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Superintendent, Lokhart Estate Vs. Kaliappan - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtKerala High Court
Decided On
Judge
Reported in(1976)ILLJ354Ker
AppellantSuperintendent, Lokhart Estate
RespondentKaliappan
Cases ReferredNew India Tannis Ltd. v. Auora Singh Mojbi and Anr.
Excerpt:
- - if so, the claim against the estate, as principal employer must fail. we fail to understand this, for, the very case is that he is not one such but is only an employee......buying for the purpose of the business of the tea estate and selling the products of the tea estate. business is a concept which takes in all the activities including the running of a hospital for the estate, the maintenance of cooli-lines, providing such amenities as are agreed to between the management and the labour and all other incidental activities. it goes without saying that in the assessment to income-tax, if the estate is to claim deduction for expenses of business, expenses such as those incurred for the purpose of running a hospital for the benefit of the estate will be claimed as business expenses though they are not to be treated as trading expenses.5. in a different context the question of the distinction between business and trade was considered by the chancery.....
Judgment:

P. Subramonian Poti, J.

1. These appeals are from two orders of the Commissioner for Workmen's Compensation, Ernakulam. A.S. Nos. 3 and 125 of 1974 are by the first opposite party and the second opposite party respectively in Workmen's Compensation Case No. 556 of 1969, while A.S. Nos. 5 and 124 of 1974 are by the first opposite party and the second opposite party respectively in Workmen's Compensation Case No. 486 of 1969. The short facts necessary for these appeals are these. The first opposite party, the Superintendent of the Lockhart Estate, Devicolam had engaged the second opposite party. Shri Vakko for the purpose of constructing cooli-lines in the estate. The said Vakko had engaged labourers to carry out the work of construction. In the course of such work, two workmen were injured by the blasting of stones. One died and another lost 4 fingers of his left palm. The injured workman and the heir of the deceased workman moved the two applications before the Workmen's Compensation Commissioner claiming compensation under the Workmen's Compensation Act. In both the applications, the Superintendent of the Estate was made opposite party. In W.C.C. 486 of 1969, the Superintendent of the Estate alone was originally a party and on a motion by the said Superintendent, M.C. Vakko was also brought on the party array as second opposite party. In the other case, both were made parties originally, M.C. Vakko being the first opposite party and the Superintendent of the Estate, the second opposite party. For the sake of convenience, we shall refer in this judgment to the Superintendent of the Estate as 'Estate', Sri Vakko as ' contractor ' and the deceased workman and the injured workman as ' workmen '.

2. The controversy before the Commissioner was whether the Estate was the principal employer and whether the workmen were engaged at the time of the accident, on any work which was ordinarily part of the trade or business of the Estate. The production and manufacture of tea and its sale is the main activity of the Estate and, therefore, it is said that the construction of cooli-lines for the purpose of housing the workmen cannot be said to be part of the business or trade of the Estate. If so, the claim against the Estate, as principal employer must fail. The case of the contractor Sri Vakko in W.C.C. 486 of 1969, is that he has been employed for many years to construct the buildings for the Estate at the rates specified and he too is only an employee. He, therefore, pleads non-liability as an immediate employer and, therefore, non-liability also to indemnify the principal employer. In W.C.C. 586 of 1969, he does not set up a case that he is not a contractor. On the other hand, his case is that he had not employed the injured but had entrusted the work to one Gopalan Asari, whose employee the injured is and, therefore, he is not liable.

3. The Commissioner for Workmen's Compensation found, in W.C.C. 486 of 1969, that the Estate is the principal employer, the contractor Sri Vakko is the immediate employer and, therefore, the compensation should be paid by the principal employer and the immediate employer should indemnify the principal employer. In W.C.C. 556 of 1969 also the principal employer was held liable and the immediate employer was found liable to indemnify the principal employer. A.S. No. 3 of 1974 and 5 of 1974 have been filed by the Estate, which has been found to be the principal employer and A.S. Nos. 125 and 124 of 1974 have been filed by Sri Vakko, who has been found to be the immediate employer. Both disclaim liability.

4. We will first deal with the case of the Estate which has been found to be the principal employer liable to answer the claim for compensation. The case is that Section 12(1) which imposes the liability on a principal employer notwithstanding the fact that the workmen are not those employed by him, may not apply to this case for the reason that the workmen were not engaged for the execution of any work which is ordinarily part of the trade or business of the principal. It may be necessary to refer to Section 12(1) of the Workmen's Compensation Act in this context and, therefore, we extract here Sub-section (i) of Section 12.

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 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.

