- Bookmark
- Share
- CaseIQ
Mulla Madina Saheb v. Province Of Madras
Structured Summary of the Opinion
Factual and Procedural Background
The appellant (plaintiff) was a contractor under the Public Works Department who entered into a contract dated 29th February 1940 for work on the Nidadavole-Chettipet Road. During execution of the work, a cooly named Subbadu slipped and drowned on 9th April 1940. The accident was reported to the Commissioner under the Workmen's Compensation Act (proceedings under Section 10-B). The Commissioner issued a notice on 6th May 1940 to the Chief Engineer to submit particulars and make a deposit under Section 10-A(2). The Chief Engineer initially disclaimed liability on the ground of an epileptic fit, but subsequently (by letter dated 4th September 1940) admitted liability and the Commissioner fixed compensation at Rs. 500, which was remitted for payment to the dependants.
When paying sums due to the contractor, the Government deducted Rs. 500 (the compensation) and paid the balance to the plaintiff on 11th November 1940. The plaintiff immediately protested, denying liability to indemnify the Government and asked for the withheld amount; no remedial action appears to have been taken by the Government. The plaintiff then brought a civil suit to recover the withheld Rs. 500 and interest.
The Government's written statement asserted that the Civil Court lacked jurisdiction because the Commissioner had, under the statute, decided the employer's liability to pay compensation. Both lower courts dismissed the suit on the basis that Section 19(2) of the Workmen's Compensation Act deprived the Civil Court of jurisdiction to entertain the claim.
Legal Issues Presented
- Whether the Civil Court has jurisdiction to entertain a suit by a contractor to recover monies withheld by the Government when the Government claims an indemnity under Section 12(2) of the Workmen's Compensation Act but there has been no adjudication by the Commissioner on the contractor's right to indemnity.
- Whether Section 19(2) of the Workmen's Compensation Act bars the contractor's civil suit in circumstances where the Government claims a right of indemnity but no determination of that right (or its amount) has been made by the Commissioner.
- Whether it was incumbent on the contractor to approach the Commissioner for adjudication of the indemnity claim, or whether the party claiming indemnity (the Government) must initiate proceedings before the Commissioner.
Arguments of the Parties
Appellant's (Plaintiff's) Arguments
- The plaintiff repeatedly protested the withholding of Rs. 500 and categorically denied any liability to indemnify the Government for the compensation paid.
- The plaintiff was not given notice of the Commissioner's proceedings and was not a party to the Commissioner's determination that compensation was payable to the dependants.
- The contractor did not accept the Government's claimed right to indemnity; hence the question of that right should be determined by the Commissioner before the Government could lawfully withhold funds due to the contractor.
Respondent's (Government's) Arguments
- The Government maintained that the Civil Court had no jurisdiction because the Commissioner had decided under the Act that compensation was payable and that the Chief Engineer (Government) was entitled to be indemnified by the contractor.
- The learned Government Pleader argued that Sub-section (2) of Section 12 would only require adjudication by the Commissioner where the contractor accepted that the Government was rightly liable to pay compensation but disputed indemnity; alternatively, he contended that once the Commissioner decided the Government was liable to pay compensation the Government obtained an absolute right to be indemnified by the contractor, precluding the contractor from disputing indemnity in a civil suit.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Bisweswar v. Khagendra, A.I.R. 1935 Cal. 683 | Referenced for the proposition that notice may have to be given to a person affected by proceedings before the Commissioner. | The Court noted the precedent but explicitly stated it was not necessary to decide whether notice was required in the present case. The Court proceeded on the admitted fact that no notice had been given and relied on that fact in concluding that the contractor was not bound by the Commissioner's proceedings on indemnity. |
Court's Reasoning and Analysis
The Court began from the statutory text of Section 12(2) of the Workmen's Compensation Act, which provides that where a principal is liable to pay compensation under Section 12(1) he shall be entitled to be indemnified by the contractor, and it expressly states that "all questions as to the right to and the amount of any such indemnity shall, in default of agreement, be settled by the Commissioner."
