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1994 DIGILAW 464 (BOM)

Narsayya Lingayya Vilasagar v. Joint Regional Director, E. S. I. Corporation

1994-08-19

D.R.DHANUKA

body1994
JUDGMENT : 1. M/s. Narsayya Lingayya Vilasagar, have preferred this appeal against order dated July 21, 1979 passed by the first Labour Court at Pune in its capacity as Employees State Insurance Court in Application (ESI/LCP) No. 7 of 1978. By the said order, the trial Court dismissed the said application preferred by the appellants before the trial Court u/s 75 of the Employees' State Insurance Act, 1948. 2. Shri Narsayya Lingayya Vilasagar used to run two handloom factories i.e. (i) at House No. 755, Ganj Peth, Pune and (2) at House No. 531, Ganj Peth, Pune as sole proprietor thereof. No power was used for running the handlooms at the said factories. Some time in the year 1972, Shri Narsayya Lingayya died leaving three sons behind him i.e. (1) Lingayya Narsayya Vilasagar, (2) Rajaram Narsayya Vilasagar and (3) Shripat Narsayya Vilasagar. After the death of the father, the three brothers formed a partnership to carry on the business of running the above referred two handloom factories and also continued shop situated at 109, Mahatma Phule Road, Pune. 3. On November 19, 1976, the Government of Maharashtra issued a Notification No. ESI 1875/800/PH 15 in exercise of powers conferred on it by sub-section (5) of Section 1 of the Employees' State Insurance Act, 1948 appointing the day of November 27, 1976 as the date on which all the provisions of the said Act shall stand extended to the classes of establishments mentioned in column 1 of the Schedule thereto appended in areas specified in column 2 of that Schedule. By the said notification, the said Act was extended, inter alia, to the establishment situate within the limits of Pune Municipal Corporation. The category 2 of the establishments mentioned in column 1 of the schedule appended to the said notification reads as under : "2. By the said notification, the said Act was extended, inter alia, to the establishment situate within the limits of Pune Municipal Corporation. The category 2 of the establishments mentioned in column 1 of the schedule appended to the said notification reads as under : "2. Any premises including 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 without the aid of power, or is ordinarily so carried on; but excluding a mine subject to the Mines Act, 1952 (35 of 1952), or a railway running shed or an establishment which is exclusively engaged in any of the manufacturing processes specified in Clause (12) of Section 2 of the Employees' State Insurance Act, 1948 (34 of 1948)." At the establishments of the appellants situate at 755, Ganj Peth, Pune as well as at 531, Ganj Peth Pune, manufacturing process used to be carried on without the aid of power. 4. Based on report of Inspector A. N. Desai dated December 14, 1977, the Joint Regional Director of the Employees' State Insurance Corporation passed an order on January 16, 1978 demanding a sum of Rs. 2613.05 towards contribution from the appellants for the period December, 1976 to October, 1977. Neither of the two units taken singly employed twenty or more employees at their factories situated at 755 Ganj Peth, Pune or at 531 Ganj Peth, Pune during the months of December, 1976 to October, 1977. It was the case of the Corporation at all times that both the said units were liable to be clubbed together in view of their functional integrality and the appellants were governed by the said Act on the footing that the said two units constituted one single establishment. The appellants contested the said assertion of the respondents. 5. In this situation, on June 22, 1978, the appellants preferred the above referred application Bearing No. 7 of 1978 before the trial Court invoking Section 75 of Employees' State Insurance Act, 1948. The appellants contested the said assertion of the respondents. 5. In this situation, on June 22, 1978, the appellants preferred the above referred application Bearing No. 7 of 1978 before the trial Court invoking Section 75 of Employees' State Insurance Act, 1948. In the said application, the appellants contended that as a matter of fact there was a partition amongst the three brothers and the unit situated at 755, Ganj Peth, Pune was being run by Rajaram Narsayya Vilasagar and Shripat Narsayya Vilasagar and unit situated at 531, Ganj Peth, Pune was being run by Lingayya Narsayya Vilasagar. It was also the case of the appellants in the said application that the two units were separate establishments and neither of the said two units employed twenty or more employees. The appellants made this assertion without prejudice to their main contention that the handlooms situated in the said factories were operated by weavers who could not be considered as employees at all within meaning of the said expression as defined in Section 2(9) of the Act. 6. At the hearing of the said application, the trial Court framed the issues set out in para 4 of the judgment under appeal. The said issues are as under : "(1) Whether the Applicant' proves that the weavers working on the handlooms are not the employees. (2) Whether the Applicant's factory is not covered by the E.S.I. Act. (3) Whether the Applicant is not liable to pay the contributions. (4) Whether the Applicant is entitled to the reliefs claimed. (5) What order ?" 7. After considering the relevant oral and documentary evidence the trial Court held that the weavers working on the handlooms were liable to be treated as employees of the appellants and the two factories or units were liable to be treated as one establishment for the purpose of Employees' State Insurance Act, 1948. While recording its findings, the trial Court considered, inter alia, the oral evidence of Rajaram Narsayya Vilasagar and Lingayya Narsayya Vilasagar, the two witnesses examined on behalf of the appellants. 8. The learned Counsel for the respondent has submitted with considerable force that this appeal does not involve any substantial question of law. The learned Counsel for the respondent has submitted that this appeal is therefore not maintainable u/s 82(2) of the Act. 8. The learned Counsel for the respondent has submitted with considerable force that this appeal does not involve any substantial question of law. The learned Counsel for the respondent has submitted that this appeal is therefore not maintainable u/s 82(2) of the Act. The learned Counsel for the respondent has invited the attention of the Court to the recent judgment of the Division Bench of this Court consisting of A. M. Bhattacharjee C.J. and V. P. Tipnis, J. being judgment dated August 12, 1994 in Letters Patent Appeal No. 97 of 1985 arising from First Appeal No. 445 of 1984. 