Section 12 of Employee’s Compensation Act imposes the liability of payment of compensation on the principal: The High Court of Delhi
If a person suffers an accident during the course of his employment while undertaking an activity concerned with the same, the employer of the aggrieved person is liable to compensate his employee after taking into consideration several factors including the age, the minimum wages and the disability certificate issued by a competent authority. The aforementioned has been upheld by the Delhi High court in the case of M/S Anshul Traders v. The Commissioner, Labour Welfare Centre and Anr. [FAO 193/2019 &amp; CM APPLs.17224/2019, 43531/2019, 26992/2020 &amp; 30265/2020] which was decided by the single judge bench comprising Justice J.R. Midha on 18th June 2021. The facts of the case are as follows. Ram Krishan, a labourer, aged 22, employed under Anshul Traders and was posted on a truck. In 2016, when he was driving the vehicle, the upper portion of the goods loaded on the vehicle came in contact with transmission line of the electricity department due to which he was electrocuted and he suffered injuries on the right leg and his right shoulder and his right leg was amputated; he was employed on the vehicle and the accident arose out of and during the course of his employment; he suffered 100% disability and claimed compensation for permanent disablement along with interest @12% per annum from the date of accident till realization and penalty to the extent of 50%.  Ram Kishan filed an application dated 29th January, 2018 under Order I Rule 10 read with Order VI Rule 17 of Code of Civil Procedure to implead the registered owner of the vehicle, namely Gagan and United India Insurance Company Ltd. as respondents No.2 and 3. However, this petition was dismissed and he was awarded a compensation of Rs. 7,11,614/- The Commissioner, Employee’s Compensation further awarded penalty on Anshul Traders to pay an amount equal to 10% of the principal amount of compensation, i.e. Rs.71,161/-. This order was challenged by the appellant in the instant appeal. Learned counsel for Anshul Traders urged at the time of the hearing that the offending vehicle bearing No. HR-55-F-6511 was validly insured with United India Insurance Company Ltd. and therefore, the liability to pay the compensation is of United India Insurance Company Ltd. under the policy. Ram Kishan has also challenged the order dated 12th October, 2018 on various grounds inter-alia that the Commissioner, Employee’s Compensation took the permanent disability as 70% whereas it should have been taken as 100% and the penalty of 10% be enhanced to 50%. After a perusal of the facts and arguments the court was of the opinion that “Ram Kishan has been rightly compensation as Anshul himself admitted the accident and employment of Ram Kishan In that view of the matter, this Court upholds the impugned order dated 12th October, 2018 insofar as the Commissioner, Employee’s Compensation has awarded the compensation of Rs.7,11,614/- along with simple interest @ 12% per annum from 23rd June, 2016 and penalty of 10%.” It also remanded the case back to the Commissioner to adjudicate upon the matter of the validity of the insurance claim and penalty being 50%.
 IN THE HIGH COURT OF DELHI AT NEW DELHI Date of Decision: 18th June 2021 FAO 193 2019 & CM APPLs.17224 2019 43531 2019 26992 2020 & 30265 2020 M S ANSHUL TRADERS Appellant Through: Mr. Raghu Vasishth Advocate THE COMMISSIONER LABOUR WELFARE CENTRE AND ANR. Respondents Through: Mr. R.K. Nain Advocate for respondent No.3 FAO 446 2019 & CM APPLs.49425 2019 & 49426 2019 RAM KISHAN Through: Mr. R.K. Nain Advocate Appellant M S ANSHUL TRADERS & ORS Respondents Through: Mr. Raghu Vasishth Advocate HON BLE MR. JUSTICE J.R. MIDHA JUDGMENT Ram Kishan filed an application for compensation before the Commissioner Employee’s Compensation against Anshul Traders claiming compensation on the averments that Ram Kishan was employed as a labourer with Anshul Traders and he was posted on the truck bearing registration No.HR 55 F 6511 he was aged 22 FAO 193 2019 & FAO 446 2019 Digitally SignedBy:RAJENDER SINGHKARKISigning Date:19.06.202113:31:45Signature Not Verified years and was drawing wages of Rs.10 000 per month including allowances on the