JUDGMENT : R. Subbiah, J. Challenging the order passed by the Employees Insurance Court (Principal Labour Court), Chennai, dismissing the petition filed by the, appellant in E.I.O.P. No. 81/2007, the present appeal has been filed. The case, in brief, is as follows: (a) The appellant factory is covered by the Employees State Insurance Corporation Act, 1948, with affect from 2000, with a separate Code No. 51-77369-90. The appellant is manufacturing and selling of stainless steel utensils from unpolished stainless steel metal sheets. Before and after the main work of manufacture of household utensils, all the allied works, like cutting of stainless metal sheets to the required sizes, pressing and polishing, were given-to outside agencies as job work contract basis, since these works cannot be done within the factory due to lack of such machinery items, such works done by job work contractors were not directly supervised by the appellant and such works were done in the nomenclature of "Contract for service" and not as contract of service". In fact, the master and servant relationship was not in existence. While so, the respondent, who conducted an inspection in the appellant factory on May 28, 2003, observed contribution on omitted wages for the total amount of Rs. 31,267/- for the period from 2001-2003 for the work done outside the factory. Out of the total amount, the alleged contribution of Rs. 31,267/-, the cooly charges; for the period 2002-2003 of Rs. 1696/- as mentioned in the order u/s 45(A) of the Employees State Insurance Act, the appellant is ready to pay on verification the books of account. The remaining amount of Rs. 29571/- is the expenditure incurred towards the work of unfinished shape of stainless steel metal sheets and unpolished utensils, which were given to outside agencies on job work basis and hence, it cannot be treated as wages u/s 2(22) of the E.S.I. Act and as such, the appellant is not liable to pay ESI contribution. (b) The respondent Corporation filed a statement reiterating that the appellant is liable to pay contribution, as claimed under the order passed u/s 45 of the E.S.I Act. (c) In order to prove the claim, on the side of the appellant, one Sakthivel was examined as P.W.1 and four documents were marked as Exhibits P-1 to P-4. (b) The respondent Corporation filed a statement reiterating that the appellant is liable to pay contribution, as claimed under the order passed u/s 45 of the E.S.I Act. (c) In order to prove the claim, on the side of the appellant, one Sakthivel was examined as P.W.1 and four documents were marked as Exhibits P-1 to P-4. On the side of the respondent Corporation, one Gurumurthy, Branch Manager, was examined as R.W.1 and the inspection report was marked as E.S.I. The trial Court, after analyzing the entire evidence, dismissed the petition filed by the appellant. Aggrieved over the same, the present appeal has been filed. 2. Heard the learned counsel for the parties and perused the materials available on record. 3. The question that arises for (consideration in this appeal is whether the appellant is liable to pay the contribution in respect of works given to outside agencies since the appellant has no direct supervision in the works done by the job work contract. 4. Learned counsel for the appellant, by relying upon a Full Bench judgment of this Court in E.S.I. Corporation Vs. Bethall Engineering Company, (2007) 4 CTC 529 submitted that some works are entrusted to the job-work contracts and such job works contracts are independent works and when the appellant has no direct supervision in the said job works, then they are not liable to pay contribution in respect of those works. 5. Per contra, the learned counsel for the respondent submitted that in the instant case, the evidence on record should show that the work was done within the premises of the appellant factory and this was admitted by P.W.1. Under such circumstances, it cannot be said that the appellant has no direct supervision in the work. 6. Keeping the submissions made by the learned counsel on either side, I have carefully gone through the reasonings given in the impugned order. I find that P.W.1 had stated in his evidence that the outside contractors like Sakthivel, Damodharan, Pazhanivel and Pachaiappan used to come to their factory "to do the work". From the said evidence, it could be seen that they used to come to the factory to collect the cheques and to get further fresh contracts. In my considered opinion, since the work was done inside the premises, it does not mean that the work was directly supervised by the appellant. From the said evidence, it could be seen that they used to come to the factory to collect the cheques and to get further fresh contracts. In my considered opinion, since the work was done inside the premises, it does not mean that the work was directly supervised by the appellant. Unless there is positive evidence to show that the work done by the contractor was directly supervised by the appellant,- they are not liable to pay compensation in respect of the works entrusted to the job contracts. In the instant case, absolutely there is no positive evidence. On the other hand, in the show cause notice dated December 28, 2006, the respondent itself has noted the works carried out through contractors "without supervising". The relevant portion in the said notice is as follows: 2002-03: 1. Coly charges A/c. 300 for Rs. 26,085.00 2. Cutting charges A/c. 273 Rs. 24,055.00 3. Pressing charges A/c.270-277 Rs. 32,740.00 The above 3 Heads of works carried out, through contractors, 'WITHOUT SUPERVISING' Name of the contractors: 1. Sakthivel, 7/2, Powder Mill Road, Chennai-600 012. 2. Pachaiappan, Contractor, 7/11, Powder Mill Road, Chennai-12. D.C. and Inward Challan verified. Their work carried out, it is confirmed. "HENCE, IT IS NOT ATTRACT E.C. Therefore, in my considered opinion, the respondent corporation itself, on inspection, came to the conclusion that, no direct supervision by the appellant was carried out to the outside agencies. Under such circumstances, I am not inclined to accept the submissions made by the respondent that since the work was carried out inside the premises, it has to be presumed that the work was supervised by the appellant. 