IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD WEDNESDAY, THE TWENTIETH DAY OF APRIL TWO THOUSAND AND ELEVEN HON’BLE SRI JUSTICE G. BHAVANI PRASAD Civil Miscellaneous Appeal No.1384 of 2003 Between: A. Srinivasa Rao, .. Appellant AND K. Ravindra Babu and 2 others .. Respondents JUDGMENT: This appeal is directed against the order of the Commissioner for Workmen’s Compensation and Assistant Commissioner of Labour-II, Guntur, dated 13-12-2001 in W.C.No.26 of 1995. The appellant, aged 26 years, was employed by the 1st respondent herein as a painter for a daily salary of Rs.50/- and the 1st respondent herein, a contractor under the Roads and Buildings Department of Government of Andhra Pradesh, was entrusted with the work in the building of the Collector’s office at Guntur and the appellant was painting the ceiling of the dining hall in the District Collector’s Bungalow on 28-07-1993. While carrying out the said work, due to a defect in the ladder, the appellant fell down, received multiple injuries on the left wrist and a lacerated injury below the lower lip. The deformity of wrist resulted in cent percent loss of earning capacity as a painter and hence, the appellant claimed a compensation of Rs.1,33,250/- from the contractor/employer and respondents 2 and 3 representing the Government of Andhra Pradesh, the principal employer. The contractor denied the allegations of the appellant and while admitting that he is a graduate Civil Engineer undertaking small Government works on contract, he denied engaging the appellant for any work. The Executive Engineer, Roads and Buildings Department/ the 2nd respondent herein contended that the appellant is put to strict proof of all his allegations. The 2nd respondent questioned the jurisdiction of the Commissioner and claimed that the claim does not come within the purview of the Workmen’s Compensation Act as respondents 2 and 3 are not the principal employer and hence, the respondents to the claim desired negativing the same. The Commissioner framed issues as to whether the appellant was a workman under the Act, whether he received personal injuries in the accident arising out of and in the course of his employment and about the age, wages, loss of earning capacity and compensation payable and by whom. The Commissioner examined AWs.1 to 3 and RWs.1 and 2 and marked Exs.A.1 to A.4 during the enquiry. The Commissioner rendered the impugned order referring to the rival contentions, issues involved and the evidence of the witnesses. The Commissioner noted that the appellant did not give any complaint in the police station, did not inform the Labour Department and had no documentary evidence of his employment. While he denied suggestions about his not being employed at all and being injured elsewhere, the medical officer from the Government General Hospital, Guntur, as AW.2 stated about the functional restricted movement of left wrist joint which imposed a disability of 10 to 15%. AW.3 corroborated the claims of the appellant about his employment, work and the accident. The 1st respondent herein as RW.1 claimed that AWs.1 and 3 never worked under him, but he did not remember whether he had done the painting work in the Collector’s bungalow. RW.2 admitted that there was a special repair work at the Collector’s bungalow carried out by RW.1, which included painting work also. With reference to such evidence, the Commissioner opined that the appellant was painting the ceiling of the dining hall at the Collector’s Bungalow and fell down from the ladder while painting the same. The Commissioner noted that the appellant received some injuries, but opined that as he was a casual employee and as the work was not meant for the employer’s trade or business, he will not be entitled to the benefits of the Workmen’s Compensation Act, more so, in the light of the provisions of the Contract Labour (Regulation and Abolition) Act, 1970. Therefore, the Commissioner dismissed the claim without costs. The appellant contended herein that the immediate employer is the contractor, who undertook maintenance and repair work of the District Collector’s Bungalow and the employment was thus for the trade or business of the principal employer/the Government of Andhra Pradesh. The liability of the principal employer arose under Section 12 of the Workmen’s Compensation Act, 1923 and the Contract Labour (Regulation and Abolition) Act, 1970 is irrelevant. The beneficial legislation ought to have been interpreted in favour of the appellant and hence, the appellant desired the impugned order to be reversed and the compensation be awarded as claimed. Smt. Vasudha Nagaraj, learned counsel for the appellant, Sri N. A. Ramachandra Murthy, learned Assistant Government Pleader for Arbitration for respondents 2 and 3 and Sri B. Parameswara Rao, learned counsel for the 1st respondent are heard. The point for consideration is whether the appellant is entitled to the benefits of the Workmen’s Compensation Act, 1923, if his allegations are true and if so, what would be the just and reasonable compensation to which he is entitled from respondents 1 to 3? The evidence of RW.2, Superintendent of the Roads and Buildings Department, Government of Andhra Pradesh, shows that as per records, the contract work of special repairs to Collector’s bungalow at Guntur was given to the 1st respondent herein including the painting work and that the said contract was in force on the date of the accident claimed by the appellant. As such, the claim of RW.1/1st respondent about not remembering whether he has done such work or not is obviously an attempt to get over the liability. The very nature of engagement of the appellant and AW.3 for the said work by RW.1 was such as would not be evidenced by any document or record and but for being engaged for such work, AWs.1 and 3 would not have had any other motive or reason to implicate RW.1 falsely. No connection between them was alleged and if RW.1 was only a petty contractor as claimed by him, the appellant or AW.3 would not have chosen him for making any substantial monetary claim falsely. AWs.1 and 3 stated on oath before the Commissioner about AW.1 being engaged for doing the painting work and suffering the