Kirloskar
Brothers Ltd. Vs. Employees' State Insurance Corpn [1996] INSC 126 (24 January 1996)
Ramaswamy,
K.Ramaswamy, K.Ahmad Saghir S. (J) G.B. Pattanaik (J)
CITATION:
JT 1996 (2) 159 1996 SCALE (2)1
ACT:
HEAD NOTE:
WITH CIVIL
APPEAL NO. 147 OF 1980 ---------------------------- O R D E R In these appeals
short question that arises for consideration is: whether the Employees' State
Insurance Act, 1948 (for short, 'the Act') would apply to the regional offices
of the appellant at Secunderabad in Andhra Pradesh and Bangalore in Karnataka States. The appellant
had established its registered office at Poona for sale and distribution of its products from three factories - one
situated at Kirloskarvadi, second at Karad in State of Maharashtra and the third one at Deewas in the
State of Madhya Pradesh. Admittedly factories situated in Maharashtra are not covered under the Act. They
set up regional offices at several places. The Governments of Andhra Pradesh
and Karnataka have applied the provisions of Section 2(g) of the Act to the
aforesaid regional offices situated at Secunderabad and Bangalore and the
respondent had issued notice under Section 3(9) of the Act calling upon them to
contribute their share of the health insurance of the workmen working in the
respective regional offices.
Disputing
the liability, the appellant filed application before Insurance Court under Section 75 of the Act. The
Court had held that the appellant's regional offices are covered under the Act
and accordingly it directed them to pay their contribution. The High Courts of
Andhra Pradesh and Karnataka have upheld the said orders. Hence these appeals
by special leave.
In
point of time, the judgment of the Andhra Pradesh High Court is the earliest
rendered in C.M.A. No.593 of 1976. It had followed the decision of this Court
in Hyderabad Abestos Cement products Ltd. vs. The Employees, Insurance Court
& Anr. [(1978) 2 SCR 3451 and held that the regional offices are
established for sale or distribution of the appellant's products, which have
their connection to its factory at Deewas and as such the appellant is liable
to pay contribution. When similar question had arisen in the Orissa High Court,
in Misc. Appeal No.187 of 1982, by an order dated March 5, 1987, the learned
single Judge had held that since the percentage of sale of products from Deewas
at Bhubaneswar regional office is not predominantly higher but is only
incidental, it is not covered under the Act.
Therefore,
the appellant is not liable to contribute to the insurance of the workmen.
S.L.P. No.7372 of 1987 against the said judgment was dismissed by a Bench of
two Judges of this Court on January 28, 1988 holding that having regard to the
peculiar facts of the case, no interference under Article 136 of the
Constitution was called for. When the appeals came for hearing before a Bench
of two Judges, by an order dated January 17, 1990, the appeals were referred to this Bench for decision. Thus
these appeals have come before us.
Shri
R.F. Nariman, learned senior counsel for the appellant, raised two-fold
contentions. It is contended that as per material on record, the regional
offices at Secunderabad and Bangalore are
transacting business of the products manufactured by Deewas factory ranging between
3% to 33%. It is not predominantly products of the factory at Deewas and the
other factories are not covered under the Act. Therefore, the view expressed by
the Orissa High Court is correct interpretation of the law and that of the High
Courts of Andhra Pradesh and Karnataka is incorrect. It is also contended that
the decision said of the High Court of Orissa between the same parties become
final, it operates as res judicata. Therefore, the appellant is entitled to be
excluded from the purview of the Act.
Shri
V.C. Mahajan, the learned senior counsel appearing for the State, contended
that regional offices having been established by the appellant at different
places to sell or distribute their products at the respective places, the
quantum of business transaction is not relevant consideration. Equally, the
test of predominant business turnover of the products manufactured by Deewas
factory is not a relevant consideration. The test laid down in Hyderabad
Asbestos Cement Products Ltd. case, i.e., control by the principal employer
connected with the sale or distribution of the products of the appellant is
relevant.
Therefore,
the test laid down by the learned Judge of the Orissa High Court is not correct
one, the Andhra Pradesh and Karnataka High Courts' view has correctly laid down
the test and commanded for acceptance. It is also contended that the principle
of res judicata cannot be applied in the facts of this case, since the entire
issue is now at large.
Having
regard to the respective contentions, the question that arises for
consideration is whether the Act applies to the respective regional offices.
