*THE HON’BLE SRI JUSTICE P.S.NARAYANA + WRIT PETITION No.6921 of 1997 %Dated 20.01.2005 # M/s. Laxmi Construction Co., Managing Partner, Sri Y.Gopal Reddy, S/o. Yoganada Reddy. ……….. PETITIONER $ 1 The Financial Adviser and Chief Accounts Officer, South Central Railway, Secunderabad 2 The Deputy Engineer, Gauge Conversion, S.C.Railway, Guntakal, Anantapaur District. ………… RESPONDENTS ! Counsel for the Petitioner: MR.V.NARASIMHA GOUD ^ Counsel for the Respondents: MR.GOURI SHANKAR SANGHI < GIST: > HEAD NOTE: ? Cases referred 1. 2003 (6) SCC 465 2. 1996(1) An.W.R. 523 (D.B) 3. 1996 (3) ALD 591 4. 1996 (3) ALD 576 5. AIR 1989 (AP) 140. 6. 1991 (3) SCC 91 7. 1989 (2) SCC 116 8. 1996(4) SUPREME 689 9. 1996 (5) SUPREME 439 10. 1988 II LLN 483 11. AIR 1946 Madras 113=1945 (2) M.L.J 522 12. 1972 (1) An.W.R 235 13. 1987 LAB.I.C. 1152 14. 1976 LAB I.C.732 15. 1997 (2) LLJ (H.C.) MADRAS 568 16. 1997 (2) ALD 602 17. 2000(2) LLJ (H.P.) 500 18. 2000 II LLJ (KERALA) 630 19. 1995(1) L.L.J. (KERALA) 334 20. 1998 L.L.J. (MADRAS) 473 21. 2001 (2) ALD 228 (DB) 22. (1995) III L.L.J.(Suppl) 669 (Guj) 23. (1989) II L.L.J. 114 (Ker) 24. (1995) III L.L.J.(Suppl) 669 (Guj) 25. (1983) II L.L.J.320 (Mad) 26. (1992) I L.L.J. 156 (Bom) 27. (1987) II L.L.J. 311 (Ker) 28. (1999) III L.L.J. (Suppl) 340 (MP) 29. (1997) III L.L.J. (Suppl) 71 (Raj). 30. (1997) III L.L.J. 655 (Ori). IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) THURSDAY, THE TWENTIETH DAY OF JANUARY TWO THOUSAND AND FIVE PRESENT THE HON'BLE MR JUSTICE P.S.NARAYANA WRIT PETITION NO: 6921 of 1997 Between: M/s. Laxmi Construction Co., Hyderabad, Rep. by its Managing Partner, Sri Y.Gopal Reddy, S/o. Yoganada Reddy, R/o. Hyderabad. ..... PETITIONER AND 1 The Financial Adviser and Chief Accounts Officer, South Central Railway, Secunderabad 2 The Deputy Chief Engineer, Gauge Conversion, S.C.Railway, Guntakal, Anantapaur District. .....RESPONDENTS Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to issue a Writ, Order or Direction, particularly one in the nature of Writ of Mandamus, declaring that the order passed by the 1st respondent in Proceedings No. ACN/SAO/I/Bills dated 27-2-1997, ordering for recovery of Rs.50.000/- and also further ordering for recovery of an amount of Rs.65,112/- from the bills of the petitioner company is illegal, unjust, contrary to law and in violation of principles of natural justice; and grant all consequential benefits to the petitioner company. Counsel for the Petitioner: MR.V.NARASIMHA GOUD Counsel for the Respondents: MR.GOURI SHANKAR SANGHI The Court made the following: HONOURABLE SRI JUSTICE P.S.NARAYANA WRIT PETITION No. 6921 of 1997 O R D E R: 1. RELIEF PRAYED FOR IN THE WRIT PETITION:- M/s. Laxmi Construction Company, Hyderabad, represented by its Managing Partner Mr.Y.Gopal Reddy filed this writ petition for issuance of a writ, order or direction, particularly one in the nature of writ of Mandamus declaring the order passed by the first respondent in proceedings No.CAN/SAO/I/Bills dated 27-02-1997, ordering recovery of Rs.50,000/- and also further ordering recovery of an amount of Rs.65,112/- from the bills of the petitioner company, as illegal, unjust, contrary to law and in violation of principles of natural justice and grant all consequential benefits to the petitioner-company and pass suitable orders. 2. IMPUGNED ORDER:- SOUTH CENTRAL RAILWAY FA&CAO/C’s Office, Secunderabad. No.CAN/SAO/I/Bills Dt.27-02-1997 Dy.CE/C/GC/GTL. Sub:- Recovery of Rs.50,000/- towards Workman Compensation. * * * Rs.50,000/- is recovered from M/s.Lakshmi Construction Co. towards Workman Compensation, the same is recovered from the on a/c bill pertaining to NDL-DNC (GC) Section vide Agt.No.43/C40/C/SC/96, dated 15-3-1996 and the balance of Rs.65,112/- may be recovered from the next on a/c bill pertaining to the same Agency. SAO/C/SC. Copy to M/s. Lakshmi Construction Co. Sd/- Sr.Accounts Officer (C), S.C., Rly., Secunderabad. 3. FACTS IN NUTSHELL:- The petitioner-company prayed for the relief specified supra on the ground that the unauthorized and unlawful deductions were sought to be made from the bills towards the payment of compensation without any proper adjudication or determination of the liability by the competent authority under the Workmen’s Compensation Act of 1923 (for short ‘the Act of 1923’). The petitioner-company, a Railway Contractor, had taken up a Guage Conversion work between Veldurthy and Bhogalu stations in Kurnool District and it appears that one woman employee by name Parvathamma was hit by the train, sustained injuries and ultimately died. Relating to it, it is stated that in pursuance of the communication received from the Commissioner of Workmen’s Compensation, the first respondent issued the impugned order dated 27-02-1997 referred to supra, which had been questioned. 