Industries Ltd Vs. Esi Corporation  Insc 973 (24 September 2007)
Arijit Pasayat & D.K. Jain
APPEAL NOS. 702-709 OF 2001 (With C.A.
Nos. 710-717/2001) Dr. ARIJIT PASAYAT, J.
Challenge in these appeals is to the order passed by a Division Bench of the
Andhra Pradesh High Court, which by the impugned order dismissed all the
appeals filed under Section 82(2) of the Employees State Insurance Act, 1948
(in short the 'Act'). The question involved in the appeals was whether the workmen
engaged were encompassed by the definition of an 'employee' under Section 2(9)
of the Act. The High Court held that the appellants were the principal
employers so far as the concerned workers who are employed are concerned and,
therefore, they are liable to pay contribution under the Act. The High Court
after quoting Section 2(9) of the Act referred to the decision of this Court in
Rajkamal Transport v. E.S.I.C., Hyderabad (1996 (3) SCALE 806) and held that
the orders passed by the courts below are correct and the appeals lack merit.
support of the appeals, learned counsel for the appellants submitted that
without analyzing the factual position and formulating the right issues, the
High Court in an abrupt manner dismissed the appeals. It was submitted that
there were different categories of persons involved and one uniform yardstick
cannot be applied so far as they are concerned.
response, learned counsel for the Corporation supported the judgment of the
issues which require to be considered are as follows:
Whether the persons engaged by the contractors for loading and unloading at the
railway sidings are employees of the contractor?
Whether statutorily such persons would qualify as insured persons as defined
under Section 2(14) of the Act or was their engagement of a sporadic nature
with liberty in them to work for several employers?
Whether for the work of loading and unloading at the railway sidings there was
supervision by the appellant or its agent?
persons engaged by the clearing and forwarding agents of the appellant in the
various places can be said to be employees of the clearing and forwarding
agents in the sense of there being continuity and regularity in the engagement
of those persons and further whether such work was carried out by them for or
on behalf of the appellant?
Whether such persons engaged by the clearing and forwarding agents were also
working for other clearing and forwarding agents?
Whether the clearing and forwarding agents who were separate juristic entities
would thus be establishments covered under notification issued under section
1(4) extending the applicability of the Act as held in M/s Cochin Shipping Co.
v. E.S.I. Corporation (1992 (4) SCC 245)?
Whether clearing and forwarding agents come within the definition of immediate
employer under section 2(13) of the ESI Act?
Further, whether the workers engaged by the contractors could be said to be
employees of the contractor and whether the appellant has supervision over the
work either by itself or by its agent? If yes what should be the apportionment
towards the labour component from the amount paid to the contractor?
Whether on the aspect of repairs and maintenance the apportionment of 25% of
the amount paid to the contractor as labour component is correct and if not
what would be the apportionment?
Whether the activity of constructing staff quarters and other could be said to
be an activity which is ordinarily part of the work of the appellant or
incidental to the purpose of the factory or establishment of the appellant?
rightly submitted by learned counsel for the appellants no finding has been
recorded on the following aspects:
Whether the persons engaged by the contractors at the railway sidings are
employees of the contractor;
Whether the contractor is in the nature of immediate employer u/s 2(13) of the
ESI Act and as such the appellant is liable as principal employer;
Whether the work done by the persons engaged by the contractor at the railway
sidings, there was supervision by the appellant or its agent.
Whether the work carried on by these persons engaged by the contractor at the
railway sidings is ordinarily part of the work of the factory or establishment
or is preliminary to the work carried on or incidental to the purposes of the
factory or the establishment.
Whether the persons engaged by the clearing and forwarding agents of the
appellant were employees of the clearing and forwarding agents in the sense
that certain number of workers were regularly doing the work of the appellant
for the clearing and forwarding agent.
Whether for work done on repairs and maintenance 25% apportionment towards labour
charges, in the amount paid to the contractor was not the correct
Whether the persons engaged by the contractors for construction of staff
quarters were the employees of the contractor or that the construction of the
staff quarter in the present case was an activity which is ordinarily part of
the work of the factory or establishment of the appellant or that it is
preliminary to the work carried on or incidental to the purpose of the factory
or establishment of the appellant.
Various decisions have been cited to submit that Raj Kamal's case (supra) is
distinguishable on facts. It is pointed out that the clearing and forwarding
measure is to be taken as an establishment itself.
the High Court has not considered the factual aspects and has abruptly
concluded that the Raj Kamal's case (supra) covers the case there is no scope
for analyzing the factual aspects in these appeals. The High Court while
dealing with the appeals under Section 82(2) of the Act is required to analyse
the factual position to see whether the definition of employee in terms of
Section 2(9) of the Act applies to the facts of the case. Whether Raj Kamal's
case applies to the facts of the case was to be adjudicated by taking note of
the factual background. Since the High Court has not analysed the factual position
it would be appropriate to remit the matter to the High Court for analyzing the
factual position to decide whether provisions of the Act are applicable to the
category of persons engaged.
appeals are disposed of accordingly with no order as to costs.