E. Abdul Jaleel vs V. Pakkirisamy and Another

Thangamani, J.—The appellant is the first respondent in W.C. No. 73 of 1988 before the Deputy Commissioner of Labour Commissioner

for Workmen''s Compensation, Tiruchirapalli. The present first respondent v. Pakkirisamy was employed in a'' Saw Mill at Mayiladuthurai. On

18.3.1988 at about 12.30 p.m. there was an accident in the mill in which Pakkirisamy''s left hand was cut and severed above the wrist by the Saw.

He was immediately taken to the Government Hospital, Mayiladuthurai and then to the Thanjavur Medical College Hospital. Inspite of the

treatment given, the wrist could not be attached. Thereupon, he filed W.C. No. 473 of 1988 before the Deputy Commissioner of Labour

Commissioner for Workmen''s Compensation claiming Rs. 22,400/- as damages. He impleaded the appellant herein Abdul Jaleel as the first

respondent and Parameshwaran the present second respondent as second respondent in that application on the ground that the appellant was the

original owner of the Saw Mill, that he joined the mill when the mill belonged to the appellant and that thereafter the appellant had leased out the

mill to the second respondent.

The appellant pleaded that since he had leased out the Saw Mill to the second respondent on 20.8.1987, he had nothing to do with the day to

day working of the said mill from the day onwards. He was not the employer of the first respondent at the time of the accident. Hence, the claim

for compensation against him was not maintainable.

The second respondent contended that he was also not the employer of the worker since it was the appellant who had appointed the first

respondent in his mill. He also pleaded that the first respondent is guilty of contributory negligence. Learned Deputy Commissioner of Labour and

Commissioner for Workmen''s Compensation in his order dated 25.8.1989 found that the appellant was the employer of the first respondent and

that he was liable to pay Rs. 22,671/- by way of compensation. And this appeal is directed against the said order.

The only point urged before this Court by the appellant was that there was no relationship of master and servant between him and the first

respondent on the date of the accident and that the liability was only on the second the averment in the application that in 1987 the appellant has

leased out the mill to the second respondent and the evidence of the workman as A.W. 1 that the second respondent alone was paying him the

wages and the mill was under the management of the second respondent at the time of the accident. He also pressed into service the statement of

the second respondent as R.W. 1 that he did not appoint the first respondent as a worker in his mill. The contract of service was only between the

appellant and the first respondent. He also pointed out that under Clause (e)ofSection2ofthe Workmen''s Compensation Act, 1923, when the

services of a workman are temporarily lent or let on hire to another person by the person with whom the workman has entered into a contract of

service or apprenticeship, the expression ""employer"" means such other person while the workman is working for him. So even as per the definition

of the Act, the second respondent alone was his employer.

However, as rightly urged by learned Counsel for the first respondent (workman) mere admission of lease cannot mean that the services of the

worker have been transferred from the appellant to the second respondent. So long as the services of the workman are not transferred from the

lessor to lessee in the manner known to law, the liability of the original employer continues. Section 25-FF of the Industrial Disputes Act, 1947,

envisages that where the ownership of management of an undertaking is transferred, whether by agreement or by operation of law, from the

employer in relation to that undertaking to a new employer, every workman who has been in continuous service for not less than one year in that

undertaking immediately before such transfer shall be entitled to notice and compensation in accordance with the provisions of Section 25-F, as if

the workman had been retrenched. In this case, it is not the evidence of the second respondent as R.W. 1 that subsequent to his taking over the

Mill on lease, there was compliance of the provisions of Section 25-FF or there was any fresh agreement between himself and the existing

workers. Even the appellant as R.W. 2 admits that there was no agreement between himself and the second respondent that all the workers

employed by him to be taken as his employees. At any rate, there was no transfer of the services of the employees of the mill from the appellant to

the second respondent with the consent of workers. In the absence of any tripartite agreement among lessor, lessee and workman, it cannot be

said that liability to pay compensation rests with the lessee.

In Manager, Pyarchand Kesarimal Ponwal Bidi Factory Vs. Omkar Laxman Thange and Others, , it has been laid down that a contract for

service is incapable of transfer unilaterally. Such a transfer of service from one employer to another can only be effected by a tripartite agreement

between the employer, the employee and that third party, the effect of which would be to terminate the original contract of service by mutual

consent and to make a new contract between the employee and third party. So long as the contract of service is not terminated, a new contract is

not made as aforesaid, and the employee continues to be in the employment of the employer. Therefore, when an employer orders him to do

certain work for another person the employee still continues to be in his employment. The only thing that happens in such a case is that he carries

out the orders of his master. The employee has the right to claim his wages from the employer and not from the third party to whom his services

are lent or hired. It may be that such a third party may pay his wages during the time that he has hired his services, but that is because of his

agreement with the employer. That does not preclude the employee from claiming his wages from the employer. The hirer may also exercise

control and direction in the doing of the thing for which he is hired or even the manner in which it is to be done. But if the employee fails to carry

out his direction he cannot dismiss him and can only complain to the employer. The right of dismissal vests with the employer.

In Chotila Gram Panchayat v. Jatashankar 1972 LIC 1172 a Division Bench of Gujarat High Court has pointed out that except in case of

statutory provision to the contrary, right to the service of an employee cannot be the subject-matter of a transfer by employer to a third party

without employee''s consent. Therefore, on this settled legal position, it is quite evident that in the present case there is only a loan of services and

not a transfer of the contract of service itself, in favour of the second respondent. So the claim of the appellant that the second respondent alone is

liable to pay compensation has no substance and the Trial Court has rightly fastened the liability on him. In the result, the appeal is dismissed. No

costs.