Andhra Pradesh High Court - Amravati
N Suresh Gupta vs State Of Ap on 12 January, 2024
HON'BLE DR. JUSTICE K. MANMADHA RAO
CIVIL MISCELLANEOUS APPEAL No.190 of 2019
JUDGMENT:
The present Civil Miscellaneous Appeal is filed by the
appellant/ petitioner, aggrieved by the order dated 05.11.2018
passed in E.S.I.O.P.No.12 of 2014 by the Principal Senior Civil
Judge, Vijayawada (for short "the court below").
2. The appellant filed the application under Section
75(2) of the Employees State Insurance Act, 1948 (in short '
ESI Act') seeking relief to declare that the appellant is not
liable to pay an amount of Rs. 3,06,735/- claimed by the 1st
respondent in its letter dated 27.09.2013 and 13.03.2014 and
consequently set aside the same. The court below after hearing
on both sides, dismissed the application holding that no
document is filed to show Kanishka Security provider paid ESI
contribution and that the appellant is liable to pay the amount
with interest as the application is devoid of merits. Assailing
the same the present C.M.A came to be filed.
3. Heard Mr. D. Bala Raju, learned counsel for the
appellant and Mr.T. Dinesh Kumar, learned counsel for the
respondents.
4. During hearing learned counsel for the appellant
would contend that the court below failed to decide who is the
employer to the Security personnel and without deciding the
same, the finding of the court below that the appellant is liable
to pay E.S.I contributions as demanded by the respondents,
without any evidence is contrary to law and also against the
provisions of ESI Act. The court below failed to consider about
the wring determination of ESI contributions for the period
from 01.09.2008 to 30.04.2010, on the monthly wages of Rs.
5,500/- for each security and for the period from 01.05.2010
to 31.08.2013, on the monthly wages of Rs. 8,250/- for each
security personnel, by ESI Department as stated in the
Demand Notice dated 27.09.2013, which is not in accordance
with law. It is submitted that as per law the ESI contributions
has to deduct on monthly earning salary of the employee only,
but the respondents calculated the ESI contributions on their
assumed wages at Rs. 5,500/- per month and also at Rs.
8,250/- per month for the claim period, equally to each one
without taking into consideration about the designation and
monthly actual earning of the said security personnel, which is
illegal and not in accordance with law.
5. It is further contention of the learned counsel for the
appellant that the appellant used to pay lumsum amount to
the said Kanishka Security Service Company for every month
by way of cheque against the invoices raised by the said
company towards remuneration for the said Security Personnel
and in turn the said Kanishka Security company used to pay
monthly salary to the security personnel, basing on the
number of days they attended to duty in the month. Therefore
the appellant is not liable to pay any amount to 1st respondent.
The impugned order is not in accordance with law, hence the
same is liable to be set aside.
6. Whereas, learned counsel for the respondents
vehemently opposed to allow the C.M.A, as the court below
rightly considering the material aspects and dismissed the
application on merits.
7. Perused the record.
8. Learned counsel for the appellant placed on record the
decision of the Hon'ble Apex Court in "Managing Director,
Hassan Co-operative Milk Producer's Society Union Ltd., v.
Assistant Regional Director, Employees State Insurance
Corporation"1, wherein it was held as follows:
"....Mere presence of employees of contractor in
establishment of appellant cannot be treated as an
employment of those persons on the premises of the factory
or establishment. (Para 18)
The employees appointed by contractor cannot be
said to be working under supervision or control of
appellant. The ordinary meaning of the word 'supervision'
is 'authority to direct' or 'supervise' i.e to oversee. The
expression 'supervision of the principal employer' under
S.2(9) means something more than mere exercise of some
remote or indirect control over the activities or the work of
the workers. Supervision for the purpose of S.2(9) is
'consistency of vigil' by the principal employer so that if
need be, remedial measures may be taken or suitable
directions given for satisfactory completion of work. .....
There is nothing to show that the appellants have
any say over the terms and conditions of employment of
employees of contractor or that the appellants have
anything to do with logistic operations of the contractors.
The employees of the contractor are therefore not covered
by the definition of 'employee' u/S.2(9). (Para 22).
