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Andhra High Court · body

2000 DIGILAW 157 (AP)

Employees State Insurance Corpn. v. AANDHRA PRABHA PRIVATE Ltd. , VIJAYANAGAR

2000-03-03

A.GOPAL REDDY, N.Y.HANUMANTHAPPA

body2000
A. GOPAL REDDY, J. ( 1 ) AS these three appeals raise common questions of law and issues, we dispose them of by this common judgment. ( 2 ) L. P. A. Nos. 296 and 310 of 1992 are filed by the Employees State Insurance corporation (for short the Corporation ) against the order passed by the learned single Judge in C. M. A. Nos. 1381 and 1380 of 1988 respectively, whereby the learned single Judge confirmed the orders passed by the Employees Insurance Court in E. I. Cases. ( 3 ) ANDHRA Prabha Pvt. Ltd. , M/s. Raasi cements Limited and M/s. Samrat international Pvt. Ltd. (hereinafter referred to as the employers ) filed E. I. cases before the Employees Insurance Court under section 75 of the Employees State insurance Act, 1948 (for short the Act ) seeking a declaration that the apprentices/ trainees are not employees within the meaning of Section 2 (9) of the Act, and as such, the employer is not liable to pay any contributions. The Insurance Court after hearing both sides and taking into consideration the documentary evidence placed before it, allowed the E. I. cases holding that apprentices/trainees cannot be treated as employees as they do not contribute to any work in the establishment, they only learn how to work during training period and that they are not paid bonus and other allowances, and that they do not earn any wage, which is payable to regular employees. On appeal, the learned single Judge of this Court dismissed the cma Nos. 1380 and 1381 of 1988, filed by corporation, confirming the orders passed by the Insurance Court. ( 4 ) AGGRIEVED by the said orders, L. P. A. Nos. 296 and 310 of 1992 were filed by the corporation. CMA No. 1774 of 1992 is filed by the Corporation against the order of the insurance Court in E. I. Case No. 1/89 wherein the Insurance Court came to the conclusion that no reliable and acceptable evidence is brought on record by the corporation to establish that the trade trainees in the petitioner-establishment are the working employees and they cannot be treated as trade trainees. Whereas the employer produced four agreements (Exs. P-1 to P-4) entered into between the management and four trainees. Before passing the order by the Corporation under ex. Whereas the employer produced four agreements (Exs. P-1 to P-4) entered into between the management and four trainees. Before passing the order by the Corporation under ex. P-2 the Corporation did not give an opportunity to the employer and the contribution claimed only on ad hoc basis and the report of the Inspector was also not filed before the Court to establish that employees are working on regular basis. In view of the same, Insurance Court allowed the petition filed by the petitioner against which the Corporation filed the appeal. ( 5 ) THE learned Counsel for the appellants-Corporation strenuously urged that both the Courts below erroneously interpreted Section 2 (9) of the Act, and that in order to avoid attraction of the provisions of the Act, the disputed category of employees, who are connected with the work of the employer, have been appointed as the apprentices. ( 5 ) THE learned Counsel for the appellants-Corporation strenuously urged that both the Courts below erroneously interpreted Section 2 (9) of the Act, and that in order to avoid attraction of the provisions of the Act, the disputed category of employees, who are connected with the work of the employer, have been appointed as the apprentices. Section 2 (9) of the Act, as amended by Act 29 of 1989 reads as under: 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 establish 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 lent 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 apprentices Act, 1961 (Act No. 52 of 1961), or under the standing orders of the establishment; but does not include- (A) any member of the Indian naval, military or air forces; 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 wages 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. " ( 6 ) HE further contended that since the trainees are neither sponsored by the government nor by I. T. Is. , nor are governed by the provisions of the Act, the employees (sic. employer) are liable to make the contribution. ( 7 ) ON the other hand, the learned counsel appearing for the employers contended that both the Courts below concurrently held that the employers are not liable to pay any contribution and that the apprentices/trainees are not the employees within the meaning of section 2 (9) of the Act, and the remuneration paid to them is only a stipend, ant thatafter completion of the training, the employer is not bound to absorb them or appoint them in regular vacancies, and that the stipend paid to the trainees during the training period cannot be termed as wages within the meaning of section 2 (22) of the Act, and therefore, the appeals themselves are not maintainable as there is no substantial question of law involved. There is no error, much less substantial error committed by the Courts below in coming to the conclusion that the employers are not liable to pay the contribution. He further submitted that the amendment made to Section 2 (9) of the Act has only prospective operation, and as such the amendment has no application to the facts of the present case. In support of his submission, he placed reliance on the decision of the Supreme Court in E. S. I. Corporation vs. Tata Engineering. and locomotive Co. Ltd. wherein in paras 7 and 9 was held as follows:"it is significant that although the legislature was aware of this definition under Sec. 2 (s) under the industrial Disputes Act, 1947, the very following year while passing the employees State Insurance Act, 1948, it did not choose to include apprentice while defining the word "employee"under Sec. 2 (9) of the Employees State insurance Act, 1948. Such a deliberate omission on the part of the Legislature can be only attributed to the well known concept of apprenticeship