4. PLEADINGS OF THE RESPECTIVE PARTIES:- It is pleaded in the affidavit filed in support of the writ petition that the petitioner is a company, carrying on construction work and the petitioner-company is a Railway contractor and had taken up guage conversion work between Veldurthy and Bhogalu stations in Kurnool District. On 08-08-1996, when the guage conversion was in progress, it was informed by the labourers working at the spit that one train came speedily without observing the employees working on guage conversion and one women employee by name Smt.Parvathamma was hit by the train and the said woman fell down and thereby sustained injuries and immediately she was shifted to Kurnool Hospital and after undergoing treatment, she was declared dead. It is also stated that the second respondent issued a letter dated 18-10-1996, calling upon the petitioner-company to deposit a sum of Rs.1,32,822/- and a reply was given on 28-10-1996 that the petitioner was not liable to deposit any amount and there is a dispute regarding the accident and the liability of the payment of compensation. It was also further stated that no claim was preferred before the Commissioner for Workmen’s Compensation to determine the liability and hence the respondents have no right or authority to deduct any amount from the bills of the petitioner-company. It was further averred that the accident occurred on account of negligence of the respondents and therefore the respondents are alone responsible for payment of any compensation if at all payable under the Act of 1923. Specific stand was taken inasmuch as no claim had been preferred by the dependents of the deceased employee before the Commissioner for Workmen’s Compensation and inasmuch as the liability had not been decided by the competent authority and in view of the stand taken by the petitioner- company, the respondents alone are responsible for causing the accident, and being the principal employer, the respondents alone will be liable to pay the amounts, that too, after determination by the Commissioner for Workmen’s Compensation under the Act of 1923. Hence, the deductions are unauthorized and even otherwise unless there is a proper adjudication, the question of workmen’s compensation could not arise. The counter affidavit is filed by taking a specific stand that the writ petition is not maintainable under Article 226 of the Constitution of India for enforcement of the contractual obligations. It was also specifically pleaded in paras-3, 4 and 5 in the counter affidavit as hereunder: “In connection with Gauge Conversion Work of Kurnool, Dronachellam Section from MG to BG, M/s.Laxmi Construction Co., Railway Contractors, Hyderabad, were awarded a work for Earthwork Contract Agreement No.92/CAO/C/SC/96 dated 19-06-1996. On 08-08-1996, While contractor’s labour were working at Bridge No.501 at KM.283/4..5, an accident took place when the Passenger Train No.554, from Dronachellam to Kurnool Town hit two of the labourers namely Smt.Parvathamma and Smt.H.Chandramma. Both the injured worker were immediately rushed to the Government Hospital, Kurnool where Smt.Parvathamma was declared dead by the Doctor attending the injured women. The other women Smt.Chandramma was treated for minor injuries and was discharged from the Hospital after few days of treatment. Inasmuch as it is the responsibility of the Employer to inform any incident of death caused by accident to the Commissioner for Workmen’s Compensation, Kurnool, as per section 10-B of the Workmen’s Compensation Act of 1923 and Rule 11 of Workmen’s Compensation Rule, 1924. This petitioner-company, being the Employer in this case, failed to inform the accident to the Commissioner for Workmen’s Compensation, Kurnool. Being the Principal Employer, the Deputy Chief Engineer/Gauge Conversion/South Central Railway/Guntakal reported the accident to the Commissioner for Workmen’s Compensation, Kurnool vide this office letter No.GTL/GC/Misc. dated 16-08- 1996. Further, a letter was addressed to the petitioner-company vide this office letter No.GTL/GC/Mis. Dated 05-10-1996 to ascertain and deposit the compensation amount with Commissioner for Workmen’s Compensation, Kurnool. On the advice by Commissioner for Workmen’s Compenstation, Kurnool, a letter dated 07-10-1996 was issued to the petitioner-company requesting to deposit the amount of compensation of Rs.1,32,022/- with the Commissioner for Workmen’s Compensation, Kurnool, followed by reminder dated 18-10-1996. But the petitioner-company refused to comply with the advice and tried to throw blame on Railways vide his letter dated: 28-10-1996. When repeated reminders from Railways had no effect on the petitioner- company, the Railways was obliged to deposit the compensation to honour the order passed by the Honourable High Court of Andhra Pradesh vide Order No.W.P.Nos.17591/96 and 20446/1996 dated 20-12-1996 amounting for Rs.1,15,512/- as determined by the Commissioner