Delhi District Court
M/S Trehun Sons vs Esic Through Deputy Director Sro ... on 1 April, 2026
In the Court of SCJ-cum-RC, (West District)
Tis Hazari Courts, Delhi.
Presided by : Ms. Richa Sharma
ESIC 5/22
CNR No. DLWT-03-002629-2022
Trehun Sons,
Through its proprietor CDR K.K. Trehun
WZ-442, Madipur,
New Delhi-110063 ..........Petitioner
Vs
1. Employees State Insurance Corporation
ESIC Regional Office, Delhi
3rd and 4th Floor, Rajendra Bhawan, Rajendra Place,
New Delhi-110008 ..........Respondent
2. Shri Ved Singh,
WZ-219/C, Madipur Village,
New Delhi-110063 ........Proforma of Party
3. Smt. Bimla,
WZ-232-A, Madipur Village,
New Delhi-110063 ........Proforma of Party
4. Shri Rajdhar Mishra
WZ-771 Palam Village,
Near-Shiv Mandir,
New Delhi-110045 ........Proforma of Party
5. Shri Sushil Kumar Yadav
WZ-509, 3rd Floor Madi Pur Village,
New Delhi-110063 ........Proforma of Party
6. Shri Nagar Pramanick
H. No. 1054/4, Gali No. 5,
Shankar Garden, Bahadurgarh, Haryana-124507 .......Proforma of Party
Digitally signed
RICHA
by RICHA
SHARMA Date of institution: 23.07.2012
Date:
SHARMA 2026.04.01
16:13:25
Date of judgment: 01.04.2026
+0530
ESIC 5/22 M/s Trehun Sons Vs ESIC Through Deputy Director SRO (north) Page No. 1 /35
JUDGMENT
1. Vide order dated 25.08.2022 passed by the Hon'ble High Court of Delhi, the present matter was remanded back to this court for fresh adjudication. Thereafter the Ld. Predecessor of this court in compliance with the order of the Hon'ble High Court of Delhi, allowed the application under Order 1 Rule 10 CPC filed on behalf of the petitioner for impleading of 5 workers as performa of party. Thereafter apart from the other witnesses that stood examined, these five witnesses were examined in chief and cross examined on oath.
2. Perusal of the record shows, that in the present petition an order of dismissal was passed by the Ld. Predecessor of this court vide order dated 03.11.2020. Aggrieved by the said order, the petitioner went to the Hon'ble High Court of Delhi, whereby the order of the Ld. Predecessor of this Court was set aside and the matter was remanded back to this Court with directions to be tried afresh.
3. In this backdrop, this Court now proceeds to adjudicate the present petition on merits and wherein the petitioner has prayed that the establishment was never coverable under the provisions of the ESI Act as it always had less than 20 employees in the said firm.
Brief facts of the present petition
4. The petitioner is a proprietorship concern running under the name and style of M/s Trehun Sons and has been engaged in LPG distributorship of Hindustan Petroleum Corporation Limited since the year 1998. It is the ESIC 5/22 Digitally M/s Trehun Sons Vs ESIC Through Deputy Director SRO (north) Page No. 2 /35 signed by RICHA RICHA SHARMA SHARMA Date:
2026.04.01 16:13:29 +0530 case of the petitioner, that his establishment was never coverable under the provisions of the Employees State Insurance Act, 1948, as the number of employees employed by him never reached the statutory threshold of 20 employees at any given point of time.
5. It is stated by the petitioner, that in December 2002, the petitioner had only two regular employees, who were voluntarily covered under the provisions of the Employees Provident Fund Act. Other persons such as trainees, transport/delivery contractors, and one sweeper were not regular employees and were not directly employed by the petitioner. It is further stated, that in the year 2010, on the basis of an anonymous complaint, officials of the ESI Department conducted an inspection of the petitioner's establishment and all relevant records were produced before the officials of the ESI department.
6. It is averred, that the petitioner addressed several communications to the respondent department clarifying, that he had never applied for ESI registration and that his establishment was not coverable under the Act. Despite this, a show cause notice was issued dated 20.07.2011. Subsequently, an order dated 17.01.2012 was passed under Section 45A of the ESI Act, directing the petitioner to deposit a sum of Rs. 4,79,050/- within 15 days from the date of the order.
7. Aggrieved by the said order, the petitioner preferred an appeal before the Appellate Authority and deposited 25% of the said amount as required. However, the appeal was dismissed vide order dated 05.07.2012.
Reply to the present petition.
Digitally signed by RICHA SHARMA RICHA Date:
SHARMA 2026.04.01
16:13:34
+0530
ESIC 5/22 M/s Trehun Sons Vs ESIC Through Deputy Director SRO (north) Page No. 3 /35
8. In reply, the respondent has averred that the present petition is not maintainable as the petitioner has failed to implead the concerned employees or their trade union as necessary parties. Reliance has been placed upon the judgment of the Hon'ble Supreme Court holding that in proceedings under Section 75 of the ESI Act, employees are required to be impleaded in a representative capacity.
9. It is further contended, that the ESI Act is a beneficial social welfare legislation enacted to provide social security benefits to employees, and the Corporation is merely a statutory body entrusted with its implementation. It is also contended, that the petitioner has failed to deposit the statutory pre-condition amount (as required under law), and therefore the petition is liable to be dismissed on this ground alone.
Replication filed by the petitioner
10. Replication has been filed by the petitioner to the reply of the respondent, whereby he has reiterated the facts present in the plaint.
EVIDENCE LED BY THE PETITIONER
11. In order to prove his case, plaintiff examined its proprietor as PW-3, who tendered his evidence by way of affidavit i.e. Ex.PW-3/A. He relied upon the following documents:-
1. Covering letter dated 05.07.2012 sent by ESIC as Ex. PW-3/1
2. Judgment dated 05.07.2012 in Appeal M/s Trehun Sons under 45AA of ESI Act 1948 as Ex. PW-3/2(colly running into 7 pages).
