Madras High Court
Sri Lakshmi Saraswathi Textiles (Arni) ... vs The Employees State Insurance ... on 24 March, 2021
Author: T.V.Thamilselvi
Bench: T.V.Thamilselvi
C.M.A.No.942 of 2012
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated : 24.03.2021
CORAM:
THE HON'BLE MRS.JUSTICE T.V.THAMILSELVI
C.M.A.No.942 of 2012
and C.M.A.No.1 of 2012
Sri Lakshmi Saraswathi Textiles (Arni) Ltd.,
Ragunathapuram,
Arni,
Tiruvannamalai District,
Rep by Thiru.R.Srihari,
Managing Director.
.. Appellant
Vs.
1. The Employees State Insurance Corporation
Rep by the Regional Director,
143, Sterling Road,
Nungambakkam,
Chennai 600 034.
2.The Deputy Director,
Employees State Insurance Corporation
143, Sterling Road,
Nungambakkam,
Chennai 600 034.
.. Respondents
PRAYER : Civil Miscellaneous Appeal is filed under Section 82 of the
Employees State Insurance Act, praying to set aside the order of the Principal
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C.M.A.No.942 of 2012
Labour Court, Vellore District, Vellore, dated 18.05.2011 in EIOP.No.4 of
2007.
For Appellant : M/s.T.S.Gopalan and Company
For Respondents : Mr.C.V.Ramachandra Murthy
JUDGMENT
The appellant herein is the petitioner, who filed EIOP.No.4 of 2007 on the file of the Principal Labour Court, Vellore District, Vellore, against the respondents/ESI Corporation, challenging the order passed by the respondents under Section 75(2) of the Employees State Insurance Act, 1948, directing payment of contribution of a sum of Rs.8,43,545/- as null and void and set aside the order passed in respect of the certificates No.TN/INS.VI/51- 10507-11, dated 16.08.2007 of the respondents.
2. The Substantial questions of law arising in this appeal is as follows;
(a) Is the order of the respondents valid in law?
(b) Are the outside representatives, employees of the appellant and commission paid to them would amount to 2/18 https://www.mhc.tn.gov.in/judis/ C.M.A.No.942 of 2012 wages and attract ESI Contribution?;
(c) Are the freelance professionals like carpenters, electricians, welders, employees of the appellant?;
(d) Is the appellant liable to pay the contribution in respect of an employer having independent code number though the said company acted as a contractor during the relevant period?.
3. Facts reveal that the petitioner/appellant owns a textile spinning mills situated at Raghunathapuram, Arani, Thiruvannamalai District.
The factory is covered under the provisions of the Employees State Insurance Act, 1948. The mill produces quality yarn and major part of the mill's production is exported to foreign countries. It is an admitted fact that in the month of June 2005, an Assistant Director of the ESI Corporation conducted inspection of the appellant's establishment and also requested the appellant to produce the documents relating to the period 2000-2001. The inspection was done on two days viz., 09.06.2005 and 10.06.2005. Based on the Inspection report dated 10.06.2005, the second respondent issued show cause notice under Section 45A of the Act directing the petitioner to pay contribution of Rs.8,43,545/-. The order passed to that effect is total 3/18 https://www.mhc.tn.gov.in/judis/ C.M.A.No.942 of 2012 violation of the provisions of law. Therefore, the appellant preferred petition before the ESI Court to set aside the order.
4. The learned counsel for the respondents contended that on verification of the records belonging to the appellant's establishment, the inspection officer has found the following expenses incurred for the year 2000-2001, which were not observed and complied by the appellant.
Extract of Wages - 1198108.00
Building Maintenance A/C - 950800.00
Building A/C - 7905593.00
Stipend of A/C - 2923088.00
An opportunity of personal hearing was given to the appellant requesting him to furnish the details and after scrutiny of the materials available on record, the respondents passed the order for contribution, against which, the appellant herein has preferred EIOP No.4 of 2007 before the ESI Court.
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5. Before ESI Court, on the side of the appellant PW.1 was examined and Exs.P1 to P8 were marked and on the side of the respondents Exs.R1 to R10 were marked.
6. Considering both the oral and documentary evidence, the ESI Court concluded that the order passed under Section 45A of ESI Act, with regard to Rs.4,15,356.00/- for the year 2000-2001 is valid. Accordingly, the petition was dismissed. Aggrieved by the order passed by the respondents/ESI, the appellant has preferred the present appeal challenging the order passed by the ESI Court.
