Madras High Court
E.S.I.Corporation vs Ghcl Ltd (Unit-Sree Meenakshi Mills) on 18 April, 2023
Author: R.Vijayakumar
Bench: R.Vijayakumar
CMA(MD).No.1286 of 2016
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
RESERVED ON : 16.03.2023
PRONOUNCED ON : 18.04.2023
CORAM
THE HONOURABLE MR.JUSTICE R.VIJAYAKUMAR
C.M.A(MD)No.1286 of 2016
E.S.I.Corporation
Sub Regional Office
Madurai
Represented by its Assistant Director
4th Main Road
K.K.Nagar,Madurai -20 ...Appellant
vs.
GHCL Ltd (Unit-Sree Meenakshi Mills)
Represented by its General Manager-Finance
Paravai, Samayanallur P.O
Madurai 625 402 ...Respondent
PRAYER:- Civil Miscellaneous Appeal filed under Section 82 of the
ESI Act, 1948, to set aside the order dated 19.01.2016 passed by the
Employees' State Insurance Court (ie.Labour Court) Madurai in
E.S.I.OP.No.25 of 2008 uphold 45-A order dated 19.01.2016 of the ESI
Corporation and allow this civil miscellaneous appeal with necessary
directions in favour of the appellant.
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https://www.mhc.tn.gov.in/judis
CMA(MD).No.1286 of 2016
For Appellant : Mr.P.Ganapathisamy
For Respondent : Mr.T.Antony Arulraj
JUDGMENT
The above appeal has been filed by the E.S.I.Corporation challenging the order of E.S.I.Court wherein the order of the E.S.I.Corporation under Section 45-A of the E.S.I.Act was set aside. Factual Matrix:
2.There is no dispute that the respondent establishment is covered under E.S.I.Act. An inspection was conducted on several dates in the month of August 2007 on the above unit and the Corporation found that the employer had failed to pay contribution on omitted wages for the period 04/2005 to 03/2007. The omitted wages were found under various heads of accounts namely civil work in progress, building addition, building repairs maintenance, handling charges, cotton charges, loading and unloading charges, contractors coolie etc., Out of the total amount of Rs.33,35,58,017/-, a sum of Rs.2,64,16,479/- was taken into account as a labour portion for the purpose of omitted wages for claiming 2/32 https://www.mhc.tn.gov.in/judis CMA(MD).No.1286 of 2016 contribution. Since the employer had failed to pay contribution, a claim Form was issued on 23.08.2007 claiming a sum of Rs.17,17,075/-
towards contribution. An enquiry was conducted after issuing a show cause notice to the employer. The employer had raised objection that the loading and unloading work is not perennial in nature and the loadmen, they come as a gang with lorry and thereafter, bargain with the establishment and they finalize the loading and unloading charges. There is no fixed working hours for the loadmen and they are doing such work for others also in the concerned area. Hence, the loadmen are self-employed and they are not employees within the meaning of Section 2(9) of the E.S.I.Act and hence, they are not liable to make any contribution for the amount paid to them.
3.The establishment had further contended that the staff mess expenses would comprise of the salary paid to the employees and it is not a statutory canteen. Running of a canteen is not even incidental to the manufacturing process and therefore, the employees of the staff canteen would not come within the purview of the Act.
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4.Out of the demand of Rs.17,17,075/-, the employer had paid a sum of Rs.16,07,336/-. The employer had refused to pay the balance amount of Rs.1,09,739/- on the ground that they are not liable to pay any amount towards coolie through contractors, cook, employees in the staff canteen and the loadmen. However, the Corporation had not accepted the said contention and passed an order under Section 45-A of the E.S.I. Act on 18.01.2008 claiming contribution towards loading charges, cook salary demanding a sum of Rs.1,09,739/-. The said order of the Corporation was challenged by the establishment by E.S.I.O.P.No.25 of 2008 before the E.S.I.Court, Madurai.
5.After considering the various judgements of our High Court and the Hon'ble Supreme Court, the E.S.I. Court arrived at a finding that the loadmen were engaged only whenever they are required and they are not engaged continuously and the loadmen used to go for other factories also. The E.S.I.Court further found that the Inspector of the E.S.I.Corporation has not produced any material or evidence adduced at the time of inspection that the said loadmen had fixed working hours and they were paid periodically and the establishment had control and 4/32 https://www.mhc.tn.gov.in/judis CMA(MD).No.1286 of 2016 supervision over the work done by them. Based upon the said findings, the E.S.I.Court had set aside the order under Section 45-A of the E.S.I.Act under the head of loading and unloading charges.