12. Petitioner further examined summoned witnesses i.e. PW-1, 2, 4, 5, 6, 7, 8 and 9. All the witnesses were cross-examined at length by the Ld. ESIC 5/22 M/s Trehun Sons Vs ESIC Through Deputy Director SRO (north) Digitally signed Page No. 4 /35 by RICHA SHARMA RICHA Date:
SHARMA 2026.04.01
16:13:38
+0530
Counsel for the respondent. Thereafter, the petitioner evidence was closed vide order dated 17.04.2025.
EVIDENCE LED BY THE RESPONDENT
13. Thereafter, matter was listed for respondent's evidence, but it is submitted by the Ld. Counsel for the respondent, that they do not wish to lead RE and therefore in view of the submissions made by the Ld. Counsel for the respondent, RE stands closed by the order of the court dated 15.05.2025.
14. Thereafter, the matter was listed for final arguments and pursuant to that, written submissions had filed on behalf of the both the parties.
15. I have heard the final arguments advanced by both the stakeholders at length and have gone through the record carefully.
MY FINDINGS ARE AS UNDER :-
16. Before adverting to the merits of the controversy, it is necessary to deal with the preliminary objection raised by the respondent regarding non- joinder of necessary parties. The record reflects, that pursuant to the directions of the Hon'ble High Court of Delhi, the Ld. Predecessor of this Court allowed the application under Order 1 Rule 10 CPC and five workers were impleaded as proforma parties. The said objection, therefore no longer survives for consideration.
17. In the case in hand, before delving into the assertions of the petitioner and the claim so made, in the considered opinion of this court it is apposite to note, that to address the principal objection taken by the respondent to the ESIC 5/22 M/s Trehun Sons Vs ESIC Through Deputy Director SRO (north) Page No. 5 /35 Digitally signed by RICHA SHARMA RICHA Date:
SHARMA 2026.04.01
16:13:43
+0530
claim of the petitioner, whereby it stands asserted, that as per the inspection report dated 22.07.2010 and the same exhibited as Ex. PW-1/23, the petitioner itself had given the name of 20 employees to the EPFO on 30.12.2012 for registration and the same exhibited as Ex. PW-9/1(colly), thereby indicating that the unit of petitioner was coverable under ESI Act as 20 or more employees working with the petitioner, it is imperative to deliberate into the relevant provisions of Employees' Provident Funds And Miscellaneous Provisions Act, 1952, state that:
Section 1 subsection 3 subject to the provisions contained in section 16, it applies-
(a) to every establishment which is a factory engaged in any industry specified in Schedule I and in which [twenty] or more persons are employed and,
(b) to any other establishment employing [twenty] or more person or class of such establishments which the Central Government may, by notification in the official Gazette, specify in this behalf.
Subsection 4: notwithstanding anything contained in subsection 3 of this section or subsection 1 of the section 16, where it appears to the Central Provident Fund Commissioner, whether on an application made to him in this behalf or otherwise, that that the employer and the majority of employees in relation to any establishment have agreed that the provisions of this Act should be RICHA SHARMA made applicable to the establishment on and from Digitally signed by RICHA SHARMA Date: 2026.04.01 the date of such agreement or from any subsequent 16:13:48 +0530 ESIC 5/22 M/s Trehun Sons Vs ESIC Through Deputy Director SRO (north) Page No. 6 /35 date specified in such agreement.
18. Thus, from the above provisions it stands clear, that the tenets of the Act is applicable to any industry/ unit thereby 20 or more persons are employed as entailed in the sections reproduced as above and further the employer and the majority of the employees in relation to any establishment can agree among themselves to have the present act applicable to them. However, the applicability of this act is distinct from the applicability of the ESI Act. The same is applicable to coverable employees and this aspect is detailed as under.
As per ESIC Revenue Manual in Chapter II:
Prior to the amendment from 1st June 2010, the definition was as follows.
(b) Whereon twenty or more persons are employed or were employed for wages on any day of the preceding twelve months and in any part of which a manufacturing process is being carried on without the aid of power or is ordinarily so carried on.
Based on the supreme Court Judgment dated 28.10.1998 in the case of ESIC Vs M.M. Suri & Associates Pvt. Ltd. New Delhi it was decided by the Corporation to consider only 'Coverable employees under section 2(9) for coverage of Factory or Establishment. This decision is applicable from 28-10-1998 i.e. the date of judgment of the Supreme Court.
RICHA SHARMA In view of this decision the word 'persons' Digitally signed by RICHA SHARMA Date: 2026.04.01 16:13:53 +0530 appearing in the definition was understood as ESIC 5/22 M/s Trehun Sons Vs ESIC Through Deputy Director SRO (north) Page No. 7 /35 "Coverable employees" till the amendment of this definition with effect from 1st June, 2010. The wage limit to be prescribed by the Central Government under Section 2(9)(b) of the Act for the purpose of coverage as an employee is fixed under Rule 50 of the ESI (central) rules, 1950 and this limit:
From 1st Jan, 1997 to 31st March 2004 Rs. 6,500/- a month From 1st April 2004 to 30th Sept. 2006 Rs. 7,500/- a month From 1st October 2006 to 30th April 2010, Rs. 10,000/- a month; and From 01.05.2010 onwards Rs. 15,000/- a month.
