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1963 DIGILAW 47 (BOM)

EMPLOYEES' STATE INSURANCE CORPORATION, BOMBAY v. INDIAN HUME PIPE COMPANY LTD. , BOMBAY

1963-06-13

R.S.KALELKAR

body1963
ORDER : 1. In this application under the Employees' State Insurance Act, the corporation is claiming from opposite party a sum of Rs. 458 as employees' contribution for the period 1 July, 1956 to 28 February, 1962. In its application the corporation says that the opposite party is a factory covered under the provisions of the Employees' State Insurance Act but has not paid the employees' contribution in respect of apprentices for the said period. 2. In this written statement opposite party contends (1) that the application is barred by limitation, and (2) that the application is not maintainable because the apprentices are not "employees" under the Employees' State Insurance Act. 3. Opposite party has raised the same contentions in correspondence with applicant and therefore he denies his liability to pay employees' contribution in respect of the apprentices. 4. At the hearing both parties by consent submitted an agreed statement of issues and the matter was to be decided on arguments alone. The issues are : (1) Whether an apprentice is an employee within the meaning of the Employees' State Insurance Act and whether any contribution is payable by the opposite party in respect of its apprentices as claimed by the applicant ? (2) Whether stipend or allowances paid to an apprentice are wages within the terms of the Employees' State Insurance Act ? (3) Whether merely because a particular stipend or allowance is received by an apprentice, he becomes an employee in terms of the Act and whether any contribution is payable in his respect ? (4) Whether the contention of the applicant that an apprentice getting a stipend or allowance is covered by the provisions of the Employees' State Insurance Act is correct ? 5. In my opinion, the first two of these issues include the remaining issues (3) and (4). The two questions in this case are : (1) whether a paid apprentice is an "employee" under the Employees' State Insurance Act; and (2) whether the stipend or allowance paid to him is "wages" as defined by the Employees' State Insurance Act and in respect of which employees' contribution is payable under the Employees' State Insurance Act. 6. The two questions in this case are : (1) whether a paid apprentice is an "employee" under the Employees' State Insurance Act; and (2) whether the stipend or allowance paid to him is "wages" as defined by the Employees' State Insurance Act and in respect of which employees' contribution is payable under the Employees' State Insurance Act. 6. The definition of an "employee" under the Employees' State Insurance Act in S. 2(9) is as follows : "employee" means any person employed for wages in or in connexion with the work of a factory or establishment to which this Act applies and - (i) who is directly employed by the principal employer on any work of, or incidental or preliminary to or connected with the work of, the factory or establishment, whether such work is done by the employee in the factory or establishment or elsewhere; or * * *" 7. The rest of the definition is not material for this case. "Wages" has been defined in S. 2(22) of the Act : "'wages' means all remuneration paid or payable in cash to an employee, if the terms of the contract of employment express or implied, were fulfilled and includes other additional remuneration, if any (paid at intervals not exceeding two months), but does not include - (a) any contribution paid by the employer to any pension fund or provident fund, or under this Act; (b) any travelling allowance or the value of any travelling concession; (c) any sum paid to the person employed to defray special expenses entailed on him by the nature of him employment; or (d) any gratuity payable on discharge." 8. Now it is contended on behalf of opposite party that an apprentice is not employed for wages; he does not do any work of the factory or in connexion with the factory and there is no contract of employment, express or implied between him and the management. He is there only to learn the work. On the other hand it is argued on behalf of the applicant that the term "employee" in the Employees' State Insurance Act should be construed liberally. In support of his argument Sri Vyavaharkar has relied on a decision of the Madras High Court in Employees State Insurance Corporation, Madras Vs. He is there only to learn the work. On the other hand it is argued on behalf of the applicant that the term "employee" in the Employees' State Insurance Act should be construed liberally. In support of his argument Sri Vyavaharkar has relied on a decision of the Madras High Court in Employees State Insurance Corporation, Madras Vs. S.M. Sriramulu Naidu, and in particular, on the passage at p. 705 : "We have already referred to the definition in the Act of the term 'employee.' That will include within its scope clerical and labour workers engaged or paid through contractors and also part-time workers and paid apprentices. That is in keeping with the objects of the Act, which was to relieve poverty, a feature not being confined only to the actual workers in a manufacturing plant." 