which the Legislature assumed and took note of for the purpose of the Act. This is not to say that if the Legislature intended it could not have enlarged the definition of the word "employee" even to include the "apprentice" but the Legislature did not choose to do so. This is not to say that if the Legislature intended it could not have enlarged the definition of the word "employee" even to include the "apprentice" but the Legislature did not choose to do so. It is clear that in order to be an employee a person must be employed for wages in the work of a factory or establishment or in connection with the work of a factory or establishment. Wages is defined under Sec. 2 (22) and from the terms of the agreement it is clear that apprentices are mere trainees for a particular period for a distinct purpose and the employer is not bound to employ them in their works after the period of training is over. During the apprenticeship they cannot be said to be employed in the work of the company or in connection with work of the company. That would have been so if they were employed in a regular way by the company. On the other hand the purpose of the engagement under the particular scheme is only to offer training under certain terms and conditions. Besides, the apprentices are not given wages within the meaning of that term under the Act. If they were regular employees under the Act, they would have been entitled to additional remuneration such as daily allowance and other allowances which are available to the regular employees. We are, therefore, unable to hold that an apprentice is an employee within the meaning of Sec. 2 (9) of the Act. " ( 8 ) SIMILARLY, a Division Bench of the karnataka High Court in Regional Director e. S. I. Corporation vs. M/s. Fibre Mangalore (P) ltd. has held as follows:"inspector found on inspection that 25 persons were working in a factory. Based on the report, the company was asked to pay E. S. I, by the Regional director ESI Corporation, Company resisted the claim stating that only 11 persons are regular employees and 11 persons are trainees and apprentices and therefore denied its liability to pay contribution till 1st August, 1974. Application filed by the company under ESI Act was allowed and it was held that trainees were not employees and as such the factory had not erred under ESI Act till 1st August, 1974. Application filed by the company under ESI Act was allowed and it was held that trainees were not employees and as such the factory had not erred under ESI Act till 1st August, 1974. Dismissing the appeal preferred by regional Director ESI, held that mere apprentice or trainee would not be an employee as defined in Sec. 2 (9) of the esi Act in view of the pronouncement of the Supreme Court in the case of esi Corporation vs. Tata Engineering and laco. Co. (1976-LLJ 81)" ( 9 ) THE learned Counsel for the appellant laid much emphasis on the Division Bench judgment of this Court in Andhra Prabha (P) ltd. vs. Employees State Insurance Corporation wherein the appeal filed by the employer i. e. , employer in LPA 296/92, was dismissed upholding the findings of the employees Insurance Court in E. I. Case no. 24/87, wherein the E. I. Court held that the apprentices/trainees were paid basic wages and also other allowances, and as such, the employer is liable to pay their contribution. In the said case, the ruling of the apex Court in the case of E. S. J. Corporation vs. Tata Engineering and locomotive Co. Ltd. (supra) was not considered as it was not brought to the notice of the Bench. Apart from the same, the judgment passed by the E. S. Insurance court which is the subject matter in the present appeal was brought to the notice of this Court, but this Court also distinguished the same stating that in the case before them, the employer failed to prove the agreements and the Insurance Court found that the apprentices/trainees were paid basic wages. In view of the same, this Court dismissed the appeal as no substantial question of law involved in the same. In the present LPA Employees Insurance Court as well as the learned Single Judge concurrently negatived the claim of the corporation and held that the employees are not drawing any wages and they are only appointed as apprentices, we decline to interfere with the said findings, which are findings of fact and also find no substantial question of law involved in these appeals. ( 10 ) COMING to CMA No. 1774/92, basing upon the Inspector s report, the employer was requested to pay contribution and omitted wages. Thereafter a show-cause notice was issued for payment of arrears. ( 10 ) COMING to CMA No. 1774/92, basing upon the Inspector s report, the employer was requested to pay contribution and omitted wages. Thereafter a show-cause notice was issued for payment of arrears. But the E. S. Insurance Court found that the report of the Inspector was not filed in the court. In the absence of the same, it cannot be concluded that the paid trainees are not the trainees and they are regular employees and covered by the provisions of ESI Act. Apart from the same, on the basis of ex. R-1, which was accepted by R. W. 1 that employees are paid trainees and, stipend was paid to them. The agreements under exs. P-1 to P-4 were filed by the management which were entered by it with the trainees goes to show that they are only trainees but not the regular employees and stipend paid to the trade trainees cannot answer the definition of wages as per sec. 2 (22) of the E. S. I. Act. In view of the above evidence, the ESI Court came to the conclusion that the petitioner establishment before it is not liable to pay the contribution under the Employees State Insurance Act as claimed by the first respondent in E. I. Case No. 1/89 is the subject matter of the above appeal which is only a finding of fact arrived basing on the evidence and Ex. P-1 to P-4 and R-4 available before the Court. As no substantial question of law involved in the appeal, which does not warrant interference, by us. ( 11 ) FOR the foregoing reasons, the LPAs as well as the CMA fail, and they are accordingly dismissed, however, with no order as to costs.