6.As far as the salary paid to the employees of the staff canteen are concerned, the E.S.I.Court had accepted the contention of the establishment that there is no link between the establishment and the canteen and the canteen is no way connected with the manufacturing activities of the petitioner mill either incidentally or preliminarily to the manufacturing process. Based upon the said findings, the E.S.I.Court had set aside the claim made under the head of salary for the employees of the staff canteen also. Challenging the said order of the E.S.I.Court, the present appeal has been filed by the Corporation. Contentions of the learned counsel appearing of the appellant Corporation are as follows:
7.The establishment is a mill and therefore, loading and unloading of the goods in the said mill are within the premises and they are very much incidental to the manufacturing process. Therefore, the E.S.I.Court was 5/32 https://www.mhc.tn.gov.in/judis CMA(MD).No.1286 of 2016 not right in holding that it is not connected with the manufacturing process.
8.As per inspection report, it could be seen that the charges were paid to the identifiable persons for the work done inside the factory, even the names of the persons who are receiving the loading and unloading charges have been mentioned. Therefore, where the amount is paid to the specific/named individual, it could not be contended that they were not employed by the establishment.
9.The learned counsel for the appellant had relied upon the judgement of the Hon'ble Supreme Court reported in (1996) 9 SCC 644 ( Rajakamal Transport and another Vs. Employees' State Insurance Corporation, Hyderabad) to contend that where loading and unloading operations are done who have connection with the work of the establishment and the said operation is under the terms and control of the establishment, the charges paid towards the same should be taken into account for payment of contribution.
10.The learned counsel for the appellant had further relied upon the Division Bench judgment of our High Court reported in 2001 2 LLJ 6/32 https://www.mhc.tn.gov.in/judis CMA(MD).No.1286 of 2016 Page 701 (Soft Beverages (Private) Ltd., Vs. E.S.I.Corporation) to contend that even though the period of employment may be short or it may be on daily wages, still there is no fetter calling the person engaged as an employee, especially when the engagement is in connection with the manufacturing process or the procedure in accordance with law or incidental to the employment.
11.The learned counsel for the appellant had further relied upon the Judgment of our High Court reported in (2001) 1 LLJ 309 (Soft Beverages (P) Ltd., Vs. E.S.I.Corporation, Madras to impress upon the Court that the loadmen coming along with lorry and leave the premises after unloading was rejected in the said appeal. He had further contended that even engagement of self employed loadmen occasionally would attract the provisions of the Act. Therefore, according to the learned counsel for the appellant, the E.S.I.Court ought not to have set aside the order under the head of loading and unloading charges.
12.The learned counsel for the appellant had further relied upon the judgement of the Hon'ble Supreme Court reported in (1978) 4 SCC 204 (Royal Talkies, Hyderabad and others Vs. Employees State 7/32 https://www.mhc.tn.gov.in/judis CMA(MD).No.1286 of 2016 Insurance Corporation) to contend that even if the canteen is not a statutory one, the employer is liable to pay contribution for those who were employed in the said canteen. Hence, he prayed for allowing the appeal.
Contentions of the learned counsel appearing for the respondent are as follows:
13. In the reply filed to the show cause, the establishment has taken a specific stand that the loadmen come in a gang along with lorry loaded with the goods. As gang, they negotiate with the management and fix the loading and unloading charges and any one of them receive the charges and share the amount themselves. For the same work loadmen is engaged by other employers on the same day. They do not have any fixed working hours or they are not expected to visit the premises every day.
Therefore, the said loadmen are self employed and independent persons and they do not fall within the definition of employee under Section 2(9) of the E.S.I.Act.
14.Just because certain names are recorded by the staff of the establishment who have received the charges, it does not make them as 8/32 https://www.mhc.tn.gov.in/judis CMA(MD).No.1286 of 2016 employees of the establishment.
15. The loadmen are not functioning under the direct control or supervision of the establishment and the establishment does not have any disciplinary control over them. When the establishment does not have any disciplinary control over them, the question of treating them as an employee would not arise.
16.The engagement of the loadmen is not perennial in nature, but they are engaged sporadically based upon the requirement. The said loading and unloading operations can never be considered to be part of the manufacturing process or ancillary to the manufacturing process in view of the fact that they are not regular in nature.
