MFA(ECC) No. 94 of 2017

## **`IN THE HIGH COURT OF KERALA AT ERNAKULAM`** ## **`PRESENT`** ## **`THE HONOURABLE MRS. JUSTICE MARY JOSEPH`** ``` MONDAY, THE 14[TH] DAY OF MARCH 2022 / 23RD PHALGUNA, 1943 ``` ## **`MFA NO. 94 OF 2017`** ``` AGAINST THE ORDER/JUDGMENT IN ECC 3/2014 OF EMPLOYEES’ COMPENSATION COMMISSIONER, palakkad dated 17.02.2016 APPELLANT/3rd OPPOSITE PARTY: ``` ``` ROADS AND BRIDGES DEVELOPMENT CORPORATION OF KERALA LTD.,REP. BY ITS MANAGING DIRECTOR (ARRAYED IN THE IMPUGNED ORDER AS COMPANY SECRETARY, ROADS AND BRIDGES DEVELOPMENT CORPORATION OF KERALA LTD.), PALARIVATTAM, KOCHI-25. ``` ``` BY ADV SRI.SHYSON P.MANGUZHA ``` ## **`RESPONDENT/APPLICANTS/OPPOSITE PARTIES 1 & 2:`** - `1 SMT.VIJAYALAKSHMI,W/O.LATE ARUMUGHAN, VEBAT HOUSE, ERAMANGALAM, NOCHULLI POST, COYALMANNAM, PALAKKAD DISTRICT-678 702` - `2 DHANYA,D/O.VIJAYALAKSHMI, VEBAT HOUSE, ERAMANGALAM,NOCHULLI POST, COYALMANNAM, PALAKKAD DISTRICT-678 702` - `*3 ISMAIL,S/O.ABDUL RAHMAN MUSALIAR, PALLIKKAL PARAMBIL HOUSE, NOCHULLI POST, KOYALMANNAM, PALAKKAD DISTRICT-678 702 (DELETED)` - `THE THIRD RESPONDENT IS DELETED FROM THE PARTY ARRAY AS PER ORDER DATED 12.07.2019 IN I.A. NO. 4683/17 IN MFA(ECC) NO. 94/2017.` - `4 NINAN MUHAMMED KERALA BAG WORKS, BOC ROAD, PATTIKKARA, PALAKKAD DISTRICT-678 014` - `BY ADVS.SRI.U.BALAGANGADHARAN SRI.L.RAJESH NARAYAN` ``` THIS MISC. FIRST APPEAL HAVING COME UP FOR ADMISSION ON 11.12.2017, THE COURT ON 14.03.2022 DELIVERED THE FOLLOWING: ``` -:2:- ## M.F.A(ECC) No. 94 of 2017 ## MARY JOSEPH, J. - - - - - - - - - - - - - - - - - - - - - - - M.F.A(ECC) No. 94 of 2017 - - - - - - - - - - - - - - - - - - - - - - - Dated this the 14[th] day of March , 2022 ## JUDGMENT Challenge is raised in the appeal against an order passed by the Commissioner for Employees’ Compensation, Palakkad in ECC No.3/2014 (Old No.WCC 173/2006) by the Roads and Bridges Development Corporation of Kerala Ltd., who is the 3[rd] opposite party. The respondents are the claimants and the opposite parties 1 and 2 in ECC No.3 of 2014. 2. The application was filed by the 1[st] and 2[nd] respondents before the Employees Compensation Commissioner, Palakkad under Section 22 of the Workmen's Compensation Act, 1923, amended as Employees Compensation Act, 1923 (referred to hereunder as 'the Act') claiming compensation to the tune of Rs.3,12,940/- (Rupees three lakhs twelve thousand nine hundred and fourty only) for the death of Arumugham due to the fatal injuries sustained during and in the course of his employment under the 1[st] and 2[nd] opposite parties. The applicants are legal heirs as well as dependents of deceased Arumugham. The M.F.A(ECC) No. 94 of 2017 -:3:- Employees’ Compensation Commissioner passed the above order holding the 3[rd] opposite party, liable to pay compensation to the applicants and directed them to deposit the compensation of Rs.3,26,140/-, arrived at with simple interest at the rate of 12% per annum with effect from 19.03.2005 and Rs.2,500/- towards funeral expenses, within 30 days from the date of the order, failing which the amount with interest will be recovered by initiating Revenue Recovery proceedings against the 3[rd] opposite party. Based on the dictum of this Court in Divisional Railway Manager v. Money [2001 (2) KLT 486], 1[st] and 2[nd] opposite parties were also directed to indemnify the 3[rd] opposite party as stipulated in Section 12(2) of the Act. The 3[rd] opposite party being aggrieved by the direction issued as above, has assailed the judgment in the appeal on hand. 3. Sri.Shyson P. Manguzha who represents the appellant has contended that the order under challenge is liable to be interfered with being contrary to facts and law. According to him, the appellant had taken a contention before the Commissioner that employer-employee relationship does not exist between the appellant and the 2[nd] opposite party and thereby with the deceased Arumugham. The contention so taken M.F.A(ECC) No. 94 of 2017 -:4:- was communicated to the Commissioner but overlooking that factum the impugned order was passed fixing the liability upon the 3[rd] opposite party/appellant to pay the compensation to the claimants. According to him, the appellant had only entered into a codicil agreement with M/s.KITCO, a company registered under the Indian Companies