for Workmen’s Compensation, Kurnool.” It was further pleaded in para-6 of the counter-affidavit that an agreement entered into between the Railways and the petitioner/contractor is governed by the conditions of contract. As per para-56 of the General Conditions of the contract. Para-6 of the counter affidavit reads as hereunder: “The contention and allegation of the Petitioner that accident was caused due to negligence of Railways is totally false and is misleading. An agreement entered into between Railways and the Petitioner/Contractor is governed by the General Conditions of contract. As per para 56 of the General Conditions of Contract, “ The Contractor shall be responsible for the safety of all employees directly or through petty Contractors or Sub-Contractors employed by him on the works.” It was further pleaded that the Railways action in deducting the amount from running bills is in accordance with the conditions stipulated in the contract and hence the impugned order. It was further pleaded that as per Section 10-A of the Act of 1923, the commissioner on receiving the information of any local accident is empowered to take necessary steps to determine the compensation and as per the procedure, the Commissioner shall intimate the amount of compensation to be paid. It was also further pleaded in para-8 and 9 of the counter-affidavit as hereunder: “The Dy.Chief Engineer/Gauge Conversion/South Central Railway/Gluntakal, in turn, has advised the petitioner that the amount to be paid. As the petitioner-comkpany consistently refused to agree to pay the amount, the Railways were left with no other option but to pay the amount to the Commissioner for Workmen’s Compensation, Kurnool and later recover the same from the petitioner-company in terms of para 57 of the General Conditions of the Contract. Notwithstanding what has been stated above, it is submitted that writ is not maintainable, for enforcing contractual obligations. Recently, a Division Bench of the Hon’ble High Court consisting Chief Justice Sri P.S.Misra and Justice Sri P.Rama Krishnam Raju, held in Writ Appeal No.512/1997, dated 10-6-1997 that one of the settled principles of law is that any obligations which arise out of a contract are ordinarily not dealt within a proceeding under Article: 226 of the Constitution of India. The present petition having arisen out of contract between Railways and the petitioner-company, the same is not maintainable and hence liable to be dismissed.” 5. SUBMISSIONS OF SRI J.JAYAPRAKASH RAO:- Sri J.Jayaprakash Rao, representing the petitioner-company would maintain that the deductions from the bill dated 15-03-1996 and the proposed deductions from the bills are unauthorized and illegal for the reason that the Commissioner for Workmen’s Compensation, under the Act of 1923, had never decided this dispute and in the absence of the same, the impugned proceedings cannot be sustained. The learned counsel also would maintain that inasmuch as the said deductions are illegal and unauthorized and being arbitrary action of public authority, the writ petition is maintainable. The learned counsel also would submit that the petitioner-company is not a party to the proceedings said to have been filed for the payment of amount. The learned counsel for the petitioner-company, while elaborating the submissions, had taken this Court through the respective pleadings of the parties. The learned counsel for the petitioner-company, to substantiate his contentions that there is no adjudication of claim at any point of time by the competent Authority, relied upon the correspondence between the parties. He also relied upon certain decisions in support of his case. 6. SUBMISISONS OF SRI GOWRI SANKAR SANGHI: Sri Gowri Sankar Sanghi, learned Standing Counsel for Railways, would contend that the matter is concerned with a contract simplicitor and in view of the arbitration clause and also other clauses, authorizing recovery in the General Conditions, the writ petition itself is not maintainable. The learned standing counsel also had pointed out that the intimation had been given by the Railways under the advise of competent authority, the Commissioner under the Act, bringing to the notice of the petitioner-company. But, the petitioner- company was not interested in complying with or satisfying the liability, and, inasmuch as the Railways had parted with the said amount, they are definitely entitled to recover the same from the bills as per the terms of the contract. The Standing Counsel also would maintain that the contract is commercial contract and the parties are bound by the terms and conditions of the contract. The Standing Counsel contends that the negligence is not on the part of the Railways and is on the part of the contractor, and hence, the contractor, cannot escape from the liability. The learned Standing Counsel also would submit that this being statutory liability and is discharged by the Railways in view of the order of the Court, the contractor has to indemnify the same, and, on failure to indemnify, the Railways are entitled to deduct the amount from the bills. The procedure specified under the provisions of the Act of 1923, need not be followed inasmuch as parties are governed by the terms and conditions of the contract as such. The learned Standing Counsel also had taken this Court through Sections 10, 10-A, 10-B and 12 of the Act of 1923 and Rule 11 of the Rules of 1924. 