Applying that provision to the facts, the Court observed that:
- No agreement had been reached between the Government and the contractor about the right to or amount of indemnity.
- The contractor had expressly disputed the Government's claim to indemnity from the outset.
- Therefore, in the absence of agreement, the statute itself assigns the settlement of "all questions as to the right to and the amount" of indemnity to the Commissioner.
On the procedural point of who must initiate proceedings, the Court rejected the contention that it was incumbent on the contractor to apply to the Commissioner. The Court reasoned that it is reasonable and consistent with the statutory scheme to construe the obligation to commence adjudication as falling on the party asserting the right (here, the Government). The Court held that when the Government claims a right to indemnity and the contractor disputes that right, the Government should initiate the statutory adjudicatory process before withholding the amount.
The Court addressed the Government's alternative arguments and responded as follows:
- There is nothing in the language of Section 12(2) excluding disputed questions of indemnity from the Commissioner's jurisdiction; the statute broadly states that all such questions shall be settled by the Commissioner.
- The contractor was not a party to the Commissioner's proceedings that led to compensation being paid to the dependants; indeed no notice was sent to him. The Court emphasized that the Act does not make an order in proceedings to which a person was not a party automatically binding on that person for all purposes, including his liability to indemnify a principal.
- The Court drew a categorical distinction between an order awarding compensation and an order allowing or disallowing a claim for indemnity. It relied on the Act's structure—particularly Section 30, which separately identifies appeals from awards of compensation and appeals from adjudications on indemnity—to show that the two types of orders are distinct and that an adjudication on indemnity is a separate matter for the Commissioner.
- Consequently, it would be unjust and contrary to the statutory scheme to hold that a Commissioner’s order (or an admitted liability by the principal) automatically and unconditionally creates an absolute right of indemnity against a contractor who was not a party and who had no opportunity to place material before the Commissioner on that question.
Finally, the Court considered Section 19(2), which deprives Civil Courts of jurisdiction to decide questions required by the Act to be settled by the Commissioner. The Court concluded that this provision does not help the Government in the present circumstances. Rather than barring the contractor's remedy, Section 19(2) means the Government cannot successfully defend a civil suit by relying on a claimed right to indemnity that has not been declared by the Commissioner—the very body charged by statute with settling such questions.
Holding and Implications
Holding:
The Court's final decision was that the lower courts were incorrect to dismiss the contractor's suit on the ground that it was barred by Section 19(2) of the Workmen's Compensation Act. The Court held that, because no adjudication by the Commissioner had been made as to the Government's right to indemnity (and there was no agreement), the Government had no proper basis to withhold the Rs. 500 from sums due to the contractor.
The Court ordered that the plaintiff be granted the relief claimed. In the opinion's own words, the plaintiff "will be entitled to get a decree as prayed for with costs throughout." Time for payment was fixed at three months. The opinion also records "Leave refused."
Implications:
- Direct effect on the parties: The Government must repay the withheld Rs. 500 to the contractor with costs and within the time directed by the Court (three months), because the statutory adjudicatory process required for determining indemnity had not been invoked by the Government and no Commissioner’s determination on indemnity existed.
- Broader implications: The opinion reasons from statutory text and procedural fairness to require that questions of a principal's right to indemnity, when disputed, be adjudicated by the Commissioner before the principal may validly rely on such indemnity to withhold contractor payments. The opinion does not state that it is creating any wider precedent beyond the application to the facts; therefore the direct consequence described above is the operative effect in this case.
This summary is confined strictly to the contents of the provided opinion and does not add information beyond what the opinion itself contains.
1. The plaintiff is the appellant. He was a contractor under the Public Works Department and entered into a contract (Ex. D-18) on the 29th February, 1940, for doing some work on the Nidadavole-Chettipet Road. It is said that during the execution of this work a cooly named Subbadu slipped and fell into a canal and got drowned on the 9th April, 1940. This accident was reported to the Commissioner appointed under the Workmen's Compensation Act, under Section 10-B of the said Act. The Commissioner issued a notice on the 6th May, 1940, to the Chief Engineer to the Government to submit a statement of particulars and also make the necessary deposit as provided under Section 10-A (2) of the Act. The Chief Engineer replied disclaiming liability to pay any compensation on the ground that the cooly accidentally fell into the canal and died on account of epileptic fits that he was suffering from. Subsequently, however, on further correspondence between him and the Commissioner, the Chief Engineer admitted liability in his letter dated 4th September, 1940, whereupon a compensation of Rs. 500 as fixed by the Commissioner was remitted to be paid over to the dependants of the deceased workman.
