Regional Director, Employees State
Insurance Corporation Vs. South India Flour Mills (P) Ltd. [1986] INSC 95 (29
April 1986)
DUTT, M.M. (J) DUTT, M.M. (J) ERADI, V.
BALAKRISHNA (J) CITATION: 1986 AIR 1686 1986 SCR (2) 863 1986 SCC (3) 238 1986
SCALE (1)1315
CITATOR INFO:
RF 1992 SC 573 (36)
ACT:
Employees' State Insurance Act, 1948 -
Section 2(9) 'employee' - 'work of the factory' - interpretation of casual
employees - whether fall within purview of Act.
HEADNOTE:
The respondent-company in Civil Appeal No.
801 of 1976 is engaged in milling wheat into wheat products in its flour mill.
It commenced the construction of another building in the compound of the
existing factory for the expansion of the factory and engaged workmen for such
construction on daily wage basis. The appellant-Corporation called upon the
respondent-company to make contribution in respect of the workmen employed for
the construction work of the factory building as required by the Employees
State Insurance Act, 1948.
The respondent-company disputed its liability
and filed a petition under Art. 226. A Single Judge allowing the petition took
the view that the persons employed in the construction of a new unit of the
factory were not employees within the meaning of the definition of the term
'employee' under s. 2(9) of the Act.
On appeal by the appellant-Corporation, a
Division Bench relying upon an earlier decision of that Court in Employees
State Insurance Corporation v. Ghanambikai Mills Ltd., [1974] 2 LLJ 530
dismissed the appeal and held that construction workers being causal employees
do not come within the purview of the Act.
The connected appeals and the special leave
petitions are based on similar facts and involve a common question of law.
864 Allowing the appeals and petitions of the
appellant- Corporation the Court.
^
HELD : 1. The Act is a piece of social
security legislation enacted to provide for certain benefits to employees in
case of sickness, maternity and employment injury. [871 F]
2. Casual employees are employees within the
meaning of the term 'employee' as defined in s. 2(9) of the Act and accordingly
come within the purview of the Act.
Andhra Pradesh State Electricity Board v.
Employees' State Insurance Corporation, Hyderabad, [1977] 1 LLJ 54, Regional
Director, ESIC, Bangalore v. Davangere Cotton Mills, [1977] 2 LLJ 404 and
Employees' State Insurance Corporation, Chandigarh v. Oswal Woollen Mills Ltd.,
[1980] 2 Lab. I.C. 1064, relied upon.
Employees State Insurance Corporation v.
Ghanbikai Mills Ltd., [1974] 2 LLJ 530, overruled.
Royal Talkies, Hyderabad v. Employees' State
Insurance Corporation, [1978] 4 SCC 204, referred to.
3. The definition of the term
"employee" under s. 2(9) of the Act is very wide. It includes within
it any person employed on any work incidental or preliminary to or connected with
the work of the factory or establishment. It is difficult to enumerate the
different types of work which may be said to be incidental or preliminary to or
connected with the work of the factory or establishment. [871 B-C]
4. In the instant cases, the additional
buildings have been constructed for the expansion of the factories in question.
It is because of these additional buildings that the existing factories will be
expanded and consequently, there will be increase in the production that is to
say increase in the work of the factories concerned. So the work of
construction of additional buildings has a link with the work of the factories.
It cannot, therefore be said that the construction work has no connection with
the work or the purpose of the factories. [871 C-E] 865
5. The expression 'work of the factory'
should also be understood in the sense of any work necessary for the expansion
of the factory or establishment for augmenting or increasing the work of the
factory or establishment. Such work is incidental or preliminary to or
connected with the work of the factory or establishment. [873 A-B]
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 801
of 1976 Etc.
From the judgment and Order dated 11.12.1973
of the Madras High Court in Writ appeal No. 288 of 1970.
V.C. Mahajan, Dr. Y.S. Chitale, Miss Kitty
Kumaramangalam, Girish Chandra, S. Ramasubramaniam, D. N. Gupta, N.S. Das
Bahal, Miss Sushma Ralhan, D.N. Gupta and C.V. Subba Rao for the appearing
parties.