Act, 1956 and the latter only functioned as the consultant for valuation and conduct of auction of the premises. Since M/s.KITCO was entrusted with the conduct of auction of assets belonging to the 3[rd] opposite party, it is a necessary party in the proceedings for a fair adjudication of the claim and for his non-impleadment, the claim petition suffers for non-joinder of necessary parties and the Commissioner ought to have dismissed the claim on the ground itself. The 2[nd] opposite party was the highest bidder in the auction conducted by M/s.KITCO and assets/structures belonging to the 3[rd] opposite party was purchased by M/S.KITCO for a sum of Rs.1,05,000/-. 10% additional amount was collected towards Sales tax payable to Government. From the above it is clear that transaction between the 2[nd] opposite party and the appellant is confined to the auction sale of assets/structures. Thirdly it was contended that since employer-employee relationship was not existing M.F.A(ECC) No. 94 of 2017 ## -:5:- among the 3[rd] and 2[nd] opposite parties, the 3[rd] opposite party cannot be considered as the principal employer and cannot be made liable to pay compensation to a worker engaged by the 1[st] and 2[nd] opposite parties. Accordingly, this Court was called upon to delve on the following contentions in the appeal on hand: “(a) Whether, an auction seller of assets/structures is an 'employer' as defined under section 2(e) of the Employees Compensation Act? (b) Whether the court below went wrong in finding that the appellant is the principal employer and liable to pay compensation under section 2 (C) of the Employee's Compensation Act, 1923 to the applicants. (c) Whether the consultant namely M/s KITCO Ltd, appointed by the 3[rd] opposite party/appellant, is a necessary party in the above proceedings and whether the case is bad for non jointer of parties. (d) Whether there is any 'employer' 'employee' relationship between the 3[rd] opposite party/appellant and with the 2[nd] opposite party/4[th] respondent.” 4. The learned counsel for the respondent has cited Kunjoonjamma Daniel v. K.S.E.B [2001 (2) KLT 38] to raise his contention that even if the employment is of casual nature, if the employment is for the purpose of employees’ trade and business, one is a workman. ## 5. The learned counsel for the respondent relied on Secretary, Kerala State Electricity Board v. M.N. Kunjappan and ## M.F.A(ECC) No. 94 of 2017 -:6:- others [2019 (2) KHC 400] wherein the Full Bench has held that the words “any other persons” occurring in sub-section (2) of Section 12 would takes within its fold even a total stranger to the business or activity in which workmen was employed, where he was responsible for the accident that caused injury. It is contended by the learned counsel that the words any other person would takes within its purview even a total stranger to the business or activity in which workmen was employed, where he was responsible for the accident that caused injury. 6. The conspectus of the facts of the case is as follows:- on 19.03.2005 at about 9.30 a.m. while the deceased was discharging his duty as Carpenter under the opposite parties, at Pattikkara, BOC Road, Palakkad, a portion of the wall of the building under construction was collapsed and fell upon his head. He sustained injuries to his head, chest and abdomen and succumbed to the injuries on the day itself. The opposite parties 1 and 2 were contractors of opposite party No.3, a Government of Kerala undertaking and the incident was admitted by them. The deceased was having a monthly wage of Rs.4,500/-. He had completed 49 years at the time of accident. The application was filed by the dependents of the deceased employee seeking for ## M.F.A(ECC) No. 94 of 2017 -:7:- Rs.3,12,940/- as compensation from the opposite parties. A preliminary enquiry was conducted on 30.06.2006 and a prima facie case was found existing against the opposite parties. Accordingly, the application seeking compensation was taken on file as WCC No.173 of 2006 by the Commissioner for Employees’ Compensation, Palakkad (Deputy Labour Commissioner). The opposite parties were served with notices and they entered appearance. The 1[st] opposite party remained absent and was declared ex parte on 08.12.2006. 