accident at the relevant time. The said claim had been concluded to be true by the Commissioner in the impugned order, who stated that as seen from the records and evidence of AWs.1 to 3, it is clear that the applicant was painting the dining hall of the Collector’s bungalow ceiling and on falling down from a ladder, received some injuries. This conclusion of fact was not challenged by way of any cross appeal or cross objections by any of the respondents to the claim and therefore, it has become first conclusive that it was probablised by the evidence on record and the finding of the Commissioner that the applicant/appellant was employed by the contractor of the Roads and Buildings Department of the Government of Andhra Pradesh for doing the painting work in the Collector’s bungalow at Guntur and that the applicant/appellant suffered injuries during the accident that occurred arising out of and in the course of employment. The Commissioner basically rejected the claim on the ground that the Contract Labour (Regulation and Abolition) Act, 1970 stands in the way of the appellant being considered as workman for the purpose of the Workmen’s Compensation Act, 1923. The scope, object and content of the Contract Labour (Regulation and Abolition) Act, 1970 does not appear to have any relevance to the question in issue herein and on the allegations of the applicant/ appellant, his employment does not appear to be within the scope of the prohibition of employment of Contract Labour under Section 10 of the Act. Be that as it may, Smt. Vasudha Nagaraj, learned counsel for the appellant/applicant, rightly relied on Section 12 of the Workmen’s Compensation Act, 1923 and the precedents arising thereunder for sustaining the claim. Section 12 sub-section (1) refers to a situation of the principal in the course of his trade or business contracting with a contractor for the execution of the whole or any part of any work, which is ordinarily part of the trade or business of the principal. The provision contemplates that any workman immediately employed by the contractor and entitled to compensation is entitled to claim such compensation from the principal as well, the calculation of the compensation being with reference to the wages of the workman. The principal may be entitled to be indemnified by the contractor in respect thereof by virtue of sub-section (2), but the provisions of sub-sections (1) and (3) of Section 12 make it clear that the workman had the option of recovering compensation from the principal or the contractor. I n K. Kamalaveni v. Managing Director, Subbathal Spinning Mills (P) Ltd., Erode[1], the Madras High Court was dealing with the definition of workman under Section 2(1) (n) of the Workmen’s Compensation Act, 1923 (as it then stood) and opined that to exclude a person from the category of a workman, not only should his employment be casual in nature, but his employment also must be not for the purpose of the employer’s trade or business. Referring to the case law on the subject, the learned Judge opined that both the conditions must be satisfied to exclude a person from the scope of workman. The learned Judge also considered the scope of Section 12 of the Workmen’s Compensation Act, 1923 and opined that when the work was executed through a contractor and a person was engaged for that work and faced an accident during the course of his employment, the principal employer is liable to pay compensation under the Act. The Kerala High Court in Payyannur Educational Society v. Narayani[2] was also construing Section 12 of the Workmen’s Compensation Act, 1923 and signifying the word “trade or business” used in Section 12 to have a very extensive meaning denoting anything connected with the trade or business of the principal. The Division Bench also considered the word ‘ordinarily’ used in Section 12 to be a very elastic term and the word was directed to be understood in the background of the execution of the particular work. In that view, two workmen engaged in excavation work by the contractor of a society were held to be victims within the meaning of Section 12 of the Act. The Kerala High Court again was dealing with the subject in Malankara Rubber and Produce Co. Ltd., Kottayam v. Hameed and others[3] and the work undertaken by a contractor in respect of expansion of factory building was considered to be with reference to the business of the principal making it liable to pay compensation for the death of a workman engaged by the contractor. The Patna High Court in Sumitra Devi v. Executive Engineer, Udar Asthan Irrigation Division, Jahanabad, Gaya[4] was again referring to the definition of workman under Section 2 (1) (n) of the Workmen’s Compensation Act, 1923 and found a casual khalasi employed by a competent authority of the Irrigation Department to be one engaged for the purpose of trade or business of the employer and as both requirements of the definition were not satisfied the workman could not be excluded from the definition of workman. The Court also observed that even if the appellant was casual, if the employment is of a longer duration, the benefits of the Act cannot be denied. Above all, an identical situation was the subject of consideration by a Division Bench of this Court in Bala Mallamma v. Registrar, Osmania University and another[5] wherein the liability of the University under Section 12 of the Workmen’s Compensation Act, 1923 in respect of a person employed for white washing/colour washing of a building was in question. The deceased fell down from a height of 40 feet as he was white washing the building and died and the Division Bench considered it to be part of the business of the University and the employment by the contractor was held to be one covered by Section 12 with reference to the case law on the subject. These conclusions of the Division Bench are binding on this Court and consequently, both the contractor and the principal employer represented by respondents 1 to 3 herein have to be made liable to pay compensation for the consequences of the injuries suffered by the applicant/appellant arising out of and in the course of his employment with the 1st respondent as a painter in the Collector’s bungalow. Coming