ESI CORPORATION v. UNITED ELECTRICAL INDUSTRIES LTD.
1974-12-11
P.JANAKI AMMA, P.SUBRAMONIAN POTI
body1974
DigiLaw.ai
Judgment :- 1. Are the employees of a canteen run by an independent contractor within the premises of a factory engaged in the business of manufacture and sale of meters and other goods, employees of that factory, as the term is defined in S.2 (9) of the Employees' State Insurance Act, 1948 (hereinafter referred to as the Act)? This is the main question which arises for decision in this appeal. There are two other questions, the. answer to which need not detain us for long. 2. M/s. United Electrical Industries Limited, Quilon applied to the Employees Insurance Court, Alleppy for a declaration that the demand made by the Employees' State Insurance Corporation for payment of contributions under the Act on wages paid to the canteen employees for the period from 7-6-1960 to 20-11-1966 and also payment of contributions on wages paid to casual workers for the period from the first quarter of 1952 to the last quarter of 1962 were illegal. Besides the question which we have formulated earlier, two other questions arose for decision before the Insurance Court. One of them was whether the casual workers were 'employees' in respect of whom contribution was payable and the other was whether the claim for recovery by the Employees State Insurance Corporation was barred by limitation. 3. The Employees Insurance Court held that in respect of casual workers as well as canteen employees no contribution was payable by the employer and further that the demand for contribution on wages paid to casual workmen was barred by limitation. 4. On the question of limitation, the Employees Insurance Court was clearly in error. It observed that the court had dealt with a good number of similar cases and had passed judgments therein declaring that any demand or application made by any party after a period of three years from the date the cause of action arose was barred by limitation under Art.137 of the Indian Limitation Act. Reference is also made to the decision of the Supreme Court reported in Bharat Barrel & Drum Mfg. Co. Ltd v. E.S.I. Corporation (1971 (2) LLJ. 647). Evidently the Insurance Court was in error in applying the provisions of the Limitation Act to an application under the Employees' State Insurance Act.
Reference is also made to the decision of the Supreme Court reported in Bharat Barrel & Drum Mfg. Co. Ltd v. E.S.I. Corporation (1971 (2) LLJ. 647). Evidently the Insurance Court was in error in applying the provisions of the Limitation Act to an application under the Employees' State Insurance Act. It has been held by this court in South India Corporation (Tray.) P. Ltd. v. E.S.I. Corporation (1973 KLT 571) that the period of limitation under the Indian Limitation Act is not applicable to proceedings before the Employees Insurance Court. Apart from that, it is strange that the question of limitation is considered not with reference to any application before the Employees Insurance Court but with reference to the claim of the Employees State Insurance Corporation to recover otherwise than through any application before the Employees Insurance Court. Evidently, therefore, the view as to limitation expressed in the judgment under appeal cannot be sustained. But in regard to casual labourers, the Employees State Insurance Corporation is not entitled to claim contribution for the reason that they are not "employees" within the scope of the definition of that term in the Act. The Corporation has no case that the persons in respect of whom contribution was claimed as payable are not casual workmen. The mere fact that certain workmen are referred to as casual workmen does not, of course, determine their character but if, from the facts, it is found that they are not "employed" by the employer but are mainly engaged for casual labour, then, of course, there is no scope for demanding contribution in respect of such workmen. We need not go into this question further in view of what we have expressed on this in our decision in A S Nos. 789 of 1972 and 55 of 1973. 5. The canteen in the premises of the factory is run by an independent contractor. The employees in the canteen are those employed by him. The applicant has no direct connection with such employees. The work in the factory is one of manufacture of meters and other similar goods.
789 of 1972 and 55 of 1973. 5. The canteen in the premises of the factory is run by an independent contractor. The employees in the canteen are those employed by him. The applicant has no direct connection with such employees. The work in the factory is one of manufacture of meters and other similar goods. On these facts it has been found by the Employees Insurance Court that there is no evidence to show that the employees are doing any work incidental to or connected with the manufacturing process and so, there is no basis to infer that the employees engaged by the independent contractor stand in employee-employer relationship, with the applicant concern. It has been further found that they are not doing any work incidental to or preliminary to the work of the applicant's factory. 6. A canteen run in the premises of the factory is so run for the purpose of providing amenities to the employees of the factory. S.46 of the Factories Act, 1948 enables the State Government to make rules requiring that in any specified factory wherein more than two hundred and fifty workers are ordinarily employed, a canteen or canteens shall be provided and maintained by the occupier for the use of the workers. Even where the number of workers is less than 2:0, it is open to the occupier to provide canteens. The object of providing such facilities is to make more amenities available to the workmen so as to increase their efficiency and also to provide them with conditions conducive to the bringing out of the best in them. The provision of hospitals, shelters, rest rooms, lunch rooms and the like are all intended to better the working conditions in factories. It cannot be said that the maintenance of these is not incidental to the work of the factory since the factory is concerned only with production. If persons concerned in such work are those employed in work incidental to the work of the factory or incidental to the purpose of the factory, it is difficult to say that the work of the employees in canteens falls outside the purview of the term. The Supreme Court had occasion to consider the position of a gardener in the premises of a factory in relation to the plea whether he is engaged in work incidental to the factory.