7. At the time of arguments, the learned counsel for the appellant submitted that the trial Judge has erroneously concluded that the Commission charges were paid to the representatives to whom the cotton procured and also the advantage derived by the company in terms of wages.
So also with regard to the payment of stipend which was given by the appellant is in terms of the standing order, but the same was also erroneously concluded by the Commissioner of Labour.
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8. The learned counsel for the appellant relied on a decision reported in 1975(2) SCC 835 (The Employees State Insurance Corporation and another Vs. The Tata Engineering & Loco-motive Company Ltd., and another, Wherein, it has been observed as follows;
The appellant ESI Corporation sought to charge the respondent company with the liability for payment of special contribution under Chapter VA of the ESI Act in respect of the apprentices in the company. The respondent's plea against the claim was upheld by the industrial tribunal acting under Section 73B. The High Court refused to interfere. Hence, the appeal by certificate by the ESI Corporation.
The word "apprentice" is not defined in the ESI Act nor is it specifically referred to in the definition of "employee'' by either inclusion or exclusion. It is difficult to hold that in ordinary acceptation of the term apprentice a relationship of master and servant is established under the law. Even etymologically, as a matter of pure English, to serve apprenticeship means to undergo the training of an apprentice.
In apprenticeship the dominant object and intent is to impart on the part of the employer and to accept on the 6/18 https://www.mhc.tn.gov.in/judis/ C.M.A.No.942 of 2012 part of the other person learning under certain agreed terms. That certain payment is made during the apprenticeship, by whatever name called, and that the apprentice has to be under certain rules of discipline do not convert the apprentice to a regular employee under the employer. Such a person remains a learner and is not an employee.
As examination of the provisions of the entire agreement leads to the conclusion that the principal object with which the parties enter into an agreement of apprenticeship was offering by the employer an opportunity to learn the trade or craft and other person to acquire such theoretical or physical knowledge that may be obtained in the course of the training. This is the primary feature that is obvious in the agreement.
It is inherent in the word ''apprentice' that there is no element of employment as such in a trade or industry but only an adequate well-guarded provision for training to enable the trainee after completion of his course to be suitably absorbed in earning employment as a regular worker. The fact that a trainee may have been absorbed in the company where he is undergoing the training, is not relevant for the purpose of comprehending the content of the term.
7/18https://www.mhc.tn.gov.in/judis/ C.M.A.No.942 of 2012 Section 2(s) of I.D.A 1947, while defining a ''workman'' includes an apprentice. Although the legislature was award of the definition, the very following year while passing the employees state Insurance Act, 1948, it did not choose the employees State Insurance Act, 1948. Such a deliberate omission on the part of the legislature can be only attributed to the well known concept of apprenticeship which the legislature assumed and took note of for the purpose of the Act.
Also from the terms of the agreement it is clear that apprentices are mere trainees for a particular period for a distinct purpose and the employer is not bound to employ them in their works after the period of training is over. During the apprenticeship they cannot be said to be employed in the work of the company or in connection with the work of the company. That would have been so if they were employed in a regular way by the company. The purpose of the engagement under the particular scheme is only to offer training under certain terms and conditions. Apprentices are not entitled to additional remuneration or allowances to which regular employees are.
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9. The learned counsel for the appellant further argued that the apprentice is a person, who is undergoing apprentice training in a designated trade in an establishment as a trainee and not a worker. Relying this proposition, the appellant counsel submits that the Commissioner of Labour erroneously concluded that for the apprentice who were employed in the petitioner's establishment has to pay contribution. To prove the payment of stipend, the appellant relied the copy of the general ledger, wages registers.
On verifying the general ledger for 2000-2001 it was found that the so called stipend was recorded in the ledger as workers weekly payment, stipend, stipend staff apprentice, amount of stipend payable to apprentice workers, amount of stipend payable to casual workers and stipend staff apprentice.
10. From the head of the accounts stipend in the general ledger for the period 2000-2001 as they have included the wages paid to driver and casual workers the word stipend is just added to evade payment of contribution to the workers/staff/drivers/casual workers/reelers etc. The wages were just mentioned as "stipend". Though this fact is denied by the appellant, to disprove this aspect, no independent evidence is available.
9/18https://www.mhc.tn.gov.in/judis/ C.M.A.No.942 of 2012 The appellant establishment has paid stipend only to the apprentice training for the year 2000-2001. The amount mentioned as stipend in the ledger as a wages paid to the driver and the casual labourers of the appellant establishment is not acceptable one. Hence the finding rendered by the Commissioner of Labour to that effect is sustainable in law.
