JUDGMENT

H. Billappa, J.

1. The appellant herein being aggrieved by the Judgment and award dated 14-6-2002 passed in WCA/SR-199/01 passed by the Commissioner for Workmen's Compensation, Belgaum has preferred this appeal.

2. The facts in brief are as follows:

The appellant herein had entrusted the construction work of additional rooms in the corner open area of Gogte College of Commerce main building to the respondent No. 2 herein who is a contractor, and an agreement dated 22-9-1999 was also entered into between them. The respondent No. 1 was engaged for doing centering work. On 12-11-1999 at about 4.30 p.m. while the respondent No. 1 was doing centering work, the ladder on which he was standing broke and he fell down and as a result of that he sustained fracture of left patella and fracture of left colles's and other injuries. The respondent No. 1 herein filed a application claiming compensation of Rs. 4,50,000/- against the appellant herein who is the principal employer and respondent No. 2 who is the contractor, for the injuries sustained by him during the course of his employment.

2(a). The Appellant herein resisted the said application denying the averments made in the application and contending that the construction work in the premises of Gogte College of Commerce, Belgaum was entrusted to the respondent No. 2 herein and that an agreement dated 22-2-1999 was entered into between them and as per the terms of the said agreement, it is the sole responsibility of the Respondent No. 2 to pay compensation to his workmen/employees, as per the provisions of the Workmen's Compensation Act (for short 'the Act') of any injuries caused to them. The appellant herein also contended that the Respondent No. 1 was not employed by him for construction work and no relationship of employer and the employee exists between him and the Respondent No. 1 and hence he is not liable to pay any compensation to the respondent No. 1.

3. The respondent No. 2 herein filed his objection denying the averments made in the application and contending that the appellant herein is the principal employer and the owner of the building and that he took the construction work from the appellant herein under an agreement and that the construction work was carried out by him under the total control observation and supervision of appellant herein who is the principal employer. He has also contended that the centering work of the building was entrusted by him to one Sri Balu Babu Kundoskop who is a sub-contractor and that they have entered into an agreement dated 24-10-1999 and that as per the terms of the said agreement the said sub-contractor is solely responsible for payment of compensation to his workers or employees as per the provisions of the Act for any injuries caused to them and that the respondent No. 1 herein was under the control and direct supervisions of the sub-contractor and therefore the said sub-contractor is liable to pay the compensation to the respondent No. 1 herein. He has also contended that he had not employed the respondent No. 1 herein for construction work and there is no relationship of employer and the employee between him and the respondent No. 1 and hence he is not liable to pay any compensation and that if it is held that the respondent No. 1/ applicant is entitled for any compensation, the liability may be saddled on the principal employer and the sub-contractor Kundoskop.

4. On the basis of these pleadings, the Commissioner framed the following issues:-

"1. Whether the Applicant is a workman as defined under Section 2(1)(n) of the Act?

2. Whether the accident occurred during the course of employment and out of employment?

3. What was the age of the Applicant at the time of accident?

4. What was the wage of the Applicant at the time of accident?

5. Whether the Applicant has proved that he is entitled for the compensation as claimed by him? If not, to what amount he is entitled for?

6. Whether the Applicant is entitled to receive the interest and penalty?

7. Which Respondent is liable to pay the amount of compensation, interest and penalty?

8. To what order?"

5. On appreciation of evidence of record, the Commissioner has held that the applicant is a workman as defined under Section 2(1)(n) of the Act and the accident occurred out of and during the course of employment and awarded compensation of Rs. 2,08,456/- including interest, fixing the liability on the appellant herein to pay the compensation.

6. The appellant herein being aggrieved by the said Judgment and award passed by the Commissioner has preferred this appeal.