7. RELEVANT STATUTORY PROVISIONS AND RULES:- The Act No.8 of 1923 is an Act to provide for the payment by certain classes of employers to their workmen of compensation for injury by accident. Chapter-II deals with ‘Workmen’s Compensation’. Section 3 of the Act of 1923, deals with the employer’s liability for compensation, which reads as hereunder: “ Sec.3. Employer’s liability for compensation:- (1) If personal is caused to a workman by accident arising out of and in the course of his employment, his employer shall be liable to pay compensation in according with the provisions of this Chapter: Provided that the employer shall not be so liable- a. in respect of any injury which does not result in the total or partial disablement of the workman for a period exceeding [three days]. b. in respect of any [injury, not resulting in death [or permanent total disablement] caused by] an accident which is directly attributable to- i. the workman having been at the time thereof under the influence of drink or drugs, or ii. the willful disobedience of the workman to an order expressly given, or to a rule expressly framed, for the purpose of securing the safety of workman, or iii. the willful removal or disregard by the workman of any safety guard or other device which he knew to have been provided for the purpose of securing the safety of workman, [x x x], iv. [x x x]. [(2) If a workman employed in any employment specified in Part A of Schedule III contracts any disease specified therein as an occupational disease peculiar to that employment, or if a workman, whilst in the service of an employer in whose service he has been employed for a continuous period of not less than six months (which period shall not include a period of service under any other employer in the same kind of employment) in any employment specified in Part B of Schedule III, contracts any disease specified therein as an occupational disease peculiar to that employment, or if a workman, whilst in the service of one or more employers in any employment specified in Part C of Schedule III for such continuous period as a Central Government may specify in respect of each such employment, contracts any disease specified therein as an occupational disease peculiar to that employment, the contracting of the disease shall be deemed to be an injury by accident within the meaning of this section and, unless the contrary is proved, the accident shall be deemed to have arisen out of, and in the course, of the employment: [ Provided that if it is proved,- a. that a workman whilst in the service of one or more employers in any employment specified in Part C of Schedule III has contracted a disease specified therein as an occupational disease peculiar to that employment during a continuous period which is less than the period specified under this sub-section for that employment, and b. that the disease has arisen out of and in the course of the employment, the contracting of such disease shall be deemed to be an injury by accident within the meaning of this section: Provided further that if it is proved that a workman who having served under any employer in any employment specified in Part B of Schedule III or who having served under one or more employers in any employment specified in Part C of that Schedule, for a continuous period specified under this sub- section for that employment and he has after the cessation of such service contracted any disease specified in the said Part B or the said Part C, as the case may be, as an occupation disease peculiar to the employment and that such disease arose out of the employment, the contracting of the disease shall be deemed to be an injury by accident within the meaning of this section.] [(2-A) If a workman employed in any employment specified in Part C of Schedule III contracts any occupational disease peculiar to that employment, the contracting whereof is deemed to be an injury by accident within the meaning of this section, and such employment was under more than one employer, all such employers shall be liable for the payment of the compensation in such proportion as the Commissioner may, in the circumstances, deem just.] (3) [The Central Government or the State Government] after giving, by notification in the Official Gazette, not less than three month’s notice of its intention so