9. In "Central Pollution Control Board v. Union of
India and 2 Others"2, wherein learned Single Judge of
Allahabad High Court, held as follows:
AIR 2010 SC 2109
2023 LLR 555
"....When the principal employers engaged workers
through contractor for their administrative and financial
convenience, any financial dispute between them will not
absolve them from their respective statutory duties in
depositing EPF dues as per provisions of the Employees
Provident Funds and Miscellaneous Provisions Act, 1952.
....
Limited power of principal employer to remove
guards in case indiscipline will not create relationship of
employer-employee between such employees and principal
employer."
10. He further relied on a decision in "The Bangalore
Urban and Rural Co-operative Milk Producers Societies
Union Limited, Bangalore v. The Employees State
Insurance Corporation, Bangalore"3, wherein the High
Court of Karnataka held that
2......"The appellant society denied its liability on the
ground that employees appointed by the contractor were
neither directly nor indirectly employees of the appellant.
3......
4.......The Apex Court ultimately held that the workers
employed in connection with the work of the society by the
contractors are not the employees of the society, inasmuch
as they are neither directly employed by the society nor
they work under supervision of society. Mere presence of
the contractor in the establishment of the appellant cannot
be treated as an employment of such persons on the
premises of the factory or establishment.
M.F.A.No.1684 of 2002 (ESI), dated 11.10.2013
5. Since the Apex Court concluded that such employees are
not covered by the definition of an 'employee' as defined
under Section 2(9) of the ESI Act ,following the said
judgment, this appeal is liable to be allowed."
11. In the instant case, it is the contention of the learned
counsel for the appellant that there is no direct relationship
between appellant and the security personal. It is a fact that
M/s Kanishka Security Services have deputed them to work
under the appellant. The appellant also paying necessary
amount to the M/s Kanishka Security Services, who is held
responsible and liable to pay any contribution to them, but not
this appellant, hence the C.M.A is liable to be allowed.
12. It is apparent on the face of the record and evidence
on record would show that the security services provided by
M/s Kanishka Security Services to the appellant and there is
no privity of contract between the appellant and said security
services. The security personal working under the said security
services, who deputed them to work under appellant. Therefore
there is no direct relationship with employer and employee
between them. The decisions cited supra are squarely
applicable to the facts of this case. The court below failed to
observe these aspects and dismissed the application of the
appellant and passed cryptic order. Therefore interference of
this court is warranted in the C.M.A.
13. Taking into consideration of the arguments of the
learned counsel as referred supra, the C.M.A is liable to be
allowed.
14. Accordingly, the Civil Miscellaneous Appeal is
allowed, while setting aside the impugned order passed by the
court below. There shall be no order as to costs.
As a sequel, all the pending miscellaneous
applications shall stand closed.
______________________________
DR. K. MANMADHA RAO, J.
Date : 12.01.2024
Note: L.R.Copy marked
B/o
KK
HON'BLE DR. JUSTICE K. MANMADHA RAO
CIVIL MISCELLANEOUS APPEAL No.190 of 2019
Date : 12.01.2024
Note: L.R.Copy marked
B/o
KK
IN THE HIGH COURT OF ANDHRA PRADESH AT
AMARAVATI
+ CIVIL MISCELLANEOUS APPEAL No.190 of 2019
% 12.01.2024
# Sri Satyanarayana Raw And Boiled Rice Mill Pvt Ltd
Rep by Authorized signatory K.Appala Raju ... Appellant.
Vs.
$ The ESI Corporation, rep., by its Joint Director
Sub-Regional Office, Padmanabha buildings,
Gandhi Nagar Vijayawada and another ... Respondents
! Counsel for the Appellants : Mr. D. Bala Raju
! Counsel for the Respondents : Mr. T. Dinesh Kumar
< Gist:
> Head Note:
? Cases referred:
1. AIR 2010 SC 2109
2. 2023 LLR 555
3. M.F.A.No.1684 of 2002 (ESI), dated 11.10.2013
DATE OF ORDER PRONOUNCED: 12.01.2024
* THE HON'BLE DR. JUSTICE K. MANMADHA RAO
1. Whether Reporters of Local newspapers Yes
may be allowed to see the Judgments?
2. Whether the copies of judgment may be Yes
Marked to Law Reporters/Journals.
3. Whether Their Ladyship/Lordship wish Yes
to see the fair copy of the Judgment?
___________________________
DR.K. MANMADHA RAO, J