7. The learned Counsel appearing for the appellant contended that the construction work was entrusted to the respondent No. 2 herein who is a contractor and that as per Clause 11 of the agreement entered into between them the respondent No. 2 herein is liable to pay the compensation. She further contended that unless it is shown that the appellant herein is the principal employer, liability cannot be fixed on him to pay the compensation. She submitted that the Commissioner has committed an error in fixing the liability on the appellant to pay the compensation, without framing an issue as to whether the appellant herein is the principal employer or not and without recording any finding with reference to evidence on record that the appellant herein is the principal employer and hence the Judgment and award passed by the Commissioner is not sustainable in law and it is liable to be set-aside and the case has to be remitted to the Commissioner for fresh consideration in accordance with law. In support of her submission, she placed reliance on the decision in the case of DR. B. RADHAKRISHNA v. GOURAMMA AND ORS., 2000-II LLJ 182 and 1994-II LLJ 584.

8. The learned Counsel appearing for respondent No. 1 herein submitted that the Commissioner on appreciation of evidence on record, recording his finding that the respondent No. 1 is a workman and that he sustained injuries in the accident that occurred during the course of his employment, has awarded compensation of Rs. 2,08,456/- including interest and has rightly fixed the liability on the appellant herein who is the principal employer to pay the compensation and hence the Judgment and Award passed by the Commissioner is justified in law and it does not call for interference. He also submitted that the respondent No. 1 herein should not be made to suffer in a dispute between the appellant herein and the respondent No. 2 .

9. The learned Counsel appearing for respondent No. 2 herein submitted that though the construction work was entrusted to the Respondent No. 2 by the appellant herein, the construction work was carried out by the respondent No. 2 under the total control, observation and supervision of the appellant herein who is the principal employer, and therefore notwithstanding any agreement entered into between them, the appellant herein being the principal employer is liable to pay the compensation under Section 12(1) of the Act and that the Commissioner has rightly fixed the liability on the appellant to pay the compensation and hence the Judgment and award passed by, the Commissioner does not call for interference. In support of his submission he placed reliance on the decision in the case of KOODALINGAM v. SUPERINTENDING ENGINEER PWD, (1995) ACJ 282.

10. In the light of the submissions made by the learned Counsel for the parties, the following question of law arises for my consideration.

"Whether the Commissioner was justified in fixing the liability on the appellant to pay the compensation without recording any finding by framing an issue regarding the liability of the appellant as principal employer and respondent No. 2 as Contractor under Section 12(1) and (2) of the act."

11. Section 12(1), (2), (3) and (4) of the Workmen's Compensation Act reads as follows:-

"(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 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 the 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.

3. Nothing in this Section shall be construed as preventing a workman from recovering compensation from the contractor instead of the principal."

4. This section shall not apply in any case where the accident occurred elsewhere than on, in or about the premises on which the principal has undertaken or usually undertakes, as the case may be, to execute the work or which are otherwise under his control or management."

12. A plain reading of Section 12(1) and (2) of the Act makes it clear that where the principal in the course of or for any purpose of his trade or business contractors with the contractor for the execution by or under the contractor, the whole or any part of any work which is ordinarily part of his trade or business, he is liable to pay compensation to the workman employed in the execution of the work and that he is entitled to be indemnified by the contractor of any person from whom the workman could have recovered compensation and that all questions as to the right to and the amount of any such indemnity shall be settled by the Commissioner. Section 12(3) provides that the workman can recover compensation from the contractor instead of the principal.

13. Sub Rule 5 of Rule 39 of the Workman's Compensation Rules reads as follows:-

"(5) In any proceeding in which a notice has been served on any person under Sub-rule 1 or Sub-rule (3) the Commissioner shall, if he awards compensation, record in his judgment a finding in respect of each of such persons whether he is or is not liable to indemnify any of the opposite-parties, and shall specify the party, if any, whom he is liable to indemnify."