It is necessary, in order to render a person, who has not directly employed the workman or workmen concerned, liable to answer the claim for compensation, to show the existence of various requisites which would attract Section 12(1) and one of them is that the principal employer has, in the course or for the purpose of his trade or business contracted with any other person 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. It is said that the trade or business of the principal here is that of producing tea in the Estate, manufacturing it, preparing it for the market and marketing it and any work which is ordinarily part of this work could alone fall within the scope of Section 12(1). Consequently, it is said that if the workmen were engaged in such activities as construction of cooli-lines when they met with the accident, even if the cooli-lines were constructed for the purposes of the Estate, that would not enable a claim to be made against the Estate as the principal employer. This contention calls for examination of what the trade or business of the principal is. The term ' trade ' or ' business ' would not have been used in Section 12(1) to mean the same, though in certain contexts they may bear the same meaning. The very fact that both these terms are employed in the section would indicate that they connote different ideas and they do not cover the identical field, ' trade ' as generally understood means activities of buying and selling and the business which is related to such buying and selling whereas ' business' is a term of such larger import. All categories of business need not be trade, since there are many categories in which there is no element of trade at all, Taking for instance, the case of a tea estate, the trade may refer to the activities of buying and selling, buying for the purpose of the business of the tea estate and selling the products of the tea estate. Business is a concept which takes in all the activities including the running of a hospital for the Estate, the maintenance of cooli-lines, providing such amenities as are agreed to between the management and the labour and all other incidental activities. It goes without saying that in the assessment to income-tax, if the Estate is to claim deduction for expenses of business, expenses such as those incurred for the purpose of running a hospital for the benefit of the Estate will be claimed as business expenses though they are not to be treated as trading expenses.

5. In a different context the question of the distinction between business and trade was considered by the Chancery Division in the decision in In re A Debtor (1927 (1) Chancery 97). Sir Scrutton, L.J., said in that case :

'The word ' trade' is often confined to buying and selling commodities. Where to draw the line between what is a profession and what is a trade is a matter which it is not possible to deal with by any general definition. ' Business' is a much wider term than ' trade.' The word 'business' at least covers a continuous occupation involving liabilities to others.

We cannot agree with the counsel for the principal employer that the construction of cooli-lines in the estate is not part of the business of the principal. Section 15 of the Plantations Labour Act, 1951 obliges every employer to provide and maintain for every worker and his family residing in the plantation necessary housing accommodation. It is a statutory duty. In discharge of such duty, the employer may himself construct houses for residence of the workers or such work may be done through a contractor. If he does such work by himself, it cannot be said that it is not part of his business, for, the business is not concerned merely with growing tea and selling it. Tea can be grown only in the tea estate and a tea estate could be run only in accordance with certain regulations and one of the regulations is that quarters are to be provided. Even if there be no statutory obligation if it is the usual requirement of the business or a term of the employment, then work such as construction of cooli-lines would be part of the business of the employer. If that be so. the consequences cannot be avoided by entrusting the work to a contractor. As observed by this Court in the decision in Vijayaraghavan v. Velu and Anr. 1973-I L.L.J. 490 : (1973) K.L.J. 47 -

The scheme of Section 12 of the Workmen's Compensation Act, 1923 is intended to secure to a workman the right to claim compensation not only against his immediate employer, who in the Act is referred to as a contractor, but also against, the person who had employed such contractor to execute the work which is ordinarily part of the trade or business of such persons. The Act refers to him as the principal, There may be cases where the contractor may not be a man of means or it may be that wittingly or unwittingly he may possibly be part of an arrangement conceived by the principal to avoid confrontation directly with the workman engaged in the execution of the work. In either case the interests of the workman need to be protected and that is what the provision secures to him. The principal can seek to be indemnified by the contractor if he has been made answerable for the payment of compensation. But to invoke the provisions of the section it is necessary the accident should have occurred on, in or about such premises on which the principal has undertaken or usually undertakes to execute the work or premises which are otherwise under his control.

Therefore, we do not find any difficulty in upholding the view expressed by the Workmen's Compensation Commissioner on the question of liability of the principal employer. We also agree with the finding that the Estate is the principal employer.

