Employees state Insurance Corporation, through it's Deputy Director, Nagpur v. Rani Sati Industries, Through its Partner Anurag, P. Agrawal
2025-12-16
PRAVIN S.PATIL
body2025
DigiLaw.ai
JUDGMENT : PRAVIN S. PATIL , J. Heard. 2. By way of present appeal, the challenge is to the judgment and order passed by the Employees Insurance Court (Industrial Court) Amravati dated 04.02.2011 passed in Employees State Insurance Case No.1/2000, whereby it is declared that the establishment of the respondent is not covered under the provisions of the Employees' State Insurance Act, 1948 (in short ‘The ESI Act”) and, therefore, they are not responsible and liable to pay any contribution required under the provisions of ESI Act. 3. The appellant Employees State Insurance Corporation has challenged the said judgment and order of the Insurance Court on the ground that learned Insurance Court failed to consider the specific material in terms of Visit Note dated 23.10.1997, which was proved by the appellant Corporation, whereby it is clear that the employees working in the respondent unit were more than 10 persons and, therefore, the unit run by the respondent comes under the definition of ‘Factory’. Hence, on this count, preferred the present appeal before this Court. 4. This Court after hearing the appellant, by order dated 28.06.2011, admitted the appeal by framing the following substantial questions of law: “1. Whether the learned lower court is justified in rejecting the documentary evidence in the visit note dated 23.10.1997 at ex.49 which was counter signed by the partner of the Respondent where in the number of employees mentioned are more than 10(7+4) and they were found working on 23.10.1997 by the Inspector? 2. Whether the learned lower court is justified in not considering the Inspection Report dated 23.10.1997 Ex.50 where in also at number of employees are shown is 13 (7+4+2)? 3. Whether the learned lower Court is justified in holding that the establishment of the Respondent: is not covered under the provisions of the Act and they are not liable to pay the contributions when it is proved by documentary evidence that 10 or more employees were engaged for wages on 23.10.1997 (Ex.49 & 50)?” 5. In light of questions of law framed by this Court, it will be necessary to record certain facts of the present matter, which are not disputed. The respondent is a partnership firm, duly registered under the provisions of law in the name and style of “M/s Rani Sati Industries”. According to the respondents, since 1993, they were carrying out the business of the firm.
The respondent is a partnership firm, duly registered under the provisions of law in the name and style of “M/s Rani Sati Industries”. According to the respondents, since 1993, they were carrying out the business of the firm. According to them, the firm deals in manufacturing of spun pipes, cement allies and other cement products. According to them, since the business was started, there were never more than 10 employees engaged in the services of the firm. Hence, the respondent firm does not come under the definition of ‘Factory’ within the meaning of the Factories Act or any other Act in force. 6. In the background of this submission, the order of the appellant dated 25.11.1999 was challenged before the Insurance Court. In response to the notices issued by the Insurance Court, the appellant Insurance Company appeared in the matter and filed its specific reply. In there reply, it is specifically stated that the inspector of the Corporation namely Shri W.P. Vaidya visited the factory of the petitioner on 23.10.1997 and found 11 employees working on wages i.e. seven regular employees plus 4 Hamals for loading and unloading of pipes and trucks. The names and signatures of these seven employees were also noted down in the visit note and one Shri Ashish Agrawal partner on behalf of the respondent also countersigned the visit note in token and correctness of the contents therein. On the basis of this visit note, the preliminary inspection report was prepared, wherein it is recorded that seven persons were found working and four hamals and truck driver and a cleaner are being engaged at the time of loading and unloading of pipes in the respondent unit. 7. In the background of above said submission of the parties, the appellant as well as respondents entered into the witness box and recorded their respective evidence. On behalf of the respondents, one Ashish Sitaramji Agrawal has deposed before the Insurance Court. In his deposition, he has reiterated the submission made in his application and stated that since beginning in their firm, there were no more than 10 employees engaged in the services. Hence, their factory does not come within the definition of ‘Factory’ under the provisions of law. According to him, there were only seven employees working and, therefore, the contention of the appellant Corporation is incorrect. 8.
Hence, their factory does not come within the definition of ‘Factory’ under the provisions of law. According to him, there were only seven employees working and, therefore, the contention of the appellant Corporation is incorrect. 8. It is pertinent to note that this witness did not deny the visit of inspector on 23.10.1997 to the unit. According to him, Inspector in his visit, has recorded only the names of seven persons and later on, added that there were four hamals found by him along with a driver and a cleaner in the matter. Hence, he has attempted to dispute the visit note dated 23.10.1997. But, document shows this witness put his own signature on the visit note, as token of authenticity of document and not denied the same. 9. It is also pertinent to note that in the entire application and in evidence, respondents nowhere stated as to how the loading and unloading of the material received to their unit is done by them. They have not given the specific names of the persons doing the work of loading and unloading in the unit. On the contrary, in a cross-examination, respondents also denied the suggestion that they used to hire the workers from the outside for loading and unloading of pipes. If that so, then it was necessary for the respondent to at least give the names of the workers who are doing this work, but nothing has been placed on record in this regard. 10. On behalf of appellant, Inspector of ESI was examined. Through this witness, appellant has proved the fact of visit and preparation of visit note. In cross-examination, this witness stated that under presumption, the name of driver and cleaner was recorded in visit note. Except this, nothing was elicited from this witness. 11. In the background of above said evidence, the learned Insurance Court proceeded to decide the matter. The learned Court below has reached to the conclusion that the visit note found to be not proved on the ground that the line below the names of labourers seems to be recorded subsequently and, therefore, said visit note cannot be accepted in the matter. It is further recorded that the Hamals, who were hired at such places is to assist the permanent loaders to unload crates, on charges negotiated on the spot which vary depending on the time, place and magnitude of work.
