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1979 DIGILAW 51 (KAR)

REGIONAL DIRECTOR, EMPLOYEES STATE INSURANCE CORPORATION v. SUVARNA SAW MILLS

1979-02-22

CHANDRASHEKARAIAH, M.RAMA JOIS, VENKATACHALAIAH

body1979
RAMA JOIS, J. ( 1 ) IN these three connected appeals filed by the, Bangalore Regional director of the Employees State Insurance Corporation, under S. 82 (2) of the Employees' State Insurance Act, 1948 (hereinafter referred to as the Act against the decision of Employees' Insurance Courts, Mangalore and Bangalore, a Division Bench of this Court has referred a common question of law for the opinion of the Full Bench undep S. 7 of the karnataka, High Court Act. That question reads as follows: "whether the casual labourers employed, by the employer-company are "employees" within the meaning of S. 2 (9) of the E. S. I. Act and whether their employment is an insurable employment within the meaning of S. 2 (13a) and covered under the Act for the claim of contribution in respect of the wages paid or payable to them?" as pointed out in the order of reference itself, a Division Bench of thus court, in Regional Director, ESI, Corporation v. Davanagere Cotton Mills ltd. , 1976 (2) Kar. L. J. 400 has already taken the view that the provisions of the Act apply to the casual employees as well. However, the Division Bench, before whom the above matters had come up, after hearing the advocates for the parties, was of the opinion that the earlier decision required reconsideration and accordingly made the reference. ( 2 ) IN all these appeals, the appellant is the Regional Director, Employees' state Insurance Corporation, Bangalore) (hereinafter referred tc as 'the Director1' ). In MFA. No. 397/76 M/s. Suvarna Saw Mills, Mangalore, is the respondent and in MFA. No. 493 and 494 of 1976 M/s. Kirloskar electric Co. , Ltd,. , Hubli. , is the respondent (hereinafter referred to as the employees ). ( 3 ) SRI R. N. Narasimha Murthy, learned Counsel appearing for the employers submitted that the earlier decision of this Court in devanagere Cotton Mills (1) required reconsideration. In support of his submission he relied on the definition of the words 'benefit period' and 'contribution period' contained in Ss. 2 (2) and. 2 (5) of the Act, respectively, which read as follows; "2. Definitions. In support of his submission he relied on the definition of the words 'benefit period' and 'contribution period' contained in Ss. 2 (2) and. 2 (5) of the Act, respectively, which read as follows; "2. Definitions. ** ** (2) "benefit period" means such period, being not less than twenty-five but not exceeding twenty-seven consecutive weeks or six consecutive months corresponding to the contribution period, as may be specified in the regulations; ** ** ** ** (5)"contribution period" means such period, being not less than twenty-five but not exceeding twenty-seven consecutive weeks or six consecutive months, as may be specfied in the regulations;"he then relied on the wordings of Ss. 47 and 50 of the Act which indicate that for securing benefits under those provisions, an employee should have earned a benefit period, and that the contribution must have been payable for atleast a minimum period of thirteen weeks during the corresponding contribution period. He argued that these provisions give the clearest indication that an employee, to be governed by the Act, must haye been employed at least for the duration of the minimum contribution period which go to show that the casual employees are not governed by the Act, and that the effect of these provisions have not been considered by the Division Bench. ( 4 ) SRI M. Papanna, learned counsel appearing for the Director, per contra submitted that though an employee, to be eligible, for the benefits like sickness benefit and maternity benefit, as the case may be, under Ss. 47 and 50 of the Act, respectively, contributions must have been payable by him for a period of not less than thirteen weeks, it did not follow therefrom, that all the benefits provided in the Act were available only to employees, who had acquired the benefit period and in respect of whom contributions were payable for any specified period. He submitted that there were several other benefits which were available even to a casual employee employed in an insurable employment even for a day, such as disablement benefit, dependants' benefits and medical benefit, as provided in Ss. 51, 52 and 56 of the Act, respectively, and regulation 103a of the Employees' State Insurance (General) Regulations, 1950 (hereinafter referred to as 'the Regulations') and, therefore, the revisions of the Act were applicable to casual employees also. 51, 52 and 56 of the Act, respectively, and regulation 103a of the Employees' State Insurance (General) Regulations, 1950 (hereinafter referred to as 'the Regulations') and, therefore, the revisions of the Act were applicable to casual employees also. ( 5 ) THE learned counsel for the employees relied on the decision of the Madras High Court in the case of The Employees State Insurance corporation v. Gnanmbika Mills, 1974 (2) LLJ. 530 (Mad. ). in support of his contention. The learned counsel for the Director relied on the decision of the Andhra High court "in Andhra Pradesh Electricity Board v. Employees State Insurance corporation and submitted that the view taken up a Division Bench of this Court in Davanagere Cotton Mills (1) was correct and did not call for reconsideration. As can be seen from the judgment in Davanagere cotton Mills (1), the above two decisions were relied on for the respective contentions, urged by the Director and the respondents therein. The division Bench of this Court, which decided that case, after considering the reasoning of both these decisions, preferred to follow the view expressed by the Andhra High Court in Andhra Pradesh Electricity board's case, 1977 (1) LLJ 53. ( 6 ) AS the Division Bench, which has made this reference, has expressed, that the view taken in Davanagere Cotton Mills case, (1) rerquired reconsideration, we shall now proceed to consider the question referred for opinion by examining the relevant provisions of the statute as the preamble of the Act indicates, it was enacted to provide certain benefits to employees in eventualities like sickness, materinity and employment injury and to make provisions for certain other benefits in relation thereto, S. 2 (13a) of the Act defines the word 'insurable employment' which reads as follows:"2 (13a ). 