night of 23rd 24th May 2016 he was on duty on the aforesaid vehicle when the vehicle reached Capital Market Shamli Road Panipat at about 10.00 P.M. the upper portion of the goods loaded on the vehicle came in contact with transmission line of the electricity department due to which he was electrocuted and he suffered injuries on the right leg and his right shoulder and he was taken to the Government Hospital Panipat where his right leg was amputated he was employed on the vehicle and the accident arose out of and during the course of his employment he suffered 100% disability and claimed compensation for permanent disablement along with interest @12% per annum from the date of accident till realization and penalty to the extent of 50%. Anshul Traders filed the written statement on 15th January 2018 in which they stated that Anshul Traders offered to bear the expenditure of Ram Kishan’s treatment at Muzaffarnagar but Ram Kishan repeatedly denied the same Ram Kishan voluntarily admitted his responsibility to bear all the repercussions of the injury caused Ram Kishan accepted Rs 37 000 from Anshul Traders and signed an undertaking that in future he would not raise any concern regarding payment of compensation and the liability to pay the compensation if any is of the Insurance Company with which the vehicle was insured. Ram Kishan filed an application dated 29th January 2018 under Order I Rule 10 read with Order VI Rule 17 of Code of Civil Procedure to implead the registered owner of the vehicle namely FAO 193 2019 & FAO 446 2019 Digitally SignedBy:RAJENDER SINGHKARKISigning Date:19.06.202113:31:45Signature Not Verified No.2 and 3. Gagan and United India Insurance Company Ltd. as respondents Vide order dated 08th March 2018 the application dated 29th January 2018 of Ram Kishan under Order I Rule 10 read with Order VI Rule 17 of Code of Civil Procedure to implead the registered owner of the vehicle as well as the insurance company as respondents No.2 and 3 was dismissed. The dismissal of the application has been recorded in the impugned award which is reproduced as followed: “6.The claimant filed amended memo of parties along with amended claim and application dated 29.01.2018 under Order 1 Rule 10 read with order VI Rule 17 CPC to implead the registered owner of the vehicle and Insurance Company as respondent no.2 &3 in the array of The claimant has stated in the application that in the original file an application Sh. Anshul M s. Anshul Traders was impleaded as R 1 and respondent no.1 has filed his W.S. along with insurance policy of the vehicle bearing no. HR 55 F 6511 as per which Sh.Gagan S o Sh.Diwan Chand R o H.No. 1693 Sector 12 HUDA Panipat Haryana was the registered owner insured of the vehicle on which the injured was employed as a labourer for loading and unloading of the vehicle and thus necessary amendment in the claim has been made and R 2 Sh. Gagan and R 3 Insurance Company be impleaded in the array of respondents. 7. On 08.03.2018 the application dated 29.01.2018 of claimant to implead registered owner of the vehicle and insurance company as R 2 and R 3 was dismissed since respondent i.e. Sh. Anshul M s. Anshul Traders had admitted that claimant was not his regular employee but was a daily wage earner and was an employee of a contractor in the statement recorded on the very first date FAO 193 2019 & FAO 446 2019 Digitally SignedBy:RAJENDER SINGHKARKISigning Date:19.06.202113:31:45Signature Not Verified of his appearance and in his written statement. Respondent was covered under the definition of principal employer since Section 12 of E.C. Act imposes the liability of payment of compensation on the principal with right to recover the same from the contractor in respect of work been carried out by the contractor. 