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2006 DIGILAW 872 (KAR)

EMPLOYEES STATE INSURANCE CORPORATION, BANGALORE v. NEW TAJ MAHAL CAFE (PRIVATE) LIMITED, BANGALORE

2006-10-31

V.JAGANNATHAN

body2006
JUDGMENT In this appeal, the Employees' State Insurance Corporation (ESIC) has questioned the legality of the order passed by the ESI Court, Mangalore in setting-aside the orders passed under Section 45-A of the Employees' State Insurance Act, 1948. 2. I have heard the learned Counsel for the parties. 3. Learned Counsel Smt. Geetadevi appearing for the Corporation submitted that in respect of the two orders under Section 45-A of the Act, the respondent establishment took up the matter before the ESI Court by filing an application under Section 75 of the Employees' State Insurance Act, 1848 and the ESI Court after examining the material on record came to the conclusion that insofar as the contribution demanded by the appellant concerning the employment of security guards is concerned, there is evidence to the effect that the contributions have been paid towards the security guards and as such once again directing the principal employer i.e., the respondent herein to pay the contribution on the employment of three security guards will not arise and accordingly the order dated 11-9-2002 i.e., Ex. A 9 was set aside. So far as the said order of the ESI Court is concerned, learned Counsel submitted the said order does not require any interference in view of the fact that the contributions have been paid in respect of the security guards. However, the main grievance of the appellant according to the learned Counsel is that insofar as the order passed as per Ex. A 10 requiring the respondent to pay the contributions in respect of the wages paid to the employees of the contractor is concerned, the ESI Court did not properly appreciate the entire material on record and has passed an illegal order and therefore the said part of the order of the ESI Court setting aside the contributions demanded as per Ex. A 10 requires interference at the hands of this Court. 4. Elaborating the submissions in this regard, learned Counsel Smt. Geetadevi submitted that it has come in the evidence of both A W. 1 and AW. A 10 requires interference at the hands of this Court. 4. Elaborating the submissions in this regard, learned Counsel Smt. Geetadevi submitted that it has come in the evidence of both A W. 1 and AW. 2 that a number of workers were engaged by the contractor to get the repair work done and in view of this admission by the two witnesses examined on behalf of the respondent establishment, the ESI Court could not have closed its eyes to the said evidence but on the contrary ESI Court has gone off in a tangent by referring to the materials produced by the respondent establishment and has observed that the amounts which were spent as per Exs. 13, 14 to 23 do pertain to the purchase of materials and amount given to the contractors and the said documents are silent with regard to the labour component and therefore the question of contribution being paid on the wages paid to the workers of the contractors will not arise. This reasoning of the ESI Court according to the appellant's Counsel is totally erroneous and contrary to the evidence on record. 5. The further submission made is to the effect that it was an incumbent on the part of the employer to have placed evidence with regard to the number of workers engaged by the contractor and the wages paid to those workers and when the employer does not place all these materials before the ESI Court, the burden does not shift to the Corporation to prove the same and when the respondent establishment do not come out with the correct amount of wages that was paid to the workers of the contractor, the ESI Court need not go into the question any further and has to accept the amount calculated by the Corporation. It was also submitted that once it is admitted that the respondent establishment did engage a contractor to carry out the repair works and if the respondent fails to get the details of the workers engaged by the contractor or the wages paid to the workers by the contractors, the appellant-Corporation is entitled to demand the contribution from the respondent establishment. In support of the above submission, learned Counsel placed reliance on the decision in Modella Woollens Limited v Employees' State Insurance Corporation and Another1 and Dharam Deo Singh v State of Uttar Pradesh2. 6. In support of the above submission, learned Counsel placed reliance on the decision in Modella Woollens Limited v Employees' State Insurance Corporation and Another1 and Dharam Deo Singh v State of Uttar Pradesh2. 6. On the other hand, learned Counsel for the respondent establishment at the out-set contended that appeal itself is not maintainable because no substantial question of law is involved and as the question related to number of workers engaged by the contractor is a pure question of law, no law is involved and as such relying on the decision of this Court in Employees' State Insurance Corporation v Super Tailors3, it was argued that the appeal has to fail for lack of substantial question of law being involved. Apart from this, learned Counsel for the respondent establishment also referred to the observations of the Trial Court at paragraph 6 of the impugned order and contended that the question of the contractor engaging the workers does not arise and it is not necessary in the case of carrying out repairs or furnishing an establishment that workers will necessarily have to be employed. As such the order of the ESI Court is just and proper. 7. In the light of the submissions made as above and having carefully gone through the material on record, the points that arise for consideration are the following.- (a) Whether any substantial question of law is involved in this appeal? (b) Whether the order of the ESI Court setting-aside the contribution demanded by the Corporation in respect of the wages paid to the works of the contractor is sustainable in law? 8. Insofar as the first point is concerned, although learned Counsel for the respondent establishment contended very forcefully that no substantial question of law is involved in this appeal, I am unable to agree with the said submission because one of the substantial questions of law raised by the appellant-Corporation is whether the respondent is liable to pay the contribution in respect of the workers engaged by the contractor. In my view, this question is a question of law having regard to the provisions of the ESI Act and the definition of the "employee" as per Section 2(9) of the Act. Therefore, there is no substance in the argument advanced by the learned Counsel for the respondent establishment that no substantial question of law is involved. In my view, this question is a question of law having regard to the provisions of the ESI Act and the definition of the "employee" as per Section 2(9) of the Act. Therefore, there is no substance in the argument advanced by the learned Counsel for the respondent establishment that no substantial question of law is involved. On the other hand, as opined by me above, the question of law involved is as to whether the establishment is liable to pay compensation in respect of the workers engaged by the contractor. Having regard to the definition of the employee in Section 2(9) of the Act, I answer the Point No. 1 in the affirmative. 