Karnataka High Court
Regional Director vs Paramount Detective And on 16 February, 2022
Bench: R Natarajpresided Byrnj
:1:
IN THE HIGH COURT OF KARNATAKA
DHARWAD BENCH
DATED THIS THE 16TH DAY OF FEBRUARY, 2022
BEFORE
THE HON'BLE MR. JUSTICE R. NATARAJ
MFA NO.22683/2010 (ESI)
BETWEEN:
1. The Regional Director,
Employees State Insurance Corporation,
No.10, Binny Pet, Bengaluru,
Rep. by Joint Director (I/C),
ESI Corporation, Sub-Regional Office,
No. H-42, Ground Floor, Niketan,
Dollors Colony, Adj. New Central
Bus Stand, Hubballi-580 030.
2. The Recovery Officer,
ESI Corporation, Sub-Regional Office,
No. H-42, Ground Floor, Niketan,
Dollors Colony, Adj. New Central Bus Stand,
Hubballi-580 030.
3. The Assistant Director,
ESI Corporation, Sub-Regional Office,
No. H-42, Ground Floor, Niketan,
Dollors Colony, Adj. New Central
Bus Stand, Hubballi-580 030.
... Appellants
(By Shri Vinay S.Koujalagi for Shri V.M. Sheelvant, advocate)
AND:
Paramount Detective & Security Agency,
Rep. by Mr. B. Jagannath,
No.20/5, Narapal Building, Bhattad Annexe,
Lamington Road, Hubballi.
... Respondent
(By Shri Suresh S.Gundi, Advocate)
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This MFA is filed under section 82(2) of the ESI Act, 1948
against he judgment and order dated 14.05.2010, passed in ESI
No.7/2008 on the file of the Employees State Insurance Court,
Hubballi, allowing the application filed under Section 75 of the
Employees State Insurance Act, 1948.
This MFA coming on for final hearing, this day, the Court
delivered the following:
JUDGMENT
This appeal is filed by the ESI Corporation challenging the
judgment and order passed by the Employees State Insurance
Court, Hubballi (for Short "the ESI Court"), dated 14th May 2010
in ESI Application No.7/2008.
2. The respondent herein is involved in the business of
providing Detective and Security Agency Services to various
establishment and is covered under the provisions of the
Employees' State Insurance Act, 1948 (for short "the Act,
1948"). It is stated that the Inspector attached to the ESI
Corporation visited the respondent-establishment and after
inspecting the records submitted an observation note, which
indicated that the respondent had not made contribution in
respect of the Security Supervising Charges paid by M/s. Mysore
Petrochemicals Ltd., Heggasanahalli Village, which lay within the
non-implemented area. Consequent thereto an order was passed
by the Corporation under Section 45-A of the Act, 1948
demanding a sum of Rs.13,715/- as contribution. The
respondent appealed against the said order contending that the
area where security guards were provided by the respondent lay
within the non-implemented area, where such employees would
not be provided with the benefits as prescribed under the Act,
1948 and therefore, it did not deduct any contribution from the
income of such security guards. The Tribunal after considering
the position of law and after considering the law declared by this
Court in the case of Motor Industries Co. Ltd., rep. by its
Dy.G.M., Bangalore And Regional Director, E.S.I. Corporation
and others reported in 2005-III-LLJ 800, held that the Security
Services provided by the respondent was at a location which lay
within the non-implemented area and therefore, the respondent
was not liable to provide any contribution.
3. Being aggrieved by the aforesaid order, the ESI
Corporation has filed the present appeal.
4. Learned counsel for the appellant submitted that a
reading of Section 1 and 2(9)(i) of the Act, 1948 made it more
than apparent that the employees of the respondent, even if
they performed work of the employer elsewhere, do come within
the ambit of the Act, 1948. In this regard, he relied upon the
judgment of the Hon'ble Apex Court in the case of Transport
Corporation of India and E.S.I. Corporation and another
reported in 2001-I-LLJ page 1 (SC).
