Judgment :- 1. Appeal against the order passed by The Employees State Insurance Judge (District Judge) Madras, in E.S.I.O.P. No. 58 of 1983, dated 30.04.1985. 2. The Employees State Insurance Corporation, represented by its Regional Director Madras, is the appellant. 3. The petitioner M/s. Duvent Fans Pvt. Ltd., Madras filed a petition under Section 75 of The Employees State Insurance Act, 1948, alleging that the petitioners company is running a consultancy service in Madras in the address given, that it has conferred medical benefits for its employees, that the respondent by its proceedings in 19532-102 dated 12.12.1980 informed the petitioner that the office of the petitioner situated in door No. 329, Pantheon Road, is covered under the provisions of the Employees State Insurance Act and allotted a code number that the petitioner informed the respondent corporation that the strength of the staff of the petitioners establishment is only less than 20, therefore, that the provisions of the Employees State Insurance Act is not applicable, that a letter was sent to that effect to the Corporation, that even thereafter on 10.9.1981 the Corporation wrote a letter to the petitioner stating that the petitioner is liable to make contribution towards its employees under the provisions of the Employees State Insurance Act and actually demanded contribution for 1.7.80 to 29.11.80 and 30.11.80 to 30.5.81, that the petitioner is not running a factory nor a shop and hence the petitioners establishment is not covered under the Employees State Insurance Act, that by letter dated 26.8.1983 the respondent Corporation called upon the petitioner to pay contribution of Rs. 12,201.70 for the period from 1.7.1980 to 28.2.1982, that the Act is not applicable because the petitioners establishment is only employing less than 20 persons, that booking orders are only received in the office of the petitioner, that no opportunity was given to the petitioner before the order was passed by the corporation, that the order dated 12.12.1980 is violative of principles of natural justice, that the petitioner is only employing 18 persons, that the Employees State Insurance Corporation has not rendered any service in respect of which demand of contribution has been made, that the petitioner is not liable to pay any contribution and since the respondent is insisting upon the demand of contribution, this petition is filed for declaration that the petitioners establishment is not covered under the Employees State Insurance Act and that the order dated 12.12.1980 passed by the respondent Corporation is invalid. 4. The respondent Corporation filed a counter contesting the claim of the petitioner by contending that a survey report conducted by the Inspector of the Corporation revealed that the petitioners establishment has employed 20 persons from 1.7.80, that therefore the petitioners establishment is covered under the Employees State Insurance Act, that the petitioner is carrying on business of designing, supply, erection and commissioning of air and gas treatment equipments, that the petitioner is an establishment within the meaning of Section 1 (5) of the Act and as per the Notification of the Tamil Nadu Government of the Labour Department dated 12.12.1976, the petitioners establishment is also covered under the Employees State Insurance Act, that the petitioner is bound to make contribution as provided for in the Act, that the order demanding contribution was based on the Survey Report submitted by the Inspectors of the Corporation and that therefore the order is valid and not liable to be set aside and that the petitioner is not entitled to the declaration sought for. 5. 5. On the basis of the pleadings of the parties, the learned Employees State Insurance Judge framed issues relating to whether the petitioners establishment is not covered by the Employees State Insurance Act, and whether it is liable to make any contribution, whether the order dated 12.12.1980 passed by the Corporation was without giving the petitioner an opportunity to state its stand, whether the Corporation has no jurisdiction to demand the contribution and whether the petitioner is an establishment within the meaning of Section 1 (5) of the Employees State Insurance Act. 6. The petitioner has examined P.W.1 the accountant employed in the company and filed Exs.P-1 to P-8 documents. The Corporation examined its Inspectors as R.Ws.1 & 2 and filed Exs.R-1 & R-2 documents. 7. On consideration of the evidence oral and documentary, the learned Employees State Insurance Judge gave a finding that the petitioners establishment is only employing less than 20 persons and therefore the Act is not applicable to the establishment, that the demand of contribution made by the corporation is therefore illegal and passed an order allowing the prayers made by the petitioner. 8. Aggrieved at the said findings and the order passed by the learned Employees State Insurance Judge, the Employees State Insurance Corporation has come in appeal. 9. The points for consideration in this appeal are: — “Whether the petitioners company is an establishment within the meaning of Section 1(5) of the Employees State Insurance Act, whether the order stating that the company is covered under the Employees State Insurance Act is liable to be set aside and whether the petitioner is not liable to pay contribution as demanded by the Corporation?” 10. The points: — It is now not in dispute that petitioners company is doing business in offering technical services and providing machineries to various companies for remuneration and therefore is an establishment doing commercial business. In fact P.W.1, the Accountant in his evidence has admitted that the petitioners company is paying sales tax and their annual turnover is more than Rs. 40 lakhs. It is also now not disputed that as pointed out in Exs.R-1 & R-2, 20 persons are in the employment of the petitioners company right from 1.7.1980 when it started doing business at Madras as a separate establishment in the address given above. 