JUDGMENT
D.P. Mohapatra, J.
1. The core questions that arise for decision in these appeals are whether in the facts and circumstances of the case, the appellants can be held liable for payment of compensation to the injured and deceased workmen and whether they are entitled to be indemnified by the contractor for the compensation paid.
2. Union of India represented by the General Manager, South Eastern Railway, Calcutta and the Divisional Railway Manager, Khurda Road Division, South Eastern Railway, Khurda, have filed these appeals under Section 30(1)(a) of the Workmen’s Compensation Act, 1923 (for short, ‘the Act’) assailing the orders passed by the Assistant Labour Commissioner-cum-Commissioner for Workmen’s Compensation, Cuttack (for short, ‘the Commissioner’) awarding compensation in favour of the claimants and holding the appellants liable to pay the same. In some appeals the appellants have also challenged the orders of the Commissioner levying penalty and interest for default in payment of the compensation amount under Section 4A of the Act.
3. Since the cases involve similar questions of fact and law, they have been heard together with consent of learned Counsel for the parties and they are being disposed of by this common judgment.
4. On the applications filed by the injured workmen or legal representatives of the deceased workmen in the prescribed forms, the W.C. cases were registered before the Commissioner. The factual position about which there is no dispute is that the workmen concerned were employed by the contractor Jagadish Prasad Roy, opposite party No. 1 in the W.C. cases (hereinafter referred as ‘the contractor’) who was engaged by the South Eastern Railway for painting of the iron structures and girders of railway bridge No. 544 over river Mahanadi. On 23.2.1990 at about 1.15 p.m. when the workmen were engaged in their work, they were injured by a goods train which passed on the said bridge while proceeding from Cuttack side towards Kendrapara Road. The accident occurred when door of a box wagon which had been left open hit the workmen on different parts of their bodies. They were admitted to the S.C.B. Medical College Hospital at Cuttack for treatment. Since no compensation was paid by the contractor or the South Eastern Railway, they filed the applications claiming compensation impleading the contractor as well as the General Manager, South Eastern Railway, Calcutta, and the Divisional Railway Manager, Khurda Road Division, South Eastern Railway as opposite parties.
5. The contractor in his written statement admitted the accident and the employment of the concerned workmen by him. He also admitted that the injuries sustained by the workmen arose out of and in course of their employment. He, however, denied his liability for compensation alleging that the amount has to be paid by the South Eastern Railway.
6. In their reply to the notice issued by the Commissioner, the appellants while admitting the factual positions relating to the accident denied liability of the South Eastern Railway to pay any compensation on the grounds, inter alia, that the workmen concerned were not their employees, that Section 12 of the Act had no application in the case; and alternatively, took the plea that even if they were held to be liable to pay compensation, they were entitled to be indemnified for the amounts by the contractor under the stipulations in the contract.
7. On consideration of the case of the parties, the Commissioner formulated two issues:
(i) What is the nature and extent of injuries sustained by the applicants? and
(ii) Whether the applicants are entitled to any compensation? If so, what is the amount and by whom payable?
On sifting the evidence placed before him, the Commissioner agreed with the assessment of loss of earning capacity made by Dr. S.K. Mohapatra, determined the wages of the workmen at Rs. 750/- per month and considering the ages of the workmen concerned determined the compensation amount payable in each case. Regarding liability of the opposite parties to pay the compensation, he recorded the finding in these words:
In the present case, it is an admitted fact that the accident occurred due to opening of the door of the wagons of the goods train, which is nothing but a negligent act of the railway employees. And for the negligent act of the principal, the contractor cannot be made liable. Hence I hold that the entire compensation would be paid by the opposite party Nos. 2 and 3 who are jointly and severally liable for same and the said amount cannot be received from the bills of the contractor, nor the contractor would indemnify the same.
Therefore, he passed the order directing opposite party Nos. 2 and 3, the present appellants, to deposit the compensation amount within thirty days from the date of receipt of the order for disbursement of the same to the claimants, failing which penalty and interest shall be imposed as per the provisions of the Act. Since opposite party Nos. 2 and 3 failed to deposit the compensation amount within the time granted in the order, the Commissioner by order dated 13.2.1992 imposed penalty and interest in terms of Section 18A of the Act. The said opposite parties have filed these appeals challenging the order directing them to pay the compensation and the consequential order imposing penalty and interest for default in complying with the order. In this back-drop the questions formulated earlier arise for determination.
8. The main thrust of the submissions of Mr. B. Pal, counsel for the appellants, was that in view of the admitted factual position that the workmen concerned were employees of the independent contractor J.P. Roy, who had engaged them for the work of painting of the railway bridge, the Commissioner committed an error of law in saddling the appellants with liability for the compensation awarded. Elucidating the point, he submitted that since the appellants were not responsible for the accident, no liability for compensation could be fixed on them. Alternatively, Mr. Pal submitted that in case the appellants were held to be liable to pay the compensation to the workmen concerned, they were entitled to be indemnified by the contractor under the terms of the agreement entered into with him. Therefore, the Commissioner erred in law in passing the order that the compensation amount cannot be received from the bills of the contractor, nor the contractor would indemnify the same. The further submission of Mr. Pal was that in any view of the matter, the order of the Commissioner imposing penalty and interest purportedly under Section 18A of the Act is wholly unsustainable since no reasonable opportunity was granted to the appellants to place their case in the matter.
Mr. K. Jena, learned Counsel appearing for the claimants and Mr. P. Roy, the learned Counsel appearing for the contractor, supported the order passed by the Commissioner.
