(O&M) R.D.E.S.I.C vs K.R.Theatre And Anr
2026 Latest Caselaw 248 P&H

Punjab-Haryana High Court

(O&M) R.D.E.S.I.C vs K.R.Theatre And Anr on 15 January, 2026

Author: Pankaj Jain

Bench: Pankaj Jain

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FAO-2256-2000(O&M)
             (O&M)




[107]                IN THE HIGH COURT OF PUNJAB AND HARYANA
                              AT CHANDIGARH

                                           FAO-22556-2000 (O&M)
                                           Reserved on 03.11.2025
                                           Pronounced on 15.01.2026
                                           Uploaded on 15.01.2026

Whether only operative part of the judgment is pronounced? Yes/No
Whether full judgment is pronounced?                                    Yes/No

The Regional Director, Employees
State Insurance Corporation, Madhya
Marg, Chandigarh and others                                        ...Appellants
                                          versus

K.R. Theatre, Meerut Road, Karnal
and others                                                         ....Respondents

Coram :              HON'BLE MR. JUSTICE PANKAJ JAIN

Present:             Mr. Ashwani Talwar, Senior Advocate with
                     Mr. Nikhil Sehrawat, Advocate and
                     Mr. Deepak Goyat, Advocate
                     for the appellants.
                     Mr. M.K. Taya, Advocate for the respondents.
                     ***

PANKAJ JAIN, JAIN J.

[1] The present appeal arises out of Order passed by the ESI Court

in a petition filed under Section 75 of the Employees State Insurance Act,

1948 by an establishment questioning the recovery ordered by ESI

Corporation for the period commencing from 01.06.1980 till 23.08.1980.

[2] The establishment is a partnership firm ru running a cinema house

at Karnal. The issue relates to inclusion of the employees of contractor

running cycle stand and canteen. The establishment claims that they only

had 15 employees working with them. At no point of time they had more

than 20 employees.

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[3] The ESI Court allowed the petition, holding that the

Corporation failed to prove that the employees under the petitioner's

establishment was 20 or more so as to attract the provisions of ESI Act.

Court held that the workers employed by the contractors to run cycle stand

and canteen cannot be held to be the employees of the establishment, as the

contractors themselves are paying to the establishment to run their business

in the complex.

[4] Learned Senior Counsel for the appellants-Corporation relies

upon 'Royal Talkies, Hyderabad and others versus Employees' State

Insurance Corporation through its Regional Director, Hill Fort Road,

Hyderabad, reported as 1978 AIR Supreme Court 1478, to contend that the

operation of cycle stand as well as canteen being incidental to the primary

purpose of the theatre, the employees employed by the contractors have been

rightly included by the Corporation to hold establishment liable to pay

contribution under 1948 Act. He submits that the reasoning adopted by the

ESI Court being in teeth of ratio of law laid down by Supreme Court in the

case of Royal Talkies, Hyderabad and others (supra) cannot be sustained.

[5] Per contra, Mr. Taya, learned counsel appearing for the

respondents, would contend that ratio of law laid down by Supreme Court in

the case of Royal Talkies, Hyderabad and others (supra) is not applicable

to the present case. It has been contended that the contractors themselves

were carrying out work and nobody was drawing wages. The site was never

inspected in the present case.

[6] I have heard learned counsel for the parties and have carefully

gone through record of the case.

[7] The precise issue as to whether the workers employed by the

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contractors hired to run cycle stand and canteen in cinema theatre fall within

the definition of 'employee' as contemplated under Section 2(9) of 1948 Act

came up for consideration before Supreme Court in the case of Royal

Talkies, Hyderabad and others (supra). Supreme Court after considering

the bare provisions and the scheme of that concluded as under:-

"15. The primary test in the substantive clause being thus wide, the employees of the canteen and the cycle stand may be correctly described as employed in connection withthe work of the establishment. A narrower construction may be possible but a larger ambit is clarly imported by a purpose-oriented interpretation. The whole goal of the statute is to make the principal employer primarily liable for the insurance of kindred kinds of employees on the premises, whether they are there in the workor are merely in connection withthe work of the establishment.

