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2005 DIGILAW 736 (KER)

Regional Director E. S. I. Corporation v. Kallai Saw Mills And Timber Industries

2005-11-22

J.M.JAMES

body2005
JUDGMENT J.M. James, J. 1. The question that arises for consideration in this appeal is whether the contractual employees found working in the premises under the supervision and control of an establishment, will come within the definition of the "Employee" of that establishment, as per S.2(9) of the Employees' State Insurance Act, 1948, in short 'the Act', for the purpose of coverage and recovery of contribution from the establishment. 2. The opposite party, the Regional Director of E.S.I. Corporation, in I.C. No.75/2000, on the file of the Employees' Insurance Court, Alappuzha, in short 'the Insurance Court', is the appellant. M/s Kallai Saw Mills and Timber Industries, Thevara, Ernakulam, is a small scale factory, and was engaged in wood industry, at the time of the inspection by D.W. 1, the Inspector of E.S.I. Corporation, on 10-10-1990. He submitted Ext. D3 report before the E.S.I. Corporation, in which he had stated that there were 11 employees, found working under the applicant. Therefore, those employees were covered under the E.S.I. Scheme. The E.S.I. Corporation also has taken steps to cover the establishment from 8-9-1990 to 30-9-1998. It sent notice as per the Rules. However, the applicant, challenged Ext. D3 report, as well as the notice covering its employees under the E.S.I. Scheme, before the Insurance Court. The contention of the applicant was that it had only five permanent employees and the four employees who were found working under the establishment were not their employees. They were employed by one P. Rajan, for the purpose of operating the circular saw machines in sizing the wood, to supply to M/s Bharat Kumar Patel and Co., Thripunithura. The facilities of the applicant's establishment were alone rendered. Therefore, it was contented that the establishment of the applicant cannot be covered under the E.S.I. Scheme. 3. This had been challenged by the appellant, mainly relying on Ext. D3 report. In it, D.W.1 has stated that there were three persons with Kallai Saw Mills and Timber Industries, whose particulars were given in Ext. D3 report. A sister concern of the applicant, as admitted, M/s Thomas John and Co., had four employees, whose details were also given by D.W.1 in Ext. D3 report. There were other four employees, whom, the applicant stated as supplied by P. Rajan. D3 report. A sister concern of the applicant, as admitted, M/s Thomas John and Co., had four employees, whose details were also given by D.W.1 in Ext. D3 report. There were other four employees, whom, the applicant stated as supplied by P. Rajan. The Insurance Court has found that there is no evidence adduced to show that all the eleven persons mentioned above were working under the applicant's establishment, and, therefore, they are to be covered under the E.S.I. Scheme. The same is under challenge through this appeal. 4. Before entering into any discussion on merit, for clarity, I reproduce below, the definition of "employee" under S.2(9), "immediate employer" under S.2(13), and the "principal employer" under S.2(17) of the Act. The same is under challenge through this appeal. 4. Before entering into any discussion on merit, for clarity, I reproduce below, the definition of "employee" under S.2(9), "immediate employer" under S.2(13), and the "principal employer" under S.2(17) of the Act. "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; 2(13) "immediate employer", in relation to employees employed by or through him, means a person who has undertaken the execution, on the premises of a factory or an establishment to which this Act applies or under the supervision of the principal employer or his agent, of the whole or any part of any work which is ordinarily part of the work of the factory or establishment of the principal employer or is preliminary to the work carried on in, or incidental to the purpose of, any such factory or establishment, and includes a person by whom the services of an employee who has entered into a contract of service with him are temporarily lent or let on hire to the Principal employer and includes a contractor; 2(17) "principal employer" means- (i) in a factory, the owner or occupier of the factory and includes the managing agent of such owner or occupier, the legal representative of a deceased owner or occupier, and where a person has been named as the manager of the factory under the Factories Act, 1948 (63 of 1948), the person so named. (ii) in any establishment under the control of any department of any Government in India, the authority appointed by such Government in this behalf or where no authority is so appointed, the head of the department. (iii) in any other establishment, any person responsible for the supervision and control of the establishment." 5. The three employees of M/s Kallai Saw Mills and Timber Industries, and four employees of M/s Thomas John and Co., the sister concern of the former were not disputed before the Insurance Court by the applicant, the respondent herein. The specific case of the respondent is that four employees who were found doing the work, with circular saw machine, were the employees of M/s Bharat Kumar Patel and Co., Thripunithura. Therefore, those four employees were of the latter company, and have no connection with the respondent's establishment. 6. The learned counsel appearing for the appellant submitted, relying on Ext. D1 letter dated 29-8-1990, addressed by M/s Bharat Kumar Patel & Co. to M/s Thomas John & Co., that 23 Nos. of rosewood logs of 9.142 cubic metres were sent for processing the same in the saw mill. Under Ext. D2, 28 Nos. of rosewood logs measuring 9.574 cubic metres were sent for the purpose of sawing. Nothing is mentioned in Exts. D 1 and D 2 that the employees of M/s Bharat Kumar Patel and Co. were deputed to the applicant's establishment, for doing the sizing work requested for, by using the circular saw machine supplied by Thomas John & Co. Therefore, the contention of the applicant that it had supplied circular saw machines, which were used by four employees of M/s Bharat Kumar Patel and Co., cannot be accepted. Moreover, P. Rajan, who is said to be the Contractor who supplied those four employees, was also not examined. In E.S.I. Corporation v. Hotel Amred ( 1998 (1) KLT 786 ) a Division Bench of this Court had laid down that a person who comes to the Court with a grievance has a duty to establish his case by leading evidence, oral and documentary, and substantiate his claim, as per S.102 of the Evidence Act. There is nothing on record to show that P. Rajan has supplied the four employees mentioned in Ext. D3 report of D.W.1. There is nothing on record to show that P. Rajan has supplied the four employees mentioned in Ext. D3 report of D.W.1. Therefore, I am not inclined to accept that the four employees who were doing the work in the establishment, under the direct supervision of the applicant, were not their employees, that they were the workers of Bharat Kumar Patel and Co., Tripunithura, and that they were deputed for the purpose of doing the work of that company in the premises of the applicant. 