9. Before going to the merit of the case, it will be convenient to take note of the provisions of the Act relevant for the purpose of the case. Section 2(1)(e) defines the term ’employer’ thus:
(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 3 is the provision regarding employer’s liability for compensation. In Sub-section (1) of the said section, it is laid down that if personal injury is caused to a workman by accident arising out of and in the course of employment, his employer shall be liable to pay compensation in accordance with the provisions of Chapter II. The proviso to the said sub-section enumerates the circumstances under which an employer shall not be liable for payment of compensation. The said provision is not relevant for the purpose of the present case.
Section 4A of the Act lays down:
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) In cases where the employer does not accept the liability for compensation to the extent claimed, he shall be bound to make provisional payment based on the extent of liability which he accepts, and, such payment shall be deposited with the Commissioner or made to the workman, as the case may be, without prejudice to the right of the workman to make any further claim.
(3) Where any employer is in default in paying the compensation due under this Act within one month from the date it fell due, the Commissioner may direct that, in addition to the amount of the arrears, simple interest at the rate of six per cent per annum on the amount due together with, if in the opinion of the Commissioner there is no justification for the delay, a further sum not exceeding fifty per cent of such amount, shall be recovered from the employer by way of penalty.
Section 12 on which heavy reliance is placed by the appellants is quoted here-under in extenso:
(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 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.
Section 22 of the Act makes provision regarding filing of application for compensation and the contents of such application.
10. From the facts of the case discussed earlier, the uncontroverted position that emerges is that railway bridge No. 544 over river Mahanadi is the property of South Eastern Railway. The painting of the iron structures and girders of the bridge was to be done by South Eastern Railway. Instead of doing the said work departmentally, they had engaged a private contractor to do the work. The said contractor engaged the workmen concerned for purpose of the work entrusted to him by the appellants. In these circumstances, South Eastern Railway, as the principal of the contractor, is liable to pay any workman employed in execution of the work any compensation which he would have been liable to pay if that workman had been directly and immediately employed by him as per Section 12(1) of the Act. Therefore, the contention of Mr. Pal that the appellants are not liable to pay any compensation to the workmen employed by the contractor cannot be accepted. If any authority is necessary in support of the view, I may refer to Golden Soap Factory (P) Ltd. v. Nakul Chandra Mondal AIR 1964 Cal 217, in which it was held that normally, a workman can recover compensation only from his employer; exception is found in Section 12(1) of the Act which gives the workman a right to recover from the person who has entered into a contract with the workman’s immediate employer and in that case Section 12(2) becomes operative and the principal who has engaged the contractor has a right to recover from the contractor by way of indemnity. Where the relationship of an employer and workman is established between a person employed by an independent contractor on the one hand and the principal on the other, the principal cannot escape liability for an injury suffered by such workman during the course of employment merely because he has interposed an independent contractor.
11. The next question to be considered relates to the claim of the appellants to be indemnified for the compensation amount by the contractor. For this purpose reliance is placed on the provision of Section 12(2) and the stipulations in the agreement entered into between the South Eastern Railway and the contractor in support of their claim. In Section 12(2) it is clearly laid down that where the principal is liable to pay the compensation under the section, he shall be entitled to be indemnified by the contractor or any other person from whom the workman could have recovered compensation. In that view of the matter, the appellants are ordinarily entitled to be indemnified by the contractor. The further question to be considered in this connection is whether there has been any default of agreement in this case because only in that event the Commissioner gets jurisdiction to decide the question. In the impugned orders the Commissioner has not discussed the relevant aspects of the question. He has merely based his findings on the observation that since the accident took place on account of negligence of the railway authorities in keeping the door of the box wagon open, they are not to be indemnified by the contractor. He has not even taken note of the terms of the agreement entered into between the parties and has not at all considered the question whether there has been a default of the agreement. This court in the case of M.P. Sharma v. Mohan Behera 57 (1984) CLT 349, held that under Sub-section (2) of Section 12, where the principal is liable to pay the compensation he is 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; the question of determination of amount of indemnity will arise only in case of a default of agreement; where the contractor is liable to indemnify the principal in respect of all statutory compensations, the question of determination of amount of indemnity by the Commissioner does not arise. Therefore, it is manifest that the Commissioner has committed an illegality in assuming jurisdiction to decide the question and in issuing a direction disentitling the appellants to be indemnified for the compensation amount in terms of the agreement. Thus, that part of the orders is clearly unsustainable.
12. The question that remains to be considered is whether the Commissioner had committed any illegality in levying penalty and interest on the appellants for non-payment of the amount within the period specified in the order. The learned Counsel for the parties have not disputed that Section 18A referred to by the Commissioner in the order dated 13.2.1992 is not the appropriate provision applicable to the facts of the case; the relevant provision is section of the Act. The order does not reveal that the Commissioner had issued any prior notice to the appellants to show cause why an order imposing penalty and interest should not be passed against them. It is also not clear from the order that he considered whether the statutory conditions were fulfilled in the case. It is my considered view that in the facts and circumstances of the case, the default on the part of the appellants in deposit/payment cannot be said to be wholly unjustified and without basis. Therefore, the imposition of penalty was not called for. Regarding interest, since the claimants have been deprived of the fruits of the award/order due to the delayed payment, they are entitled to interest at the rate of six per cent per annum from the date of the order.
13. In the result, appeals are allowed in part, the order of the Commissioner for Workmen’s Compensation that the compensation awarded cannot be recovered from the bills of the contractor, nor the contractor would indemnify the same and the orders imposing penalty are set aside. The appellants are entitled to recover the amount paid to the claimants as compensation from the contractor-respondent by deducting from his bill or in any other manner in accordance with law.
There will be no order for costs.