The Supreme Court had occasion to consider the position of a gardener in the premises of a factory in relation to the plea whether he is engaged in work incidental to the factory. The question there was whether certain gardeners employed in a garden attached to a mill could claim to be employees within the meaning of the term in the Bombay Industrial Relations Act. Dealing with the question, the Supreme Court in Ahmedabad Mfg. & Calico Ptg. Co. v. Ramtahel (AIR. 1972 S. C. 1598) quoted the following passage from the judgment of the High Court which was under appeal before that Court, at page 1601: "A garden when attached to a mill is an amenity that is provided to the workers employed in the mill and it is not necessary that an amenity should arise from a statutory requirement or obligation and it hardly makes any differences if the garden was provided for voluntarily or under a statutory obligation. The activities in an undertaking such as a textile mill are not confined purely to factory work of manufacturing textile fabric within the mill premises, but various other incidental and connected institutions such as hospital, a canteen, a playground and a garden might be maintained by the mill to provide amenities to its workers and these activities could be considered as the activities made in relation to and in the usual course of conducting the affairs of the mill. Not merely within the turning of the wheels of the machine which, no doubt, is directly responsible for the production of the article for which the plant of the particular industry was installed and not merely in utilising the power to move the machine to action, the filed of activities of the undertaking is restricted and exhausted, but there are many more varieties though allied and complementary activities which are being carried on by the management and which help, though in an indirect manner, in creating a healthy atmosphere of well being and co-operation amongst the workers by providing essential facilities such as means for treatment of their ailments, for general entertainment and care not only of the workers but of the children who are left unattended while their parents are engaged in their work in the factory.
While, therefore construing the words "in the course of" and "ordinarily a part of the undertaking' we must give them a meaning which is natural and consistent with the working of a factory as it exists in the present times and while doing so, an approach should not be theoretical and academic but pragmatic and practical. The activities that are usually conducted as a part of an undertaking by which not only workers participate in the actual running of the machinery but also activities which conduce to the smooth working of the plant as a whole must be considered to fall within the ambit of the definition. We are, therefore, unable to agree with the contention of Mr. Patel that the application of the Act must be restricted to only those workers who are directly engaged in the manufacture of textile fabric." Referring to this, the Supreme Court said: "The respondents' learned counsel, apart from urging that the High Court has sent the case back for deciding the nature of work done by the malis in this case and that, therefore, the appellant cannot appropriately ask this court to determine these questions which are awaiting decision by the Industrial Court, also relied on Basti Sugar Mills Ltd. v. Ram Ujagar, (1964) 2 SC R.838 = (AIR. 1964 SC 355) and on J.K. Cotton Spg & Wvg. Mills (Supra). In the former case the respondents there employed by a contractor to remove press mud from the sugar factory were held to be workmen employed by the factory because removing press mud was considered ordinarily to be a part of the sugar industry. The latter case is an authority for the proposition that an employee engaged in any work or operation which is incidentally connected with the main industry is a workman if other requirements of S.2(s) of the Industrial Disputes Act, 14 of 1947 are satisfied and that the malis in that case were workers within the meaning of S.2 of UP Industrial Disputes Act 28 of 1947. The bungalows and gardens on which the malis in that case worked were a kind of amenity supplied by the mills to its officers and on this reasoning the malis were held to be engaged in operations incidentally connected with the main industry carried on by the employer.
The bungalows and gardens on which the malis in that case worked were a kind of amenity supplied by the mills to its officers and on this reasoning the malis were held to be engaged in operations incidentally connected with the main industry carried on by the employer. It was by relying on the ratio of this decision that the High Court in the present case came to the conclusion that the workers in order to come within the definition of "employee" need not necessarily be directly connected with the manufacture of textile fabrics. This decision is binding on us and indeed Shri Desai also fairly accepted its ratio. He only contended that the malis employed by a contractor unless directly connected with the textile operations cannot get the benefit of this decision". This decision is referred to by the Supreme Court and followed in Saraspur Mills Co.v. Ramanlal (AIR. 1973 S.C. 2297), a case concerning coverage relating to employees in canteens 7. The High Court of Andhra Pradesh in the decision in Sirsilk Ltd. v. Regional Director, E.S I Corporation (AIR 1964 AP 291) was concerned with the question of coverage of workmen in a canteen attached to the factory and the learned judges took the view that such workmen are employees as they are concerned with the work incidental to the work of the factory. We are in respectful agreement with this view. If the workmen in the canteen are employed in connection with any work incidental to the purpose of the factory, then, even if they are employed by an independent contractor, they will be employees if they are working on the premises of the factory, which is the case here. Therefore, the canteen employees are liable to be covered. To that extent, the appeal succeeds. A declaration is granted in respect of the canteen employees. No declaration can be granted as prayed for in respect of casual workers as they are persons held to be not covered by the Act. The appeal is disposed of as above. No costs.