Section 2(9) of the Act defines "employee" to mean any person
employed for wages in or in connection with the work of a factory or
establishment to which this Act applies and includes any person employed for
wages on any work connected with the administration of the factory or
establishment or any part, department or branch thereof or with the purchase of
raw materials for, or the distribution or sale of he products of, the factory
.......(Emphasis supplied), "Occupier" of the factory under Section
2(15) shall have the meaning assigned to it in the Factories Act.
"Principal employer" defined in Section 2(17) means, "in a
factory, the owner or occupier of the factory and includes the managing agent
of such owner or occupier, the legal representative or a deceased owner or
occupier, and where a person has been named as the manager of the factory under
the Factories Act, 1948, the person so named; 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 nos appointed the
Head of the Department; in any other establishment, any person responsible for
the supervision and control of the establishment." It would thus be seen
that the principal employer is the exclusive owner or occupier of the factory
and includes the managing agent of the owner of occupier or where a person has
been named as the manager of the factory under the Factories Act the person so
named or nay other person responsible for the supervision and control of the
establishment etc., is the principal employer. Having established the regional
offices at the respective places, the person who keeps control or is
responsible for the supervision of the establishment at the respective regional
offices in connection with factory whose finished products are distributed or
sold, would be the principal employer for the purpose of the Act. The person
appointed for sale or distribution of the products in the regional office is
the employee covered under the Act.
The
object of the Act is to provide certain benefits to employees in case of
sickness, maternity, employment injury and for certain other matters in
relation thereto. Section 39 of the Act enjoins upon the employer to make
payment of contribution and deduction of the contribution of the employees from
their wages at the rates specified in the First Schedule to the Act and to
credit the same to their account. The employes covered under the Act in return
would receive treatment for sickness, maternity, payment for employment injury
etc. Every human being has the right to live and to feed himself and his
dependents. Security of one's own life and livelihood is a pre-condition for
orderliness. Liberty, equality and dignity of the person
are intertwined precious right to every citizen. Article 1 of the Universal
Declaration of Human Rights, 1948 assures human sensitivity and moral
responsibility of every State and that all human beings are born free and equal
in dignity and rights. Article 3 assures everyone the right to life, liberty
and security of person. Article 25 [1] assures that everyone has a right to a
standard of living adequate of the health and well-being of himself and of his
family, including, among others things, medical care, and right to security in
the event of sickness, disability etc. Article 6 of Internationa Convent on
Civil and Political Rights, 1966 assures that every human being has inherent
right to life.
This
right shall be protected by law. Article 7 [b] recognizes the right of everyone
of the enjoyment of just an healthy conditions of work which ensures in
particular safe and healthy working conditions. The Preamble of the
Constitution of India, the Fundamental Rights and Directive Principles
constitution Trinity, assure to every person in a welfare State social and
economic democracy with equality of status an dignity of person. Political
democracy without social and economic democracy would always remain unstable.
Social
democracy must become a way of life in an egalitarian social order. Economic
democracy aids consolidation of social stability and smooth working of
political democracy.
For
welfare of the employees, the employer should provide facilities and
opportunities to make their life meaningful.
The
employer must be an equal participant in evolving and implanting welfare
schemes. Article 39 [e] of the Constitution enjoins upon the State to secure
health and strength of the workers and directs that the operation of the law is
that the citizens are not forced by economic necessity to work under forced labour
or unfavorable and unconstitutional conditions of work. It should, therefore,
be the duty of the State of consider that welfare measures are implemented
effectively and efficaciously. Article 42, therefore, enjoins the State to make
provision for just and human conditions of work and maternity relief. Article
47 imposes a duty on the State to improve public health.
Economic
security and social welfare of the citizens are required to be reordered under
rule of law. In C.E.S.C. Limited v. Subhash Chandra Bose [(1992) 1 SCC 441 at
463], in paragraph 31 this Court surveyed various functions of the State to
protect safety and health of the workmen and emphasized the need to provide
medical care to the workmen and emphasized the need to provide medical care to
the workmen to prevent disease and to improve general standard of health
consistent with human dignity and right to personality. In para 32, it was held
that the term 'health' implies more than an absence of sickness. Medical care
and health facilities not only protect against sickness but also ensures stable
manpower for economic development. Facilities of health and medical care
generate devotion and dedication to give the workers' best, physically as well
as mentally, in productivity. it enables the worker to enjoy the fruit of his labour,
to keep him physically fit and mentally alert for leading a successful,
economic, social and cultural life. It was held that "medical facilities
are, therefore, part of social security and life gilt-edged security, it would
yield immediate return to the employer in the increased production and would
reduce absenteeism on ground of sickness, etc." It would thus save
valuable man power and conserve human resources.