11. The learned counsel for the appellant also further submitted that the amount paid to the outside representatives was also erroneously appreciated by the respondent/ESI Corporation and demanded the contribution, which is quite contrary to the provisions of ESI Court. The learned counsel further submits that these representatives are paid remuneration which includes the travels expenses and other miscellaneous expenses and they are not their employees and there is no supervision for their work and they doing work for the brokerage.
12. On perusal of the records, during the enquiry, an opportunity was given to the appellant to produce necessary records to substantiate its contention, but they have failed to do so. Though the appellant paid wages 10/18 https://www.mhc.tn.gov.in/judis/ C.M.A.No.942 of 2012 in the form of remuneration, if really those representatives are not supervised by them, there is no necessity to pay the amount under the head of remuneration by the appellant establishment. Therefore, the amount paid to the outside representatives has been observed as 'wages' by the respondent is sustainable in law.
13. With regard to other expenses of Rs.6,77,550/-, the appellant contended that those amount are not wages under Section 2 (22) of the ESI Act, since it was paid to non coverable employees such as skilled workers, like carpenter, electrical etc, wages paid above ceiling i.e., Rs.6500 /- as shown in the enclosure abstract/voucher and wages statement. But the details furnished therein are not sufficient to calculate whether the wages so paid to employees such as maistries, carpenters, were paid above Rs.6,500/-
which was ceiling in the year 2000-2001. Therefore, the respondent corporation rightly observed that those amounts are wages and demanded the contribution. Even with regard to the building account, as per the general ledger from the year 2000-2001 produced at the time of personal hearing, the break up for the said amount, expenditure wise, it is shown under the various 11/18 https://www.mhc.tn.gov.in/judis/ C.M.A.No.942 of 2012 heads as expenditure. But those amounts were paid in the year 1999 but not for the year 2000-2001. Therefore, the contention of the appellant and other expenses as rightly rejected by the respondent corporation.
14. Before passing the impugned order, the respondents carefully verified the bills and other ledgers submitted on the side of the appellant. But inspite of the several opportunities, the appellant failed to produce the material evidence to substantiate their statement submitted before the ESI Authority.
15. On perusal of the evidence of PW.1, during the cross examination, he has deposed as follows:
ehd; mf;ft[d;l; nknd$uhf gzp g[hpfpnwd;/ 15 tUlkhf mg;gzpapy; ,Uf;fpnwd;/ ,v!;I mYtyfk; Kd;g[ tprhuizf;F jdpnkyhsUk; fe;jrhkpa[k;
M$uhdhh;fs;/ ehd; cld; nghapUe;njd;/ jdp
mYtyh; gzpapy; ,Uf;fpwh;/ vdf;F Xust[ tptuk;
bjhpa[k;/ bgh;rdy; nknd$Uf;F KGtJk; bjhpa[k;/
Ehw;g[ Miyia ,v!;I Ma;thsh; vg;bghGJ te;J
Ma;t[ bra;jhh; vd;why; bjhpa[k;/ Ma;t[ bra;jnghJ
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C.M.A.No.942 of 2012
ehd; cld; ,Ue;njd;/ mf;ft[d;l; byl;$h;fs;
rhpghh;f;fg;gl;ld/ bgh;rdy; nknk$h; ehfuh$d;
,g;bghGJk; ,Uf;fpwhh;/ mth;; b$duy; nknd$uhf
gjtp ,Uf;fpwhh;/ vdf;F tHf;F gw;wp vJt[k;
bjhpahJ vd;why; rhpay;y/ fhl;ld; nghd;wit
K:yjd';fis btspapy; th';fp v';fs; Miyapy;
Ehyhf Mf;Ffpnwhk;/ mjw;fhf Ml;fs;
epakpj;Js;nshk;/ me;j gUj;jp tpistpg;gth;fsplk;
th';fp v';fSf;F mDg;g[thh;fs;/ rhk;gpis ghh;j;J
mth;fSf;F Mh;lh; bfhLg;nghk; tpiyngrp bfhs;Kjy; bra;nthk;/ vilnghl;L ruf;F mDg;g[thh;fs; gzk; mDg;g[nthk;/ 12. 14 ngh; ntiy bra;fpwhh;fs;/ mg;bghGJ Fwpg;gpl;L ntiy bra;jhh;fs; vd fhl;l Mtzk; vJt[k; nghltpy;iy/ mth;fs; Cjpak; vj;jid ngh; ntiy bra;jhh;fs; vd brhy;yKoahJ/ mth;fSf;Fk; chpa re;jh bjhifia eh';fs; brYj;jtpy;iy/ ghuh vz; 5y; TLjy; rk;gskhf 11.