7. In this regard, a reference could be placed in some of the judgments relied on by the appellant. In E.S.I. Corporation rep. by its Regional Director v. Bethall Engineering Company (supra), a Full Bench decision rendered by this Court, it has been held as follows: 7. It is thus clear from the dicta of the Supreme Court that where the job work is entrusted to a third party contractor and such third party contractor has engaged independent workers, the fact that the principal employer has power to reject the end product manufactured by the contractor, does not constitute an element of supervision within the meaning of Section 2(9) of the Act. The judgment of the Division Bench in Poonam Easwardas, Proprietrix, Kaleel Corporation v. Employees State Insurance Corporation (supra) relied upon by the appellant Corporation is concerned with the direct employees of the establishment and has no application to the facts of the instant case which is about the contract employees. 8. The judgment of the Division Bench in South India Surgical Co. v. The Regional Director, Employees State Insurance Corporation relied upon by the Employees State Insurance Corporation is also concerning the liability to pay the ESI charges in respect of the contractor/employees. The appellant in that case was a trading concern dealing in surgical instruments. They had erected some machines necessary for the manufacture of surgical instruments and lend them to some contractors for the manufacture of surgical instruments. The Bench after referring to the decision in Calcutta Electric Supply Corporation v. Subhash Chandra Bose 1972-I-LLJ-475, held that the contractor employees cannot be said, to be the employee within the meaning of Section 2(9) of the Act merely because the supervisory controls were exercised by the manufacturers over the contractors for quality reasons. The relevant observations of the Division Bench are reproduced below: 18. In our opinion, so long as the appellant had arrogated, to itself the right to reject the end product manufactured by the disputed workmen those workmen could not be claimed to be falling within the meaning of Section 2(9) of the Act... In fact, the Supreme Court, in its judgment Calcutta Electric Supply Corporation Limited v. Subhash Chandra Bose (supra), has gone to the extent of holding that even in cases, where supervisory controls were exercised by the manufacturer over the contractors for, quality reasons, that by itself would not lead to a conclusion that the workmen of those contractors to become employees of the manufacturer within Section 2(9) of the Act. In this context, the appellant's case is an a fortiori one in the sense that the appellant does not exercise supervisory control and simply rejects the materials manufactured by the disputed workmen". 9. In our opinion, there is no conflict between the judgments of the Division Benches, since the fact situations are totally different. In this context, the appellant's case is an a fortiori one in the sense that the appellant does not exercise supervisory control and simply rejects the materials manufactured by the disputed workmen". 9. In our opinion, there is no conflict between the judgments of the Division Benches, since the fact situations are totally different. So far as the issue referred to us is concerned, we answer the same in the negative and hold that the right of the principal employer to reject or accept the work done by the contractor through his employees is by itself cannot be construed as effective and meaningful supervision as envisaged u/s 2(9) of the Act. 8. Yet another decision that has been cited by the learned counsel for the appellant is The Managing Director, Hassan Co-operative Milk Producer's Society Union Limited Vs. The Assistant Regional Director Employees State Insurance Corporation, (2011) 1 SCC(L&S) 85 and the relevant paragraphs in the said decision are extracted hereunder: 19. The answer to the controversy presented; before us has to be found primarily from Section 2(9) which defines 'employee' and the terms of agreements. Section 2(9) has been extensively analysed by this Court in Royal Talkies, Hyderabad and Others Vs. Employees State Insurance Corporation, (1978) 4 SCC 204 ) thus: 14. Now here is a break-up of Section 2(9). The clause contains two substantive parts. Unless the person employed qualifies under both he is not an employee. Firstly, he must be employed "in or in connection with" the work of an establishment. The expression "in connection with the work of an establishment" ropes in a wide variety of workmen who may not be employed in the establishment but may be engaged only in connection with the work of the establishment. Some nexus must exist between the establishment and the work of the employee but it may be a loose connection. 'In connection with the work of an establishment' only postulates some connection between what the employee does and the work of the establishment. He may not do anything directly for the establishment; he may not do anything, statutorily, obligatory in the establishment; he may not even do anything which is primary or necessary for the survival or smooth running of the establishment or integral to the adventure. He may not do anything directly for the establishment; he may not do anything, statutorily, obligatory in the establishment; he may not even do anything which is primary or necessary for the survival or smooth running of the establishment or integral to the adventure. It is enough if the employee does some work which is ancillary, incidental or has relevance to or link with the object of the establishment. Surely, an amenity or facility for the customers who frequent the establishment has connection with the work of the establishment. The question is not whether without, that amenity or facility the establishment cannot be carried on but whether such amenity or facility, even peripheral may be, has not a link with the establishment. Illustrations may not be exhaustive but may be informative. Taking the present case, an establishment like a cinema theatre is not bound to run a canteen or keep a cycle stand (in Andhra Pradesh) but no one will deny that a canteen