7. The 3[rd] opposite party had filed a written statement. The proceedings were completed and an order was passed on 16.06.2008 by the Commissioner in favour of the applicants. Appeal was preferred by the 3[rd] opposite party before this Court as WP(C) No.7258 of 2011. This Court by judgment dated 20.11.2012 remitted the case back to the Employees’ Compensation Commissioner for consideration afresh. As directed by this Court fresh notices were issued to the parties following which the applicant and opposite party No.3 entered appearance. The 3[rd] opposite party was permitted to file an additional written statement on 18.11.2013. The applicants were examined and the case was transferred to the Employees’ M.F.A(ECC) No. 94 of 2017 -:8:- Compensation Commissioner, Palakkad and renumbered as ECC No.3 of 2014. 8. The contention of the 3[rd] opposite party in the written statement filed was that he had no connection with the applicant, who is not even known to them. According to the 3[rd] opposite party they have opted to auction the acquired structures for demolition and awarded the work to the highest bidder. An auction was conducted by M/s.KITCO who is the consultant of the 3[rd] opposite party on 11.02.2005 at the Project Office, Palakkad. The 2[nd] opposite party Sri.N.K. Ninan Mohammed was the highest bidder. Thus the entire process of demolition of the building was carried out by the 2[nd] opposite party and therefore, the 3[rd] opposite party cannot be made liable for payment of compensation. 9. An additional written statement was filed by the 3[rd] opposite party on 18.04.2013 wherein it was reiterated that the 2[nd] opposite party is only an auction purchaser and therefore employer-employee relationship was not there between the deceased and the 3[rd] opposite party. The 3[rd] opposite party entered into a codicil agreement with M/s.KITCO Ltd whereunder the latter was entrusted with the work of auction and re-auction M.F.A(ECC) No. 94 of 2017 -:9:- of the assets and disposal of those. Auction notice was published and on 11.02.2005, 2[nd] opposite party conducted the auction sale of the acquired assets at Palakkad-Sulttanpet Road, Palakkad. The 2[nd] opposite party was the highest bidder and an amount of Rs.1,05,050/- including 10% sales tax was collected from him as sale consideration. Therefore, it was the duty of 2[nd] opposite party to remove the assets from the site. 10. Evidence was adduced in support of the averments of the applicants. The 1[st] applicant was examined as AW1 and Exts.A1 to A3 were marked in evidence. The 3[rd] opposite party had examined its manager as RW1 and marked Ext.R1 in evidence. Based on evidence adduced as above, the Employees’ Compensation Commissioner found that the work of demolition of the structures was for various developmental activities performed by the Roads and Bridges Corporation of Kerala, who is the 3[rd] opposite party, and therefore the activities are to be considered as trade or business of the Corporation. It was also found that the work of demolition of the structures though not carried out directly by the 3[rd] opposite party, they cannot evade themselves from the liability under Section 12(1) of the Act. Accordingly the 3[rd] opposite party was found as the principal employer and M.F.A(ECC) No. 94 of 2017 -:10:- liability was fixed on them to pay the compensation for the death of the victim. Compensation was assessed as Rs.3,26,140/- and the 3[rd] opposite party being the principal employer was held liable to pay the same. 11. The issue referred for consideration in Kunjappan supra was whether a total stranger to the contractual relationship between the victim of an accident arising out of his employment and his employer could be made liable to pay compensation under the Workmen’s Compensation Act, 1923. The contention taken by KSEB in the case was that they being total strangers to the incident resulted in the death of the worker, cannot be held liable to pay compensation. The Full Bench was called upon to settle the controversy on liability. In that case KSEB was made liable to pay compensation, where the worker while working on the top of the floor of a building died of electrocution when a rod which he was holding came in contact with a live electric wire. As already stated, the Full Bench of this Court