The Judgment of the Court was delivered by
DUTT, J. Civil Appeal No. 801 of 1976 and Civil Appeal No. 819 (NL) of 1976
have been preferred by Special Leave by the Employees State Insurance
Corporation, hereinafter referred to as 'ESI Corporation'. The ESI Corporation
has also filed Special Leave Petition Nos. 1134-1145(NL) of 1978. These appeals
and the Special Leave Petition raise a common question of law and, as such,
they have been heard together. Indeed, by an order of this Court the Special
Leave Petitions were directed to be heard along with Civil Appeal No. 801 of
1976. Before we indicate the question of law we may state a few facts.
In Civil Appeal No. 801 of 1976, the
respondent company, South India Flour Mills (P) Ltd., is engaged in milling
wheat into wheat products in its flour mill. It is not disputed that the mill
of the respondent company is a factory within the meaning of the Factories Act,
1948. In or about the middle of 1964, the respondent company commenced the
construction of another building in the compound of the existing factory for
the expansion of the factory and engaged workmen for such construction on daily
wage basis.
The ESI Corporation called upon the
respondent company to make contribution in respect of 866 the workmen employed
for the construction work of the factory building as required by the Employees'
State Insurance Act, 1948, hereinafter referred to as 'the Act'.
The respondent company moved the Madras High
Court under Article 226 of the Constitution against the said demand. A learned
Single Judge of the High Court took the view that the persons employed in the
construction of a new unit of the factory were not employees within the meaning
of the definition of the term 'employee' under section 2(9) of the Act. In that
view of the matter, the learned Judge allowed the writ petition of the
respondent company. On appeal by the ESI Corporation to a Division Bench of the
High Court, the Division Bench simply referred to and relied upon an earlier
decision of that Court in Employees State Insurance Corporation v. Gnanambikai
Mills Ltd., [1974] 2 L.L.J. 530.
In that case, it has been held that though
casual employees come within the definition of the term 'employee' under
section 2(9) of the Act yet, as they may not be entitled to sickness benefit in
case their employment is less than the benefit period or contribution period,
it does not appear to be the intention of the Act that casual employees should
be brought within its purview. Accordingly, it has been held that construction
workers being casual employees do not come within the purview of the Act. The appeal
preferred by the ESI Corporation was dismissed.
In Civil Appeal No. 819 (NL) of 1976, the
respondent company, Shri Sakhti Textiles Pvt. Ltd., was granted an additional
spindleage. Accordingly, the respondent company expanded its mill, that is the
factory, by putting up of new buildings and, for that purpose, the company had
to employ a large number of workers. The ESI Corporation demanded from the
respondent company contributions in respect of the said workers for the period
from July 1, 1963 to September 30, 1967. The respondent company instituted
proceedings under section 75 of the Act in the Employees' State Insurance
Court, Coimbatore, inter alia, praying for a declaration that the workers
employed for the construction work of the factory buildings were not employees
within the meaning of section 2(9) of the Act. The Employees' State Insurance
Court held that the workers engaged by the respondent company for putting up of
additional constructions for the factory were not employees within the definition
of the term 'employee' under 867 the Act. On appeal by the ESI Corporation
against the order of the Employees' State Insurance Court a Division Bench of
the Madras High Court took the view that employment of workers for putting up
of additional buildings for the purpose of commencing manufacturing process
would not be employment incidental or preliminary to or connected with the work
of the factory and, accordingly, the workers employed for the purpose of
construction of additional buildings were not employees within the meaning of
section 2(9) of the Act. In that view of the matter, the Division Bench
dismissed the appeal.
In the Special Leave Petition Nos. 1143-1145
of 1978, the respondent companies owning the textile mills workers for the
construction of additional factory buildings. The Division Bench of the Madras
High Court has following its earlier decisions taken the same view that the
workers employed for the construction of additional factory buildings of the
mills in question are not employed within the meaning of section 2(9) of the
Act. Hence the ESI Corporation has filed these Special Leave Petitions which,
as aforesaid, have been heard along with the above appeal.
