Principal Employer Liable To Compensate For Worker's Death Even If He Is Engaged Through Contractor: J&K High Court

Citing Section 2 (1)(e) and Section 12 of the Act a bench of Justice Mohammad Yousuf Wani recorded,

“that where a principal employer engaged a Contractor for execution of some works, he is liable to compensate to any employee engaged by the Contractor for doing his work”.

Justice Wani reasoned that the scheme of Section 12 of the Act is intended to secure to a workman the right to claim compensation not only against the immediate employer, be it a contractor or sub-contractor but also against the principal employer.

Background of the Case

The case revolved around the death of Atta Mohammed Khanji, a laborer who died while unloading irrigation pipes in Doda district. Khanji, employed by a contractor for a Public Health Engineering (PHE) project, was earning Rs. 10,000 per month. His widow, Sakina Begum, filed for compensation under the Employees' Compensation Act, 1923.

The Assistant Labour Commissioner (ALC) of Doda awarded Begum Rs. 7,58,240 along with 12% interest per annum from the date of Khanji's death. The State appealed this decision, contesting the ALC's award on several grounds, including non-liability as the deceased was employed by a contractor and not directly by the State.

The State's counsel, Mr. Amit Gupta, argued that the ALC's award was erroneous as the deceased was not employed by the State but by a contractor. He contended that the ALC failed to consider the non-joinder of the contractor as a necessary party and that there was no valid proof of the deceased's income. Moreover, the State argued that no notice was issued to them under Section 10 of the Act.

In contrast, Begum's counsel, Mr. Sheikh Altaf Hussain, argued that the State qualified as the principal employer under Section 12(1) of the Act. He cited evidence showing that the deceased was engaged in work directly benefiting the State. Hussain emphasized that the principal employer is liable for compensation even if the contractor was not made a party to the claim.

Court's Observations:

Justice Wani, after examining the arguments and evidence, observed that both parties agreed Khanji was working for a contractor hired by the PHE Division. He further noted that witnesses presented by both sides confirmed Khanji's involvement in loading and unloading pipes for the department.

The Court emphasized the provisions of Section 2(1)(e) and Section 12 of the Act, which hold the principal employer liable for compensating workers engaged by contractors for tasks that are part of the principal employer's usual business.

The Court acknowledged Begum's counsel's reliance on Thirthamurthy v. Radha (2003), which established the right to claim compensation against either the principal employer, the contractor, or both. It further noted the provision in Section 12(2) that allows the principal employer to seek indemnification from the contractor in such cases.

“.. the principal employer in the circumstance, where the employee being engaged by the contractor or sub-contractor dies, or suffers some injuries in the course of employment, can seek indemnification from the Contractor in view of the Section 12 (2) of the Act”, the bench maintained.

In a significant observation, the Court suggested the inclusion of a clause in government and semi-government tender notices. It reasoned,

“Such stipulations shall prompt the Contractors to secure available beneficial insurance policies in respect of the employees being engaged by them and the Contractors in such situations can plead the benefit of such insurance schemes during any compensation proceeding initiated under the Act. Such a practice can facilitate the convenient and prompt payment of compensation to the suffering applicants”

Justice Wani thus dismissed the appeal, terming it "meritless." He upheld the ALC's award, directing the immediate release of any deposited compensation amount to Begum. The Court also allowed Begum to pursue execution proceedings before the ALC for any remaining unpaid compensation.

Case Title: State through Executive Engineer PHE Division, Doda Vs Sakina Begum

Citation: 2024 LiveLaw (JKL) 187

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