9. It can, however, be seen that in that Madras case the Court was not called upon to decide the question whether a paid apprentice was an "employee" or even the question whether a particular worker was an "employee." The question for decision there was whether the employer's establishment were covered under S. 2(12) of the Employees' State Insurance Act as a factory and more than 20 persons were working in it. The Appellate Bench of the Madras High Court was considering in that case the definition of "factory" and who were persons working and the premises of the factory and while discussing the scope of the Employees' State Insurance Act and pointing out difference between the Factories Act and the Employees' State Insurance Act, they held that the definitions under the Factories Act should not be used in construing under the Employees' State Insurance Act the object of which is wider. The reference to the paid apprentices in the passage cited above, cannot, in my opinion, be relied on as an authority which would have been the case if the Madras High Court had to consider whether a paid apprentice is an "employee" under the Act or if the High Court was considering the definition of an "employee" under S. 2(9) of the Act. In fact this has been pointed out in a later Madras decision in Employees' State Insurance Corporation with its Regional Office at Coimbatore Vs. Ganpathia Pillai and Others, AIR 1961 Mad 176 where this earlier Employees State Insurance Corporation, Madras Vs. In fact this has been pointed out in a later Madras decision in Employees' State Insurance Corporation with its Regional Office at Coimbatore Vs. Ganpathia Pillai and Others, AIR 1961 Mad 176 where this earlier Employees State Insurance Corporation, Madras Vs. S.M. Sriramulu Naidu, AIR 1960 Mad 248 has been discussed. At p. 598 the learned Chief Justice observes : "In that case Employees State Insurance Corporation, Madras Vs. S.M. Sriramulu Naidu, there was no question as to whether a person was or was not an 'employee.'" 10. It is argued by Sri Mehta that whenever the legislature wanted to give the benefit of certain provisions of the labour legislation to the apprentices, they have specifically included them in the definition of "employee" or "worker." For instance, under the Industrial Disputes Act of 1947 the definition of a "workman" in S. 2(s) is : "'workman' means any person (including an apprentice employed in any industry to do any skilled or unkilled manual, supervisory, technical or clerical work for hire or reward, whether the terms of employment be expressed or implied, and for the purposes of any proceeding under this Act in relation to an industrial dispute, includes any such person who has been dismissed, discharged or retrenched in connexion with, or whose dismissal, discharge or retrenchment has led to that dispute, but does not include any such person." 11. Similarly under the Bombay Shops and Establishments Act, S. 2(6), an "employee" specifically includes an apprentice. The fact that such specific inclusion is not made in the case of Employees' State Insurance Act shows that they were not included. In my opinion, this argument of Sri Mehta is correct. 12. There is no dispute in this case that an apprentice is employed primarily for learning and training. But it is argued on behalf of the corporation that if the scope of the Employees' State Insurance Act has been wider, the apprentices must be included in the definition of an "employee" under the Act. In my opinion, it will be relevant in this connexion to refer to and compare the provisions of the Apprentices Act, 1961 (52 of 1961), though it is not in terms applicable to the apprentices in this case. In my opinion, it will be relevant in this connexion to refer to and compare the provisions of the Apprentices Act, 1961 (52 of 1961), though it is not in terms applicable to the apprentices in this case. The definition of "apprentice" in S. 2(a) of the Act defines an "apprentice" as a "person who is undergoing apprenticeship training in a designated trade in pursuance of a contract of apprenticeship." In my opinion, this definition of apprenticeship is applicable to apprentices in any trade or industry. Again S. 12 provides that "every apprentice undergoing apprenticeship training shall have the following obligations, namely : (a) to learn his trade conscientiously and diligently and endeavour to qualify himself as a skilled craftsman before the expiry of the period of training; (b) to attend practical and instructional classes regularly; (c) to carry out all lawful orders of his employer and superiors in the establishment; and (d) to carry out his obligations under the contract of apprenticeship." Then S. 13(1)f provides : "The employer shall pay to every apprentice during the period of apprenticeship training such stipend at a rate not less than the prescribed minimum rate as may be specified in the contract of apprenticeship and the stipend so specified shall be paid at such intervals and subject to such conditions as may be prescribed" and Sub-section (2) provides : "An apprentice shall not receive any other payment from his employer nor shall he be paid on the basis of piecework or required to take part in any output bonus or other incentive scheme." 13. Section 14 provides : "where any apprentices are undergoing training in a factory, the provision of Chapters III, IV and V of the Factories Act, 1948, shall apply in relation to the health safety and welfare of the apprentices ..." 14. Now, if apprentices were included as workers in the Factories Act, this provision would be unnecessary. Then there is a special provision, S. 15(3), which provides : "An apprentice shall be entitled to such leave as may be prescribed and to such holidays as are observed in the establishment in which he is undergoing training." 15. This also shows that an apprentice will not be entitled to such leave as an ordinary employee of the factory will be entitled to but for this provision. This also shows that an apprentice will not be entitled to such leave as an ordinary employee of the factory will be entitled to but for this provision. Then S. 16 provides : "If personal injury is caused to an apprentice by accident arising out of and in the course of his training as an apprentice, his employer shall be liable to pay compensation which shall be determined and paid, so far as may be, in accordance with the provisions of the Workmen's Compensation Act, 1923, subject to the modifications specified in the schedule" and in the schedule specified certain changes in the definition of wages which includes stipends to "workman" which includes apprentices. Now, in my opinion, if the Workmen's Compensation Act already applied to an apprentice, no specific provision like S. 16 of this Act was necessary. Therefore, in my opinion, even an ordinary apprentice not covered by the Apprentice Act is not covered by the Workmen's Compensation Act and similarly he is not covered by the Employees' State Insurance Act also unless it is made specifically applicable to him. Then again S. 18 of the Apprentices Act says : "Save as otherwise provided in this Act - (a) every apprentice undergoing apprenticeship training in a designated trade in an establishment shall be a trainee and not a worker, and (b) the provisions of any law with respect to labour shall not apply to or in relation to such apprentice." 