40 lakhs. It is also now not disputed that as pointed out in Exs.R-1 & R-2, 20 persons are in the employment of the petitioners company right from 1.7.1980 when it started doing business at Madras as a separate establishment in the address given above. The only controversy that survives is as to whether the petitioners establishment will attract the provisions of the Employees State Insurance Act, because according to the petitioner it is only employing 18 persons who are being paid wages within the prescribed limit of the notification issued under the provisions of the said Act. It is not now disputed that altogether there are 20 persons employed in the petitioners establishment out of whom two are drawing salary of more than Rs. 1,000/- and therefore they are not employees within the meaning of the Employees State Insurance Act. The Corporation also does not dispute the fact that at the relevant point of time the prescribed cealing with regard to salary or wages of an employee to get the benefits of the Act was Rs. 1000/- and less. Therefore contending that of the 20 persons employed in the petitioners establishment, two persons are being paid salary over and above Rs. 1,000/- were not employees eligible to get the benefits of the Employees State Insurance Act and barring them there are only 18 persons employed in the establishment and therefore the coverage under the Employees State Insurance Act does not arise. The relevant provisions have to be borne in mind before considering as to whether the petitioners establishment will come under the purview of the Employees State Insurance Act, 1948. The relevant provisions have to be borne in mind before considering as to whether the petitioners establishment will come under the purview of the Employees State Insurance Act, 1948. Section 2(12) defines “factory” in the following terms: “2(12) - “factory” means premises including the precinctes thereof — (a) whereon ten or more persons are employed or were employed for wage on any day of the preceeding 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, or (b) whereon twenty or more persons are employed or were employed for waged on any day of the preceeding 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 does not include a mine subject to the operation of the Mines Act, 1952 or a railway running shed” The term “employee is defined in Section 2(9) of the Act as under: “2.(9)- ‘employee’ means any person 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 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 (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 or any person engaged as an apprentice, not being an apprentice engaged under the Apprentice Act, 1961, or under the standing orders of the establishment, but does not include (a) any member of the Indian naval, military or air force, or (b) any person so employed whose wages (excluding remuneration for overtime work) exceed such wages as may be prescribed by the Central Government a month. Provided that an employee whose waged excluding remuneration for overtime work exceed such wages as may be prescribed by the Central Government 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.” 11. Even though the petitioner is not a factory it is now conceded that it is an establishment carrying on business activities in offering technical services and providing machineries to various companies for remuneration relating to air and gas treatment equipments. The petitioners company is an establishment and therefore, will come under the purview of the Act. It is contended by the petitioner that the Employees State Insurance Act is not applicable to the establishment because even though it employed 20 persons, only 18 persons are employed within the meaning of the Act and two persons are not employees because they draw more than the prescribed wages i.e., over and above Rs. 1,000/- 12. In Section 2(12) sub-Section (b) the wordings used are “whereon twenty or more persons are employed or were employed for wages on any day of the preceding twelve months..” So, in Section 2(12) (b) the word used is persons relating to “persons employed” and if really the Act was intended to cover only establishment where 20 employees entitled to the benefits of the Act are employed, the Legislature could have used the words “twenty or more employees “working. But specifically in the definition section of establishment it is merely stated that the Act is applicable to the establishments whereon 20 or more persons are employed or were employed. Section 2(9) defines ‘employee’ as ‘employee’ means any person employed for wages and excludes an employee whose wages excluding remuneration for overtime work exceeds such wages as may be prescribed by the Central Government for a month at any time after and not before the beginning of the contribution period. 13. The above wordings of the Section would make it clear that the Legislature has used two separate words with two different connotation and this must have been intended for a definite purpose and object. 