9. Point No. 2.-Coming to the merits of the case, it is not in dispute that the respondent establishment did carry out the work of repairs and the number of documents produced as per Exs. 14 to 23 bear testimony to this fact. Apart from this, there is also the evidence of AW. 1-Shankarprabhu, the accountant of the respondent establishment and in his evidence by way of affidavit he has stated at paragraph 7 that workers who have done the building repairs are not the workers of the employer but were the persons employed by the outside contractor. AW. 2-K Vamana Shenoy who is the Managing Director of the respondent establishment in the course of his evidence by way of an affidavit has also stated particularly during his cross-examination that when the ESI Inspector visited the establishment, the respondent was informed to split the wages paid to the workers in the total expenditure involved in carrying out the repairs and further necessary records were also asked to be sent to the Corporation but he goes on to admit that neither the establishment furnished the information with regard to the wages paid to the workers out of the total expenditure incurred nor any records were sent in this regard. This witness further admits in the cross-examination that the contractor, one Mohandas Shetty did repair work and number of workers were engaged and for that period AW. 2 did not maintain any records and he is also not aware of the wages paid by the contractor to the workers. 10. This witness further admits in the cross-examination that the contractor, one Mohandas Shetty did repair work and number of workers were engaged and for that period AW. 2 did not maintain any records and he is also not aware of the wages paid by the contractor to the workers. 10. In the face of such evidence on record placed by AW.1 and AW.2, it becomes very clear that number of workers were engaged by the respondent establishment to carry out the repair works and inspite of the ESI Inspector directing the respondent establishment to furnish the particulars of the wages paid, the respondent did not give any positive reply. Such being the state of affairs in the instant case, the decision of the Hon'ble Supreme Court in Modella Woollens case stated as supra, becomes squarely applicable. In the aforesaid decision, the Hon'ble Apex Court has observed that "In the application filed before the Insurance Court, if the employer does not come out with the correct amount which according to them was payable, assuming their contention that the production bonus was not wages, was not upheld". The ESI Court did not go into that question any further and its acceptance of the amount calculated by the Corporation as the correct amount of contribution therefore has to be upheld". In another decision viz., Employees' State Insurance Corporation v Harrison Malayalam Private Limited!, it has been observed by the Hon'ble Supreme Court that under the ESI Act ''It is the duty of the respondent-Company to get the necessary details of the workman employed by the contractor at the commencement of the contract since primary responsibility of payment of the contribution is on the primary employer". The Court went on to further observe that "On the admitted fact that the respondent establishment had engaged the contractor to execute the work, it was also the duty of the respondent- company to get the temporary identity certificates issued to the workmen as per the provisions of the Regulations 12, 14 and 15 of the Employees' State Insurance (General)" Regulations, 1950". In the very same decision, the Apex Court has further observed that: "If the respondent-company failed to get the details of the workmen employed by the contractor, it has only itself to thank for its default". In the very same decision, the Apex Court has further observed that: "If the respondent-company failed to get the details of the workmen employed by the contractor, it has only itself to thank for its default". Since the workman were in fact engaged by the contractor to execute the work in question and the respondent-company had failed to pay the contribution, the appellant-Corporation was entitled to demand the contribution although both the contribution period and the corresponding benefit period had expired. 11. In the light of the aforesaid decision of the Apex Court which in my opinion is squarely applicable to the case on hand, the ESI Court was totally in error in ignoring the evidence on record particularly those of AW. 1 and AW. 2 and it is rather surprising that the ESI Court makes an observation that the employer only spent about securing the materials for the repairs and that there is no labour component involved. I fail to understand as to how the employer could have got the work of repairs done by spending such huge amount as could be seen from Exs. A 14 to A 23 without engaging any workers. The evidence of A Ws. 1 and 2 goes to indicate that the workers were in fact employed by the contractor concerned. Hence the said observation of the Trial Court at paragraph 6 is totally perverse and contrary to the evidence placed by the respondent establishment of AW. 1 and AW. 2. Before parting with this case, it also has to be mentioned that the ESI Court has made certain observation with regard to the appellant asking the respondent-employer to go with records to Bangalore. In my opinion, the observations made at paragraphs 16 and 17 are totally uncalled for and it is hoped that in future the ESI Court will not make such observations which have no bearing on the facts and questions involved before the ESI Court are concerned. Restraint on the part of the ESI Court is necessary while making observations of the nature that is found in the impugned order. 12. In the result, I answer the point under consideration in the negative and hold that the ESI Court was in error in setting-aside the order passed under Section 45-A as per Ex. Restraint on the part of the ESI Court is necessary while making observations of the nature that is found in the impugned order. 12. In the result, I answer the point under consideration in the negative and hold that the ESI Court was in error in setting-aside the order passed under Section 45-A as per Ex. A. 10 and therefore the said part of the order of the ESI Court requires to be set aside. Hence, I pass the following.- ORDER The appeal is allowed. The impugned order of the ESI Court insofar as setting-aside the order passed under Section 45-A as per Ex. A. 10 is set aside.