In view of the facts stated above, the only
question that is involved in these appeals and the Special Leave Petitions is
whether the workers employed for the construction of additional buildings for
the expansation of the factories in question are employees within the meaning
of section 2(9) of the Act. Section 2(9) of the Act before the same was amended
by the Amendment Act 44 of 1966 provided as follows :
"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 if 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
868 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." It appears from the definition that three categories of
persons as mentioned in clauses (i), (ii) and (iii) of section 2(9) can be
employees. We are, however, concerned with the category under clause (i)
inasmuch as in all the cases before us the workers concerned were directly
employed by the principal employers, namely, the respondent companies. Under
category (i), in order to be an employee a person must be employed directly by
the employer for wages in the factory or establishment on any work which should
be incidental or preliminary to or connected with the work of the factory or
establishment. The definition seems to be very wide and brings within the
purview various types of employees. As soon as the conditions under the definition
are fulfilled, one becomes an employee within the meaning of the definition.
Before we proceed to consider the principal
question, we may deal with a connected question, namely, whether the
construction workers, who are admittedly casual workers, come within the
purview of the Act. We have already noticed that in the case of Gnanambikai
Mills (Supra) referred to and relied upon by the Division Bench of the Madras
High Court in Civil Appeal No. 801 of 1976, it has been held that the casual
workers do not come within the purview of the Act although they are covered by
the definition of the term 'employee' under section 2(9) of the Act. The reason
for the said finding is that in view of their short duration of employment,
they will not be entitled to sickness benefit and, as such, it is not the
intention of the Act that casual employees should be brought within its
purview. In expressing that view, it appears that the Madras High Court has
overlooked some other provisions of the Act which will be referred to presently.
869 Section 39 provides for contributions
payable under the Act. Sub-section (4) of section 39 provides as follows :
"The contributions payable in respect of
each week shall ordinarily fall due on the last day of the week, and where an
employee is employed for part of the week, or is employed under two or more
employers during the same week, the contributions shall fall due on such days
as may be specified in the regultion." Sub-section (4) clearly indicates
employment of a casual employee when it provides "and where an employee is
employed for part of the week". When an employee is employed for part of a
week, he cannot but be a casual employee. We may also refer to sub-section (3)
of section 42 relating to general provisions as to payment of contributions.
Sub- section (3) reads as follows:
"Where wages are payable to an employee
for a portion of the week, the employer shall be liable to pay both the
employer's contribution and the employee's contribution for the week in full
but shall be entitled to recover from the employee the employee's
contribution." Sub-section (3), inter alia, deals with employer's
liability to pay both employer's contribution and the employee's contribution
where wages are payable to an employee for a portion of the week. One of the
circumstances when wages may be payable to an employee for a portion of the
week is that an employee is employed for less than a week, that is to say, a
casual employee. Thus section 39(4) and section 42(3) clearly envisage the case
of casual employees. In other words, it is the intention of the Legislature
that the casual employee should also be brought within the purview of the Act.
It is true that a casual employee may not be entitled to sickness benefit as
pointed out in the case of Gnanambikai Mills (Supra). But, in our opinion, that
cannot be a ground for the view that the intention of the Act is that casual
employees should not be brought within the purview of the Act. Apart from
sickness benefit there are other benefits under the 870 Act including
disablement benefit to which a casual employee will be entitled under section
51 of the Act.
Section 51 does not lay down any benefit
period or contribution period. There may again be cases when casual employees
are employed over the contribution period and, in such cases, they will be
entitled to even the sickness benefit. In the circumstances, we hold that
casual employees come within the purview of the Act. In Andhra Pradesh State
Electricity Board v. Employee's State Insurance Corporation, Hyderabad, [1977]
1 LLJ 54; Regional Director, ESIC, Bangalore v. Davangere Cotton Mills, [1977]
2 LLJ 404 and Employees' State Insurance Corporation, Chandigarh v. Oswal
Woollen Mills Ltd., [1980] 2 Lab. I.C. 1064, the Andhra Pradesh High Court,
Karnataka High Court and the Punjab and Haryana High Court have rightly taken
the view that casual employees are employees within the meaning of the term
'employee' as defined in section 2(9) of the Act and, accordingly, come within
the purview of the Act.