'insurable employment' means an employment in a factory or establishment to which this Act applies; s. 2 (12) defines 'factory' to mean any premises including the precincts thereof whereon twenty or more persons are employed or were employed for wages on any day of the preceding twelve months and in any part of which a manufacturing process is being carried on with the aid of power or is ordinarily so carried on but does not include a mine subject to the operation of the Mines Act or a railway running shed. The above definitions clearly indicate that employment in every factory or establishment to which the Act applies constitutes an Insurable Employment. It is not disputed by the employers, that the Act does apply to their factories as the applicability of tht Act, to the factories of employers is not disputed the employers cannot also dispute that the employment under the employers respondents in these appeals falls within the definition of the words 'insurable employment' contained in Sec. 2 (13a) of the Act. Even so, the contention of the employers is that though persons employed for wages in their factories on permanent or temporary basis are covered by the Act, casual employees employed as and when necessary for doing any special item of work, are not covered by the Act, whereas according to the director the povisions of the Act do apply to casual employees as well, and that employees and employers contribution payable under the Act are payable in respect of every employee employed by the employers to whose factories the Act applies and casual employees even employed for a day are not exempted from the provisions of the Act, and therefore they are required to be insured under the Act. The answer to the controversy depends on the interpretation of Sec. 2 (9) of the Act which defines employees and sections 38 and 39 of the Act. , which read as follows: 2. The answer to the controversy depends on the interpretation of Sec. 2 (9) of the Act which defines employees and sections 38 and 39 of the Act. , which read as follows: 2. (9) "employee" means any pe,rson employed for wages in or in connection 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 qf, 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 (ii) who is employed by or through an immediate employer on the premises of the factory or establishment or under the supervision of the principal employer or his agent on work which is ordinarily part of the work of the factory or establishment or which is preliminary to the work carried on in or incidental to the purpose of the factory or establishment; or (iii) whose services are temporarily lent or let on hire to the principal employer by the person with whom the person whose services are so lent or let on hire has entered into a contract of service; and includes any person employed for wages on any work connected with the administration of the factory or establishment or any part, department or branch thereof or with the purchase of raw materials for, or the distribution or sale of the products of, the factory or establishment; but does not include- (a) any member of the Indian naval, military or air fortes; or (b) any person so employed whose wages (excluding remuneration for overtime work) exceed one thousand rupees a month. Provided that an employee whose wages (excluding remuneration for overtime work) exceed one thousand rupees a month at any time after (and not before) the beginning of the contribution period shall continue to be an employee until the end of that period. ""38 All Employees to be Insured:-Subject to the provisions of the Act, all the employees in factories or establishments to which this Act applies shall be insured in the manner provided by this Act. 39. ""38 All Employees to be Insured:-Subject to the provisions of the Act, all the employees in factories or establishments to which this Act applies shall be insured in the manner provided by this Act. 39. The contributijn payable under this Act in respect if an employee shall comprise contribution payable by the employer (hereinafter referred to as the employer's contribution) and contribution payable by the employee (hereinafter referred to as the employee's contribution) and shall be paid to the Corporation. 