5. Learned counsel for the respondent on the other
hand submitted that the Inspector attached to the Corporation,
who was examined as a witness before the Tribunal, clearly
deposed that the employees in the non-implemented area would
not be entitled to the benefits under the Act, 1948 and therefore
submitted that the employees are not covered under the
provision of the Act, 1948 as the work performed by them lay
within the non-implemented area. Learned counsel relied upon
the judgment of this Court in the case of Motor Industries Co.
Ltd., rep. by its Dy.G.M., Bangalore (Supra) and contended that
the respondent employees, who are working outside the
non-implemented area were not covered.
6. I have considered the submissions made by the
learned counsel for the parties.
7. Section 1 of the Act, 1948 reads as follows:
"1. Short title, extent, commencement and
application.-- (1) This Act may be called the Employees'
State Insurance Act, 1948.
(2) It extends to the whole of India 2[3[***]].
(3) It shall come into force on such date or
dates as the Central Government may, by notification
in the Official Gazette, appoint, and different dates
may be appointed for different provisions of this Act
and 1[for different States or for different parts thereof].
(4) It shall apply, in the first instance, to all
factories (including factories belonging to the
Government) other than seasonal factories.
[Provided that nothing contained in this
sub-section shall apply to a factory or
establishment belonging to or under the control of
the Government whose employees are otherwise in
receipt of benefits substantially similar or superior to the
benefits provided under this Act.].
(5) The appropriate Government may, in
consultation with the Corporation and [where the
appropriate Government is a State Government,
with the approval of the Central Government],
after giving [one month's] notice of its intention of so
doing by notification in the Official Gazette, extend the
provisions of this Act or any of them, to any other
establishment, or class of establishments, industrial,
commercial, agricultural or otherwise.
[Provided that where the provisions of this Act have
been brought into force in any part of a State, the said
provisions shall stand extended to any such
establishment or class of establishments within
that part if the provisions have already been
extended to similar establishment or class of
establishments in another part of that State.]
[(6) A factory or an establishment to which this Act
applies shall continue to be governed by this Act
notwithstanding that the number of persons employed
therein at any time falls below the limit specified by or
under this Act or the manufacturing process therein
ceases to be carried on with the aid of power.]
8. Section 2(9)(i) of the Act, 1948 defines the
"employee" as follows:
2. Definitions. -- XXXXX
(9) "employee" means any person employed
for wages in or in connection with the work of a
factory or establishment to which this Act applies and --
(i) who is directly employed by the principal
employer on any work of, or incidental or
preliminary to or connected with the work of,
the factory or establishment, whether such
work is done by the employee in the factory
or establishment or elsewhere."
9. A perusal of the aforesaid definition would indicate
that any employee who is performing any work of, or incidental
or preliminary to or connected with the work of, the factory or
establishment notwithstanding whether such work is done by the
employee in the factory or establishment or elsewhere, is
covered under the Act, 1948. This therefore meant that once the
establishment was registered under the provisions of the Act,
1948, unless an employee was exempted from payment of
contribution as provided under Section 88 of the Act, 1948, any
employee of the employer working elsewhere even outside the
"implemented area" is covered. This Court in the case of M/s.
VRL Logistics Ltd., V. The Asst. Director, Employees State
Insurance Corporation and another, disposed off on 04th
February 2022, while considering similar circumstances is held
that once the establishment is covered under the provisions of
the Act, 1948, a part of the establishment even if it is located
outside the implemented area/non-implemented area is covered.
10. In that view of the matter, the impugned order
passed by the Tribunal is erroneous and therefore, the same is
liable to be set aside. Consequently, the following:
ORDER
(i) The appeal is allowed.
(ii) The impugned order passed by the Tribunal
is set aside.
(iii) The respondent is directed to pay
contribution along with applicable interest
within a period of three months from the
date of receipt of a certified copy of this
judgment.
Sd/-
JUDGE
Vnp*
