Contracting and subcontracting

(1) Where any person (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 (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 undertaken by the principal, the principal shall, provided the notice of the accident required under section 16 is given to him, be liable to pay to any workman employed in the execution of the work any compensation under this Act which he would have been liable to pay if that workman had been immediately employed by him; and where compensation is claimed from or proceedings are taken against the principal, then in the application of this Act references to the principal shall be substituted for references to the employer, except that the amount of compensation shall be calculated with reference to the earnings of the workman under the employer by whom he is immediately employed. (2) Where the contract relates to threshing, ploughing, or other agricultural work and the contractor provides and uses machinery driven by mechanical power for the purposes of such work, he and he alone shall be liable under this Act to pay compensation to any workman employed by him on such work. (3) Where the principal is liable to pay compensation under this section, he shall be entitled to be indemnified by any person who would have been liable to pay compensation to the workman independently of this section. (4) Nothing in this section shall be construed as preventing a workman recovering compensation under this Act from the contractor instead of the principal. (5) This section shall not apply in any case where the accident occurred elsewhere than on, or in, or about premises on which the contractor or the principal, himself being a contractor, has undertaken to execute the work or which are otherwise under his control or management.