Liability of employee is on principal employer: HC

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.

The vehicles were required to be transported by a driver, Sureshkumar Parasnath Singh, engaged by M G M Motors on behalf of M&M. Thus, the HC held the liability towards an employee engaged by contractor or a managing agent is on the principal employer (in this case M&M).

It was suggested that since the driver was engaged by M G M Motors, the appellant (United India Assurance) does not have the liability towards payment of compensation.
The HC, however, said it is not proved that due to any terms of contract between the two sides, the liability towards employees' compensation was to be borne by M G M Motors.

Irrespective of 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.