Health
is thus a state of complete physical, mental and social well being and right to
health, therefore, is a fundamental and human right to he workmen. "The
maintenance of health is the most imperative constitutional goal whose
realization requires interaction of many social and economic factors. Just and
favorable condition of work implies to ensure safe and health working
conditions to the workmen.
The
periodical medical treatment invigorates the health of the workmen and harnessers
their human resources. Prevention of occupational disabilities generates
devotion and dedication to duty and enthuses the workmen to render efficient
service which is a valuable asset for greater productivity to the employer and
national production to the State." Interpreting the provisions of the Act
in para 33, it was held that the Act aims at relieving the employees from
health and occupational hazards. The legal interpretation is not ensure social
order and human relations.
In Consumer Education & Research Center & Ors. v. Union
of India & Ors. [(1995) 3 SCC 42] a three-Judge Bench of this Court held
that the jurisprudence of personhood or philosophy of the right to life
envisaged in Article 21 of the Constitution enlarges its sweep to encompass
human personality in its full blossom with invigorated health which is a wealth
to the workmen to earn his livelihood, to sustain the dignity of person and to
live a life with dignity and equality. The expression 'life' assured in Article
21 does not connote mere animal existence or continued drudgery through life.
It has a much wider meaning which includes right to livelihood, better standard
of living, hygienic conditions in the workplace and leisure facilities and
opportunities to eliminate sickness and physical disability of the workmen.
Health of the workmen enables him to enjoy the fruits of his labour, to keep
him physically fit and mentally alert. Medical facilities, therefore, is a
fundamental and human right to protect his health. In that case health
insurance, while in service or after retirement was held to be a fundamental
right and even private industries are enjoined to provide health insurance to
the workman.
In
expanding economic activity in liberalized economy Part IV of the Constitution
enjoins not only the State and its instrumentalities but even private
industries to ensure safety to the workman and to provide facilities and
opportunists for health and vigor of the workman assured in relevant provision
in part IV which are integral part of right to equality under Article 21 which
are fundamental rights to the workman. Interpretation of the provisions of the
Act, therefore, must be read in the light not only of the objects of the Act
but also the constitutional and fundamental and human rights referred to
hereinbefore.
The
principal test to connect the workmen and employer under the Act to ensure
health to the employee being covered under the Act has been held by this Court
in Hyderabad Asbestos case, i.e., the employee is engaged in connection with
the work of the factory. The test of predominant business activity or too
remote connection are not relevant.
The
employee need not necessarily be the one integrally or predominantly connected
with the entire business or trading activities. The true test is control by the
principal employer over the employee. That test will alone be the relevant
test. The connection between the factory and its predominant products sold or
purchased in the establishment or regional offices are irrelevant and always
leads to denial of welfare benefits to the employees under the Act.
When
there is connection between the factory and the finished products which are
sold or distributed in the regional offices or establishment and principal
employer has control over employee, the Act becomes applicable. The test laid
down by the orissa High Court, namely, predominant business activity, i.e.,
sale or distribution of the goods manufactured in the factory at Deewas, is not
a correct test. It is true that this court in the special leave petition
arising from the orissa High Court judgment, leave was declined holding it to
be of peculiar facts.
This
Court ha not laid down any law therein, Shri Nariman has contended that it
would operate as a precedent.
Since
the entire controversies between he parties is at large and his Court has seisen
of the issue and pending decision, Orissa case should have got posted with
these appeals. That case did not lay any law. The decision does not operate as res
judicata. Therefore, we do not find any merit in the contentions. Accordingly,
we hold that the view expressed by the Andhra Pradesh and the Karnataka High
Courts is correct in law. The appellant, therefore, is liable to pay
contribution from the respective date of demand of 1975 in Andhra Pradesh case,
and on the respective date in Karnataka case under Section 39 read with first
schedule to the Act.
The
appeals are accordingly dismissed with the above modifications. No costs.
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