16. Merely being employed in connection with the work of an establishment, in itself, does not entitle a person to be an 'employee'. He must not only be employed in connection with the work of the establishment but also be shown to be employed in one or other of the three categories mentioned in Section 2(9).

17. Section 2(9) (i) covers only employees who are directly employed by the principal employer. Even here, there are expressions which take in a wider group of employees than traditionally so regarded, but it is imperative that any employee who is not directlyemployed by the principal employer cannot be eligible under Section 2(9) (i). In the present case, the employees concerned are admittedly not directly employed by the cinema proprietors.

18. Therefore, we move down to Section 2(9) (ii). Here again, the language used is extensive and diffusive imaginatively embracing all possible alternatives of employment by or through an independent employer. In such cases, the 'principalemployer' has no direct employment relationship since the 'immediate employer of the employee concerned is some one else. Even so, such an employee, if he works (a) on the premises of the establishment, or

(b) under the supervision of the principal employer or his agent "on work which is ordinarily part of the work of the establishment or

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which is preliminary to the work carried on in or incidental to the purpose of the establishment", qualifies under Section 2(9) (ii). The plurality of persons engaged in various activities who are brought into the definitional net is wide and considerable; and all that is necessary is that the employee be on the premises or be under the supervision of the principal employer or his agent. Assuming that the last part of Section 2(9) (ii) qualifies both these categories, all that is needed to satisfy that requirement is that the work done by the employee must be (a) such as is ordinarily (not necessarily non- statutorily) part of the work of the establishment, or (b) which is merely preliminary to the work carried on in the establishment, or

(c) is just incidental to the purpose of the establishment. No one can seriously say that a canteen or cycle stand or cinema magazine booth is not even incidental to the purpose of the theatre. The cinema goers ordinarily find such work an advantage, a facility an amenity and sometimes a necessity. All that the statute requires is that the work should not be irrelevant to the purpose of the establishment. It is sufficient if it is incidental to it. A thing is incidental to another if it merely appertains to something else as primary. Surely, such work should not be extraneous or contrary to the purpose of the establishment but need not be integral to it either. Much depends on time and place, habits and appetites, ordinary expectations and social circumstances. In our view, clearly the two operations in the present case, namely, keeping a cycle stand and running a canteen are incidental or adjuncts to the primary purpose of the theatre.

19. We are not concerned with Section 2(9) (iii) nor with the rest of the definitional provision.

20. Shri Chitale tried to convince us that on a minute dissection of the various clauses of the provision it was possible to exclude canteen employees and cycle stand attendants. May be, punctilious sense of grammar and minute precision of language may sometimes lend unwitting support to narrow interpretation. But language is handmaid, not mistress. Maxwell and Fowler move along different streets, sometimes. When, as in Section 2(9), the definition has been cast deliberately in the widest terms and the draftsman has endeavoured to cover every possibility so as not to exclude even distant categories of men employed either in the primary work or cognate activities, it will defeat the object of the

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statute to truncate its semantic sweep and throw out of its ambit those who obviously are within the benign contemplation of the Act. Salvationary effort, when the welfare of the weaker sections of society is the statutory object and is faced with stultifying effect, is permissible judicial exercise."

[8] In view of the above, this Court finds that the issue being fully

covered by the ratio of law laid down in Royal Talkies, Hyderabad and

others case (supra) in favour of the Corporation, the impugned order cannot

be sustained and is hereby set aside. The respondent-establishment is held

to be covered under the provisions of ESI Act and is held liable to pay

statutory contribution in terms of notices impugned in the petition filed

under Section 75 of the 1948 Act.

[9]                  The appeal stands allowed.

[10]                 All miscellaneous application(s), if any, stand disposed off.




                                                              (PANKAJ JAIN)
                                                                 JUDGE
15.01.2026
'R. Sharma'

                            Whether speaking/ reasoned   :     Yes / No
                            Whether reportable           :     Yes / No




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