Employees State Insurance ... vs Rajendrakumar Tarachand Khatri & ...
2016 Latest Caselaw 6814 Bom

                                                                                   
    F.A. No.237/2003                                 1




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

                                    FIRST APPEAL NO.237 OF 2003




                                                          
    Appellant                :        Employees State Insurance Corporation,
                                      through the Joint Regional Director,
                                      Sub-Regional Office, 




                                               
                                      Employees State Insurance Corporation, 
                                      Panchdeep Bhawan, Ganeshpeth, Nagpur - 18.
                               ig     -- Versus --

    Respondents              :    1] M/s. ASTRAC Agro & Foods Private Limited,
                             
                                     through its Manager, 
                                     C/o. C-15, M.I.D.C., Amravati.

                                  2] Revenue Recovery Tahasildar,
                                     C/o Collectorate, Amravati.
      


                        =-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=
   



                        Mrs. B.P. Maldhure, Advocate for the Appellant.
                          Shri K.R. Lule, A.G.P. for Respondent No.2.
                                  None for Respondent No.1. 
                        =-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=





                              C ORAM :  S. B. SHUKRE, J.

                             DATE     :  30
                                               NOVEMBER, 2016.
                                            th



    ORAL JUDGMENT :- 

This is an appeal preferred against the judgment and order dated

06/02/2003 delivered by the Member, Employees Insurance Court, Amravati,

thereby allowing the application filed under Section 75 of the Employees

State Insurance Act (for short, 'the ESI Act') and quashing the order

determining the employer's contribution dated 30/03/1990 passed by the

Joint Regional Director, Nagpur.

02] Respondent No.1 was running a manufacturing unit for

manufacturing of plastic bags under the name and style as M/s. Khatri Plastic

Industries, Amravati since the year 1983. It was a small scale industry unit.

Till the month of January, 1998, there were only 18 employees. The

Inspector of Employees State Insurance Corporation visited the unit on

04/02/1998, 11/02/1988 and 26/02/1988. He also called upon the

employer-respondent No.1 to submit on 26/02/1988 a duly filled up and

signed Form No.1 giving information relevant for deciding the coverage of the

unit under the ESI Act or otherwise. On 11/09/1989, the Inspector again

visited the unit and on his demand, he was furnished some information

including six vouchers showing payments being made to two workers namely

Rashid Khan and Sheikh Jalil in connection with the work of expansion of the

factory of the plastic unit. Thereafter, by a letter dated 24/10/1989, the

employer was informed that his plastic manufacturing unit was covered under

the provisions of the ESI Act and, therefore, he was required to make

statutory contributions. The employer, however, made a request for

reconsideration of the whole issue, but to no effect. An order dated

30/03/1990 rejecting objections of the employer and determining the

contribution to be made by the employer was passed by the Regional

Director. Even before that another order, a recovery order under Section 5 of

the Revenue Recovery Act, 1890 in respect of a different period was also issued.

03] Respondent No.1, the employer, being aggrieved by the same,

filed an application under Section 75 of the ESI Act before the Industrial

Court in order to seek redressal of his grievances. The appellant as well as

respondent No.1 examined one witness each and relied upon some

documents. The learned Member of the Industrial Court after considering the

entire material available on record as well as written submissions of the

parties, came to the conclusion that the provisions of the ESI Act were not

applicable to the plastic unit of respondent No.1 and, therefore, he was not

liable to make any statutory contribution. Accordingly, by the judgment and

order delivered on 06/02/2003, the learned Member allowed the application

and quashed and set aside the order dated 30/03/1990. Being aggrieved by

the same, the Employees State Insurance Corporation is now before this Court

in the present appeal.

04] I have heard Smt. B.P. Maldhure, learned Counsel for the

appellant and Shri K.R. Lule, learned Assistant Government Pleader for

respondent No.2 - the Revenue Recovery Tahasildar. None has appeared on

behalf of respondent No.1, although duly served.