8. The respondent Sh. Anshul Proprietor of M s. Anshul Traders filed a copy of insurance policy of the vehicle with his reply but on perusal it was seen that Sh.Gagan S o Sh.Diwan Chand was the insured and not Sh. Anshul i.e. Proprietor of M s. Anshul Traders. It was very much clear that when the claimant came to know that Sh.Gagan was the policyholder of the vehicle and not his employer Sh. Anshul Proprietor of M s. Anshul Traders he immediately put in an application for amending the claim application accordingly in which he stated that the claimant was employed as labourer with respondent no.1 and posted on vehicle owned by respondent no.2 which is clearly an afterthought. The claim has been tried to be amended in a way so that the compensation liability entirely shifts to insurance company. Respondent Sh. Anshul had no documentary evidence to who the role of Sh. Gagan insured owner of the vehicle in M s. Anshul Traders which is a Proprietorship firm. In absence of any employment documents documentary evidence proving Sh. Gagan to be the employer and admittance of employment by respondent Sh. Anshul Proprietor of M s. Anshul Traders in his W.S. as well as by claimant in his claim the application of claimant to amend the claim was dismissed and the matter was fixed for filing of the rejoinder. ” The Commissioner Employee’s Compensation held that there was an employer employee relationship between Ram Kishan and Anshul Traders at the time of accident and Ram Kishan was entitled to the compensation. The Commissioner Employee’s Compensation computed the compensation of Rs.7 11 614 on the basis of the age FAO 193 2019 & FAO 446 2019 Digitally SignedBy:RAJENDER SINGHKARKISigning Date:19.06.202113:31:45Signature Not Verified of Ram Kishan i.e. 22 years the relevant applicable factor of 221.37 wages of Rs. 8 000 per month and disability was taken as 70% according to the disability certificate issued by the Disability Board Aruna Asaf Ali Hospital Delhi. The Commissioner awarded simple interest @ 12% p.a. from 23rd June 2016 till the date of deposit of the amount. The Commissioner Employee’s Compensation awarded penalty on Anshul Traders to pay an amount equal to 10% of the principal amount of compensation i.e. Rs.71 161 under Section 4A(3) Employee’s Compensation Act. Anshul Traders filed a writ petition W.P.(C) 3754 2019 which was subsequently converted into an appeal under Section 30 of the Employee’s Compensation Act and re numbered as FAO 193 2019. Vide order dated 11th April 2019 Ram Kishan was impleaded as respondent no.3. Vide order dated 09th August 2019 this Court impleaded the registered owner Gagan as appellant No.2 and United India Insurance Company Ltd. as respondent No.4 in FAO 193 2019. Anshul Traders has challenged the order of the Commissioner Employee’s Compensation on various grounds inter alia that the order dated 12th October 2018 passed by the Commissioner Employee’s Compensation was not received by him Respondent No. 3 has not placed any evidence on record pertaining to his employment with the appellant that the date of payment of compensation should have been 12th October 2018 and not 23rd June 2016 Respondent No. 3 had placed two different Voter ID FAO 193 2019 & FAO 446 2019 Digitally SignedBy:RAJENDER SINGHKARKISigning Date:19.06.202113:31:45Signature Not Verified cards on record that the vehicle was in the name of Gagan and was insured and the registered owner and the insurance company were necessary and proper parties before Commissioner Employee’s Compensation. Learned counsel for Anshul Traders urged at the time of the hearing that the offending vehicle bearing No. HR 55 F 6511 was validly insured with United India Insurance Company Ltd. and therefore the liability to pay the compensation is of United India Insurance Company Ltd. under the policy. 10. Ram Kishan has also challenged the order dated 12th October 2018 on various grounds inter alia the Commissioner Employee’s Compensation took the permanent disability as 70% whereas it should have been taken as 100% and the penalty of 10% be enhanced to 50%. 11. Vide order dated 11th April 2019 the proprietor of the petitioner undertook to deposit Rs 2 00 000 with the Registrar General of this Court within three weeks and the balance award amount within three months. 12. On 03rd May 2019 Anshul Traders deposited Rs.2 00 000 by demand draft dated 01st May 2019 and Rs.5 11 614 by demand draft dated 06th July 2019 with this Court. 