unjust and untenable. Compensation becomes payable on the date of the accident and not on the date of determination of the amount thereof, as held by the Supreme Court in Pratap Narain Singh Deo v. Shrinivas Sabata 1976 ACJ 141 (SC). 26. Therefore, we hold that the claimants are entitled to the amount of compensation of Rs. 1,35,828 awarded by the Commissioner along with 50 per cent penalty and interest at the rate of 6 per cent from the date of the accident of Ram Chander who admittedly died on 15.6.89. The entire amount together with interest and penalty shall be deposited with the Registry office by the appellant Corporation within three months from this date and the appellant Corporation shall be at liberty to get the indemnification of the amount from the respondent contractor u/s 12 (2) of the Act. 27. The entire amount together with interest and penalty shall be deposited with the Registry office by the appellant Corporation within three months from this date and the appellant Corporation shall be at liberty to get the indemnification of the amount from the respondent contractor u/s 12 (2) of the Act. 27. The finding of the Commissioner below that under the Hindu Succession Act, 1956 claimant Sheesh Ram, father of the deceased will not be entitled to get the share of the compensation is not found to be legal and valid. It appears that the Commissioner below has not cared to read the definition of dependant u/s 2 (1) (d) of the Act whereunder a parent is entitled for compensation being dependant of the deceased workman. In the present case the deceased was unmarried at the time of his death. Both the claimants are, therefore, held entitled to share the entire amount of compensation together with interest and penalty in equal shares. No other submissions have been made by the learned counsel on either side. 28. In the result, for the aforesaid reasons and observations the appeal is allowed in part and the order of the Commissioner below shall stand modified to the extent indicated above. Cross-objections are allowed in the aforesaid terms. Costs on parties.