Dismissing an appeal by an insurance company against an order by the Mumbai Commissioner for workmen’s compensation, the Bombay high court has laid down that the liability of an employee employed by a contractor is on the principal employer. The appeal was filed against the commissioner’s order to an auto manufacturing company asking it to pay monetary compensation to a worker who lost his life in an accident while transporting its vehicle. The appeal was against the order on the grounds that the employee was not directly employed by the company but hired by a contractor and hence the liability to pay the compensation was on the contractor.
Justice A.H. Joshi was hearing the appeal filed by United Assurance Company Ltd, which challenged the awarding of compensation to the driver who was hired by MGM Motors. 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 to pin-point and address the court on a substantial question of law asking whether a principal employer would be liable to pay compensation to a worker employed by a managing agency.
The vehicle belonging to Mahindra & Mahindra was being transported by an MGM Motors driver Sureshkumar Parasnath Singh, when he died in an accident.
The high court held that the liability towards an employee engaged by a contractor or a managing agent is on the principal employer. It was suggested that since the driver was engaged by MGM Motors, the appellant (United India Assurance) does not have the liability towards the payment of compensation. The high court, however, said that it is not proven that due to certain terms in the contract between the two sides, the liability of compensation was to be borne by MGM Motors. Irrespective of the terms, the employee concerned is seen to be entitled to receive the compensation, the judge remarked and dismissed the appeal, finding no merit in it.
The ruling puts the onus of paying compensation on the principal employer for whom the contractor had hired the employee in the first place.