9. The trial Court held that the so called theory of oral partition was not proved. There is no partition deed. The trial Court therefore proceeded to decide the above referred application on the footing that both the units belonged to the partnership firm constituted by the three brothers. After applying the relevant test, the trial Court held that there was functional integrality between the two units even though the two units were situated at different places at some distance. The trial Court held that there was common management and control in respect of both the units. The trial Court held that the raw-material required for both the factories was issued through the partnership shop, and the payments to the weavers were made on the same day through the partnership shop. The trial Court held that there was a functional unity between the two units. It is not necessary to discuss more. It is not shown that the trial Court has misdirected itself in law or had applied the wrong tests for the purpose of deciding the question of clubbing. It is not possible for this Court to reappreciate the evidence and record fresh findings of facts in this restricted appeal. I have, therefore no hesitation in rejecting the submission of the learned Counsel for the appellant that the two units could not have been clubbed together. As far as the shop premises are concerned, it appears that merely accounts were maintained at the said shop and merely one or two employees were working in the said shop. The trial Court had therefore concentrated on clubbing of the two factory units only. This aspect of the case is indicated above only for the sake of clarity. 10. As far as the shop premises are concerned, it appears that merely accounts were maintained at the said shop and merely one or two employees were working in the said shop. The trial Court had therefore concentrated on clubbing of the two factory units only. This aspect of the case is indicated above only for the sake of clarity. 10. The trial Court held that having regard to the totality of the facts and circumstances on record the weavers working on the handloom were liable to be considered as employees within meaning of Section 2(9) of the Act. I agree with the reasoning of the trial Court as set out in para 6 of its judgment and held that the dispute concerning Issue No. 1 also does not involve any substantial question of law. 11. The learned Counsel for the appellants submitted that the trial Court ought to have framed the issue on the question as to whether the two units even if taken together employed twenty or more employees as required under Clause (2) of the above referred notification, dated November 19, 1976. The argument appears to be attractive at the first blush. At one stage, I was inclined to remand the matter to the trial Court on this aspect. On in depth scrutiny of this submission, I have reached the conclusion that there is no merit in this submission also. It appears that Inspector A. N. Desai noted down that figures of employees/weavers from the muster roll and other records of the appellants themselves and the figures contained in the said report concerning number of employees working at the said two units is not reasonably disputed. The said figures are as under : It is obvious from these undisputed figures that the appellants did employ twenty or more employees during the months of January to April, 1977. The Act became applicable to the categories of establishments/with which we are concerned, with effect from November 26, 1976. It is of considerable significance that the impugned order, dated January 16, 1978 pertains to the period December, 1976 to October, 1977. The said notification would be applicable if the appellants employed for wages twenty or more employees on any day of the preceding twelve months. It is true that the appellants did not employ twenty or more employees in the month of December, 1976 or from the month of May, 1977. The said notification would be applicable if the appellants employed for wages twenty or more employees on any day of the preceding twelve months. It is true that the appellants did not employ twenty or more employees in the month of December, 1976 or from the month of May, 1977. As far as the month of November, 1976 is concerned, the total number of employees working in both the units now clubbed together could not have been taken into consideration as the Act itself was extended to this establishment from November 27, 1976. The learned Counsel for the appellants points out that Unit No. 531 was even closed from July. 1977. If the two units are considered as single establishment owned by single partnership firm closure of unit situated at 531 Gani Peth, Pune, makes no difference and if the said firm employed twenty or more employees on any day of the preceding twelve months i.e. on a single day during months of December, 1976 and October, 1977, the appellants would be liable to pay the amount of contribution as contemplated by letter dated January 16, 1978. At the highest, there is a remote possibility of a marginal error in the view taken by the trial Court. Such a possibility, if any, does not give rise to a substantial question of law. In my opinion, the trial Court is right in taking the view it took. 12. It is hereby clarified that all contentions of both sides in respect of the period subsequent to October, 1977 are kept open as this appeal is restricted to the period December, 1976 to March 1977. 13. In the result, the appeal fails. The appeal is dismissed. No order as to costs. 14. During the pendency of the appeal, stay was granted in favour of the appellants on the condition that the appellants would deposit a sum of Rs. 2,000 in this Court and the respondent was granted liberty to withdraw the said amount on furnishing bank guarantee. The respondent has withdrawn the said amount against the bank guarantee furnished by the respondent. The bank guarantee stands discharged. The appellant is directed to pay the balance amount to the respondent within one month from today.