13. The above wordings of the Section would make it clear that the Legislature has used two separate words with two different connotation and this must have been intended for a definite purpose and object. The establishments where twenty or more persons employed are sought to be covered are brought under the the Employees State Insurance Act and all those persons need not be employees within the meaning of the Act to get the benefits of the Employees State Insurance Act. The Employees State Insurance Act has been brought into existence only to help the working class whose wages are low and who cannot afford the luxury of medical care and for whose benefit the company has intervened by bringing in the legislation. While conferring benefits, the Legislature has excluded those employees who are getting more wages than the prescribed wages and this is quite but natural. It is one thing to say that all persons employed in a factory or establishment are not entitled to the Employees State Insurance benefits but it is different to say that the coverage be only in respect of establishments where twenty or more employees who are eligible to get the benefits alone will come under the coverage of the Act. So, the Act is intended to bring under its coverage all establishments where twenty or more persons are employed irrespective of the fact whether all those persons are entitled to the benefits of the Act. When number of persons are prescribed as qualification for being covered under the Act, the Legislature has intended to exclude small factories or establishments. All the establishments where twenty or more persons employed are definitely covered by the Employees State Insurance Act and that is the reason why in Section 2(12) (b) the following words are used: “Whereon twenty or more persons are employed” The very same Act provides under Section 2(9) the definition of an ‘employee’, Employee means any person employed for wages provided an employee draws wages exceeding such wages as may be prescribed by the Central Government a month. So, by using different phrases and terms, the Legislature has intended only to bring all establishments where twenty or more persons are employed, but at the same time not extending the benefits of the Act for all the persons but only to those persons who will come within the meaning of ‘employee’ as stated in Section 2(9) of the same Act. Twenty persons stated in Section 2(12) (b) need not necessarily be ‘employees’ within the meaning of the Act. If an establishment has engaged twenty or more persons, the coverage of the Act will be attracted to that establishment but the benefits conferred under the Act will be eligible only to such persons who are employees within the meaning of the ‘employees’ as stated in Section 2(9) of the same Act. Therefore, once it is proved as seen from Exs,.R-1 and R-2 that petitioners establishment is employing twenty persons, it is covered under the Employees State Insurance Act and the benefits will be only extended to those persons who are also employees within the meaning of Section 2(9) of the Act. The contribution also will be demanded only in respect of those persons who are employees and not to all the persons working in the same establishment but who are not employees within the meaning of the Act. Therefore once the Corporation has established that the petitioner is employing twenty persons, the Employees State Insurance Act will be applicable to the said establishment. If really only establishments having 20 employees within the meaning of Section 2(9) are brought under coverage, the words “twenty employees” could have been used but the Legislature has chosen to definitely use the words “Twenty or more persons” and not “Twenty or more employees:. Therefore, notwithstanding the fact that two of twenty employees in the petition ers establishment are not eligible for the benefits conferred under the Employees State Insurance Act, the Employees State Insurance Act will be applicable to the establishment because it is employing twenty persons. 14. The learned counsel appearing for the petitioner relied upon a ruling of Delhi High Court in M.M. Suri and Associates Pvt. Ltd. v. Employees State Insurance Corporation (F.J.R. Vol. 91 page 234). 14. The learned counsel appearing for the petitioner relied upon a ruling of Delhi High Court in M.M. Suri and Associates Pvt. Ltd. v. Employees State Insurance Corporation (F.J.R. Vol. 91 page 234). A single Judge of the Delhi High Court in the said case has held that for deciding as to whether a factory or establishment comes under the coverage of the Employees State Insurance Act, persons employed who are drawing wages more than prescribed limit are not employees, cannot be taken into consideration for determining as to whether 20 or more persons are employed. In that case where out of 24 persons working with the appellant-company, 13 were getting more wages than the prescribed limit, the learned Judge held that the Act was not intended to cover the said establishment and negatived the claim of the Corporation for contribution from the establishment. The learned Judge seem to have drawn support for his view from an observation made by the Supreme Court in Employees State Insurance Corporation v. Ramanuja Match Industries (1985) 66 FJR 108 (S.C.). But that was a case where Employees State Insurance coverage was sought to be extended to a factory where 21 persons were employed, out of whom three were partners of the firm. The Supreme Court observed that partners are not employees within the meaning of the Act and therefore negatived the contentions raised by the Corporation. The Supreme Court has only held in that case that partners who were found working in the firm cannot be called employees because there is no relationship of master and servant between them. Therefore, the Supreme Court stated that these three partners are not the persons employed and it held that the Act will not cover that establishment because it does not constitute an establishment within the meaning of the Act since 18 persons are employed. The Supreme Court has not decided whether the persons employed in any establishment or a factory must necessarily be employees within