in which myself was also a party has elaborately dealt with the scope of Section 12(2) of the Act in M.N. Kunjappan 's case (supra) and held: “Provision has now been made for indemnifying even persons who do not have any contractual relationship with the M.F.A(ECC) No. 94 of 2017 ## -:11:- employee. The resultant position therefore is that every person responsible for the accident could be made liable under the provisions of the Act. In the present case, the workman was electrocuted when an iron rod that he lifted, came into contact with an 11 KV line of the KSEB. The appellant would therefore fall within the expression “any other person from whom the workman could have recovered compensation” incorporated by amendment in sub-section (2) of S.12 of the Act. In the light of the above discussion,the reference is answered, holding that the words, “any other person” from whom the workman could have recovered compensation, - occurring in sub section (2) of S.12 of the Act would take within its fold even a total stranger to the business or activity in which the workman was employed, where he was responsible for the accident that caused the injury.” (Emphasis supplied) The Division Bench in the case referred for consideration of the Full Bench had dealt with the amendment brought under Section 12(2) of Workmen’s Compensation Act, 1923 and had held that the object of the amendment was to avoid litigation in connection with the injury sustained to the workman. Endorsing that view the Full Bench held: “The object of the amendment, according to the Division Bench, was to avoid litigation in connection with the injury sustained by the workman. All questions arising are therefore brought within the ambit of the Act by the amendment. It is to the advantage of the workman M.F.A(ECC) No. 94 of 2017 ## -:12:- that, all persons standing to him in contractual relationship or responsible to him as tortfeasors are dealt with and their respective liabilities settled under the Act. The indemnity provided under S.13 is an incentive to the person liable under S.12 to pay compensation or indemnity promptly and to settle the issue without a prolonged and expensive civil litigation. We are in respectful agreement with the said dictum.” 12. Therefore it is settled now that all persons maintaining the status of an employer either in a contractual relationship or as a tortfeasor will be liable to pay compensation as contemplated under Section 12 of the Act. 13. In the case on hand, as instructed by the 3[rd] opposite party and for their benefit, M/s.KITCO, their consultant had conducted an auction for removal of acquired assets from the premises. It undoubtedly was to secure the trade or business of the 3[rd] opposite party which is engaged in developmental activities. Therefore, the role of a principal can be assigned to the 3[rd] opposite party and tortuous liability for the accident resulted due to failure to exercise due caution and vigilance can be attributed to them. The principle of absolute liability under the law of torts can be drawn into the context on hand in view of the Full Bench decision cited supra. Therefore, the Commissioner ## M.F.A(ECC) No. 94 of 2017 -:13:- has rightly held that the 3[rd] opposite party is the principal employer and accordingly fixed the liability on them to pay the sum arrived at as compensation in favour of the claimants. In view of the interpretation given by the Full Bench to the words “any other person”, the 3[rd] opposite party, though a total stranger to the business or activity of removal of the waste building materials after demolition of the buildings standing thereon, in which Arumugham was engaged, being the principal employer is responsible for the accident that caused the injury, undoubtedly is liable to pay compensation to the claimants being the dependents of deceased Arumugham. The 3[rd] opposite party is entitled to recover the amount from the 1[st] and 2[nd] opposite parties as stipulated under Section 12(2) of the Act. Appeal fails for the reason and is dismissed. Sd/- MARY JOSEPH, JUDGE. ttb ## M.F.A(ECC) No. 94 of 2017 ## -:14:- ## APPENDIX APPELLANT’S EXHIBIT : ANNEXURE A1 : THE ORIGINAL RECEIPT DATED 23.06.2017 ISSUED BY COMMISSIONER FOR EMPLOYEES’ COMPENSATION, PALAKKAD. //TRUE COPY// Sd/- P.S. TO JUDGE