19. Now, as per the memorandum dated 06.11.2000, vide office letter no.
P-11/13/97-Ins.IV, it stands clarified as to what all payments fall within the definition of wages in order to entail any contribution being payable under the ESI Act. Some of the examples are- payments made to Rikshaw Pullers, Hathrairy pullers and Truck operators, Hamals/culloies employed at a particular time and commissions made to dealers/agents, payments made to labour consultant, lawyers, engineers, counsels, chartered accountant per se do not constitute wage as per the provisions of ESI Act and accordingly no contribution is payable. This aspect stands explained in detail as under:
Digitally signed by RICHA Payment made to Rickshaw Pullers, Hathrairy RICHA SHARMA SHARMA Date:
2026.04.01 16:13:58 pullers and truck operators (including loading & +0530 ESIC 5/22 M/s Trehun Sons Vs ESIC Through Deputy Director SRO (north) Page No. 8 /35 unloading charges when the loaders/unloaders are the employees of the truck operators: Rickshaw pullers, Hathrairy pullers and Truck Operators ( who bring labour with them) no contribution is payable on the amount paid by the employer if the amount paid is lumpsum amount including loading/unloading charges and no separate wages are paid by the employer. Similar view was held by Bombay Division Bench in 1990 in the case of Raisaheb Tekchand Mohate Mills Vs R.D. ESIC HAMALS/COOLIES EMPLOYED AT A PARTICULAR TIME Where Hamals & Coolies are employed at a particular place and a particular time, outside the premises of the factory/establishment to perform a specific job on the spot in such cases no contribution is payable on the amount paid to the coolies and hamals for services rendered within the premises of the employer.
Bombay High Court in the case of Parley Bottling Co. Ltd Vs ESIC Bombay 1989 and Supreme Court in the case of ESIC Vs Premier Clay Products have held this view.
COMMISSION TO DEALERS/AGENTS:
Where dealers/agents are appointed by the employers but no regular wages are paid and it is Digitally signed by RICHA RICHA SHARMA not obligatory on the part of such dealers/agents to SHARMA Date:
attend to the factories/establishments and they are 2026.04.01 16:14:02 +0530 ESIC 5/22 M/s Trehun Sons Vs ESIC Through Deputy Director SRO (north) Page No. 9 /35 paid commission only on the quantum of sales, in such cases the amount paid by the employer as commission/dealership does not constitute wage under Section 2(22) of the ESI Act and hence no contribution is payable.
PAYMENT MADE TO LABOUR
CONSULTANTS, LAWYERS, ENGINEERS,
COUNSELS, CHARTERED ACCOUNTANTS:
The amount paid by the employer to labour consultants, lawyers, engineers, counsels, chartered accountants does not constitute wage as per provision under Section 2(22) of the ESI Act and hence no contribution is payable.
20. Thus, in order to qualify as an employee under the ESI Act, a person should be employed for wages as a coverable employee and primarily employment of any person either on commission basis or on payment made to Rikshaw Puller and Truck Operator including loading and unloading charges are not to be covered within the category of employees being covered under the ESI Act as such Rikshaw Puller are the employees of Truck Operators. Further the commission agents and the dealers are also not covered within the category of employees under the ESI Act and this fact duly stands upheld by the Supreme Court in the judgments as under:
In the case titled as ESIC Vs M.M. Suri & Associates (P) Ltd. it was held that:
RICHA SHARMA "..... this definition of "factory" was changed and Digitally signed by RICHA SHARMA at the relevant time, it was substituted by the Date: 2026.04.01 16:14:07 +0530 ESIC 5/22 M/s Trehun Sons Vs ESIC Through Deputy Director SRO (north) Page No. 10 /35 words "employed for wages". When the word "wages" is specifically introduced in the section, it can only mean to have reference to what "wages" mean in Section 2(22) of the Act. It cannot be given any other meaning. Therefore, the Act would apply to an establishment only when the number of employee contained in Section 2(9) of the Act. There is conflict of decisions of the High Courts. One view is that for an Act to be applicable to an establishment, the total number of employees should be 20 or more (now it is 10 or more) irrespective of the fact whether all the employees fall within the definition of "employee" as given in Section 2(9) meaning thereby that drawing of any amount of wages is immaterial. The other view is that these 20 or more persons should be those who fall within the definition of "employee" as given in Section 2(9) of the Act getting wages as prescribed therein. As to what "wages" means has also been defined. The second view commends to us. It was submitted that if there are 18 employees drawing the amount of wages prescribed and only two or more are drawing more than that, the Act should be applicable as in any case this is beneficial legislation. Reliance has been placed on a Division Bench decision of the Andhra Pradesh High Court in A.P. SEB v. ESI Corpn. where the High Court RICHA SHARMA said that the expression "wages" used under Digitally signed by RICHA SHARMA Section 2 (12) must be understood in a wider sense Date: 2026.04.01 16:14:11 +0530 ESIC 5/22 M/s Trehun Sons Vs ESIC Through Deputy Director SRO (north) Page No. 11 /35 as meaning any remuneration paid to any person who is employed in the factory and cannot be restricted only to remuneration paid to the employees, who come within the definition of Section 2(9). Section 2(12), no doubt, uses the words "persons are employed or were employed for wages". Stress was, therefore, on the word "persons" and it is submitted that for the Act to be applicable, the only criterion is to see if the establishment has 20 or more persons in its employment. This interpretation ignores the fact of wages as defined in Section 2(22). If we refer to the definition of "factory" when the Act came into force or at least till 1968 when the Act was amended by Amending Act 44 of 1966, "factory" meant any premises "wherein 20 or more persons are working". This definition of "factory" was changed and at the relevant time, it was substituted by the words "employed for wages". The exact amendment we have already noticed above. When the word "wages" is specifically introduced in the section, it can only mean to have reference to what "wages" mean in Section 2(22) of the Act. It cannot be given any other meaning as has been done by the Andhra Pradesh High Court. In our view, therefore, the Act would apply to an establishment only when the number of employees RICHA SHARMA is 20 or more and all those employees answer the Digitally signed by RICHA SHARMA Date: 2026.04.01 description of employee contained in Section 2(9) 16:14:15 +0530 ESIC 5/22 M/s Trehun Sons Vs ESIC Through Deputy Director SRO (north) Page No. 12 /35 of the Act.