17. The learned counsel for the respondent had relied upon the Judgement of the Hon'ble Supreme Court reported in 1994 Supp (3) SCC 568 (State of Orissa and Others Vs. Joy Prakash Panda and another) and (2010) 11 SCC 537 (Hassan Co-operative Milk Producer's Society Union Ltd., Vs. E.S.I.Corporation) to contend that when the loading and unloading operations are not under the direct supervision of the establishment and their engagement is sporadic in nature, the charges 9/32 https://www.mhc.tn.gov.in/judis CMA(MD).No.1286 of 2016 incurred towards them cannot be calculated for the purpose of contribution.
18.The learned counsel had also relied upon the Judgement of the Division Bench of our High Court reported in 1997-1-L.W.663 ( South India Surgical Company etc., vs.The Regional Director, E.S.I., etc) and the judgement of our High Court reported in 2000(1) CTC 219 (The Regional Director, E.S.I.Corporation Vs. S.SR.S.Brothers) and the Judgement of the Bombay High Court in Letters Patent Appeal No.39 of 1982, dated 10.01.1989 ( Parle Bottling company (Private) Ltd., Vs. Employees' State Corporation) to contend that the hiring casual coolies from the road /street or an ad hoc basis without even knowing the names and details and payment of the loading and unloading charges to them, would not attract the provisions of E.S.I.Act.
19.The learned counsel for the respondent had relied upon the judgment of the High Court reported in 2006(III) FLR 808(The Regional Director, E.S.I.Corporation Vs. Godrej Soaps (P) Ltd., Madras) to contend that unless there is some link between the establishment and the work, the employees of the canteen can never be 10/32 https://www.mhc.tn.gov.in/judis CMA(MD).No.1286 of 2016 considered for the purpose of coming under the purview of E.S.I.Act. Therefore, he prayed for sustaining the order passed by the E.S.I.Court.
20.I have considered the submissions made on either side and perused the materials available on record.
21.There is no dispute that the establishment is covered under E.S.I.Act. A notice has been issued by the E.S.I.Corporation on 23.08.2007 for the omitted wages relating to the period between April 2005 to March 2007. The notice primarily refers to the omitted wages paid to the loading and unloading personnel and the cook of the staff canteen maintained by the establishment.
22.In the reply, the establishment had contended that the canteen is not a statutory one and the loading and unloading men are not under their own direct supervision and they are not engaged regularly. He had further contended that the loadmen work under different employers even on the same day. The Tribunal had accepted the contention of the establishment and set aside the order passed by the E.S.I.Corporation.
23.Now let us consider the issue relating to the coverage of loading and unloading charges towards determination of contribution 11/32 https://www.mhc.tn.gov.in/judis CMA(MD).No.1286 of 2016 under the E.S.I.Act.
24. Section 2(9)(1)(ii) of the E.S.I.Act is extracted as follows:
“Section2(9)(ii): who is employed by or through an immediate employer, on the premises of the factory or establishment or under the supervision of the principal employer or his agent on work which is ordinarily part of the work of the factory or establishment or which is preliminary to the work carried on in or incidental to the purpose of the factory or establishment; or”
25.The Hon'ble Supreme Court had occasioned to interpret the said provision in (1978) 4 SCC 204 (Royal Talkies Vs.E.S.I.Corporation) in Paragraph Nos.16, 17 & 18 which are extracted as follows:
“ 16.Merely being employed in connection with the work of an establishment, in itself, does not entitle a person to be '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 Sec. 2(9).
17.Sec. 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 directly employed by the principal employer cannot be eligible under Sec. 2'(9) (i) . In the present case, the employees 12/32 https://www.mhc.tn.gov.in/judis CMA(MD).No.1286 of 2016 concerned are admittedly not directly employed by the cinema proprietors.
18.Therefore, we move down to Sec. 2(9) (ii). Here again, the language used is extensive and diffusive imaginatively embracing all Possible alternatives of employment by or through all independent employer. In such cases, the 'principal employer' has no direct employment relationship since the 'immediate employer' of the employee, concerned is some one else. Even so, such an employee, if 7-520SCI/78 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 which is preliminary to the work carried on in or incidental to the purpose of the establishment", qualifies under Sec. 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 Sec. 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 nor 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.....” 13/32 https://www.mhc.tn.gov.in/judis CMA(MD).No.1286 of 2016
26.The Hon'ble Supreme Court in a judgement reported in (1996) 9 SCC Page 644 (Rajakamal Transport and another vs. Employees' State Insurance Corporation) interpreting Section 2(9) of the E.S.IAct with regard to the loading and unloading employees, in Paragraph No.7 has held as follows.
