Khadi Gramdyog Emporium Gandhi ... vs Deputy Ragional Director Nagpur
2016 Latest Caselaw 1670 Bom

                                                        1               fa765.04.odt

                     IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                             NAGPUR BENCH, NAGPUR




                                                                                     
                                                             
                               FIRST APPEAL  NO. 765 OF 2004 


                Khadi Gramodyog Emporium,




                                                            
                Gandhi Sagar, Nagpur,
                by its Secretary and Manager ......                              APPELLANT

                                     ...VERSUS...




                                              
                Deputy Regional Director,
                             
                Incharge,
                Employees State Insurance Corporation,
                ESIC Bhavan, Ganeshpeth, Nagpur ......         RESPONDENT
                            
     -------------------------------------------------------------------------------------------
     Shri S.W.Ghate, counsel for appellant.
     Smt. B.P.Maldhure, counsel for Respondent
      

     -------------------------------------------------------------------------------------------
                              CORAM: R. K. DESHPANDE, J.

th DATE : 20 APRIL, 2016 .

ORAL JUDGMENT

1] On the basis of the inspection carried out in the

establishment of the appellant on 25.10.1985, the appellant

was called upon by the communication dated 22.01.1986 to

remit the total contribution of Rs. 4447.50 under the

Employee State Insurance Scheme in respect of honorarium

at the rate of Rs.150/- per month paid to one Shri Shankarrao

Padhye from April, 1984 to September, 1986 (Rs.474.90) and

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to Shri R.M.Aswale at the rate of Rs.350/- per month

(Rs.6550.00) and daily wages paid to Choukidar for the

period from April, 1985 to 24.09.1985 of Rs.29.75. The

appellant replied to this communication stating that two

persons namely Shri Shankarrao Padhye and Shri

R.M.Aswale were not the employees but the members of the

Society for rendering service to the appellant establishment.

2] The respondent passed an order under Section

45A of the Employees State Insurance Act (in short "the ESI

Act") rejecting the contention and calling upon the appellant

to pay Rs.4447.50 towards contribution and Rs.613.85

towards interest. The appellant preferred an application

under Section 75(1) of the ESI Act before the Employee

State Insurance Court challenging the recovery, which has

been dismissed on 24.09.2004. The appellant is, therefore,

before this Court.

3] On 11.04.2005, this Court passed an order

admitting the matter and framed the following substantial

questions of law;

                                                       3               fa765.04.odt

                      (i)      Whether Mazdoori Khata paid to staff for working




                                                                                   

during the lunch hours is wages within the meaning of Section 2(22) of the Employees'

State Insurance Act, 1948?

(ii) Whether the honorarium paid to the elected

secretaries is wages within the meaning of Section 2(22) of the Employees' State Insurance Act, 1948?

(iii)

Whether the wages paid to Choukidar under Bhavan Suraksha Khata are wages within the

meaning of Section 2(22) of the Employees' State Insurance Act, 1948?

(iv) Whether the wages paid for cotton, silk and

woolen stitching to the tailors are wages within the meaning of Section 2(22) of the Employees'

State Insurance Act, 1948?

Question No. (i)

4] In respect of the first substantial question of law,

the ESI Court placed reliance upon the Majurikhata ledger

which finds reference in the inspection report dated

22.01.1986. The inspection report does not give details of

this Majurikhata. The inspector who prepared this inspection

report has not entered the witness box to depose. The ESI

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Court has not referred to such ledger account. The demand

on the basis of such inspection report was, therefore, totally

unwarranted.

Question No. (ii)

5] So far as substantial question of law at Sr.No.(ii)

is concerned, the burden of proof to establish relationship of

employer and employee between the appellant and the two

persons namely Shri Shankarrao Padhye and Shri

R.M.Aswale, whose names appeared in the inspection report,

was upon the respondent Corporation. There is absolutely no

evidence on record to establish such relationship. Merely

because they were being paid honorarium, that would not

attract the contribution under the ESI Act. On the contrary,

the aforesaid two persons were the members of the society

and payment to them established the contract for service.

6] The learned counsel Smt. Maldhure appearing

for the respondent Corporation has invited my attention to the

definition of "wages" under Section 2(22) of the said Act,

which speaks about the remuneration paid to the employees.

She has also invited my attention to the decision of the

5 fa765.04.odt

Gauhati High Court in the case of Frontier Motor Car Co. (P)

Ltd vrs. Regional Director, ESIC, Gauhati reported in

1992-I-LLJ-828, wherein it has been held that the

honorarium paid to the employee is also covered by the

definition of "wages', which is construed to be wide. The

proposition of law laid down in the said decision is not

disputed and it would operate only in the event if the

relationship of employer and employee is established. In the

present case, as has already been held that the relationship

of employer and employee between the appellant and two

persons has not been established. Hence, the amount paid

to them by way of honorarium cannot be called as wages

within the meaning of Section 2(22) of the said Act.

Question No. (iii)

7] As to the third substantial question of law, it is

not disputed before this Court that it was the case of the

Choukidar employed by the appellant and hence, the liability

to that extent would be attracted and the question as to

whether he was terminated from service or was granted

reinstatement would not have any material bearing on the

liability of the appellant to pay the amount of contribution

6 fa765.04.odt

during the period when he was in employment. The fourth

substantial question of law does not at all arise in the present

case.

8] Since the question of payment of contribution in

respect of the stitching by the tailors is already rejected in

First Appeal No. 753 of 2004. For the same reasons, the

appellant cannot be held liable to pay the contribution and

the appellant would be entitled to refund to that extend also.

9] In the result, the appeal is partly allowed. The

judgment and order dated 24.09.2004 passed by the

Employees' State Insurance Court in Application (ESI) No. 4

of 1986 is hereby quashed and set aside only to the extent of

payment of contribution under the ESI Act in respect of two

persons namely Shri Shanarrao Padhye and Shri

R.M.Aswale and on the basis of the ledger account, it is held

that the appellant would be liable to pay the contribution in

respect of choukidar. No order as to costs.

10] It is informed that the appellant has deposited

some amount in the ESI Court. The ESI Court shall

7 fa765.04.odt

accordingly calculate the amount payable by the appellant on

the basis of this judgment and refund the balance amount to

the appellant along with interest, if any, accrued thereon.

The amount payable in respect of choukidar in terms of this

judgment shall be refunded to the respondent.

JUDGE

Rvjalit