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1974 SCC OnLine Kar 163 : ILR 1974 Kar 1248 : (1975) 1 LLN 244 : (1975) 1
Kant LJ 17 : 1975 ACJ 113 : 1975 Lab IC 341 : (1975) 47 FJR 76

In the High Court of Karnataka

Appellate Civil*
(BEFORE HONNIAH AND NESARGI, JJ.)

Bharath Earth Movers Ltd. … Appellant;

Versus
Bhagyam by L.R. Thangaraj and Another … Respondents.
Miscellaneous First Appeal No. 360 of 1973 against the Award dated 7th April,
1973 in Case No. F.C. 10 of 1969 passed by the Commissioner of Workmen's
compensation, K.G.F.
Decided on July 19, 1974
Workmen's Compensation Act (Central Act 8 of 1923) — Section 12 — Liability to
indemnify — When arises — Principle — who is — Ordinarily part of the trade or business of
the principal Nature of.
The appellant Bharath Earth Movers Ltd., the ordinary business of which is to manufacture earth
moving machinery, entered into a contract with the 2nd respondent, Kaveri structurals, for getting a
building constructed. While the building was in the course of construction, one George, employee of
the 2nd respondent, touched a live electric wire and died. His mother preferred a claim under the
provisions of the Workmen's compensation Act for compensation. The Commissioner allowed the
claim against the appellant. Hence, the appeal.
The question before the High Court was whether the appellant is the ‘Principal’ within the meaning
of Section 12(1) of the Act and whether it is liable to pay any compensation to the dependents of
George.
Held :
Section 12 of the workmen's compensation Act consists of two parts. The first part deals with
contracting with any contractor. For the application of the said section, a person has to enter into a
contract with another person in the course of or for the purposes of the trade or business

Page: 1249

of the former. The other part is in regard to the nature or type of the contract entered into. For
application of this part of the Section, it is necessary that the work, the execution of which is
entrusted to the contractor, has to be in the whole or in any part ordinarily a part of the trade or
business of the former. It is only when his part of Section 12(1) of the Act is satisfied that the former
will become the ‘principal’ within the meaning of that provision.

(Para 6).
Construction of a building is not ordinarily a part of the trade or business of the appellant as its
business is to manufacture earth moving machinery. Hence, the work that was to be executed by
the 2nd respondent for the appellant was not ordinarly a part of the trade or business of the
appellant. The Second part of Section 12(1) of the Act is hence not satisfied as against the appellant.
Hence, the appellant is not liable to indemnify the dependants of George.
(Page 7).
1. New India Tennis Ltd. v. Aurora Singh Rojbi—A.I.R. 1957 Calcutta 613.
2. Robia Mohamad Tahir v. G.I.P. Railway, A.I.R. 1929 Bombay 179.
3. S.M. Ghose v. National Sheet and Metal Works Ltd., A.I.R. 1950 Calcutta 548.
4. Muninanjappa v. Agneesamma—A.I.R. 1951 Mysore 113.
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5. Municipal Board, Almora v. Jasood Singh,—A.I.R. 1960 Allahabad 468. Relied on.
Advocates who appeared in this case :
Sri S.G. Sundamswamy for Appellant.
Sri Srikantappa for 1st Respondent.
The Judgment of the Court was delivered by
NESARGI, J.:— This appeal is filed under Section 30 of the Workmen's
Compensation Act, 1923 (hereinafter referred to as the Act).
2. One George was an employee of Kaveri Structurals, Structural Engineers,
Thiruchirapalli, i.e., respondent No. 2, in this appeal. The appellant—Bharat Earth
Movers, Ltd., wanted to get a building constructed and entered into a contract with
respondent No. 2 for that purpose. While the building

Page: 1250

was in the course of construction, George touched a live electric wire and died the next
day. Bhagyam, his mother, filed a claim in the Court of the Commissioner for
Workmen's Compensation, Kolar District (hereinafter referred to as the Court), in Case
No. F.C. 10 of 1969 as against the appellant and respondent No. 2. The appellant
contended that George was not at all a workman for whose injuries the appellant was
liable to compensate. Respondent No. 2 contended that the ‘principal’ was the
appellant and he was liable to compensate. It so happened that when the proceedings
were pending in the Court. Bhagyam expired and one Thangaraj, who is now
respondent No. 1, got himself impleaded as the legal representative of Bhagyam on
the ground that he was her brother. The appellant and respondent No. 2 contended
that Thangaraj could not be impleaded as legal representative of Bhagyam and the
Court had no jurisdiction to decide whether he was or not a legal representative of
Bhgyam. The Court held that the appellant was liable to pay compensation as per
Schedule I to the Act in view of Section 12(1) of the Act and that Thangaraj,
respondent No. 1, was the legal representative of Bhagyam and he was entitled to
receive the compensation. It directed the appellant to deposit an amount of Rs. 4,800
within two months from the date of its judgment. It is this judgment that is
challenged in this appeal.