to do, may, by a like notification, add any description of employment to the employments specified in Schedule III, and shall specify in the case of employments so added the diseases which shall be deemed for the purpose of this section to be occupational diseases peculiar to those employments respectively, and thereupon the provisions of sub-section (2) shall apply [in the case of a notification by the Central Government, within the territories to which this Act extends, or, in case of a notification by the State Government within the State] [xxx] as if such diseases had been declared by this Act to be occupational diseases peculiar to those employments. (4) Save as provided by [sub-sections (2), (2-A) and (3)] no compensation shall be payable to a workman in respect of any disease unless the disease is [xxx] directly attributable to a specific injury by accident arising out of and in the course of his employment. (5) Nothing herein contained shall be deemed to confer any right to compensation on a workman in respect of any injury if he has instituted in a Civil Court a suit for damages in respect of the injury against the employer or any other person; and no suit for damages shall be maintainable by a workman in any Court of law in respect of any injury- a. if he has instituted a claim to compensation in respect of the injury before a Commissioner; or b. if an agreement has been come to between the workman and his employer providing for the payment of compensation in respect of the injury in accordance with the provisions of this Act.” Section 10 of the Act of 1923 deals with ‘Notice and Claim’, which reads as hereunder: “ Section 10. Notice and claim:- [No claim for compensation shall be entertained by a Commissioner unless notice of the accident has been given in the manner hereinafter provided as soon as practicable after the happening thereof and unless the claim is preferred before him within [two years] of the occurrence of the accident or, in case of death within [two years] from the date of death]: Provided that, where the accident is the contracting of a disease in respect of which the provisions of sub-section (2) of Section 3 are applicable, the accident shall be deemed to have occurred on the first of the day during which the workman was continuously absent from work in consequence of the disablement caused by the disease: [Provided further that in case of partial disablement due to the contracting of any such disease and which does not force the workman to absent himself from work, the period of two years shall be counted from the day the workman gives notice of the disablement to his employer: Provided further that if a workman who, having been employed in the employment for a continuous period, specified under sub-section (2) of Section 3 in respect of that employment, ceases to be so employed and develops symptoms of an occupational disease peculiar to that employment within two years of the cessation of employment, the accident shall be deemed to have occurred on the day on which the symptoms were first detected:] [Provided further that the want of or any defect or irregularity in a notice shall not be a bar to the [entertaining of a claim]— a. if the claim is [preferred] in respect of the death of a workman resulting from an accident which occurred on the premises of the employer, or at any place where the workman at the time of the accident was working under the control of the employer or of any person employed by him, and the workman died on such premises or at such place, or on any premises belonging to the employer, or died without having left the vicinity of the premises or place where the accident occurred, or b. if the employer [or any one of several employers or any person responsible to the employer for the management of any branch of the trade or business in which the injured workman was employed] had knowledge of the accident from any other source at or about the time when it occurred]: Provided further that the Commissioner may [entertain] and decide any claim to compensation in any case notwithstanding that the notice has not been given, or the claim has not been [preferred], in due time as provided in this sub-section, if he is satisfied that the failure so to give the notice or [prefer] the claim, as the case may be, was due to sufficient cause. (2) Every such notice shall give the name and address of the person injured and shall state in ordinary language the cause of the injury and the date on which the accident happened, and shall be served on the employer or upon (any one of) several employers, or upon any person (x x x) responsible to the employer for the management of any branch of the trade or business in which the injured workman was employed. (3) The State Government may require that any prescribed class of employers shall maintain at their premises at which workmen are