“7.It is seen that the Insurance Court after elaborate consideration, found as a fact, that the appellants have the control over loading and unloading of the goods entrusted to the appellants. The appellants' regular business is transportation of the goods entrusted to it as carrier. When the goods are brought to the warehouse of the appellants, necessarily the appellants have to get the goods loaded or unloaded through the hamalis and they control the activities of loading and unloading. lt is true as found by the Insurance Court that instead of appellants directly paying the charges from their pocket, they collect as a part of the consideration for transportation of the goods from the customers and pay the amount to the hamalis. The test of payment of salary or wages in the facts of this case is not relevant consideration. What is important is that they work in connection with the work of the establishment. The loading and unloading of the work is done at their directions and control.” 14/32 https://www.mhc.tn.gov.in/judis CMA(MD).No.1286 of 2016
27.The Hon'ble Supreme Court again while interpreting Section 2(9) of the Act in relation to the loading workers, in (2010) 11 SCC Page 537 (Managing Director, Hassan Co-operative Milk Producer's Society Union Limited Vs. Assistant Regional Director, employees' State Insurance Corporation) in Paragraph Nos.24, 25, 26 and 33 have held as follows:
“24.We shall assume, to test the validity of the contention, in favour of the E.S.I. Corporation that workers engaged by the contractor (immediate employer) for transportation of milk have been employed in connection with the work of the principal employer and these employees, thus, qualify under first substantive part of Section 2(9). But as stated in Royal Talkies1 that 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). Are these workers covered by any of these categories?
25. It is not the case of any of the parties nor there is any evidence to show that the persons who did loading and unloading were directly employed by the appellants. Section 2(9)(i) is, therefore clearly not attracted as it covers the workers who are 15/32 https://www.mhc.tn.gov.in/judis CMA(MD).No.1286 of 2016 directly employed by the principal employer. As a matter of fact, the thrust of the arguments centred round clause (ii) of Section 2(9).
This clause, requires either
(a) that the person to be an employee should be employed on the premises of the factory or establishment, or
(b) that the work is done by the person employed under the supervision of the principal employer or his agent on work which is ordinarily part of the factory or establishment or which is preliminary to the work carried on in or incidental to the purpose of the factory or establishment.
The expression "on the premises of the factory or establishment" comprehends presence of the persons on the premises of the factory or establishment for execution of the principal activity of the industrial establishment and not casual or occasional presence.
26.We shall again assume in favour of the E.S.I. Corporation that for the purposes of loading and unloading the milk cans, the truck driver and loaders enter the premises of the appellants but mere entry for such purpose cannot be treated as an employment of those persons on the premises of the factory or establishment. We are afraid, the said expression does not comprehend every person who enters the factory for whatever purpose. This is not and can never be said to be the purpose of the expression. It has to be held that the persons employed by the contractor for loading and 16/32 https://www.mhc.tn.gov.in/judis CMA(MD).No.1286 of 2016 unloading of milk cans are not the persons employed on the premises of the appellants' establishment”.
33.Exercise of supervision and issue of some direction by the principal employer over the activities of the contractor and his employees is inevitable in contracts of this nature and that by itself is not sufficient to make the principal employer liable. That the contractor is not an agent of the principal employer under Section 2(9)(ii) admits of no ambiguity. This aspect has been succinctly explained in C.E.S.C. Ltd.7 with which we respectfully agree.”
28.The Hon'ble Supreme Court in a judgement reported in 1994 Supp (3) SCC 567 (Employees' State Insurance Corporation Vs. Premier Clay Products) has held as follows:
“....The respondent had hired some casual coolies for loading and unloading of its goods. The work itself was of a sporadic nature. The coolies were available for work to others and in fact on the very day worked for several others who engaged them. In the circumstances, the said coolies cannot even be called casual workmen. Hence, no contribution is payable by the respondent to the Corporation on their behalf...”
