In a significant ruling, the Bombay high court has laid down a substantial point of law, saying the liability towards an employee engaged by a contractor or managing agent is on the principal employer.

The court recently upheld the decision of 'Mumbai Commissioner for Workmen's Compensation' to award monetary relief to a worker, who died in an accident despite the fact that he was not employed by the principal employer but by a contractor.

Justice A H Joshi was hearing an appeal filed by United Assurance Company Ltd, which challenged the award of compensation to a driver who was hired by M G M Motors to transport vehicles on behalf of Mahindra & Mahindra Ltd (M&M).

The Judge noted that this being an appeal under The Employees' Compensation Act, the appellant has to substantiate the challenge on substantial questions of law.

He directed the appellant's advocate K V Vitonde to pin point and address the court on substantial question of law whether a principal employer would be liable to pay compensation to a worker employed by a managing agency.

Admittedly, the victim was not employed by M&M, a top auto firm, which owned the vehicles. The victim was rather employed by M G M Motors to whom the work/contract for transport of vehicles was entrusted by the auto company.

Liability of employee is on principal employer: HC - The Times of India

This gives a fair idea of liability of principal employer.

From India, Pune
Above narration lacks clarity on so many points.

(1)Whether the deceased died a natural death or on account of aggravation of some preexisting disease due to the stress of the employment?

(2) Whether any complaint was lodged with the Police, FIR registered, inquest conducted by the Police or post mortem conducted?

(3) Whether ESI applicable to the case?

(4) Whether the deceased was a contract labour or otherwise?

(5)If not the questioner, who else are the dependents as per the E.C Act,1923?

It is a well-established legal position that the Principal Employer is primarily liable under the EC Act for compensation. All the above questions require a lot of preliminary works before making a claim for compensation and the questioner seems to be not capable of doing such things indepenently. Therefore, it is better for him to approach a lawyer well-versed in such matter and if he has got some financial constraints, he has to approach the Free-Legal Aid Centre functioning under the District Court.

From India, Salem
Dear Nathrao,
I was aware of this judgment but still I kept mum intensionally. We have many learned members on this forum and I was expecting someone else to come out with this.
Thanks for bringing this discussion now in correct way.
The nominee of deceased watchmen is entitled for compensation under ESI if he is Insured Person under ESIS and if not, under EC Act. Compensation is payable by ESI corporation or by employer as the case may be. Here employer means his master. If his master is contractor and he is denying to pay the compensation then Principal Employer has to pay it.
The compensation is payable irrespective whether the deceased watchmen was regular employee or not, whether the deceased watchmen was in direct employment or not and what did he die off.
I hope there is no ambiguity on this subject.

From India, Mumbai
Dear Friends,

My suggestions to the queriest are as under:

1. To write the employer i.e. both contractor and PE as the case may be, giving the fact of incident of death of his father while on duly with relevant details and ask for compensation as applicable under ESI or EC Act.

2. If the employer does not give response to his request, he should make complaint to ESI Corporation if his father was Insured Person under ESI. If not then, make complaint to Commissioner under EC Act.

3. To hire an expert to lead the case before the authority. The expert has to prove that the death occurred out of and in the course of employment.

The incident of death is occurred in the premises of employment. The employer is responsible for lodging complaint of incident with police. giving intimation to various authorities etc.

I am giving a procedure to claim compensation under EC Act as under:

1. An application for claiming compensation payable under the EC Act has to be made to the Commissioner for Employee’s Compensation in the prescribed form.

2. Before filing the application the Employee / his nominee has to give notice of the accident to the employer containing the details of the accident / incident.

3. Before filing the application the Employee has also to submit himself for medical examination if he is required to do so by the employer, in case of accident not resulting in death.

4. The application has to be made within 2 years of the occurrence of the accident or within 2 years from the date of death.

5. If any applicant is poor, the Commissioner may exempt him from paying the application fees.

6. The Commissioner can take the assistance of any person possessing special knowledge of any matter relating to the case for deciding the application.

7. The commissioner can recover the amount payable by any person under the Act as an arrear of land revenue.

The queriest has no option but to approach any good advocate locally.

The queriest seems to be from Guntur district of AP. As suggested by one of the members namely Loginmiraclelogistics, any of our members happens to be from Guntur district of AP, please come forward to help him and do the noble work of giving legal justice to the poor person from the employer and or the authorities.

From India, Mumbai
Answer-Part 1- Company is always responsible even if security staff is engaged through Agency. Agency is liable to follow applicable labour laws and non compliance situation has to be corrected at the end of agency but principal employer can not escape.There could be various types of terms and conditions in agreement signed between the two, but establisment can not be divided in between the two. .
part2-security Agency has to pay wages earned, leave salary and other dues to the nominees. Wages payment including unpaid wages is principal employers' responsibility ie if first party has not paid , not allowed any process like PF / PENSION, ESI,OR DEATH BENEFITS, principal employer must be compelled to enforce ensuring benefits paid to nominees.
RDS Yadav

From India, Delhi

Dear Shri Korgaonkar,
""I was aware of this judgment but still I kept mum intensionally. We have many learned members on this forum and I was expecting someone else to come out with this.""
The main issue is how the querist can be helped.
The poor gentleman is shocked at death of his father.
He does not appear to have that much of knowledge of complicated laws on the subject and even the financial muscle required to tackle factory management.
I was aware of the ruling by Honble courts on the subject of principal employer earlier itself.That is why I quoted it for discussion and awareness of other HR people who may not be aware of the particular ruling.
The deceased is entitled to come sort of compensation here and if legal aid society in district courts cn help him out it will be ideal.

From India, Pune
I would visualise if there is an active union of employees (regd. or unregd.) half of their problem would be solved. I expect this case is not that much complicated to fix the PE and/or the Contractor for an amicable settlement. Probably the dependents need some seed money to kick start the process in the Indian conditions. Advocates also might expect certain %age of the settlement. Similarly if the authorities insist for a 'succession certificate' court fee also involved. Also the postmortem report of the deceased is to be a crucial evidence in the scheme of things. If the employees' union takes up the case it's sure shot.
From India, Bangalore
procedures for getting ROC report in case of closure of foreign branch office in India.Need total solution and correct procedures with require documents.
From India, Vadodara
Dear Mr Brijendra Singh, Labour Laws are basically social jurisprudence that is why courts and authorities perform their duties to meet weeker sections .Your query is answered as beloow;1) If company is under ESI implementaed area then ESI scheme is applicable othereise WC Act is applicable. This goes without saying that any employee say factory or engaged through contractor, he will be under ESI or WC. It is responsibilty of contractor Agency to deduct contributions and deposit but Employer must answer that it is deposited to the concerned authority without any lapse else employer will be liable for risk involved.Suppose in this case Agency has not deposited ESI due amount of contributions , then company will be liable to pay all financial obligations . Any such legal dues are paid to contractor by company as a general practice which if ESI contributions being unpaid and assuming PF though applicable is also not complied then Company will have to bear the consequences.
2) Company is always at liberty to recover any such financial burden from Agency.This means company to pay from its pocket first and then he can recover from Agency such money having already paid to contractor.Normally, Security agency takes money home after making few months legal compliance and gradually they remove names of security personnel.from coverage. This type of situation has no excuse .

RDS Yadav
Labour Laws Advider
Director-Future institute of Engg and Management.

From India, Delhi

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