2. Admittedly moneys were due to the plaintiff for the work done by him under the contract and in paying his dues the Government deducted a sum of Rs. 500 being the amount which was paid as compensation to the dependants of the deceased workman and the balance after deduction was paid to the plaintiff on 11th November, 1940. Immediately the plaintiff sent a notice through his lawyer to the Government reiterating the protest which he had made even at the time of the receipt of the balance of the amount and categorically denying his liability to pay the sum of Rs. 500 as indemnity to the Government. No action appears to have been taken by the Government on this notice though in Ex. P-1 the proceedings of the Executive Engineer, Godavari West at Nidadayole, we find the following statement being made by the Executive Engineer--
It is also presumed that he will be getting a notice from the Commissioner to present his objection statement, if any, and that he can represent his case to the Commissioner, if necessary.
3. Evidently there was no proceeding before the Commissioner as was contemplated by Ex. P-1. The plaintiff then filed the present suit for recovering the sum of Rs. 500 still due to him in respect of the work done by him under the contract and for interest on that amount. The plea of the Government in the written statement was that the Civil Court had no jurisdiction since the Commissioner had decided under the powers given to him by' the statute the liability of the employer to pay compensation for the injury caused. In paragraph 5 it is stated--
The Commissioner of Workmen's Compensation Act of 1923 held the deceased to be a workman within the meaning of the Act and that compensation is therefore payable under section 12(2) of the.act and that the defendant (Chief Engineer) is entitled to be indemnified by contractor (plaintiff).
4. In answer to a question from me the learned Government Pleader admitted that there was no order of the Commissioner holding that the Government is entitled to be indemnified by the contractor.
5. Both the lower Courts have dismissed the suit on the ground that Section 19(2) of the Workmen's Compensation Act (VIII of 1923) deprives the Civil Court of jurisdiction to entertain the suit. Section 19(2) is in these terms:
No Civil Court shall have jurisdiction to settle, decide or deal with any question which is by or under this Act required to be settled, decided or dealt with by a Commissioner or to enforce any liability incurred under this Act.
6. To understand the contentions of the parties in this case it is necessary also to refer to Section 12 of the Act which is in these terms:
(1) Where any person (hereinafter in this section referred to as the principal) in the course of or for the purposes of his trade or business contracts with any other person (hereinafter in this section referred to as the contractor) for the execution by or under the contractor of the whole or any part of any work which is ordinarily part of the trade or business of the principal, the principal shall be liable to pay to any workman employed in the execution of the work any compensation which he would have been liable to pay if that workman had been immediately employed by him; and where compensation is claimed from the principal, this Act shall apply as if references to the principal were substituted for references to the employer except that the amount of compensation shall be calculated with reference to the wages of the workman under the employer by whom he is immediately employed.
(2) Where the principal is liable to pay compensation under this section, he shall be entitled to be indemnified by the contractor, or any other person from whom the workman could have recovered compensation and where a contractor who is himself a principal is liable to pay compensation or to indemnify a principal under this section he shall be entitled to be indemnified by any person standing to him in the relation of a contractor from whom the workman could-have recovered compensation, and all questions as to the right to and the amount of any such indemnity shall, in default of agreement, be settled by the Commissioner.