2. The Contributions shall be paid at the rates specified in the first Schedule, and in cases where the provisions of this Act are made applicable to any employee or class of employees in any factory or establishment or class of factories or establishments in such manner that they are excluded from some of the benefits under this Act, at such rates as the Corporation may fix in this behalf. (3) A week shall be the unit in respect of which all contributions shall be payable undor this Act. (4) The Contributions payable in respect of each week shall ordinarily fall due on the last day of the week, and where an employee is employed for part of the week, or is employed under two or more employers during the same week, the contributions shall fall due on such days as may be specified in the regulations. "the definition of the word 'employee,' contained in Sec. 2 (9) of the Act does not make any difference between a casual or temporary or permanent employee. It is wide enough to include even a casual employee employed for a day for wages. Therefore every person who is employed for wages on any work connected with the work of a factory or establishment to which the Act applies except those exempted by the definition fall within the definition of the word employee. Section 38 of the, Act specifically states that all employees in factories or establishments to which the Act applies, shall be insured in the manner provided by the Act. As already stated is not disputed that the Act applies to the factories or establishments of the employers in these cases. Therefore, having regard to the wording off Section 38 of the Act, all employees engaged on wages by the employers, whether casual or otherwise, are required to be insured in the manner provided in the Act. As already stated is not disputed that the Act applies to the factories or establishments of the employers in these cases. Therefore, having regard to the wording off Section 38 of the Act, all employees engaged on wages by the employers, whether casual or otherwise, are required to be insured in the manner provided in the Act. Section 39 of the Act creates the obligation to pay employees' and employees contribution. According to subsections (1) and (2) of Section 39, the contribution which an employer is bound to remit to the corporation consists of the employees' contribution which can be deducted from his wages and employers contribution which an employer has to pay from out of his own funds in accordance with the rates prescribed in the First Schedule. According to sub-section (3), a week is constituted as the unit for all contributions payable under the Act. This provision read with First Schedule to the Act which prescribes the rate of contribution, indicates that the employees contribution payable is calculated on the basis of daily wages; and irrespective of the number oi days an employee has worked during a week, the employee's contribution is payable only on the. basis of day's wages calculated on the basis of average daily wagefs in the connected week. The, employer's contribution payable in respept of each employee is twice the contribution payable by the concerned employee. Thus, it may be, seen that though under subsection (3) of section 39, a week is taken as the unit for payment of employers and employees' contribution under the Act, the contribution becomes payable the moment a person is employed even for a day in a week. Sub-section (4) of Section 39 provides that the contribution payable in respect of each week shall ordinarily fall due on the last day of the week, or when a parson is employed under two or more employers during the same week, the contribution shall fall due on such days as may be specified in the Regulations. Sub-section (4) gives the clearest indication that casual employees are also covered by the provisions of the Act, as it covers cases of employees who are employed for a part of the week or are employed under two or more employers during the same week. A permanent or regular employee does not work under more than one employer in the same week. A permanent or regular employee does not work under more than one employer in the same week. The possibility of his working under more than one employer in the same week exists only in the case of casual employees. Therefore, having regard to the definition of the word 'employee' contained in section 2 (9) of the Act and the provisions of sections 38 and 39 of the act, the conclusion that is irresistible is, that casual employees are also governed by the provisions of the Act. ( 7 ) THE learned counsel for the employers submitted that sections 2 (9), 38 and 39 of the Act should be interpreted in the light of section 47 of the Act which prescribes the eligibility for sickness benefit and section 56 of the Act which prescribes the eligibility for maternity benefit and that if all these provisions are harmoniously construed, the only reasonable view to take is that casual employees are not covered by the Act. He pointed out that according to section 47 of the Act an employee becomes entitled to the sicknes$ benefit during any benefit period, if during the corresponding contribution period, weekly contributions in respect of him were payable for not less than thirteen weeks and that similarly under section 50 of the Act, a female employee becomes eligible for maternity benefit during the benefit period, only if cotributions were payable for a minimum period of thirteen weeks during the corresponding benefit period. On the basis of these provisions, he argued that unless contributions were payable in repspect of an employee for a period of not less than thirteen weeks during the relevant contribution period, an employee would be disentitled to the sickness benefit or maternity benefit as the case may be, and therefore the provisions of Ss. 38 and 39 of the Act and the definition of the word 'employe' in S. 2 (9) of the Act must be interpreted in that light and it should be held that casual employees of the employers are not governed by the Act. ( 8 ) IN order to appreciate the above submission made on behalf of the employers, it would be necessary to point out to the various benefits provided under the Act to the employees and the conditions of eligibility for getting those benefits. ( 8 ) IN