Delhi High Court
The Regional Director Employees State ... vs Capital Co-Operative Industries ... on 2 February, 2001
Equivalent citations: 2001IIIAD(DELHI)156, 90(2001)DLT792, 2001(57)DRJ840, [2001(89)FLR925], (2001)ILLJ1597DEL
Author: M.S.A. Siddiqui
Bench: M.S.A. Siddiqui
ORDER Khan, J.
1. Both these Appeals involving identical questions of law are being disposed of by this common order.
2. Appellant raised a demand against respondent No.1 for contribution under Employees' State Insurance Act. Respondent No.1 resisted this by filing a Civil Writ petition for quashment of the demand on the ground that its members did not fall within the definition of "Employees" under Section 2(9) of the Act. The Writ Court formulated the question whether members of the producers Co-operative Society could be treated as "Employees" under the Act and after elaborate analysis and discussion of the relevant provisions of the Act and the Bye-laws of the society answered it in the negative. While doing so it concluded that they were neither employed, nor did they receive any wages and nor did the relationship of employer and employee existed between the Society and them.
3. Appellant feels aggrieved of this and has filed these appeals. Its counsel Mr. N.S. Bajwa submitted once the members of the Society were engaged in a commercial venture in an organized manner and were admittedly on probation that by itself prove that they were employees of the society attracting provisions of ESIA in the process. No other factor was pressed in service to show that these members were employed by someone and were paid any wages or that any relationship of an employer and employee existed between them and the society.
4. We could have dismissed the Appeal by adopting the reasoning of the Writ Court, but we thought it better to deal with Mr. Bajwa's submissions. Ld.Counsel seems to be labouring under the impression that anyone engaged in a commercial activity and being on probation for whatever assumes the status of "Employee" in terms of Section 2(9) of the Act. By that logic, anyone doing business or commerce or on probation, be that for enrollment in a society or association would have to be regarded as a an "employee" dehors requirements of the provisions of Sec.2(9) which provide for his being employed for wages.
5. We find it difficult to accept this theory for the simple reason that Section 2(9) of the Act neither talks of engagement in commercial activity nor probation. The provision has its own requirements which have to be satisfied while determining the status of a person as employee.
6. Viewed thus, it becomes unnecessary to undertake a fresh survey of relevant provisions all over again for this purpose. Suiffice it to say that a probation only implies a process or a period of testing the conduct, character, ability and performance of a person in a certain role not necessarily connected with or referable to employment. It only connoots a period for which he is under watch and trial so to say for assessment of his suitability and awaits a formal recruitment/appointment. Therefore, merely because bye-laws of a society provide for probation of a member before his formal enrolment would not make such member an employee. Nor would the enrolled members engagement in commercial activity confer such status on him.
7. We accordingly hold that members of the Producers' Co-operative Society are not 'employees' within the meaning of Sec.2(9) of ESI, merely because their Society was engaged in any organized business or because the Bye-Laws of Society required them to be on probation before their formal enrollment as members. Respondent Society is consequently not liable to make any contribution under the Act and any demand raised against is incompetent and without justification.
8. We accordingly affirm the impugned judgment by adopoting its reasoning to dismiss these Appeals.