98. 106 vd;W cs;sJ/ mjw;F re;jh brYj;jg;gltpy;iy/ ,e;j bjhiffSf;Fhpa Mtz';fSk; jhf;fy; bra;ag;gltpy;iy/ vt;tst[ Cjpak; bfhLf;fg;gl;lJ vd fhl;l Mtzk; vJt[k;
,y;iy/ buFyuhf fl;olj;ij guhkhpf;f Ml;fs;
,Ug;ghh;fs;/ mnj Ml;fs;jhd; te;J ntiy
bra;thh;fs;/ mjw;fhd vt;tst[ ngh; ntiy
bra;jhh;fs; rk;gsk; vt;tst[ bfhLf;fg;gl;lJ vd
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C.M.A.No.942 of 2012
fhl;l Mtzk; vJt[k; jhf;fy; bra;atpy;iy/ 9.50.700 U:gha; rk;gsk;jhd;/ mth;fs; 6.77.000 kl;Lk; re;jh nghl;lhh;fs; kPjpia fl;otpl;nlhk;/ kPjpia fl;lntz;oaij fhl;l Mtzk; vJt[k; nghltpy;iy/ 2000?01y; bjhHpw;rhiyia tp!;jhpg;g[ bra;njhk;/ bghpa fl;olk; fl;oa[s;nshk;/ v';fs; bjhHpw;rhiyf;F njitf;fhf fl;ol';fs; fl;ondhk;/ mth;fs; eph;zak; bra;jJ 14.86.000 mjpy; re;jhit fl;ondhk;/ Lty; !;lf;r;rh; vd;w v';fs; fPH; bray;gLtjw;fhf fl;lg;gl;lJ vd;why; rhp/ bjhHpyhsh;fis mjw;fhf mkh;j;jpdhh;fs;/ vt;tst[ fl;ondhk; vd fhl;lMtzk; vJt[k; jhf;fy; bra;atpy;iy/ 2000?01 mjw;F Kd;g[k; ,v!;I Mf;l; gpufhuk; mth;fs; rl;lg;go nfhl; ek;gh; bfhLf;fg;gltpy;iy/ ftnu$;k; ,y;iy/ v';fs; rhh;ghf fk;bgdp rhh;gpy; fl;lg;gl;lJ/ mjw;F ,v!;I re;jh bjhif fl;lntz;Lk; vd;why; rhp/ gpy;o'; fl;odhYk; guhkhpg;g[ bra;jhYk; re;jh fl;lntz;Lk;/ mth;fs; vjph;kDjhuh; nfl;l bjhiff;F re;jh brYj;jtpy;iy/ My; xh;f; brg;of; lh';f;, nyd;l; ! ;nfg; g[l;ghh;h;l; Kjypaitfspy; guhkhpg;g[ bra;njhk;/ ,jw;F 11.69.237 brythdJ/ bjhHpyhsh; Typ tiu bfhLj;Js;nshk;/ nygh; rhh;$; kl;Lk; nfl;lhh;fs;/ mjw;fhd re;jh bjhiffisa[k; fl;ltpy;iy/ mg;guz;orhf 300 kw;Wk; 350 ,Uf;fpwhh;fs;/ mth;fs;
mg;guz;o!;jhd; vd fhl;l Mtzk; vJt[k; 14/18 https://www.mhc.tn.gov.in/judis/ C.M.A.No.942 of 2012 nghltpy;iy/ me;j 300. 350 bfhLf;fg;gl;l bjhifjhd; !;ilgd;lhf brytplg;gl;lJ/ khjk; vt;tst[ jUfpnwhk; vd;W brhy;yKoahJ/ epiyahiz nghltpy;iy/ mth;fs; ntiyjpwik gw;wp fhl;l epiyahiz nghltpy;iy/ 3 tUlk; ntiy bra;jhy; 15.000 5 tUlk; ntiy bra;jhy;
25.000 bfhLg;nghk;/ ,J khj rk;gsj;jpw;F TLjyhf bfhLg;nghk;/ vjw;fhf obuapdp'; vLg;gth;fSf;F ,t;tst[ bjhif bfhLf;fpwhh;fs; vd;W vdf;F bjhpahJ/ mij rk;gsk; vd;W bfhLf;fhky;
!;ilgd;l; vd;W brhy;ypapUf;fpnwhk;/ oiuth; !;fhyd;r;h;. tPl;L ntiyf;fhuh; ,th;fs;midtUk; bcwl;oy; tUthh;fs;/ ,e;j nkw;goahsh;fSf;F bfhLf;fg;gl;l bjhiff;F !;ilgd;l; fl;ltpy;iy/ nkw;goahsh;fSf;F onuapdp'; gPhpal; tuhJ vd;why;
rhp/ ,J khjphp bcwl;o'; bfhLj;J fl;lhjpUg;gJ
jtwhdjhFk;/ Ma;twpf;if v/k/j/rh/M/1?';fSf;F
bfhLf;fg;gl;l mwpf;if/ v/k/rh/M/4 kw;Wk; 5/
eh';fs; tha;jh nfl;L bfhLj;j kD v/k/rh/M/6
kPz;Lk; v';fis tprhuizf;F tUkhW mDg;gpa
fojk; v/k/rh/M/9 kw;Wk; 8/ eh';fs; bfhLj;j