6. Our attention has been drawn to a series of decisions of various High Courts in India by learned Counsel, Shri Appu Nayar appearing for the principal employer. The earliest of the decisions to which reference is made is that of the High Court of Bombay in Rabia, MD. v. G.I.P. Railway A.I.R. 1929, Bombay 179. Reference has also been made to the decision in Karnani Industrial Bank Ltd. v. Ranfan A.I.R. 1933, Calcutta 63. It may not be necessary to consider these decisions in detail, for, both these decisions came up for consideration in a later Full Bench decision of the High Court of Bombay and that decision is reported in Kokilabai v. Keshavlal Mangaldas & Co. A.I.R. 1942, Bombay 18. We have expressed our agreement with the view of the Full Bench of the Bombay High Court in our decision in Vijayaraghavan v. Velu and Anr. (supra). The facts of the earlier Bombay case i.e., in Rabia, M.D. v. G.I.P. Railway (supra) were: The G.I.P. Railway Company had entrusted the work of drawing overhead electric cables to a contractor and a workman of such contractor met with an accident during the course of his work. The question was whether drawing of electric cables was part of the ordinary business of the Railway Company. The Bombay High Court took the view in that case that the Railway Company was to run its services and the drawing of the overhead cable was only incidental to its work, and, therefore, it could not be said to be a part of the trade or business. It would appear from the Full Bench decision that the view taken in the earlier Bombay case did not receive the approval of the Full Bench. It was distinguishable as a case on its own facts and, therefore, one which need not call for any expression of opinion as to the correctness of the decision. The case before the Calcutta High Court, Karnani Industrial Bank Ltd. v. Ranjan (supra) was one where a Banking company had engaged a contractor to construct a building and a workman employed by such contractor met with an accident. The question was whether any claim would lie against the Bank. The observations of Sri Rankin, C.J. in that decision are relied on in support of the appellants' case here. But as explained by the Full Bench of the Bombay High Court, it does not appear that the Calcutta High Court had decided any question finally. After having stated a proposition on which there cannot be any controversy, the learned Judge proceeded to observe:

But, if anybody is entitled to say that that he is outside that principle if for example, he went to a builder to build a house for him, I should suppose that body to be a bank which ordinarily would not take house building operations into its own hands at all. Of course, my notion of banking business may not be the same as the notion of the Karnani Industrial, Bank. Merely because it is called a bank, I cannot say, as a matter of law, that it has not got this business of a speculative builder or the business of building houses for itself. I cannot say that it is not part of its ordinary business except upon some evidence.

The Full Bench of the Bombay High Court rightly noticed that the case before the Calcutta High Court laid down no law and was no authority for any such proposition as was sought to be relied on. The facts of the case before the Full Bench were that the principal employers who were the selling agents of a mill company had engaged for transport of the goods from the mill company's godown to their own business premises the services of a contractor under whom the workman who met with an accident was working at the relevant time. The question was whether the selling agents were liable though the accident occurred at a time when the workman was not working under the company but only under its contractor, who was engaged in transporting the goods from the mill premises to the business premises of the selling agents. The question in such a case, the Court held, was not whether the accident occurred when the workman was engaged in a work which was part of the business but whether it occurred as part of the business of the particular principal.

7. Though the decision in Ghose v. National Sheet and Metal Works : AIR1950Cal548 , was relied on by the counsel of Sri Vakko as supporting the stand taken by him, we do not think, the decision is of any assistance to the learned Counsel. In paragraph 12 of that Judgment, Harries, C.J., stated the law as follows:

The reason for such a provision obviously is that if a person substitutes another for himself to do that which in his own business he ought not to escape the liability which would have been imposed upon him if he had done it himself towards the workman employed in the business.' On the other hand, where a person enters into a contract with another by which that other does work which ordinarily forms no part of the principal's business then there is no reason at all why the principal should be made liable for compensation for an accident received by a workman in the contractor's employment.

Having stated so, the learned Judge considered the applicability of this rule to the facts of that case. Those were that one Ezad Bakah, sustained injury as a result of an accidental fall from a scaffolding while he was painting a factory shed which formed part of the premises occupied by respondent No. 1 as their place of business. The workman's left knee was injured and that resulted in some incapacity. The workman was employed by opposite party No. 2. But he claimed compensation against opposite party No. 1 as the immediate employer. Opposite party No. 1 was the National Sheet and Metal Works Ltd., and the question was whether the painting of the shed was part of the business of the said company. In dealing with this, the learned Chief Justice said:

It was not suggested that painting work ordinarily formed the whole or part of their business and indeed the name ' National Sheet and Metal Works Ltd.' does not suggest a company which was engaged ordinarily in painting work.

Later in the same judgment, the learned Judge said:

There is no suggestion that painting a shed or anything-else formed any part of the trade or business of the National Sheet and Metal Works Limited.

Evidently, it was as a result of this approach that it was held in that case that the workman was not shown to be engaged in any work which is part of the business of the principal.