In ESI Corp. Vs Apex Engineering (P) Ltd. there was challenge to the judgment of the Bombay High Court holding that the managing director of the respondent company was not an employee within the meaning of Section 2(9) of the Act and since the number be covered under the Act as it would be outside the definition of "factory" under Section 2 (12) of the Act. This Court, after examining the provisions of Section 2(9) of the Act, said:
"A mere look at the aforesaid provision shows, that before a person can be said to be an employee the following characteristics must exist qua his service conditions-
1) He should be employed for wages. This would presuppose relationship between him as employee on the one hand and the independent employer on the other;
2) such employment must be in connection with the work of the factory or establishment to which the Act applies;
In the present case, there is no dispute that as per the notification in question, the establishment of the respondent is a shop and the number of employees falling within the definition of Section 2(9) of the Act is less than 20. We, therefore, RICHA SHARMA uphold the impugned judgment of the High Court that since in the establishment of the respondent, Digitally signed by RICHA SHARMA Date: 2026.04.01 16:14:20 +0530 ESIC 5/22 M/s Trehun Sons Vs ESIC Through Deputy Director SRO (north) Page No. 13 /35 the employees number less than 20, the notification dated 30.09.1988 extending the Act to the establishment of the respondent is not applicable.
Therefore, the appeal is accordingly dismissed. There shall, however, be no order as to costs. In case titled as EMKO KCP Ltd Vs ESIC it was held:
"7. Learned counsel for the appellant relied on the decision of the Bombay High Court in the case of Sbi General Insurance Company vs. Employees State Insurance, in W.P.(L) No.7264 of 2020 and the judgment of High Court of Karnataka in the case of The Assistant Director ESI https://www.mhc.tn.gov.in/judis Corporation rep by Deputy Director vs. M/s. Vasu Agarbatthis, 2018 SCC Online Kar 1740, wherein both the Courts have clearly held that in respect of commission agents, contribution does not stand attracted.
11.A careful reading of the Sec.2(22) of the Employees' State Insurance Act, 1948 clearly indicates that third party agents could not be treated as employees and amounts paid to them would not fall under the definition of 'wages' under the Act. Infact, the Court below also rightly came to the conclusion that the respondent cannot call RICHA SHARMA upon the appellant to pay contribution for persons Digitally signed by RICHA SHARMA who act as agents and claim commission and Date: 2026.04.01 16:14:24 +0530 ESIC 5/22 M/s Trehun Sons Vs ESIC Through Deputy Director SRO (north) Page No. 14 /35 service charges.
12. Therefore, in the light of such finding, it was not proper on the part of the Labour Court to remand the matter back to the respondent/Corporation merely because certain documents were made available only before the Labour Court and that if such documents had been produced before the respondent/Corporation, then the respondent/Corporation would have been in a better position to arrive at a https://www.mhc.tn.gov.in/judis proper conclusion. This finding of the Labour Court is therefore liable to be set aside, especially considering the fact that even if the additional documents are allowed to be considered by the respondent/Corporation, nothing would turn on such documents because the very liability of the employer i.e., the appellant herein to pay contribution for the persons who acted as sales and commission agents does not arise in the first place."
In the case title as SBI General Insurance Company Ltd. Vs ESIC and Anr. It was held that:
2. ".......Learned Senior Advocate submitted that authority has fastened the liability of paying ESI contribution on the petitioners in respect of RICHA surveyors and insurance agents etc. It is his SHARMA submission that these surveyors/insurance agents Digitally signed by RICHA SHARMA Date: 2026.04.01 etc. Are not in the employement of the petitioners 16:14:28 +0530 ESIC 5/22 M/s Trehun Sons Vs ESIC Through Deputy Director SRO (north) Page No. 15 /35 and they are working as commission agents for specified service. Learned senior advocate submits that the said surveyors, insurance companies agents are rendering services are not restricted to the petitioners. There is no employer-employee relationship according to him.
3. Learned Senior counsel invited my attention to the detailed submissions made by the petitioner to the show cause notice which is at Exhibit 'C' in his submission, the corporation itself issued a circular/order which is available on the website of the corporation stating that commission paid is not 'wage' as defined under Section 2(22) of the Act.
He submits that the claim is contrary to the corporation's own circular."
6. However, though the specific contention was raised by the petitioners in their written submission that the corporation itself has issued a circular/order stating that commission paid is not the 'wage' under Section 2(22) of the said Act, the said circular does not appear to have been considered. The corporation does not deny that such a circular/order is in existence. In the said circular/order, it has been provided that where dealers/agents are appointed by employers but no regular wages are paid and it is not obligatory on RICHA the part of the such dealers/agents to attend to the SHARMA factories/establishments and they are paid Digitally signed commission only on the quantum of the sales, i by RICHA SHARMA Date: 2026.04.01 16:14:32 +0530 ESIC 5/22 M/s Trehun Sons Vs ESIC Through Deputy Director SRO (north) Page No. 16 /35 such cases, the amount paid by the employer as commission/dealership does not constitute 'wage' under Section 2(22) of the ESI Act and hence, no contribution is payable.
The circular provides payment made to Labour consultants, lawyers, enginers, counsels, chartered accountants does not constitute 'wage' as per the provisions of Section 2(22) of the said Act. Hence, no contribution is payable. In fact, said circular/order goes on to say that what items will form the part of wage both under section 2(9).
7. In this view of the matter, I find substance in the contention of Ld. Senior Advocate that the said circular has not been considered by the authority. The impugned orders call for interference and are accordingly set aside.
In the case titled as The Assistant Director ESI Corporation Vs. M/S Vasu Agarbatthis; it was held that this appeal is filed by the corporation against the order dated 07.09.2012 passed in ESI Application no. 6/2018 on the file of the presiding officer, Industrial Tribundal, Masore allowing the applicaiton filed by the respondent and setting aside the order dated 28.02.2008 holding that amount paid towards outside job work, security charges and commission, no contribution is RICHA payable.