to the extent of the loss of earning capacity due to the injuries suffered, the application attempted to allege loss of earning capacity to be cent percent, which was denied by the respondents. The evidence of the medical officer, who treated the injured, is only that the functional restricted movement of the left wrist joint imposed a disability of 10 to 15 %. Though he stated that there was difficulty for the applicant/appellant to attend the painting work, he did not probablise by anything said in his evidence that the inability to work as a painter was cent percent for the applicant. The Co-painter examined as AW.3 was not specific about the extent of disability suffered by the applicant and the applicant himself only stated about his inability to bear any weight and feeling pain in the left hand. The restricted movement of the wrist cannot be, therefore, taken as imposing cent percent loss of earning capacity. It is also not clear from the evidence whether the applicant was a left hander, while the pain felt is on his left hand. While the applicant suffering injuries was upheld by the Commissioner, which conclusion was not challenged in any manner by the respondents, the evidence of the medical officer as AW.2 can be taken as the basis for concluding that the result of the injuries sustained during the accident left 10 to 15% disability on the left wrist and that the restricted movement of the left wrist left forever with the applicant might have inflicted a loss of 50% of the earning capacity in respect of his occupation as a painter by the time of accident. The assessment, of course, necessarily involves an element of guess and estimate. If so, the applicant would be entitled only to half of what he claimed in the application in accordance with the statutory formula and calculation treating the loss of earning capacity as 100%. Therefore, the compensation to be awarded against respondents 1 to 3 shall be Rs.66,625/- payable jointly and severally. The compensation ought to have been paid within one month from the date it fell due and as it was not so paid, the applicant will also be entitled to simple interest at 12% p.a. under the existing provision and 6% p.a. prior to the amendment by Central Act 30 of 1995. As the amendment had no retrospective effect, with reference to the date of accident, the applicant will be entitled to interest only at 6% p.a. Given the nature of the claim, the question of granting any costs needs no consideration on the peculiar facts of the case. Coming to the date from which interest has to be paid on the compensation, Sri N.A. Ramachandra Murthy, learned Assistant Government Pleader relied on National Insurance Co. Ltd. v. Mubasir Ahmed and another[6] and Kamla Chaturvedi v. National Insurance Company and others[7]. The principle laid down in the former decision is that the starting point being completion of one month from the date on which the compensation fell due, the same cannot be the date of the accident and as there was no indication as to when the compensation becomes due, it has to be taken to be the date of adjudication of the claim. The Apex Court laid down that the compensation becomes due on the basis of adjudication of the claim made and unless adjudication is done, the question of compensation becoming due does not arise. It was also noted that significantly the Legislature has not used the expression ‘from the date of the accident’ and the crucial expression is ‘falls due’. In the later decision, it was reiterated that the liability for interest would be in terms of what has been stated in the earlier decision. However, Smt. Vasudha Nagaraj, learned counsel for the appellant invited attention to a later decision of the Apex Court in Oriental Insurance Company Limited v. Mohd. Nasir and another[8] by a Bench of coordinate strength, wherein while stating that there cannot be any doubt whatsoever that interest would be from the date of default and not from the date of award of compensation, it was observed that the Workmen’s Compensation Act does not prohibit grant of interest at a reasonable rate from the date of filing of the claim petition till an order is passed. It was noted that Section 4-A (3) does not take into consideration the chargeability of interest on various other grounds including the amount which the claimant would have earned if the amount of compensation would have been determined as on the date of filing of the claim petition. The decision in National Insurance Co. Ltd. v. Mubasir Ahmed and another (6 supra) was specifically referred to and it was stated that this aspect of the matter has not been considered therein. The Apex Court, therefore, granted interest at 7½ per cent per annum from the date of filing of the application till the date of the award in that case, while the rate of interest thereafter was stated to be payable in terms of the order passed by the Commissioner. Reconciling both the points of view and following the later decision of the Apex Court, interest can be reasonably awarded from the date of the claim petition herein. But the rate of interest can be restricted to 6 per cent per annum itself in view of the length of time for which such interest has to be paid. Such earlier interest is also justified by the fact that the applicant was deprived of any compensation for almost 18 years in spite of his entitlement to the same. In the result, the order dated 13-12-2001 in W.C.No.26 of 1995 on the file of the Commissioner for Workmen’s Compensation and Assistant Commissioner of Labour-II, Guntur is set aside and the W.C.No.26 of 1995 is ordered directing payment of compensation of Rs.66,625/- by the respondents 1 to 3 jointly and severally to the applicant along with interest thereon at 6% p.a. from the date of the claim petition till the date of payment or deposit. The Civil Miscellaneous Appeal is allowed accordingly in part without costs. _____________________ G. BHAVANI PRASAD, J Date: 20-04-2011 Ksn [1] 2004 (3) LLN 617 [2] 1996 Accident Claims Journal 73 [3] 2002 (2) LLJ 630 [4] 1997 (3) LLJ (Supp) 1058 [5] 2002 (2) ALT 107 (D.B.) [6] (2007) 2 Supreme Court Cases 349 [7] (2009) 1 Supreme Court Cases 487 [8] (2009) 6 Supreme Court Cases 280