the meaning of the Act. The Supreme Court has not decided whether the persons employed in any establishment or a factory must necessarily be employees within the meaning of the Act. Moreover since two different words have been purposely used by the Legislature in Sections 2(12) and 2(9) of the Employees State Insurance Act, we have to adopt different meaning for the two words and therefore in an establishment or a factory where 20 persons are employed, the Act will become applicable irrespective of the fact whether twenty persons are employees within the meaning of Section 2(9) of the Act. 15. I am supported in this view by a Division Bench ruling of the Andhra Pradesh High Court made in Andhra Pradesh State Electricity Board v. Employees State Insurance Corporation, Hyderabad (1978 (I) LLJ page 44). The question that arose for consideration in that case was whether the Meter Relay Transformer Establishment of the Andhra Pradesh State Electricity Board at Guduru is a factory within the meaning of Section 2(12) of the Act and whether the employees contribution and employers special contribution can be levied against them by the Employees State Insurance Corporation. In that case in the said establishment there were 20 persons working including one Junior Engineer. If the Junior Engineer is also taken into consideration, the establishment would be a factory within the meaning of Section 2(12) of the Act. But if he is excluded, the establishment would not be a factory. It was admitted that salary paid to the Junior Engineer exceeded the prescribed limit. The establishment contended that since the Junior Engineers salary exceeded the prescribed limit, he should not be taken into account in computing the 20 persons employed for wages referred to in Section 2(12) of the Act. In that case High Court observed as follows: — “If really the Legislature desired that in computing the number twenty referred to in Section 2(12) only employees should be taken into consideration it could have easily used the expression “where twenty or more employees are working in the precincts.” But it has deliberately used the expression “whereon twenty or more persons are employed or were employed for wages. “It is therefore, clear to us on a plain reading of Section 2(12) of the Act that in computing the number twenty all persons employed for wages should be taken into consideration and not merely those who strictly fall within the definition of employees under Section 2(9) of the Act.” 16. This view also finds support from various decisions of High Courts. In Bank Silver Co. v. E.S.I. Corporation (A.I.R. 1965 Bom. 111) Bombay High Court has held that Section 2(12) of the Act defines a “factory” not by reference to the number of “employees” who work in the factory but by reference to “persons” who work in the factory and the language used in the said clause will shown that the sole test which should be applied for determining whether an establishment is a factory or not, is whether twenty or more “persons” are working in the factory and whether a manufacturing process is being carried on with the aid of power in any part of the establishment. 17. In Employees State Insurance Corporation v. M.A.H. Siddique (1965 I L.L.J. 573) it was held by Mysore High Court that Section 2(12) does not speak or persons working for wages as such. So long as the number of persons working on the premises is 20 or more, the premises is “factory’ falling within the meaning of the definition, it being immaterial whether these persons so working are paid wages or not. 18. Punjab High court in Chaman Singh and Sons v. Employees State Insurance Corporation (A.I.R. 1963 Punj. 422) held that a principal employer being a person who actively works on the premises must be included in the figure of twenty referred to in Section 2(12) of the Act. It was pointed out that the expression “persons’ was deliberately used instead of “employees” in the definition of factory and hence the persons who are not employees has to be taken into consideration as long as they were working in the premises. 19. In Employees State Insurance Corporation v. Pioneer Laundry (1966 II L.L.J. 425), the decision of the Bombay High Court in Bank Silvar and Co. v. E.S.I. Corporation was referred to with approval and it was stated that the sole test as to whether establishment or factory is not whether twenty or more persons were work. 20. 19. In Employees State Insurance Corporation v. Pioneer Laundry (1966 II L.L.J. 425), the decision of the Bombay High Court in Bank Silvar and Co. v. E.S.I. Corporation was referred to with approval and it was stated that the sole test as to whether establishment or factory is not whether twenty or more persons were work. 20. In complete agreement with the above decision of the Andhra Pradesh High Court Which was supported by various decisions of die High Courts as indicated above. Therefore, I hold that when it is established that the petitioners establishment is employing 20 persons, even though two persons are not employees within the meaning of the Act, the establishment will come under the purview of the Employees State Insurance Act and the Act is applicable. The lower court has mistakenly concluded that since only 18 persons are employees, the establishment will not be covered under the Act. Therefore, the appeal has to be allowed and the order of the Employees State Insurance Judge has to be set aside. 21. In the result, the appeal is allowed and the declaration sought for by the petitioners establishment is refused and it is held that the petitioners establishment is covered under the Employees State Insurance Act and the demand of contribution made by the Corporation is perfectly legal and valid. However, mere shall be no order as to costs.