SHARMA Digitally signed by
3. The appellant claimed contribution on RICHA SHARMA Date: 2026.04.01 16:14:37 +0530 commission paid to field force. The respondent has ESIC 5/22 M/s Trehun Sons Vs ESIC Through Deputy Director SRO (north) Page No. 17 /35 engaged commission agents and paying commission only based on the performance of the said field force who is working on commission basis, so they are agents of the products of the respondent's factory. They are not drawing salary and they were not on the roles of the respondent's factory. Thus, the respondent contended that he is not liable to pay the contribution as claimed by the appellant.
6. The ESIC Court placed reliance on the decision in JHARKHAND Bihar Rubber Company ltd. Vs. ESIC, Patna, reported in 2008 LLR 64, where it is held as follow: "A company manufacturing rainwears and air pillows and covered under the ESI Act outsourcing various jobs on piece- rate basis to other units will not be liable for payment of ESIC contribution for such job work done by other establishment the work of which is neither supervised nor controlled by the Company in view of the Supreme Court Judgment, the demand as raised by the ESI Authorities being misconceived, hence liable to be quashed".
9. It is further case of the respondent that respondent engaged commission agents and paying commission based on their performance. So they are agents of the products of the RICHA respondent. They are not drawing salary not liable SHARMA to pay contribution to commission paid to the said Digitally signed by RICHA SHARMA agents. The appellant could not make out any Date: 2026.04.01 16:14:42 +0530 ESIC 5/22 M/s Trehun Sons Vs ESIC Through Deputy Director SRO (north) Page No. 18 /35 contra case. RW1 admitted that agents names are not shown in the attendance register but only amount paid to them is shown. Commission paid is not covered in the definition of wages for these reasons, the ESI Court has held that the respondent is not liable to pay contribution on work got through outsource, amount paid to security guards and commission paid to the agents."
In the case titled as ESIC Vs. Cheeran's Auto Agencies: it was held that two persons, Muraleedharan and Narayanakutty are not employees but they are only trainees. One among the trainees has been examined and he has deposed that he is only a trainee and also that the establishment has got another trainee. This information has been accepted by Court and the Court held that assuming that there are 21 persons, even then there are only 19 persons are employees in the establishment as so the provisions of the employees' state Insurance Act are not applicable. The question whether the two persons are employed or not is a question which has to be decided on assessment of facts and it is a question of fact. The insurance court has given sufficient reason to hold that the two persons are trainees. If RICHA that finding is correct, what has been done by the SHARMA Digitally signed Employees' Insurance Court is perfectly legal and by RICHA SHARMA Date: 2026.04.01 valid.
16:14:46 +0530 ESIC 5/22 M/s Trehun Sons Vs ESIC Through Deputy Director SRO (north) Page No. 19 /35
21. In the backdrop of the above judgments and the law being settled via them, this court hereby proceeds with the evaluation of the testimony of each witnesses that stands examined one by one.
22. To begin with, PW-4 Ms. Bimla, categorically deposed in her examination in chief, that she had been doing job with the MCD since 1988 as safai karamchari, meaning thereby, that she was employed as a regular employ with the MCD and which leads to the logical inference, that once a witness or an employee stands regularly employed with the MCD then such witness can most certainly not be employed under ESIC scheme. The witness has further submitted, that she use to visit the petitioner premises once or twice a week for cleaning their office room as a kind gesture and in reward the petitioner and the staff so employed with the petitioner used to help her with her banking work. She further contended, that she was never employed with the petitioner at any point of time. The relevant excerpts of her cross examination to this effect are reproduced as under:-
"I had been doing job in MCD since 1988 as Safar Karamchari. I visited the petitioner's premises once or twice a week for cleaning their room office for a very few minutes as a gesture (bhaibandi) because the proprietor of the firm/staff helped me for my banking work which is near to the petitioner office. I was not employed with the RICHA petitioner at any point of time. At present, I am SHARMA getting pension from the MCD department since Digitally signed by RICHA SHARMA Date: 2026.04.01 my date of retirement and doing nothing since 16:14:50 +0530 ESIC 5/22 M/s Trehun Sons Vs ESIC Through Deputy Director SRO (north) Page No. 20 /35 after my retirement."
23. Further in her cross examination she stated, that she was never an employee of the petitioner's firm and she never got any salary from the petitioner. The petitioner used to pay 5-10 Rs a week and as per this deposition also, by no stretch of imagination PW-4 can be perceived to be falling wthin the wage limit of Rs. 1600/- that was decided per month from the period runnning from 27th June 1985 to 31st March 1992. The relevant excerpts of her cross to this effect are reproduced as under:-
" I was not employee of the petitioner firm and never get any salary from the petitioner. The petitioner used to pay Rs. 5- Rs. 10 in a week whenever I went there for sweeping the office. It is incorrect to suggest that I was employee of the petitioner firm and also got the salary from the petitioner."
24. Thus, from the entire cross examination of PW-4, it categorically stands deduced, that PW-4 was never employeed with the petitioner in accordance with the provisions entailed under the ESIC Act and therefore it stands transpired, that there was no employer and employee relationship between Bimla and the petitioner and that she cannot be considered as an employee for the purpose of 20 or more coverable employees as per the provision of ESI Act.