29.The Hon'ble Division Bench of our High Court in a judgement reported in 1997 -1- LW. 663 (South India Surgical Company Vs, The 17/32 https://www.mhc.tn.gov.in/judis CMA(MD).No.1286 of 2016 Regional Director, Employees State Insurance Corporation) in Paragraph Nos.17 and 21 has held as follows:
“17.Thus, a careful perusal of the entire evidence both oral and documentary, would clearly go to show that the appellant company was not exercising any supervisory control over the disputed workmen and they were working as employees of the independent contractors....
21.The facts of the case on hand, as already noticed, would only show that the appellant has no control or right of supervision over the employees of the contractors and that the concerned workmen were free agents operating as independent contractors over whose activities, the appellant had no control whatsoever.....”
30.A careful perusal of the judgements of the Hon'ble Supreme Court and the Division Bench judgement of our High Court, the preposition of law relating to coverage of loading and unloading workers under the E.S.I.Act can be summarized as follows:
(i).If the loading and unloading workers are engaged directly by the establishment then the said case would directly fall under Section 2(9)(i) of the Act and therefore, there cannot be any doubt that the said 18/32 https://www.mhc.tn.gov.in/judis CMA(MD).No.1286 of 2016 loading and unloading workmen are covered under the provisions of E.S.I.Act. Any wages paid towards them would certainly have to be calculated towards determination of contribution.
(ii).When the loading and unloading workmen are engaged by an immediate employer, any one of the following conditions have to be satisfied for covering the said workmen under the E.S.I.Act.
(a). The work should be carried out within the premises of the factory or establishment
(b).under the supervision of the principal employer or his agent.
(c). The said loading and unloading work is ordinarily part of the work of the factory or establishment or which is preliminary to the work carried on in or incidental to the purpose of the factory or establishment.
(iii).Therefore, it is clear that the work has to be carried out either in the premises of the factory or establishment or it could be carried out elsewhere under the supervision of the principal employer or his agent.
However, the said unloading work should mandatorily be part of the work of the factory or establishment or preliminarily or incidentally for the purpose of the factory or establishment.
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(iv). A mere entry of the loadmen into the factory for loading and unloading purpose cannot be treated as an employee. The expression “supervision of the principal employer” under Section 2(9) of the Act means something more than mere exercise of some remote or indirect control over the activities or the work of the workers. A direct disciplinary control by the principal employer over the workers engaged by the contractors may also be covered by the expression “ supervision of the principal employer”.
(v).Mere exercise of supervision and issue of some direction by the principal employer over the activities of the contractor and his employees is inevitable in loading and unloading contracts and it is not sufficient to make the principal employer liable. The contractor who engages loadmen is not an agent of the principal employer under Section 2(9)(ii) of the Act.
(vi).When the establishment have any say over the terms and conditions of the employment of the loadman or that establishment have anything to do with the logistic operations of the contractor then it will result in application of the E.S.I.Act.
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(vii).When the principal employer did not have any knowledge about the number of persons engaged by the contractors or their names and the establishment was not aware of the amount payable to each of its worker, even assuming that the loading and unloading is incidental to the factory or workmen, the employees cannot be covered under the E.S.I.Act.
(viii).If the establishment had hired casual coolies and the work is of sporadic nature, then the said operations cannot be taken into consideration for coverage.
(ix). If the loadmen were available for work to others and in fact on every day, they work for several others who engaged them will, only result in an inference that they cannot even be called as casual workmen. Hence, no contribution is payable by the establishment to the Corporation on their behalf. When the establishment had not exercised any supervisory control over the disputed workmen and they were working as employees under the independent contractor, they cannot be considered as employees under Section 2(9) of the E.S.I.Act. 21/32 https://www.mhc.tn.gov.in/judis CMA(MD).No.1286 of 2016
(x).When the loadmen are self-employed labourers who are available on the spot at the particular point of time and it on adhoc basis, they are not covered under the Act.