7. It is clear that the right of the Government to withhold the sum of Rs. 500 from the amount admittedly due to the plaintiff is based on the right given to them as principal under Sub-section (2) of Section 12. But that sub-section provides that all questions as to the right to and the amount of any such indemnity shall, in default of agreement, be settled by the Commissioner. In this case there was no agreement between the Government and the contractor in regard to the right to or the amount of indemnity. From the outset, the plaintiff was protesting against the action of the Government in withholding the amount of Rs. 500. In my opinion in such circumstances as mentioned above, when the right of the Government to be indemnified is being disputed by the plaintiff the question had to be decided by the Commissioner. I do not agree that it was incumbent on the plaintiff to have approached the Commissioner or to have applied to the Commissioner for adjudication. It was the Government that was claiming a right to be indemnified and if that right was not accepted by the contractor, then the question " as to the right" had to be settled by the Commissioner and, in my opinion, it is a reasonable construction to hold that it is for the party claiming a right to initiate proceedings for adjudication in respect of that right.
8. Admittedly there was no reference to the Commissioner and no decision by him of either the right to or the amount of the indemnity claimed by the Government.
9. The learned Government Pleader contended that the latter part of Sub-section (2) of Section 12 will only apply when a contractor admits that the Government was held rightly liable to pay compensation, but nevertheless he was notliable to indemnify the Government. He also contended that once the Commissioner had decided that the Government was liable to pay compensation, the Government obtained an absolute right to be indemnified by the contractor and it was not open to the contractor to deny such right of indemnity. There are two answers to his contention. The first is that there is nothing in the enactment itself which excludes any ease of disputed right to indemnity from the jurisdiction of the Commissioner to adjudicate under Sub-section (2) of Section 12. When the words of the statute are:
all questions as to the right to and the amount of any such indemnity shall be settled by the Commissioner.
10. I do not think the Court will be justified in reading words which are not to be found in the enactment so as to exclude certain questions as to this right to the indemnity. The second is more important as it concerns a fundamental principle of all civilised jurisprudence. In this case admittedly the plaintiff was not a party to the proceedings of the Commissioner in and by which it was decided that compensation was payable by the Government. No notice even went to the plaintiff. It is not necessary for me to decide whether notice had to go as was held in Bisweswar v. Khagendra A.I.R. 1935 Cal. 683. But the fact remains that there was no notice and the plaintiff was not a party and there is nothing in the Workmen's Compensation Act which makes an order to which he was not a party binding on him for all purposes including his further liability to indemnify the principal held liable to pay compensation under Section 12(1) of the Act. The contention of the learned Government Pleader amounts to this. A principal may even wrongly be held liable to pay compensation by the Commissioner or it may be, as in this case, a principal may agree to pay compensation. Then in spite of the fact that the liability was wrongly incurred or was incurred without any adjudication, the contractor will be liable to indemnify the principal and will not have a right to place material before the Commissioner to show that the order to which he was not a party was not correct and cannot adversely affect his rights. To me the Act does not appear to contemplate this injustice. The learned Government Pleader says that the party, i.e., the contractor may approach the Commissioner to review the order granting compensation, but so long as he does not get that order set aside, the Government will have an absolute right to be indemnified in respect of the amount of compensation paid. There is nothing in the Act to support this contention. An order awarding compensation is entirely distinct and different from an order allowing or disallowing a claim for the amount of indemnity. There may be an order for compensation, but there may not be an order allowing indemnity. Section 30 of the Act providing for appeals to the High Court mentions separately an appeal against an order awarding compensation in Clause (a) and an appeal against an order allowing or disallowing any claim for the amount of indemnity under the provisions of Sub-section (2) of Section 12 under Clause (d).
11. It is true that Section 19(2) precludes the Civil Court from deciding any question which is to be decided by the Commissioner under the Act. But this provision far from disentitling the plaintiff from obtaining any relief really disentitles the defendant-Government from succeeding on any plea based upon their right to indemnity. In fact this provision leaves them without any defence whatever, because they claim to withhold an amount to which the right has not been declared by the Commissioner as it ought to be the case--and it was disputed by the contractor. The lower Courts were therefore wrong in holding that the suit was barred by Section 19(2) of the Workmen's Compensation Act.
12. As it does not appear that there is any other defence to the suit, the plaintiff will be entitled to get a decree as prayed for with costs throughout. Time for payment--3 months.
13. Leave refused.
Alert