Indeed Dr. Chitale, learned counsel appearing
on behalf of the respondent company in Civil Appeal No. 819 (NL) 1976, franckly
concedes that it will be difficult for him to contend that casual workers are
not covered by the definition of the term 'employee' under section 2(9) of the
Act. He, however, submits that in the instant case the work in which the casual
workers were employed by the respondent company, namely, Shri Shakthi Textiles
Mills Pvt. Ltd., not being the work of the factory or incidental or preliminary
to or connected with the work of the factory, such workers cannot be employees
within the meaning of section 2(9) of the Act. The contention of the learned
counsel is that the work of the factory being 'weaving', an employee within the
meaning of section 2(9) must be employed on any work incidental or preliminary
to or connected with the work of weaving that is carried on in the mill or
factory. Counsel submits that the work of construction of factory buildings
cannot be said to be an activity or operation incidental to or connected with
the work of the factory, which is weaving.
Mr. D.N. Gupta, learned counsel appearing on
behalf of the respondent companies in the other cases adopts the contention of
Dr. Chitale and submits that the workers employed for the construction of the
factory buildings do not come within the purview of the definition of
'employee' under section 2(9) of the Act.
871 Therefore, the investigation under the
principal question A formulated above boils down to this, namely, whether the
construction of factory buildings for the expansion of the existing factories
is incidental or preliminary to or connected with the work of the factory or
not. It has been already noticed that the definition of the term 'employee'
under section 2(9) of the Act is very wide.
It includes within it any person employed on
any work incidental or preliminary to or connected with the work af the factory
or establishment. It is difficult to enumerate the different types of work
which may be said to be incidental or preliminary to or connected with the work
of the factory or establishment. It seems that any work that is conducive to
the work of the factory or establishment or that is necessary for the
augmentation of the work of the factory or establishment will be incidental or
preliminary to or connected with the work of the factory or establishment. In
the instant cases, the additional buildings have been constructed for the
expansion of the factories in question. It is because of these additional
buildings that the existing factories will be expanded and, consequently, there
will be increase in the production, that is to say, increase in the work of the
factories concerned.
So the work of construction of these
additional buildings has a link with the work of the factories. It cannot be
said that the construction work has no connection with the work or the purpose
of the factories. So it is difficult to hold that the work of construction of
these additional factory buildings is not work incidental or preliminary to or
connected with the work of the factories.
The Act is a piece of social security
legislation enacted to provide for certain benefits to employees in case of
sickness, maternity and employment injury. To hold that the workers employed
for the work of construction of buildings for the expansion of the factory are
not employees within the meaning of section 2(93 of the Act on the ground that
such construction is not incidental or preliminary to or connected with the
work of the factory will be against the object of the Act. In an enactment of
this nature, the endeavour of the Court should be to interpret the provisions
liberally in favour of the persons for whose benefit the enactment has been
made.
872 In this connection, we may refer to a
decision of this Court in Royal Talkies, Hyderabad v. Employees' State
Insurance Corporation, [1978] 4 SCC 204. The question that came up for
consideration by this Court was whether the workers employed to run the canteen
and the cycle stand situate within the compound of a 'cinema theatre' were
employees within the meaning of section 2(9) of the Act. It was held the
workers employed to run the canteen and the cycle stand were employees within
the meaning of section 2(9) of the Act. Krishna Iyer, J. speaking for the Court,
observes:
"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. 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..... 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." In our opinion, the work of construction of additional
buildings required for the expansion of a factory must be held to be ancillary,
incidental or having some relevance to or link with the object of the factory.
It is not correct to 873 say that such work must always have some direct
connection with the manufacturing process that is carried on in the factory.
The expression "work of the factory" should also be understood in the
sense of any work necessary for the expansion of the factory or establishment
or for augmenting or increasing the work of the factory or establishment. Such
work is incidental or preliminary to or connected with the work of the factory
or establishment.
We are, therefore, unable to accept the view
of the Madras High Court in all these cases that the workers employed for the
construction work of the additional buildings for the expansion of the
factories are not employees within the meaning of section 2(9) of the Act.
For the reasons aforesaid, we allow Civil
Appeals Nos.
801 of 1976 and 819 (NL) of 1976 and set
aside the judgments of the Madras High Court.
So far as Special Leave Petitions Nos.
1143-1145 (NL) of 1978 are concerned, we grant special leave in all these
matters, set aside the judgment of the Madras High Court and Allow the
connected appeals.
The parties are directed to bear their own
costs in all these matters.
A.P.J. Appeals allowed.
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