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1998 SCC OnLine Mad 816 : (2000) 2 LLN 315 : (2000) 84 FLR 485 (Mad) : (2000)
1 LLJ 799 : (1999) 95 FJR 640
In the High Court of Judicature at Madras
(BEFORE SRI K. GNANAPRAKASAM, J.)
Between
Ashok Leyland, Ltd.
Versus
Employees' State Insurance Corporation
Appeal Against Order No. 1009 of 1990
Decided on November 25, 1998
Employees' State Insurance Act, 1948, Ss. 2(9)(i), 2(22) and 45 — Insurance Corporation passed an
order under S. 45 of the Act calling upon the appellant-company to pay contributions in respect of
amounts paid for repair,
Page: 316
maintenance, addition and alteration of building — The defence of the appellant-company was that it was
not liable to pay the contributions in question because it had engaged private contractors for doing such
works and that it had no details of the persons employed by the contractors and that the persons
employed by contractors are not its “workmen” as defined in S. 2(9) and the amounts paid to them are
not “wages” as defined in S. 2(22) — Rejecting the contention of appellant and following the decision
reported in 1993 (2) L.L.N. 675, High Court held that it is duty of principal-employer to get details of
workmen employed by contractor — Appellant principal-employer is primarily liable to pay contribution on
account of wages paid to employees of contractor engaged by principal employer — Appellant is liable to
pay contribution and the claim made by respondent cannot be set aside.
[Paras 7 and 8]
Cases referred: Paras.
1. 1993 (2) L.L.N. 675
2. 1987 (70) F.J.R. 160
For Appellant.— M/s S. Ramasubramanian Associates
For Respondent.— Ms Radha Srinivasan.
JUDGMENT
1. This civil miscellaneous appeal is directed against the order, dated March 1, 1990,
passed by the Employees' Insurance Court in E.S.I.O.P. No. 101 of 1987.
2. The respondent herein by its order, dated September 10, 1987, passed under S. 45-
A of the Employees' State Insurance Act, 1948, called upon the appellant to pay
contribution in respect of the amounts spent on several heads namely, wages paid for
garden maintenance, building expenditure (repair and maintenance) from July 1984 to
December 1984, addition and alteration of building works, building construction,
conveyance allowance, etc. As against the said order the appellant herein filed an
application under S. 75 of the Employees' State Insurance Act before Employees'
Insurance Court in E.S.I.O.P. No. 101 of 1987. That in the said petition, the appellant
questioned the amount of contribution demanded on the heads of repair, maintenance,
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addition or alteration of building during the period from July 1984 to December 1985, and
the conveyance allowance paid to the employees during the period August 1985 to
December 1985. The said action was resisted by the respondent on the ground that the
appellant was given enough opportunities and also personal hearing on June 10, 1987 and
June 29, 1987, and, thereafter only, the order under S. 45-A was passed with the
available materials.
3. The Employees' Insurance Court after having taken into consideration all the
materials placed before it, came to the conclusion that the amount spent by the appellant
for repairs, maintenance, addition or alteration of building the appellant is liable to pay
contribution. It is further held that the appellant is liable to pay contribution in respect of
the amount spent on conveyance to the workers. Aggrieved by the same, the appellant
has preferred this appeal.
4. The appellant in the appeal questioned the contribution demanded by the
respondent on both the heads. But, however, at the time of argument, learned counsel for
the appellant has conceded that he is not pressing his claim in respect of the contribution
demanded by the respondent with regard to the amounts spent for conveyance.
Page: 317
5. The only question that remains to be answered in this appeal is whether the
appellant is liable to pay contribution in respect of the amount spent for repair and
maintenance, addition or alteration of the building? The learned advocate for the
appellants has submitted that they have engaged private contractors for carrying out the
repairs, maintenance, addition or alteration of the buildings and the workers engaged in
the said work were under the control of the private contractors, and the appellant was not
having any list of the employees employed and also the appellant was not having any
control over the said employees except the fact that they have paid amounts to the
contractors and, therefore, they cannot be construed as “employees” as defined under S. 2
(9) of the Employees' State Insurance Act and the amounts paid to them would not come
within the definition of “wages,” as defined under S. 2(22) of the Employees' State
Insurance Act. The appellant cannot also be expected to maintain a detailed account of the
amount paid to the workers and the amounts spent for the materials and those workers
have got to be construed as casuals as they were engaged for a particular job of work and
they were not employed under the appellant's factory and, therefore, the appellant is not
liable to pay contribution on the amounts spent on the abovesaid heads.