16. This is a clear indication that an apprentice is a trainee and not a worker and provisions of any labour law do not apply to him unless they are specifically made applicable to him. This is true not only of "an apprentice" governed by the Apprentices Act but also of apprentices in general. I am therefore of opinion that a paid apprentice is not an "employee" under the Employees' State Insurance Act and the stipend that he receives during the period of his apprenticeship is not "wages." 17. In support of his argument Sri Mehta has referred to several decisions (which I shall briefly discuss). In Nutan Mills Vs. I am therefore of opinion that a paid apprentice is not an "employee" under the Employees' State Insurance Act and the stipend that he receives during the period of his apprenticeship is not "wages." 17. In support of his argument Sri Mehta has referred to several decisions (which I shall briefly discuss). In Nutan Mills Vs. Employees State Insurance Corporation, AIR 1956 Bom 336 a Division Bench of the Bombay High Court has held that the lay-off compensation paid under S. 25C of the Industrial Disputes Act cannot be held to be "wages" within the meaning of S. 2(22) of the Employees' State Insurance Act. It has been observed at p. 218 : "Therefore, it is clear that it is not every payment by the employer which would come within this definition. It must be a payment which should be remuneration and remuneration must mean that it is payment for service rendered or to be rendered by the employee." 18. In my opinion, if it is so in the case of a payment to an employee, it is all the more so in the case of the paid apprentice who renders no service. In Employees' State Insurance Corporation, Bombay v. Raman (Chittur Harihar Iyer) 1957 I L.L.J. 267 - J. K. Chemicals, Ltd., case], the Bombay high Court has held that before a person can be said to be an "employee" within the meaning of S. 2(9) of the Employees' State Insurance Act, it must be shown that he has been employed on any work of, or incidental or preliminary to, or connected with, the work of the factory. "Where it is admitted that the work of the factory ends with production of finished articles and it was not its work to sell the products of the factory, it cannot be held that the work of selling the products of the factory is incidental to, or connected with, the work of the factory. Where the factory and the administrative office maintain two separate musters, wage-rolls and two separate accounts and the person concerned is employed in the administrative office and his work consists mainly of taking down dictation from the manager and other officers and typing letters, such person is not an "employee" within the meaning of the Act." 19. In Anusuyabai Vithal Vs. In Anusuyabai Vithal Vs. Mehta J.H., (1959) 61 BOMLR 1417, the Bombay High Court has held that "compensation, which is payable for lay-off, that is, on account of the failure or inability of the employer to provide work, cannot therefore be said to be remuneration. The payment is made not as consideration for work done or services rendered, but as compensation for temporary loss of employment." 20. This was in reference to the definition of "wages" under the Payment of Wages Act where "wages" has been defined as remuneration which would be payable if the terms of employment were fulfilled or for work done in such employment. In the case of an apprentice, there is no contract of employment and no work is done by an apprentice in such employment. Any work that is done by an apprentice while undergoing apprenticeship training is work done not in any employment but in an apprenticeship. 21. In Employees' State Insurance Corporation with its Regional Office at Coimbatore Vs. Ganpathia Pillai and Others, , a Division Bench of the Madras High Court has held that a clerk employed in the managing agents' office looking after the disbursement of pay to the officers and staff and also of wages to the workers in the mills was an "employee" within the meaning of S. 2(9) of the Employees' State Insurance Act as the payment of wages to the workers employed in the factory is in a sense incidental to or connected with the work of factory. But the other staff in the managing agents' office which was not concerned with the manufacturing process or or the work of the factory was not included in the term "employee" under Employees' State Insurance Act. In this case the Appellate Bench relied on the decision of the Bombay High Court in J.K. Chemicals case 1957 I L.L.J. 267 referred to above. 22. Sri Mehta has also referred to a recent decision of the Supreme Court in Mohmedalli and Others Vs. Union of India (UOI) and Another, AIR 1964 SC 980 , which was a case under the Employees' Provident Funds Act. At p. 542 it is observed : "both 'salary' and 'wages' are emoluments paid to an employee by way of recompense for his labour. Neither of the two terms is a 'term of art'." 23. Union of India (UOI) and Another, AIR 1964 SC 980 , which was a case under the Employees' Provident Funds Act. At p. 542 it is observed : "both 'salary' and 'wages' are emoluments paid to an employee by way of recompense for his labour. Neither of the two terms is a 'term of art'." 23. My findings on the issues are : (1) No. (2) No. (3) No. (4) No. ORDER 24. Application is dismissed.