(xi).An employee of the establishment might have taken down the names of the loadmen to whom the charges were disbursed. But the said fact is being done by the employee so as to protect himself and substantiate his claim for the charges mentioned in the voucher. Therefore, any reference to the names of the loadmen in some records maintained by the establishment, would not make the loadmen as employees as contemplated under Section 2(9) of the E.S.I.Act. In the light of the above said proposition of law, let us now consider the facts of the present case:
31.An inspection has been conducted on 23.08.2007 and a report has been prepared by the Corporation. As per the said report, the salary/wages for the year 2005 to 2007 along with general ledgers, they have found that there is difference in wages/salaries shown in the general ledgers. The said difference amount has been taken into account as omitted wages and contribution have been demanded for the said omitted 22/32 https://www.mhc.tn.gov.in/judis CMA(MD).No.1286 of 2016 wages. In the reply submitted by the establishment on 31.10.2007, they have pointed out that the loading and unloading work is not perennial in nature and they are engaged sporadically. They have further pointed out that they are not under the direct supervision and control of the establishment. The same loadmen working under many employers even on the same day. However, when an order was passed under Section 45-A of the Act on 18.01.2008, none of these objections raised by the establishment were considered. The impugned order states that the loading charges were paid to identifiable persons for the work done inside the factory and the loading and unloading charges are Rs.11,22,714/-.
32.The corporation has not taken into consideration whether the loading and unloading personnel were under the direct control and supervision of the establishment or not. The corporation has not considered the fact that the loadmen are engaged intermittently on time to time basis and on the same day and these loadmen are engaged by other employers also. Without considering the said facts, merely based on the names of some loadmen are entered into the records, the corporation 23/32 https://www.mhc.tn.gov.in/judis CMA(MD).No.1286 of 2016 has proceeded to hold them as employees under Section 2(9) of the E.S.I.Act.
33.The Hon'ble Supreme Court in the judgement reported in 1994 Supp(3) Supreme Court Case 567 (Employees' State Insruance Corporation Vs. Premier Clay Products) has categorically found that hiring of some casual coolie for loading and unloading which is sporadic nature would not attract the provisions of the Act. The Hon'ble Supreme Court had further found that the coolies were available for work to others and in fact on the very day, they are working for several others would clearly establish the fact that they are not even casual workmen warranting contribution to be paid by the management.
34. The Hon'ble Supreme Court in a judgement reported in (2010) 11 SCC 537 (The Managing Director, Hassan Co-operative Milk Producer's Society Union Ltd., Vs. The Assistant Regional Director, E.S.I.Corporation) held that merely because of the loading and unloading operations are taking place inside the premises and the loadmen are permitted to enter into the premises and they cannot be 24/32 https://www.mhc.tn.gov.in/judis CMA(MD).No.1286 of 2016 treated as employee of those persons on the premises of the factory or establishment. They further held that a mere exercise of some remote or indirect control over the activities or work of the loadmen is not sufficient to attract the definition (supervision of the principal employer ) The Hon'ble Supreme Court in the said judgement has further found that there is no agreement between the employer and the loadmen over the terms and conditions of the employment and hence, they cannot be treated as employees.
35..In such circumstances, even if the loading and unloading operations are incidental to the functioning of the factory, those loadmen cannot be covered by the definition of an 'employee'. The Hon'ble Bombay High Court in a judgement reported in Letters Patent Appeal No.39 of 1982 (Parle Bottling Company (Pvt) Ltd., Vs. Employees' State Insurance Corporation, Bombay) has held that merely because the employee of the establishment has recorded some names of a loadmen while disbursing the loading and unloading charges, the same is not sufficient to cover those loadmen as an employee. The staff of the establishment is recording the names only to protect himself and to 25/32 https://www.mhc.tn.gov.in/judis CMA(MD).No.1286 of 2016 substantiate their claim for the charges mentioned in the voucher. Therefore, merely on the ground that the names of some labourers are found in the records of the establishment, the said loadmen cannot be treated as an employee as contemplated under Section 2(9) of the Act. If the corporation had inspected the other factories or establishment in the same locality, they could have found the same persons in their ledgers/vouchers also, indicating the fact that some loadmen were engaged by other employers also.
36.The loadmen having not been directly engaged by the employer would not fall under Section 2(9)(i) of the Act. The main contention of the establishment that the loadmen come as gang along with the goods vehicle into the premises and they negotiate the loading and unloading charges, has not been disputed by the Corporation in their order. This Court can take judicial notice of the fact that the loadmen assemble in some prime location as a gang and they cling on to the goods vehicle from the said place to the destination namely the factory or establishment and compel the employer to engage the said loadmen on their own terms and conditions. Therefore, the employer can never be considered to be 26/32 https://www.mhc.tn.gov.in/judis CMA(MD).No.1286 of 2016 employing these loadmen either directly or through an immediate employer. When the loadmen were not employed either directly by the establishment or through an immediate employer but the loadmen on their own, enter into the premises and demand wages, this Court is of the view that Section 2(9)(ii) of the E.S.I Act is not attracted. The loadmen are not being employed by the establishment or immediate employer voluntarily. Though these facts have been placed in the counter/ objection filed by the establishment, they have not been answered and the order under Section 45-A of the Act has been passed merely on the fact that some names of the loadmen are reflected in the ledge/ voucher of the establishment.