25. Moving further PW-5 i.e. Sh. Ved Singh, stated in his examination in chief, that he was working as a clerk in the petitioner establishment from RICHA SHARMA 2002 till his superannuation i.e. in 2017. He further stated, that during the Digitally signed period running from 2002- 2017, there were only 3-4 regular employees by RICHA SHARMA Date: 2026.04.01 16:14:55 +0530 ESIC 5/22 M/s Trehun Sons Vs ESIC Through Deputy Director SRO (north) Page No. 21 /35 that were working in the office of the petitioner, including the godown keeper. He further clarified, that the delivery boys were engaged on commission basis and they were treated as freelancers and were free to undertake work for other gas agencies and no attendance register was maintained in respect of them. Therefore, nothing material could be elicited in his cross-examination to discredit his testimony on this aspect. The relevant excerpts of his cross to this effect are reproduced as under:-
"In the year 2002 to 2017, there were only 3 to 4 employees working namely Satish Sahani (who is already expired), Rajeev Tiwari (who has also expired) in the office of the petitioner firm which include the godown keeper. There were some delivery boys in the penal of 8-12 engaged as freelancer. Out of these 8-12 delivery boys, only 4 to 6 engaged for delivery of gas cylinder on commission basis. These delivery boys are free to work anywhere else during the day as they have a independent contract and are self employed. These delivery boys/contractor also engaged in other gas agencies in the vicinity as well as are doing job for third persons as their will and wish. They are not bound to do the petitioner's job only."
26. Further, PW-6 i.e. Sh. Rajdhar Mishra, stated in his examination in chief, that he was engaged as a delivery boy on commission basis and was paid RICHA SHARMA on the basis of the number of cylinders delivered. He specifically stated, that there were no fixed working hours, no appointment letter was issued, Digitally signed by RICHA SHARMA Date: 2026.04.01 16:14:59 and he was at liberty to work with other establishments without seeking +0530 ESIC 5/22 M/s Trehun Sons Vs ESIC Through Deputy Director SRO (north) Page No. 22 /35 permission from the petitioner. His testimony also remained consistent in cross-examination. PW-6 further stated in his cross examination, that he was getting paid on daily basis in cash at the end of the day. The relevant excerpts of his cross to this effect are reproduced as under:-
"I was engaged withh the petitioner's firm as delivery boy. I used to work with the petitioner firm on a commission basis for delivery of gas cylinders on and off. I used to get payment on a daily basis depending upon delivery of gas culilnders on a particular day. I used to deliver the gas cyulinders on my cycle. I was also engaged and working for other gas agencies in the vicinity and whenever I got any job on any day, I do the same without permission from the petitioner as I and other delivery boys were working as a freelancers. I used to be paid on daily basis in cash at the end of the day."
Thus, from the testimony of PW-6, it again stands deduced, that he was not a permanent employer and as per his own version was working on commission basis as and when he was required to deliver the cylinders and accordingly the payment made to him was not failing in the category of Section 2(22) of ESI Act.
27. PW-7 namely Sh. Nagar Pramanick, stated in his examination in chief, that he was working on commission basis, initially delivering cylinders RICHA on cycle and later on his own auto-rickshaw. He admitted, that there were SHARMA no fixed timings prescribed by the petitioner and that payment was Digitally signed by RICHA SHARMA Date: 2026.04.01 calculated on per-cylinder basis and paid cumulatively at the end of the 16:15:04 +0530 ESIC 5/22 M/s Trehun Sons Vs ESIC Through Deputy Director SRO (north) Page No. 23 /35 month. He also affirmed that he undertook part-time work elsewhere. The relevant excerpts of his cross to this effect are reproduced as under:-
"I was engaged with the petitioner's firm as delivery boy. I used to work with the petitioner firm on a commission basis for delivery of gas cyulinders on and off. I used to get payment on a daily basis depending upon delivery of gas cylinders on a particular day. I used to deliver the gas cyulinders on my auto-rickshaw."
Thus, the absence of fixed service conditions or exclusive engagement is evident from his deposition, thereby the resulting into the logical and legal inference that he was not the permanent employee with the petitioner and thereby not covered under the ESI Act.
28. PW-8 namely Sh. Sushil Kumar, likewise deposed in his examination in chief, that he worked only on and off as a delivery boy between 2002 to 2005 and was paid on commission basis, had no fixed working hours, and was free to work for other establishments. He also stated, that no identity card was issued to him and he was strictly engaged only for delivery work. The relevant excerpts of his cross to this effect are reproduced as under:-
" I was engaged with the petitioer's firm as delivery boy from 2002 till 2005 only and that too I worked on and off. I used to work with the petitioner firm on a commission basis for delivery Digitally signed by RICHA of gas cylinders on and off. I used to ge payment RICHA SHARMA SHARMA Date:
2026.04.01 16:15:09 +0530 on a daily basis depending uponn delivery of gas ESIC 5/22 M/s Trehun Sons Vs ESIC Through Deputy Director SRO (north) Page No. 24 /35 cylinders on a particular day.
No ID card was issued by the petitioner firm to me."
29. PW-9, Sh. Vikas Chaudhary, Senior Social Security Assistant from the EPFO, produced the summoned record exhibited as Ex. PW-9/1 (colly). As per the said record, the petitioner establishment was covered under PF scheme under Section 1(4) of the EPF & MP Act, 1952 on a voluntary basis. He stated, that at the time of coverage, the establishment had four regular employees and sixteen persons engaged on commission basis for delivery work. He further stated, that compulsory coverage under the EPF Act requires twenty regular employees and since the petitioner was employing less than twenty regular employees, the coverage was granted voluntarily. Though in cross-examination PW-9 stated, that he had not been specifically authorized to depose on behalf of the department and had appeared only to produce the summoned record, the authenticity of the official record Ex. PW-9/1(colly) was neither disputed nor rebutted. The documentary record thus corroborates the consistent stand of the petitioner and the witnesses, that the establishment did not employe twenty regular salaried employees at any point of time.
30. The evidence of PW-9, being supported by official records, lends further credence to the oral testimonies of PW-5 to PW-8 and reinforces the position, that the delivery personnel were engaged on commission basis RICHA and were not regular employees for the purpose of statutory coverage. SHARMA From the consistent depositions of these witnesses, it clearly emerges, Digitally signed by RICHA SHARMA Date: 2026.04.01 that the delivery boys were not engaged as regular salaried employees but 16:15:13 +0530 ESIC 5/22 M/s Trehun Sons Vs ESIC Through Deputy Director SRO (north) Page No. 25 /35 were independent commission-based workers without fixed service conditions, attendance requirements, or exclusive control of the petitioner.