order to appreciate the above submission made on behalf of the employers, it would be necessary to point out to the various benefits provided under the Act to the employees and the conditions of eligibility for getting those benefits. Chapter V of the Act which deals with the benefits commences with S. 46 which enumerates Various types of benefits that arc requied to be extended to the employees under the act. They are as follows: s. 46 (1) (a) Sickness benefit (b) Maternity benefit (c) Disablement benefit (d) Dependants' benefit (e) Medical benefit (f) Funeral benefit s 47 of the Act prescribes the condition of eligibility for an employee to secure sickness benefit. According to the said provision an employee becomes elligible for claiming sickness benefit during any benefit period if during the corresponding contribution period, weekly contributions in respect of him were payable for not less than thirteen weeks. The sickness benefit payable under the Act is in the form of monetary payment to the employee during the sickness period when he is unable to earn the wages according to the rates prescribed under the Act. Maternity benefit required to be given under S. 50 of the Act to a female employee is also similar and subject to similar conditions. S. 51 of the Act prescribes the condition of eligibility for granting disablement benefit at the rates provided in the first Schedule. According to clause (a) of the said provision, if an employee sustains temporary disablement for not less than threa days ex-cluding the day of accident, he becomes entitled to periodical payment lor the period of such disablement in accordance with the provisions of the first Schedule. According to clause (b) of S. 51 of the Act, a person who sustains a permanent disablement, whether total or partial, becomes eligible for periodical payment for such disablement in accordance with the provisions contained in the First Schedule. According to the proviso to S. 51 of the Act, such disablement benefit would be available either for a limited period or for life as the case may be depending upon the nature of disability. S. 52 of the Act prescribes the condition of eligibility for dependants' benefit. According to the proviso to S. 51 of the Act, such disablement benefit would be available either for a limited period or for life as the case may be depending upon the nature of disability. S. 52 of the Act prescribes the condition of eligibility for dependants' benefit. According to the said provision, if an insured person dies as a lesult of an employment injury sustained as an employee under the Act, his dependants become eligible for payment of dependants benefit at the rates prescribed in the First Schedule. Sub-clauses (i) and (ii) of clause 6 (a) of S. 2 of the Act defines the dependants to whom the bener fit should be given. In addition to this S. 46 (f) of the Act also provides tor payment of funeral benefits subject to a maximum of Rs. 100/ -. Section 56 of the Act prescribes the eligiblity for medica1 benefit. According to the said provision, the insured person or a member of his family whose condition requires medical treatment and attendance become entitled to receive the medical benefit. According to sub-section (3) of Section 56 of the Act, a person becomes entitled to the medical benefit during any week tor which contribution is liable to be paid in respect of him,or during the period when he id qualified to claim sickness benefit or maternity benefit according to the proviso to section 56 (3) of the Act, the medical benefit could be made available by regulations for such period as may be specified in the regulations even to a person in respect of whom contribution has ceased. ( 9 ) THUS it may be seen, while the Act provides for extending various types of benefits to the employees, only the availability of sickness benefit and maternity benefit to employees arei limited to the duration of the benefit period only, provided contributions were payable for a minimum period of thirteen weeks during the corresponding contribution period but, when we come to the provisions prescribing conditions of eligibility for disablement benefit (section 51), dependants benefit (section S2) medical benefit (section 56) and funeral benefit (section 46 (1) (f), it is seen that no specific contribution period is insisted upon as a condition of eligibility for extending those benefits. Therefore, it fallows that even casual employees, who do not fulfil the conditions of eligibility prescribed for securing the sickness benefit under section 47 or maternity benefit under section 50, are entitled to the benefits contemplated by Sections 46 (1) (f), 51, 52 and 53 of the Act. ( 10 ) A memo has been filed on behalf of the Director, in which it is stated thai according to the provisions of the Act, even if a person is taken for work only for a day by an employer of a factory or establishment which is covered by the provisions of the Act he becomes an insured, person. As regards the entitlement of medical benefit, it is stated in the memo that even a casual employee employed for a day in an insurable employment would become eligible for medical benefit to himself and to the members of his family, which includes specialists treatment and doctor's, treatment for a period of thirteen weeks as per Sec. 56 read with regulation 103a of the Regulations. Regulation 103a reads as follows"103a. Medical Benefit after Contribution ceases to be payable. (1) A person on becoming an insured person for the first time shall be entitled to medical benefit for a period of 13 weeks provided that where such a person continues for 13 weeks or moire to be an employee of a factory or establishment to which the. Act applies he shall be entitled to medical benefit till the beginning of the corsesponding benefit period. (2) A person in respect of whom 13 weekly contributions have been paid in a contribution period shall be entitled to, medical benefit till the end of the corresponding benefit period. 