7. Under S.2(13) of the Act, the four - employees stated to have been supplied by P. Rajan, for carrying out the work, which is ordinarily part of the work of the establishment under the principal employer or his agent, as the contract service of employees were temporarily lent or let on hire to the principal employer and includes a Contractor, is bound to be counted as the employees under the principal employer or his agent. Under S.2(9)(ii) and (iii) of the Act, an employee who is employed by the establishment, through an immediate employer, and whose work is ordinarily part of the work of the establishment or incidental thereto, is also an employee thereunder. 8. In view of the interpretation of S.2(9) and 2(13) of the Act, the four persons who were claimed to have been supplied by P. Rajan, in the facts of this case, were doing the work of the establishment, the sawing work, for which the logs were send to the establishment of the applicant for sizing the same. Therefore, those four workers come as employees, as defined under S.2(9) of the Act. Even if they were supplied by P. Rajan, who is an immediate employer under S.2(13) of the Act, they become the employees of the applicant establishment. 9. Counsel for the appellant relied on E.S.I. Corporation v. Premier Timber Supplies ( 1991 (1) KLT 554 ) in which a Division Bench of this Court had accepted the principle laid down in A.P.S.E. Board v. E.S.I.C., Hyderabad (1977 Lab IC 316) that a casual worker is entitled to payment of contribution by the employer towards employer's contribution, as well as the employee's contribution, though he is employed even for a day or two or a few days in a week. Thus, the word 'employee' as defined under S.2(9) of the Act, includes casual worker also. Thus, the word 'employee' as defined under S.2(9) of the Act, includes casual worker also. The Bench has quoted the decision of another Division Bench of this Court from M.F.A.No.350 of 1985, in which the question whether the employees employed through a Contractor are employees for whom the principal employer will have to pay contribution was answered affirmatively. Further, the Court also held that the mere fact of no deductions having made from the wages does not absolve the principal employer from his liability to pay contributions to the Corporation. 10. In Saraswath Films v. Regional Director, E.S.I.Corporation (2003 (1) KLT 886 (SC)) it was held that the security agency may be an immediate employer of the security guards, who were working in the cinema theatre. Accepting the definition of "employee" contained in clause (iii) of S.2(9) of the Act, and the definitions of "principal employer" and "immediate employer", as stated earlier, it was further held that security guards would come within the purview of "employee", as defined under S.2(9) of the Act. Thus, if the work done by an employee is even incidental to the work of the establishment, that person would come as an employee of the establishment. In the case at hand, all the four persons were working in the premises doing the principal work of the establishment, under the principal employer. Therefore, they come within the definition of the expression contained in S.2(9) of the Act. In the absence of any evidence having adduced by the respondent, relying on Hotel Amred's case, (supra) I hold that all the four employees, whom the applicant claimed to have been supplied by P. Rajan, the immediate employer, are the employees of the applicant establishment. Therefore, the establishment squarely falls within the E.S.I. coverage. 11. Hence, I am unable to accept the findings of the E.S.I. Court that there was no employer - employee relationship for the four employees with the respondent - establishment. I further hold that the respondent is bound to pay the share of the E.S.I. contribution of all the eleven employees, as reported by D.W. 1, through his Ext. D3 report. The findings of the E.S.I. Court on that point are set aside. 12. I further hold that the respondent is bound to pay the share of the E.S.I. contribution of all the eleven employees, as reported by D.W. 1, through his Ext. D3 report. The findings of the E.S.I. Court on that point are set aside. 12. Another point that is raised is whether under the proviso to S.77(1A)(b) of the Act, the E.S.I. Corporation can make a claim after five years of the period, to which the claim relates to. The inspection, as seen from Ext. D3, was made by D.W. 1 on 10-10-1990. In Para.7 of the written statement, the E.S.I. Corporation has stated that it has sent the letter to the respondent - applicant for registration of the employees, payment of contribution and maintenance of records, etc. first on 11-12-1990, and later on various dates, 31-7-1991, 12-2-1997 and 26-3-1998. However, I do not find any document produced to show that the appellant had sent these communications to the respondent - applicant. Therefore, in the absence of any acceptable evidence, I am unable to enter into a finding under the proviso to S.77(1A)(a) & (b) of the Act. 13. Considering my findings, as given above, and also the importance of this matter, which relate to the benefit of the employees under the E.S.I. Scheme, though the claim period relates back to 1990, I am inclined to remit the matter to the E.S.I. Court, for the limited purpose of adducing evidence regarding the claim period, and the demand made thereon, as per S.77(1A)(a) & (b) of the Act. Both sides will be given an opportunity to adduce evidence on this aspect. Thereafter, the Insurance Court shall dispose of the matter, as per the law, within two months from the date of appearance of the parties before it. The parties shall appear before the Employees' Insurance Court, Alappuzha, on 20-12-2005. Appeal is partly allowed as above.