service, a toilet service, a car park or cycle stand, a booth for sale of catchy film literature on actors, song hits and the like, surely have connection with the cinema theatre and even further the venture. On the other hand, a bookstall where scientific works or tools are sold or a stall where religious propaganda is done, may not have anything to do with the cinema establishment and may, therefore, be excluded on the score that the employees do not do any work in connection with the establishment, that is, the theatre, in the case of a five-star hotel, for instance, a barber shop or an arcade, massage parlour, foreign exchange counter or tourist assistance counter may be run by some one other than the owner of the establishment but the employees so engaged do work in connection with the establishment or the hotel even though there is no obligation for a hotel to maintain such an ancillary-attraction. By contrast, not a lawyer's chamber or architect's consultancy. Nor, indeed, is it a legal ingredient that such adjunct should be exclusively for the establishment if it is mainly its ancillary. 15. The primary test in the substantive clause being thus wide, the employees of the canteen and the cycle stand may be correctly described as employed in connection with the work of the establishment. Nor, indeed, is it a legal ingredient that such adjunct should be exclusively for the establishment if it is mainly its ancillary. 15. The primary test in the substantive clause being thus wide, the employees of the canteen and the cycle stand may be correctly described as employed in connection with the work of the establishment. A narrower construction may be possible but a larger ambit is clearly imported by a purpose-oriented interpretation. The whole goal of the statute is to make the principal employer primarily liable for the insurance of kindred kinds of employees on the premises, whether they are therein the work or are merely in connection with the work of the establishment. 16. Merely being employed in connection with the work of an establishment, in itself, does not entitle a person to be an employee. He must not only be employed in connection with the work of the establishment but also be shown to be employed in one or other of the three categories mentioned in Section 2(9). 17. Section 2(9)(i) covers only employees who are directly employed by the principal employer. Even here, there are expressions which take in a wider group of employees than traditionally, so regarded, but it is imperative that any employee who is not directly employed by the principal employer cannot be eligible u/s 2(9)(i). In the present case, the employees concerned-are admittedly not directly employed by the cinema proprietors. 18. Therefore, we move down to Section 2(9)(ii). Here again, the language used is, extensive and diffusive imaginatively embracing all possible alternatives of employment by or through an independent employer. In such cases, the principal employer has no direct employment, relationship since the immediate employer of the employee concerned is some one else. Even so, such an employee, if he works (a) on the premises of the establishment, or (b) under the supervision of the principal employer or his agent on work which is ordinarily part of the work of the establishment or which is preliminary to the work carried on in or incidental to the purpose of the establishment", qualifies, u/s 2(9)(ii). The plurality of persons engaged in various activities who are brought into the definitional net is wide and considerable; and all that is necessary is that the employee be on the premises or be under the supervision of the principal employer or his agent. The plurality of persons engaged in various activities who are brought into the definitional net is wide and considerable; and all that is necessary is that the employee be on the premises or be under the supervision of the principal employer or his agent. Assuming that the last part of Section 2(9)(ii) qualified both these categories, all that is needed to satisfy that requirement is that the work done by the employee must be (a) such as is ordinarily (not necessarily nor statutorily) part of the work of the establishment, or (b) which is merely preliminary to the work carried on in the establishment, or (c) is just incidental to the purpose of the establishment. No one can seriously say that canteen or cycle stand or cinema magazine, booth is not even incidental to the purpose of the theatre. The cinema goers ordinarily find such work an advantage, a facility, an amenity and some times a necessity. All that the statute requires is that the work should not be irrelevant, to the purpose of the establishment. It is sufficient if it is incidental to it. A thing is incidental to another if it merely appertains to something else as primary. Surely, such work should not be extraneous or contrary to the purpose of the establishment but need not be integral to it either. Much depends on time and place, habits and appetites ordinary expectations and social circumstances. In our view, clearly the two operations in the present case, namely, keeping a cycle stand and running a canteen are incidental or adjuncts to the primary purpose of the theatre. A reading of the above judgments would show that merely a person being employed in connection with the work of an establishment, in itself does not mean that he is a person to be termed as an employee. In the instant case, the respondent Corporation itself observed that there is no supervision of the appellant with regard to the works entrusted to the outside agencies. Under such circumstances, following the principles laid down in the said decisions, I am of the opinion that the appellant is not liable to pay contribution. Hence, the order passed by the Court below is liable to be set aside. For the reasons stated above, the civil miscellaneous appeal is allowed and the order passed by the Court below is set aside. No costs. Hence, the order passed by the Court below is liable to be set aside. For the reasons stated above, the civil miscellaneous appeal is allowed and the order passed by the Court below is set aside. No costs. Consequently, connected M.P. is closed.