8. Reference has also been made to the decision in New India Tannis Ltd. v. Auora Singh Mojbi and Anr. 1957-II L.L.J. 440. It may be necessary to refer to the facts of that case in brief. The New India Tannis Ltd., was a company carrying on the business of making extracts of myrobalan and exporting the same to foreign countries. It had a factory at Rong Kuti where its manufacturing business was carried on. Its chimney needed repairs early in 1953. It engaged a contractor, one Hazara Singh to dismantle the upper portion of the chimney and hoist a new length of chimney in its place. While the contractor was carrying out the work, a workman by name Bishan Singh fall from a height of 60 feet and died instantaneously. Compensation was claimed by his son against the New India Tannis Ltd. This claim was refuted by the company on the plea that the work of fitting of the chimney was given on contract to Hazara Singh and he being an independent contractor, the deceased could not be considered to be an employee of the company. It was further said that the work of fitting the chimney was not part of the ordinary trade or business of the company. Nevertheless, the company wanted Hazara Singh also to be brought on the party array to claim indemnity against the contractor. The Commissioner for Workmen's Compensation decreed the claim against the company and also directed Hazara Singh to indemnify it. It was against this that the appeal was filed by the company. The Commissioner had found that the fitting of the chimney of the factory was within the scope of the trade and business of opposite party No. 1. The question considered by the learned Judge of the Calcutta High Court was whether the contract entered into with Hazara Singh was a contract of service or a contract for service. The learned Judge said -

The requirement of the second part of the (S. 12), however, is altogether different. What is required there is that the work to the execution of which the contract relates, must be one ' which is ordinarily part of the trade or business of the principal.' I find it wholly impossible to hold that where a company carries on the business of manufacturing goods and requires a factory for performing the manufacturing; process and the factory requires a chimney, the work of occasional repairs to the chimney is a part of the ordinary trade or business of the company. The business of the company in such a case is to manufacture the goods which it produces. The manufacture may be done inside a factory and the factory may require a chimney which would occasionally need repairs but repairing the chimney can in no way be a part of the company's trade or business, whether ordinarily or extraordinarily.

We are afraid, the terms 'trade' and ' business ' have been treated as meaning one and the same and we think with great respect, that should not have been the case. We have indicated our views as to the concept of 'business.' In the circumstances, we see no way to agree with the decision of the learned Judges of the Calcutta High Court. We think the case before the Bombay High Court is not distinguishable in the manner attempted by the Calcutta Judges. The relation between the contractor who was engaged in transporting and the principal employer in the Bombay case is similar to that in the case before us. In both, the contractor is engaged in work which is part of the business, may be transport of articles in one and construction of buildings in the other. It is because of the scope of the concept of the term ' business' that such activity has to be brought within the term ' part of the business ' of the principal employer. Our conclusion which is stated earlier is in line with the view taken by the Full Bench of the Bombay High Court. That is sufficient to dispose of A.S. Nos. 3 and 5 of 1974. Both appeals are dismissed with costs.

9. In A.S. No. 124 of 1974, the only question is whether the second opposite party, viz., contractor Sri Vakko is an employee or is the immediate employer. He had categorically stated in his written statement before the Commissioner that he was a person employed in the estate ' for many ' years and though he was paid on a system of specified rates, he was really employed by the estate. Possibly issue No. 5 covered this question. But there is no evidence in proof of this case. On the other hand, there is an observation in the order that there is no case that he is not a contractor. We fail to understand this, for, the very case is that he is not one such but is only an employee. It is not as if this stand was given up by the contractor Vakko at the trial before the Commissioner. If that be so, a specific finding on this question was necessary for holding him liable to indemnify the principal employer. For this reason, we have to reopen the order under appeal to the limited extent of directing the Workmen's Compensation Commissioner to go into the question whether the second opposite party was the immediate employer, or was only a workman as contended by him. The decision of this alone will determine his liability to indemnify the principal employer. It is not necessary to reopen the question of compensation, for, even if it is found that the second opposite party is not an immediate employer, and, therefore, the Estate is not the principal employer, the Estate will be liable as the employer. Hence the matter is remitted to the Workmen's Compensation Commissioner for the limited purpose of determining the question of liability of the second opposite party.

10. In A.S. No. 125 of 1974, Sri Vakko has not raised any contention that he is not an independent contractor but is only an employee. On the other hand, his plea is that he has en-entrusted the work to one Gopalan Asari, whose employee the injured was. But on that, there is no evidence and necessarily no finding could be entered in favour of the appellant. Hence no interference is called for in A.S. 125 of 1974. In A.S. No. 124 of 1974, the parties will bear their costs. A.S. No. 125 of 1974 is dismissed with costs. Since we are not reopening the question of compensation payable to the workmen, there is no impediment; to the withdrawal of the compensation already awarded, if this had not been withdrawn so far.


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