31. At this stage court deems it fit to place reliance on the judgment of Hon'ble High Court of Delhi in the case titled as Anokhe Lal Vs Govt. of NCT of Delhi and Another, it was held that:
2. The facts leading to the filing of the instant petition are as follows:
a) It has been stated by the petitioner that he was working with a gas agency, i.e. M/s Gaur Enterprises, respondent no. 2 herein, since the year 1988 as a 'storekeeper/delivery man' on a last drawn salary of Rs. 2,100/- per month
43. This Court has perused the lower Court record, wherein as per the affidavit of the petitioner, Ex.
WW1/A, it is inferred that the petitioner testified himself to be employed with the respondent no. 2 as a 'storekeeper' since the year 1988, whereas, contrary to the said statement, the petitioner distinguished the same by admitting in his cross examination that till 21st Marc, 1999, worked as 'deliveryman'.
44. Moreover, as per Ex. MW1/1 to Ex. MW1/8, the designation of the petitioner is stated to be 'deliveryman' and his duty was to deliver the cylinder by driving a vehicle bearing no.
RICHA DEL8829. Ex. MW1/4 is a notification issued by SHARMA the respondent no. 2 in the year 1997, whereby, Digitally signed by RICHA SHARMA Date: 2026.04.01 16:15:17 +0530 certain directions were issued to the deliveryman ESIC 5/22 M/s Trehun Sons Vs ESIC Through Deputy Director SRO (north) Page No. 26 /35 and in the said document, the petitioner has marked his signature at 'point A' which shows that the petitioner was aware about his designation.
45. Ex. MW1/12 is a complaint made in the year 1997 by a customer wherein the petitioner's name has been mentioned with his designation as a 'deliveryman'. Therefore, the designation of the petitioner as a 'storekeeper' as claimed by him, cannot be deciphered due to the discrepancies in his statement as well as due to the lack of documentary evidence. However, the evidence relied upon by the respondent no.2 substantiate the management's stance and brings out the inconsistency in the case of the petitioner.
32. In the judgment of Hon'ble High Court of Judicature at Gauhati in the case titled as Employees' State Insurance Corporation, Regional Office and another Vs Technico and another it was held:
10. From the above decisions it is apparent that the mode of payment and fact that the employees are casual employees it is not at all relevant. The learned counsel for the respondents has further submitted that there is no material on record to show that the respondents have engaged the thelawalas on casual basis and the respondents RICHA have engaged them in the work of transportation.
SHARMA Further the thelawalas are self employed persons Digitally signed by RICHA SHARMA Date: 2026.04.01 like taxi drivers, etc., running their thela or vehicle 16:15:21 +0530 ESIC 5/22 M/s Trehun Sons Vs ESIC Through Deputy Director SRO (north) Page No. 27 /35 for hire if such thela are hired or services of thelawalas are utilised on payment can be and termed as employees of the persons engaging them. There is no evidence to show that thelawalas are performing full time or fixed time job under the respondents. During whole day thelawalas are engaged by different concerns for taking their different handling jobs. Hence, in a case where a particular thelawala has worked for 5/6 persons on a particular day can he be deemed to be an employee of the 5/6 persons for the purpose of the Act or the same person will be getting benefits under the Act though under 5/6 reads. I find sufficient force in the above submission and in view of the finding of the learned trial Judge that the thelawalas are not casual employees even, I find no merit in this appeal. The appeal is accordingly, dismissed. No order as to costs.
33. In the judgment of Hon'ble High Court of Bombay in the case titled as ESIC Vs Western India Theatres Ltd., Bombay it was held:
2. In its pleading before the Court, the appellant contended that for the relevant period i.e. for the period between 12th November, 1978 and 31st December, 1979 not had a managing director who also was required to be included in the RICHA SHARMA respondent's set up and so done the respondent had Digitally signed by RICHA SHARMA Date: 2026.04.01 in all 20 employees in its establishment and was 16:15:27 +0530 ESIC 5/22 M/s Trehun Sons Vs ESIC Through Deputy Director SRO (north) Page No. 28 /35 required to be covered under the Act even for the aforesaid relevant period. At the trial before the Court, evidence was led and in the evidence it transpired that besides the 19 employees regularly employed by the respondent and the managing director, the respondent made certain payments against vouchers to the sweepers/the cleaners, the liftmen and the care cleaner. The Court on appreciation of evidence negatived the contention of the appellant that the managing director of the respondent was also required to be included in the set up of the respondent's establishment for the purpose of bringing the number of employees of the respondent to 20 so that the provisions of the act would be made applicable to the respondent's firm. However, the Court took into consideration the evidence which was led before it to show that the respondent made payment by way of tips against vouchers to the sweepers/the cleaners, the liftmen were required to be included in the number of employees of the respondent and once that is done, the number of employees of the respondent for the relevant period would be in excess of 19 and therefore the respondent's establishment would be liable to be covered under the act even RICHA for the aforesaid relevant period. In this view of SHARMA the matter, the Court ultimately dismissed the Digitally signed by RICHA SHARMA application of the respondent.Date: 2026.04.01
16:15:31 +0530 11. Mere payments of small amounts by the ESIC 5/22 M/s Trehun Sons Vs ESIC Through Deputy Director SRO (north) Page No. 29 /35 respondent to the sweeper/the cleaners and the liftmen could hardly be said to be payment of wages or other remuneration. Those payments would obviously be in the nature of tips albeit against vouchers for the respondent cannot make any payment except against vouchers. Considering the matter from this angel, the relationship between the respondent and the sweepers/the cleaners and the liftmen cannot be said to be the relationship arising out of a contract of service. So far as the respondent is concerned, the sweepers/the cleaners and the liftmen cannot be said to be the employees within the meaning of that word as defined in Section 2(9) of the Act. The sweepers/the cleaners and the liftmen therefore could not be counted as the employees of the respondent for the application of the act to the establishment of the respondent.