05] Upon careful consideration of the impugned judgment and order

as well as record of this case, I find that the learned Member of the Industrial

Court has committed a grave error of fact and law in reaching the conclusion

that the plastic unit of respondent No.1 is not covered under the provisions of

the ESI Act and, therefore, not liable to make any statutory contribution.

There is no dispute about the fact that during inspection made by the

Inspector of the Corporation, 18 employees were found to be on the muster

roll of respondent No.1. Respondent No.1 plainly admits this fact. The

dispute is about 3 more employees, out of whom two were, according to the

case of respondent No.1, the daily wagers and who were, according to the

case of the appellant, squarely fell within the ambit of definition of employee

given under Section 2(9) of ESI Act in view of the law settled by the Hon'ble

Apex Court in the case of Regional Director, Employees' State Insurance

Corporation, Madras vs. South India Flour Mills (P) Ltd. - AIR 1986 SC

1686. The Inspector had paid visit to the plastic unit of respondent No.1 on

11/09/1989 and demanded certain information from the employer, which

indeed was given to the Inspector under the cover of the letter dated

11/09/1989. This information included six vouchers dated 06/01/1988,

16/01/1988, 25/05/1988, 29/05/1988, 05/06/1988 and 05/06/1988. The

explanation given by the employer in respect of these vouchers as can be seen

from his letter dated 14/02/1990 is that the payments made under these

vouchers to the two persons shown therein was on account of a specific job

given to them and it was by treating those persons only as casual workers

whose engagements came to an end the moment, the job assigned to them

was completed. The employer does not dispute the fact that these workers,

termed by him as causal were engaged by him for and in connection with the

construction of the additional premises for the factory. In the case of South

India Flour Mills Pvt. Ltd. (supra), the Hon'ble Apex Court has held that the

work of construction of additional building required for expansion of a factory

is ancillary, incidental and of such a nature as is having some relevance to or

link with the object of the factory and, therefore, whosoever is engaged as a

worker for the construction work of a additional building for such expansion

of the factory, is an employee within the meaning of Section 2(9) of the Act.

The reply of the employer i.e. respondent No.1 does not dispute, as already

stated, the fact that these persons were engaged by him as workers for the

construction work relating to expansion of the factory of the employer. What

he says is that they were casual workers. However, the definition of the term

"employee" given under Section 2(9) of the ESI Act does not distinguish

between a regular employee and a casual employee. It only says, amongst

others, that whosoever is employed for wages or in connection with the work

of a factory or establishment to which this act applies is an employee. Under

Section 2(2) of this Act wages means all remuneration which is paid or

payable to an employee, if the terms of contract of employment express or

implied are fulfilled. In other words, if a person is employed for completing a

particular job relating to any work which is incidental or ancillary to the work

of a factory and paid some remuneration upon completion of his such work,

he would be a person, who could be considered as an employee for wages in

terms of Section 2(9) read with Section 2(22) of the ESI Act. A bare perusal

of these vouchers is also enough for one to come to the conclusions that all

these ingredients or requirements of a person being an employee are fulfilled

in the instant case.

06] The learned Member of the Industrial Court has not appreciated

the evidence available on record properly and has failed to apply correctly the

law laid down by the Hon'ble Apex Court in the case of South India Flour

Mills (supra) to the facts emerging from the record of this case. Thus, grave

error of facts as well as law has been committed by the learned Member of

the Industrial Court while passing the impugned order. Such an order cannot

be sustained in law. The appeal deserves to be allowed by holding that the

plastic unit of respondent No.1 is covered under the provisions of the ESI Act

and there is no need to make any interference with the order dated

30/03/1990 passed by the Joint Regional Director .

07] The appeal is allowed accordingly. The impugned order dated

06/02/2003 is quashed and set aside. The order of the Joint Regional

Director, dated 30/03/1990 is confirmed. The parties to bear their own costs.

JUDGE *sdw