3 ** ** 4_ * * * * (5) An insured person, whose title to medical benefit has ceased under thus Regulation shall again be entitled to medical benefit from the date of his re-employment as an employee under the Act by factory or establishment to which the Act applies if he produces certificate from the employer in the form which may be specified by the Director General for the purpose. Such an insured parson shall unless he is covered by sub-regulation (2) be entitled to medical benefit till the commencement of the benefit period corresponding to the contribution period in which he is re-employed. Such an insured parson shall unless he is covered by sub-regulation (2) be entitled to medical benefit till the commencement of the benefit period corresponding to the contribution period in which he is re-employed. (6) An employer shall, on demand issue the certificate referred to in sub regulation (5) to an employee who has been employed by him after cessation of his previous insurable employment. "the clarification made in the above mamo is in conformity with the provisions of section 56 read with regulation 103a aforesaid. According to regulation 103a aforesaid, it is seen that if a person has worked in an insurable employmemt even for one day, he and members of his family become eligible for medical treatment for a period of 13 weeks. It is no doubt true that after the expiry of thirteen weeks, the medical benefit would not be available unless he again works atleast for one day in an insurable employment in which event medical benefits would again become available for another thirteen weeks and so on. As far as the disablement and dependants' benefits are concerned, it is clear from the provisi ns of section 51 and 52 of the Act that even a casual employee, who even on the first day of his employment suffers disablement or death on account of an employment injury, becomes entitled to those benefits, respectively, at rates prescribed in the First Schedule. Therefore, all that can be said is that some of the benefits viz. , sickness benefit and maternity benefit, contemplated by sections 47 and 50 of the Act may not be available to casual employees, but other important benefits like) disablement benefit, dependants' benefit and medical benefit are made available even to casual 'employees. Therefore), even in the light of the provisions contained in chapter V of the Act, we are of the opinion, thajt casual employees are also governed by the provisions of the Act. 10. The learned counsel for the employers also referred to section 73 of the Act which prohibits an employer from dismissing or removing an employee during the period of sickness,. 10. The learned counsel for the employers also referred to section 73 of the Act which prohibits an employer from dismissing or removing an employee during the period of sickness,. He urged that there is no question oi removal of a casual employee, as it is for the employer to take him for work for a day of refuse the work on the next day, it should be held that in view of section 73 of the Act, such employees are not covered by the provisions of the Act. We see no force in this submission also. The answer to the above argument is that S. 73 of the Act in the nature of things applies to permanent or temporary employees and not casual employees. That does not mean that the provisions of the entire Act are not applicable to the casual employees. ( 11 ) AS regards the decision in Gnanambika Mills' case (2) relied on for the employers, it may be seen that the Madras High Court having expressed the view that on the wording of Section 2 (9) of the Act, the casual employees stand included, (see para 2 of that judgment) proceeded to state that they were taking a practical view of the matter in holding casual employees are not covered by the Act. With great respect to Their lordships, for reasons already stated by us, we find it difficult to agree with the reasoning of the said decision. In our opinion the view taken by the Andhra Pradesh High Court in Andhra Pradesh Electricity Board's case (3) on which the counsel for the Director relied and which was followed by a, Division Banch of this Court in Davanagere Cotton Mills' case, (1) ig the correct view. ( 12 ) THE learned counsel for the employees also relied on the decision of the Supreme Court in Employees State Insurance Corporation v. Tata Enginetring Co. , Ltd. , AIR. 1976 SC. 66. in which the Supreme, Court held that apprentices employed by an employer in an insurable employment are not covered by the provisions of the Act. The said decision was rendered on the basis of the definition of the word 'employee' in section 2 (9) of the Act which does not take in apprentices also. Therefore that decision is in no way helpful to the employers. The said decision was rendered on the basis of the definition of the word 'employee' in section 2 (9) of the Act which does not take in apprentices also. Therefore that decision is in no way helpful to the employers. ( 13 ) IN the light of the above discussion, we are of the opinion that the provisions of the Act are applicable to casual employees therefore, after reconsidering the question, we affirm the view taken by the Division Bench in Davanagere Cotton Mills' case (1 ). Accordingly, we answer the question referred for our opinion in the affirmative. --- *** --- .