3. It is an undisputed fact that George was not employed by the appellant. He was
an employee of respondent No. 2. One of the contentions of respondent No. 2 was that
George was not a workman employed by them, but he had taken a subcontract from
them. That contention has been negatived by the Court and there is no material before
us to hold that contention of respondent No. 2 is substantiated. Another undisputed
fact is that the appellant had entered into a contract with respondent No. 2 for the
construction of a building of which they were in need, and respondent No. 2 were
constructing that building during the course of which construction, George sustained a
shock as he happened to touch a live electric wire and succumbed to that shock the
next day.
4. Shri S.G. Sundaraswamy, learned Advocate appearing on behalf of the appellant,
urged that Section 12(1) of the Act, has been wrongly interpreted by the Court and
the correct interpretation of that Section would show that the appellant would not be
the ‘principal’ within the meaning of that provision and, therefore, would not be liable
to pay any compensation to the dependent or dependents of George the workman.
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Page: 1251

5. ‘Workman’ is defined in Section 2(n) of the Act. Both the sides agree that George
was not, a ‘workman’ of the appellant within this definition. The contention on behalf
of respondent No. 1 is that it is in view of Section 12(1) of the Act that the appellant
became the ‘principal’ and therefore, liable to pay compensation in this case.
6. Section 12(1) of the Act reads as follows:
“12. (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.”
It is plain that this provision consists of two principal parts. The first part deals with
contracting with any contractor. It lays down that for the application of this Section, a
person has to enter into such contract with another person in the course of or for the
purposes of the trade or business of the former. So far as this part of Section 12(1) of
the Act is concerned, it has to be held that the appellant did enter into a contract with
respondent No. 2 and this was in the course of or for the purposes of the trade or
business of the appellant. This aspect of the matter has not been disputed by the
appellant at any stage in this proceeding. The other part is in regard to the nature or
type of the contract entered into. For application of this part of the Section, it is
necessary that the work, the execution of which is entrusted to the contractor, has to
be in the whole or in any part ordinarily a part of the trade or business of the former.
It is only when this part of Section 12(1) of the Act is satisfied that the former will
become the ‘principal’ within the meaning of this provision. This is exactly what has
been also held by the Calcutta High Court in New India Tannis Ltd. v. Aurora Singh
Mojbi(1) .
7. Shri Sundaraswamy contended that the contract that was entered into between
the appellant and respondent No. 2

Page: 1252

was in regard to construction of a building and that construction of buildings was not
ordinarily a part of the trade or business of the appellant because the ordinary
business of the appellant was to manufacture earth-moving machinery. He contended
that, in view of this aspect of the matter, the Court was wrong in applying the
provisions of Section 12(1) of the Act and holding that the appellant was the ‘principal
within the meaning of this Section and hence liable to pay compensation.

8. Shari P. Srikantappa, learned Advocate appearing on behalf of respondent No. 1,

contended that would not be the correct position in law. He urged that the appellant
could not escape his liability by entrusting the job to a contractor because if the
appellant himself had taken up construction of this building and had engaged workers
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for that purpose, he would have been liable to pay compensation to such of the
workers who sustained injuries within the meaning of the Act.
9. We find lot of force in the contention of Shri Sundaraswamy, in view of the plain
provisions of Section 12(1) of the Act. It will have to be held that construction of a
building is not ordinarily a part of the trade or business of the appellant, as it is an
undisputed fact that the business of the appellant is to manufacture earth-moving
machinery. Hence, it is clear that the work that was to be executed by respondent No.
2 for the appellant, was not ordinarily a part of the trade or business of the appellant.
In this view of the matter, it follows that the second part of Section 12(1) of the Act is
not satisfied. Same is the view expressed in Robia Mahomed Tahir v. G.I.P. Railway(2) .
This decision has been followed by the Calcutta High Court in S.M. Ghose v. National
Sheet and Metal Works Ltd.(3) , This two decisions have been followed by the Mysore
High Court in R. Muninanjappa v. Agneesamma(4) . The latest decision that we could lay
our hands on, is reported in Municipal Board, Almora v. Jasod Singh(5) , We respectfully
agree with these decisions. We, therefore, hold that the Court was wrong in making
the appellant liable to pay compensation, by applying the provisions of Section 12(1)
of the Act.

Page: 1253

10. Hence, we allow this appeal and set aside the award passed by the Court of the
Commissioner for Workmen” Compensation, Kolar District, in Case No. F.C. 10 of
1969.
11. The next question that falls for consideration is the failure on the part of the
Court to consider the claim of respondent No. 1 as against respondent No. 2 Kaveri
Structural. It is noticed that Bhagyam filed her claim as against both the appellant
and respondent No. 2. A perusal of the judgment passed by the Court shows that in
view of its finding that the appellant was the ‘principal’ by virtue of Section 12(1) of
the Act, it held that the appellant was primarily liable to pay compensation to
respondent No. 1 and was entitled to be indemnified by the contractor, viz.,
respondent No. 2. This shows that in case the Court had come to the conclusion that
the appellant was not primarily liable, it might have, on the basis of the very same
reasoning offered by it, fastened the liability on respondent No. 2. Now that we have
taken the view that the appellant does not become the ‘principal’ within the meaning
of Section 12(1) of the Act, the question whether the liability has or not to be fastened
on respondent No. 2, so as to see that respondent No. 1 is not left without a remedy
for no fault of his, has to be gone into. We, therefore, direct the Court of the
Commissioner for Workman's compensation, Kolar District, to go into this question so
far as the claim of respondent No. 1 against respondent No. 2, is concerned and
dispose of the matter according to law, after affording reasonable opportunity to both
sides to adduce any more evidence if they choose to adduce.
12. No costs under the circumstances of the case.
13. The amount deposited by the appellant is directed to be returned to the
appellant.
———
*
Miscellaneous First Appeal No. 360 of 1973 against the Award dated 7th April, 1973 in Case No. F.C. 10 of 1969
passed by the Commissioner of Workmen's compensation, K.G.F.
(1) A.I.R. 1957 Cal. 613.
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(2) A.I.R. 1929 Bom. 179.

(3)
A.I.R. 1950 Cal. 584.
(4) A.I.R. 1951 Mys. 113.
(5) A.I.R. 1960 All. 468.

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