37.In view of the above deliberations, this Court is in complete agreement with the findings to arrive at by the E.S.I.Court that the loading and unloading charges would not attract the contribution under E.S.I.Act.
38.As far as the payment of contribution towards the employee of the staff canteen are concerned, it is the specific case of the establishment that it is not a statutory canteen and the said canteen is not even 27/32 https://www.mhc.tn.gov.in/judis CMA(MD).No.1286 of 2016 incidental to the manufacturing process of the textile mill. But as per the findings of the corporation, the canteen is running for the benefit of the mill employees and therefore, the canteen/mess is part and parcel of the mill only.
39.The Hon'ble Supreme Court in the judgement reported in (1978) 4 SCC 204 (Royal Talkies, Hyderabad and others Vs. Employees State Insurance Corporation) while considering the case of a canteen in cinema theatre has proceeded to hold that though the canteen is not statutory in nature, but just incidental to the purpose of establishment. The Hon'ble Supreme Court has pointed out that the statute requires that the work should not be irrelevant to the purpose of the establishment. It is sufficient if it is incidental to it. A thing in incidental to another, if it merely appertains to something else is primary.
40.On the above said findings, the Hon'ble Supreme Court has proceeded to hold that running a canteen in the cinema theatre is incidental to the said purpose of the establishment and therefore, the staff of the said canteen would be covered under the E.S.I.Act. In the present 28/32 https://www.mhc.tn.gov.in/judis CMA(MD).No.1286 of 2016 case, though the staff canteen is not contemplated under the Industrial Disputes Act, it is certainly run for the benefit of the employees of the establishment and therefore, it is incidental to the purpose of the establishment as contemplated under Section 2(9)(ii) of the E.S.I.Act. Therefore, this Court is of the considered opinion that E.S.I.Court was not right in setting aside the order of the E.S.I.Corporation with regard to the payment of contribution relating to the staff of the canteen run by the establishment.
41.A sum of Rs.72,926/- has been demanded by the Corporation towards contribution arising out of contractors coolie. This Court has already arrived at a finding that the contractors coolie, there is no discussion whatsoever under order dated 18.01.2008 passed under Section 45-A of the E.S.I.Act. Similarly there is no discussion about the said issue under the head of contractors coolie in the order passed by the E.S.I.Court. It is submitted by the learned counsel appearing for the respondent that the contracts also reflects the payment made to contractors towards loading and unloading charges. 29/32 https://www.mhc.tn.gov.in/judis CMA(MD).No.1286 of 2016
42.In view of the judgement of the Hon'ble Supreme Court reported in (2010) 11 SCC 537 (Hassan Co-operative Milk Producer's Society Union Ltd., Vs. E.S.I.Corporation), there is nothing on record to show that the principal employer had any knowledge about the number of persons engaged by the contractors or their names or other details of such persons. There is no evidence that the establishment were aware of the amount payable to each of these workers. Even assuming that the amount paid to the contractors towards loading and unloading operations is incidental to the purpose of the factory, those charges could not be taken into consideration for calculating the contribution for want of any supervision and control over the said loadmen.
43.In view of the above said deliberations, the appeal filed by the E.S.I Corporation is allowed only to the extent of the payment of contribution towards employees of the staff canteen. In respect of other heads, the order of the E.S.I.Court stands confirmed. 30/32 https://www.mhc.tn.gov.in/judis CMA(MD).No.1286 of 2016
44.This Civil Miscellaneous Appeal is partly allowed to the extent as stated above. No costs.
18.04.2023
Index : Yes/No
Internet : Yes/No
NCC : Yes/No
msa
1.The Labour Court
Madurai
2.The Record Keeper,
Vernacular Section,
Madurai Bench of Madras High Court,
Madurai.
31/32
https://www.mhc.tn.gov.in/judis
CMA(MD).No.1286 of 2016
R.VIJAYAKUMAR,J.
msa
Pre-delivery Judgement made in
C.M.A(MD)No.1286 of 2016
18.04.2023
32/32
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