tpsf;ff; fojk; v/k/rh/M/9/ 45 V Mh;lh; v/k/rh/M/10/ 8.43.545 brYj;JkhW nfl;lhh;fs/ gpd;g[ 45 go Mh;lh; nghl;lhh;fs;/ ,e;j Mh;lh; go mth;fs; 4.15.356 U:
nfl;L 16/08/2007y; mwptpg;g[ bfhLj;jhh;fs;/ eh';fs;
15/18 https://www.mhc.tn.gov.in/judis/ C.M.A.No.942 of 2012 Mtz';fs; goahd bjhifia Mtz';fs; mog;gilapy; bjhifia fHpj;Jf;bfhz;lhh;fs;/ gpd;dh; mth;fs; nfl;l bjhiff;F bfhLj;j Mtz';fs; rhpapy;yhJ vd;W brhy;yp bjhifia brYj;JkhW nfl;oUe;jhh;fs;/ rhpahd tptuk; ml';fpa Mtz';fs; jug;gltpy;iy vd;W
brhd;dhh;fs;/ me;j bjhiff;Fhpa Mtz';fs; kw;Wk; tptu';fs; ,';Fk; eh';fs; jutpy;iy/
16. In the evidence of PW1, he himself has stated as follows;
...vjw;fhf obuapdp'; vLg;gth;fSf;F ,t;tst[ bjhif bfhLf;fpwhh;fs; vd;W vdf;F bjhpahJ/ mij rk;gsk; vd;W bfhLf;fhky; !;ilgd;l; vd;W brhy;ypapUf;fpnwhk;/ oiuth; ! ;fhyd;r;h;. tPl;L ntiyf;fhuh; ,th;fs;midtUk; bcwl;oy;
tUthh;fs;/ ,e;j nkw;goahsh;fSf;F bfhLf;fg;gl;l bjhiff;F !;ilgd;l; fl;ltpy;iy/ nkw;goahsh;fSf;F onuapdp'; gPhpal;
tuhJ vd;why; rhp/ ,J khjphp bcwl;o'; bfhLj;J fl;lhjpUg;gJ jtwhdjhFk;.........” which would reveal that instead of salary, they have mentioned as stipend. He himself admit that Driver, scavenger and house keeper will come under specific head and they have 16/18 https://www.mhc.tn.gov.in/judis/ C.M.A.No.942 of 2012 not given stipend for the persons coming under such category as there is no training period hence it is wrong to mention such head. Further the appellant has produced the ledger to substantiate his claims before the respondent corporation. During the enquiry, the documents filed by the appellant have not sufficiently proved that he is not liable to pay the compensation as claimed. Therefore the Commissioner of Labour has rightly concluded that the notice issued by the respondent corporation is a valid one.
17. In view of the foregoing discussions, this Court finds that the Civil Miscellaneous Appeal preferred by the appellant Establishment disputing to pay contribution is devoid of merits. Accordingly, the Civil Miscellaneous Appeal is dismissed. No costs. Consequently, connected miscellaneous petition is closed.
24.03.2021 ub Index : Yes/No Speaking Order: Yes/No 17/18 https://www.mhc.tn.gov.in/judis/ C.M.A.No.942 of 2012 T.V.THAMILSELVI,J.
ub To
1. The Principal Labour Court, Vellore District, Vellore.
2.The Employees State Insurance Corporation Rep by the Regional Director, 143, Sterling Road, Nungambakkam, Chennai 600 034.
3.The Deputy Director, Employees State Insurance Corporation 143, Sterling Road, Nungambakkam, Chennai 600 034.
C.M.A.No.942 of 201224.03.2021 18/18 https://www.mhc.tn.gov.in/judis/