Case Note & Summary
The case arises from a claim for compensation under the Workmen's Compensation Act, 1923, filed by Manoj Achyut Bhosle (respondent No.1), a labourer employed by Mule Constructions Company (respondent No.2), a contractor engaged by the Latur Municipal Council (appellant) to construct a shopping complex at Gandhi Maidan, Latur. On 3 September 2001, while watering a slab, Bhosle fell and suffered grievous injuries, leading to hospitalization and registration of Crime No. 39 of 2002. He claimed he earned Rs.100 per day and was 20 years old at the time, becoming disabled and unable to work. The Commissioner for Workmen's Compensation, Latur, awarded Rs.1,99,433/- with 12% interest per annum on 3 November 2011, holding the Municipal Council and contractor jointly and severally liable. The Municipal Council appealed, arguing that under Section 2(2) of the Act, construction of a shopping complex is not its regular business, and thus it should not be liable. The contractor supported the award, citing indemnity clauses in the agreement. The High Court examined Section 2(2) and Section 12 of the Act, along with precedents including Garrison Engineer (Projects) v. Guttamma Hanmantdas (1979), Sarjerao Unkar Jadhav v. Gurindar Singh (1990 ACJ 719), and Panditrao Shamrao Bhongade v. Sunanda Nagesh Dongre (2000 ACC 522). The court held that construction of a shopping complex is part of the Municipal Council's business, as municipal bodies undertake such activities in discharge of their functions. The court further held that indemnity clauses between the principal employer and contractor do not absolve the principal employer's statutory liability to the workman. The appeal was dismissed, affirming the joint and several liability of the Municipal Council and contractor.
Headnote
A) Workmen's Compensation - Principal Employer's Liability - Section 12 Workmen's Compensation Act, 1923 - Construction of shopping complex by contractor for Municipal Council - Workman employed by contractor suffered injuries - Held that the Municipal Council, as principal employer, is jointly and severally liable with the contractor to pay compensation, as the construction activity is part of the business of the Municipal Council under Section 2(2) of the Act (Paras 6-9). B) Workmen's Compensation - Business of Principal Employer - Section 2(2) Workmen's Compensation Act, 1923 - Construction of shopping complex for Municipal Council - Held that such construction is part of the ordinary business of the Municipal Council, as it is akin to building activities undertaken by a municipal body in discharge of its statutory functions, and thus the principal employer cannot escape liability (Paras 7-9). C) Workmen's Compensation - Indemnity Clause - Effect on Statutory Liability - Clause 22.1 and 24.1 of agreement between Municipal Council and contractor - Held that indemnity clauses between principal employer and contractor do not affect the statutory liability of the principal employer under the Workmen's Compensation Act, 1923, and the principal employer remains liable to the workman (Para 8).
Issue of Consideration
Whether the Municipal Council, as principal employer, is jointly and severally liable to pay compensation to a workman employed by its contractor for injuries sustained during construction of a shopping complex, and whether such construction activity falls within the 'business' of the Municipal Council under Section 2(2) of the Workmen's Compensation Act, 1923.
Final Decision
Appeal dismissed. The order of the Commissioner for Workmen's Compensation, Latur, dated 3.11.2011, awarding Rs.1,99,433/- with interest @ 12% p.a. against the Municipal Council and contractor jointly and severally is upheld.
Law Points
- Principal employer's liability under Section 12 of Workmen's Compensation Act
- 1923
- Construction activity as part of business under Section 2(2)
- Indemnity clause does not absolve principal employer's statutory liability
- Joint and several liability of principal employer and contractor