13. On careful consideration of the contentions of the parties this Court is of the view that the Ram Kishan has been rightly compensation as Anshul himself admitted the accident and employment of Ram Kishan when he appeared in person before Commissioner Employee’s Compensation on 13th November 2017 FAO 193 2019 & FAO 446 2019 Digitally SignedBy:RAJENDER SINGHKARKISigning Date:19.06.202113:31:45Signature Not Verified and secondly Anshul admitted having paid Rs.37 000 to Ram Kishan. So far as the appeal of Ram Kishan is concerned this Court is of the view that there is no infirmity in assessing the permanent disability of Ram Kishan as 70%. In that view of the matter this Court upholds the impugned order dated 12th October 2018 insofar as the Commissioner Employee’s Compensation has awarded the compensation of Rs.7 11 614 along with simple interest @ 12% per annum from 23rd June 2016 and penalty of 10%. The issue of valid insurance and claim of penalty of 50% have not been adjudicated by the Commissioner Employee’s Compensation and therefore the matter is remanded back to the Commissioner Employee’s Compensation to adjudicate only on the following two issues namely: 1) Whether the offending vehicle bearing No. HR 55 F 6511 was validly insured by United India Insurance Company Ltd. If so whether United India Insurance Company Ltd. is liable to reimburse the compensation amount interest and penalty to Ram Kishan Onus of proof on Anshul Traders and Gagan. 2) Whether Ram Kishan is entitled to penalty of 50% of the compensation amount Onus of proof on Ram Kishan. 16. Gagan and United India Insurance Company Ltd. are impleaded as respondent No.2 and 3 in the proceedings before the Commissioner Employee’s Compensation. The Commissioner Employee’s Compensation shall afford an opportunity to all the FAO 193 2019 & FAO 446 2019 Digitally SignedBy:RAJENDER SINGHKARKISigning Date:19.06.202113:31:45Signature Not Verified parties to lead evidence with respect to the aforesaid issues. 17. After recording the evidence the Commissioner Employee’s Compensation shall adjudicate the aforesaid issues. If Issue No.1 is decided in favour of Anshul Traders the Commissioner Employee’s Compensation shall direct United India Insurance Company Ltd. to reimburse such amount as is determined to be the liability of United India Insurance Company Ltd. With respect to Issue No.2 the Commissioner Employee’s Compensation shall adjudicate whether any enhancement of penalty is warranted and if so who would be liable to pay the enhanced penalty amount to Ram Kishan. 18. Since the compensation of Rs.7 11 614 along with simple interest @ 12% p.a. from 23rd June 2016 till the date of deposit and penalty of 10% is upheld the Registrar General is directed to release the amount deposited by the Anshul Traders to Ram Kishan by instructing UCO Bank Delhi High Court Branch as under: Rs.6 lakh be kept in 40 FDRs of Rs.15 000 each in the name of Ram Kishan for the period 1 month to 40 months respectively with cumulative interest. The balance amount after keeping Rs.6 lakh in FDR be released to Ram Kishan by transferring the same to his savings bank account No. 38730613630 with State Bank of India Rohini Sector 24 Delhi. iii) All the original FDRs shall remain with UCO Bank Delhi High Court Branch. However the statement containing FDR number amount date of maturity and maturity amount shall be furnished to Ram Kishan. FAO 193 2019 & FAO 446 2019 Digitally SignedBy:RAJENDER SINGHKARKISigning Date:19.06.202113:31:45Signature Not Verified iv) The maturity amounts of the aforesaid FDRs be released to Ram Kishan by transferring the same to his aforesaid savings bank account as mentioned above. v) No loan or advance or pre mature discharge shall be permitted without the permission of this Court. vi) State Bank of India shall permit Ram Kishan to withdraw money from his savings bank accounts by means of a 19. The Registrar General shall ensure the disbursement within withdrawal form. three weeks. 20. Both the appeals are disposed of in the above terms. Pending applications are also disposed of. 21. The record of Commissioner Employee’s Compensation be returned back along with the copy of this judgment. 22. All the parties shall appear before the Commissioner Employee’s Compensation on 15th July 2021. 23. The Commissioner Employee’s Compensation endeavour to decide the issues being remanded back by this Court within a period of four months from the first date of appearance of the parties. JUNE 18 2021 J.R. MIDHA J. FAO 193 2019 & FAO 446 2019 Digitally SignedBy:RAJENDER SINGHKARKISigning Date:19.06.202113:31:45Signature Not Verified 