14. The case of the appellant herein is that the construction work was entrusted to the respondent No. 2 herein who is a contractor and as per Clause 11 of the agreement entered into between them the respondent No. 2 is liable to pay compensation and that as the respondent No. 1 was not employed by him and there is no relationship of employer and employee between him and the respondent No. 1, he is not liable to pay any compensation. The case of the respondent No. 2 herein is that though the construction work was entrusted to him by the appellant herein, the construction work was carried out under the total control, observation and supervision of the appellant who is the principal employer and that the centering work of the building was entrusted by him to one Balu Babu Kundoskop who is a sub-contractor and that as per the terms of the agreement entered into between them, it is the sub-contractor who is liable to pay the compensation and that as there is no relationship of employer and employee between him and the respondent No. 1, he is not liable to pay any compensation and that it is the principal employer and the sub-contractor who are liable to pay the compensation. Though both the appellant and the respondent No. 2 have denied their liability to pay compensation as principal employer and contractor, the Commissioner has neither framed any issue, nor recorded any finding regarding the liability of the appellant herein as principal and respondent No. 2 herein as contractor under Section 12(1) and (2) of the Act. The Commissioner while answering Issue No. 7, simply extracting Section 12(1) of the Act has stated that the appellant herein is liable to pay the compensation, without giving any reasons. This Court, in the case of DR. B. RADHAKRISHNA AND GOURAMMA AND OTHERS (Supra) has held that unless it is shown that the appellant is the principal employer he cannot be saddled with any liability. In DR. B. RADHAKRISHNA AND GOURAMMA (Supra) as no issue was framed for determining as to whether the principal employer was supervising the work that was being executed by the deceased workman, the Division Bench of this Court has remanded the matter for fresh consideration. In the case of KOODALINGAM v. SUPERINTENDING ENGINEER, PWD(Supra), Kerala High Court has held that the principal who is made liable to pay compensation is entitled to be indemnified by the contractor by virtue of Section 12(2) of the Act and to recover the amount of compensation, if any paid to the workman from the contractor. It is clear from the ratio of these decisions the Section 12(1) and (2) of the Act that unless it is shown that a person is the principal employer he cannot be saddled with liability to pay compensation and that the principal who is made liable to pay compensation is entitled to be indemnified by the contractor by virtue of Section 12(2) of the Act and to recover the amount of compensation, if any, paid to the workmen, from the contractor. In view of this, the Commissioner ought to have framed an issue regarding the liability of the appellant and the respondent No. 2 herein as principal and contractor under Section 12(1) and (2) of the Act and recorded his finding. Without framing an issue regarding the liability of the appellant and respondent No. 2 herein as principal employer and contractor under 12(1)(2) and (3) of the Act and without recording any finding the Commissioner has fixed the liability on the appellant herein to pay compensation. It is therefore, I hold that the Commissioner was not justified in fixing the liability on the appellant herein to pay compensation. The Judgment and award passed by the Commissioner is not sustainable in law and it is liable to be set-aside. In the circumstances stated above the matter requires fresh consideration, and therefore it is proper to remit the case to the Commissioner to consider it afresh in the light of the observations made in the course of this Judgment by giving an opportunity to the parties to lead further, evidence and pass orders in accordance with law.

15. For the reasons stated above, the appeal is allowed, the Judgment and award dated 14.6.2002 passed by the Commissioner Workmen's Compensation, Belgaum in WCA.SR.199/01 is set aside and the case is remitted to the Commissioner to consider it afresh in the light of the observations made in the course of this Judgment by giving opportunity to the parties to lead further evidence and pass orders in accordance with law, within six months from the date of communication of this order. All contentions of the parties are left open. The parties are directed to appear before the Commissioner on 29.3.2004 at 3 p.m. It is seen from the records that out of the amount deposited by the appellant herein in terms of the award passed by the Commissioner, some amount has already been paid to the respondent No. 1 herein. The remaining amount shall be invested in Fixed Deposit in any Nationalized Bank till the disposal of this case and the Commissioner shall pass appropriate orders as to whom it is to be paid, at the time of passing final orders. The registry is directed to send back the records to the Commissioner forthwith. No order as to costs.