It is further recorded that the Hamals, who were hired at such places is to assist the permanent loaders to unload crates, on charges negotiated on the spot which vary depending on the time, place and magnitude of work. The coolies are self employed labourers acting on their own responsibility. The work of such Hamals by its very nature of ad-hoc nature. They cannot be called to be employed. There is no master and servant relation although they work as a part of the establishment. These works are transitory in nature just like engaging a bullock cart or taxi drivers. There, is therefore, no contract of service and these persons cannot be considered as a labour of the Industry. 12. In view of this finding of learned Insurance Court, the appellant has specifically relied upon the judgment delivered by this Court, in the case of Employees State Insurance Corporation, Sub Regional Office, Panchdeep Bhawan, Ganeshpeth, Nagpur, through its Dy. Direcotor vs. M/s Shah Maganlal Veljee and Sons, a registered partnership Firm of Gawalipura, Amravati by its Partner Shri Bharat Maganlal Shah, reported in 2023 Supreme (Online) (Bom) 24346. As per the judgment of this Court, it is pointed out that, this Court has elaborately considered the judgment of the Hon’ble Supreme Court, in the case of Rajakamal Transport Vs. Employees State Insurance Corporation, Hyderabad reported in 1996, LawSuit (SC) 785, whereby it is held that Hamals engaged by the respondent firm were also covered by the ESI Act. In this regard the findings recorded by this Court in paragraph No.18 would be relevant and, therefore, same is reproduced as under: “18. The Honourable Apex Court in the case of Rajakamal Transport vs. Employees State Insurance Corporation, Hyderabad cited supra observed that the Rajakamal Transport had engaged “Hamals” for loading and unloading goods undertaken by them for carriage as carriers. The ESI Corporation had called upon it to pay its contribution towards the insurance benefits of the "Hamals". The Rajakamal Transport disputed the liability and made an application. The Honourable Apex Court, while considering the argument that "Hamals" cannot be considered to be employees in view of the definition of the ESI Act, held that the employees need not necessarily be directly employed by the employer.
The Rajakamal Transport disputed the liability and made an application. The Honourable Apex Court, while considering the argument that "Hamals" cannot be considered to be employees in view of the definition of the ESI Act, held that the employees need not necessarily be directly employed by the employer. Those who are 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 is an employee within the meaning of Section 2(9) of the ESI Act. The above said view had already been taken by the Honourable Apex Court in the case of Royal Talkies vs. ESI Corporation, reported in (1978)4 SCC 204 .” 13. In the present matter, in view of the questions of law framed by this Court, question is to be answered as to whether the visit note Exhibit-49, which was countersigned by the partner of the respondents is valid or not and secondly, the learned Insurance Court is justified in not covering the establishment of the respondents under the provisions of ESI Act. 14. In light of the evidence available on record and perusal of the visit note Exhibit-49, it is clear that the same was countersigned by one of the partner namely Ashish Agarwal. The signature was signed by him in the capacity of managing partner and in the entire record and his evidence, it is nowhere stated that the signature available at Exhibit-49 is not his signature. On the contrary, the appellant in his written statement itself stated that the signature of the managing partner has been obtained towards the authenticity of the document. Signature of the managing partner on the office note is available and denied by him, it has to be presumed that same was signed by him after considering the contents of the visit note and said visit note was prepared in his presence. Hence, in my view, only because it is written in a small handwriting cannot be a reason to discard the document. Once the document has been signed by the Managing Director, the document is required to be accepted as a correct and valid document. 15.
Hence, in my view, only because it is written in a small handwriting cannot be a reason to discard the document. Once the document has been signed by the Managing Director, the document is required to be accepted as a correct and valid document. 15. It is pertinent to note that after the preparation of the preliminary report, the appellant Corporation has issued the intimation of coverage Exhibit-40 to the respondents on 19.12.1997, informing thereby that on the basis of visit note dated 23.10.1997, the provisions of the ESI Act has to be impleaded and also allotted Code No.23–3713–46. However, to this notice, there is no reply from the appellant in the matter. 16. In the background of above said factual position, the officers of the appellant Corporation visited the unit on 19.02.1999 and 25.02.1999 and requested the respondents to produce the relevant record for inspection. However, no such record was made available by the respondent firm to them. In the background of above said factual position, the order under Section 45-A of the ESI Act, (exhibit 33) was issued to the respondents asking thereby to deposit the contribution of Rs.15,337/-. 17. The said order was challenged before the Insurance Court at Amravati. The main contention of the respondents was that they were no ten employees in the Unit, therefore, the provisions of the ESI Act are not applicable in the matter. However, in view of judgment of Hon’ble Supreme Court and this Court, it is now settled law that Hamals who were shown present in unit are covered under the definition of ‘employee’. 18. In my opinion, the answer to the questions of law framed by this Court is required to be answered in favour of the appellant in the matter. Hence, I am of the opinion that there were more than 10 employees working on the day of visit i.e. on 23.10.1997 and hence, the provisions of the ESI Act are applicable to the respondent firm. 19. It is also held that Insurance Court has committed an error by not considering the inspection report dated 23.10.1997, exhibit 50 and thereby the impugned judgment and order is liable to be quashed and set aside. In the circumstances, I proceed to pass the following order: ORDER i) The appeal is allowed.
19. It is also held that Insurance Court has committed an error by not considering the inspection report dated 23.10.1997, exhibit 50 and thereby the impugned judgment and order is liable to be quashed and set aside. In the circumstances, I proceed to pass the following order: ORDER i) The appeal is allowed. ii) The impugned order and judgment dated 04.02.2011 passed by Employees’ Insurance Court (Industrial Court), Amravati, in Employees’ State Insurance Case No.1/2000 is quashed and set aside. 20. No order as to the costs.