6. The appellant also relied upon the deicsion rendered by the Kerala High Court in the
case of Employees' State Insurance Corporation v. P.R. Narahari Rao [1987 (70) F.J.R.
160], wherein the Kerala High Court had considered the case of hotelier who engaged
casual workers for short periods of time when the employer had catering contracts through
contractors, who employed the same workmen for works under other similar catering
establishments on a contract basis, it is held that the effect of S. 2(9)(i) of the Act which
defines an “employee,” the essential question is whether there is a “contract of
employment” between the casual workmen “engaged” by the contractor and the employer
establishment. In this case, the employer was not aware of the number of workers
engaged by the contractor and he did not know, the other the details of such persons. He
was not aware of the amount payable to each of the workmen and he could not have
insisted upon the attendance of these persons at any point of time. He had no control over
the manner in which the work was performed by them. There was no evidence regarding
the existence of master and servant relationship between the casual workmen and the
employer-establishment. The nomenclature “casual” in describing the workmen did not
determine their character and what was material was whether a person concerned was
“employed” by the “employer” or whether he was only “engaged” for casual labour.
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Thereby, a distinction was made of the workers who are merely engaged for doing the
work and they are not employed for the work to be carried out and thereby came to the
conclusion that the persons merely engaged for specific items cannot be brought under
the definition of “employees” and the Employees' State Insurance Corporation is not
entitled to claim contribution in respect of the amounts paid to the said employees.
7. The learned advocate for the respondent-Employees' State Insurance Corporation
has submitted that the view taken by the Kerala High Court is not correct and the same is
also not applicable to our case. To sustain and support her submission, she relied upon the
decision rendered by the Supreme Court in the case of Employees' State Insurance
Corporation v. Harrison Malayalam (Private), Ltd. [1993 (2) L.L.N. 675], wherein the Apex
Court in Para. 3, at pages 675 and 676, observed as follows:
“…Under the Act, it was the duty of the respondent-company to get the necessary
details of the workmen employed by the contractor at the commencement of the
contract since the primary responsibility of the payment of the contribution is on the
principal employer. On the admitted fact that the respondent-company had engaged
the contractor to execute the work, it was also the duty of the respondent-company to
get the temporary identity certificates issued to the workmen, as per the provisions of
regulations 12, 14 and 15 of the Employees' State Insurance (General) Regulations,
1950, and to pay the
Page: 318
contribution as required by S. 40 of the Act. Since the respondent-company failed in its
obligation, it cannot be heard to say that the workers are unidentifiable. It was within the
exclusive knowledge of the respondent-company as to how many workers were employed
by its contractor. If the respondent-company failed to get the details of the workmen
employed by the contractor, it has only itself to thank for its default. Since the workman in
fact were engaged by the contractor to execute the work in question and the respondent-
company had failed to pay the contribution, the appellant-Corporation was entitled to
demand the contribution although, both the contribution period and the corresponding
benefit period, had expired. The scheme under the Act for insuring the workman for
conferring on them benefits in the case of accident, disablement, sickness, maternity, etc.,
is distinct from the contract of insurance, in general. Under the Act, the scheme is more
akin to group insurance. The contribution paid, entitles the workmen insured to the benefit
under the Act. However, he does not get any part of the contribution back if during the
benefit period, he does not qualify for any of the benefits. The contribution made by him
and by his employer is credited to the insurance fund created under the Act and it
becomes available for others or for himself, during other benefit periods, if he continues in
employment….”
8. The fact and principles dealt with by the Supreme Court are squarely applicable to
our case and the decision of the Apex Court put an end to the controversy that has been
raised by the appellant. In the said view of the matter, the appellant is liable to pay
contribution and the claim made by the respondent cannot be assailed or set aside and
hence the order passed by the Employees' Insurance Court is hereby confirmed. In the
result, the C.M.A. is dismissed. No costs.
———
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