34. Thus, from the conjoint appreciation of PW-5 to PW-9 and applying to the facts of the present case, the settled propositon of law discussed as above through various judgments of High Courts as well as the Hon'ble Apex Court, it stands established that the petitioner establishment had only 3-4 regular salaried employees at any point of time. Further from the cumulative testimonies of all the witnesses it categorically stands transpired that:
Digitally signed by RICHA The testimonies of PW-6, PW-7 and PW-8 clearly RICHA SHARMA SHARMA Date:
2026.04.01 16:15:35 establish that they were engaged only as a delivery boys on a +0530 ESIC 5/22 M/s Trehun Sons Vs ESIC Through Deputy Director SRO (north) Page No. 30 /35 commision basis and were paid per cylinder deliver, The said delivery personnel had no fixed working hours and no appointment letters were ever issued to them by the petitioner, No attendance register was maintaind, No fixed number of working days, No identity card, The witnesses further deposed that they were free to work with other gas agencies or establishments, The testimony of PW-9 (EPFO official) corroborates, that the establishment was granted voluntary coverage under the PF Act, as it had less than 20 regular employees.
35. In view of the law laid down in ESIC Vs M.M. Suri & Associates (P) Ltd., only those persons who fall within the statutory definition of "employee" can be counted for determining coverage. Commission-based independent delivery workers cannot be treated as coverable employees under the ESI Act. Further as per the provision of ESI Act, in the year 2002, the establishment must employed 20 or more coverable employees to cover the establishment under the ESI Act.
Therefore, this court therefore holds, that the delivery personnel engaged on commission basis do not fall within the ambit of "employee" as defined under Section 2(9) of the Employees' State Insurance Act, 1948. They cannot be counted for the purpose of determining the RICHA statutory threshold of 20 coverable employees. The entire basis of SHARMA coverage as per ESIC is the alleged employement strength of 20 Digitally signed employees including commission based delivery personnel. However, it by RICHA SHARMA Date: 2026.04.01 16:15:39 +0530 ESIC 5/22 M/s Trehun Sons Vs ESIC Through Deputy Director SRO (north) Page No. 31 /35 is a settled legal position, that persons working on commission basis, without control or supervision of the principal employer do not qualify as "employees" under Section 2(9) of the ESI Act.
36. Further it is aposite to note, that with respect to the onus of proof, the judgments of Hon'ble Supreme Court categorically establishes as to what onus falls on which parties.
In the case titled as ESIC Vs M.M. Suri & Associates (P) Ltd. it was held; that labour law employees' State Insurance Act 1948-SS 1(5), 2(12) (after 1966 amendment), 2(9), 2(22)- Delhi Administration Notification dated 30.09.1988 issued under Section 1(5) extending the act to shops wherein the specified number of persons were employed for wages-determination of number of "persons employed for wages" - only the persons answering the description of "employee" under Section 2(9) and not others, held, can be taken into account-1966 amendment to Section 2(12) taken into consideration for determining the controversy - Words and phrases-
"Persons employed for wages"
Further in Revenue Manual of ESIC it was held; that prior to the amendment from 1st June 2010 the definition was as follows:
Digitally (b) Where on twenty or more persons are signed by RICHA RICHA SHARMA SHARMA Date:
employed or were employed for wages on any day 2026.04.01 16:15:45 +0530 of the preceding twelve months, and in any part of ESIC 5/22 M/s Trehun Sons Vs ESIC Through Deputy Director SRO (north) Page No. 32 /35 which a manufacturing process is being carried on without the aid of power or is ordinarily so carried on.
Based on the Supreme Court's Judgment dated 28.10.1998 in the case of ESIC Vs M.M. Suri & Associates Pvt. Ltd. New Delhi, it was decided y the Corporation to consider only 'coverable employees under section 2(9)' for coverage of Factory or Establishment. This decision is applicable from 28.10.1998 i.e. the date of judgment of the Supreme Court.
In view of this decision, the word "persons" appearing in the definition was understood as "Coverable employees" till the amendment of this definition with effect from 1st June 2010.
Wages limit to be prescribed by the Central Government under Section 2(9)(b) of the Act for the purpose of coverage as an employee is fixed under Rule 50 of the ESI (Central) Rules, 1950 and this limit is raised from time to time as given below:
From 1st Jan 1997 to 31st March 2004 Rs. 6500/- a month;
From 1st April 2004 to 30th September 2006 Rs. 7,500/- a month;
From 1st October 2006 to 30th April 2010 Rs.
RICHA 10,000/- a month; and
SHARMA
Digitally signed by
From 1.05.2010 onwards: Rs. 1,5000/- a RICHA SHARMA Date: 2026.04.01 16:15:49 +0530 month.ESIC 5/22 M/s Trehun Sons Vs ESIC Through Deputy Director SRO (north) Page No. 33 /35
Wage limit for coverage of employees with disability: (Second proviso to rule 50 of the ESI (Central) Rules, 1950) this new provision has been introduced from 1.04.2008.
37. It is futher pellucid to note, that the initial burden was upon the employer/petitioner to rebut the presumption arising from the inspection report relied upon by the Corporation/respondent and in light of the detailed appreciation of the evidence as above, this court finds no hesitation in deducing that the petitioner has fairly discharged the onus so placed upon it.
38. However, once the employer produces cogent oral and documentary evidence showing that the number of coverable employees was below the statutory threshold, the burden shifts upon the corporation/respondent to establish that the petitioner/establishment employed the requisite number of employees so as to attract the provisions of the ESI Act but in the light of the fact and circumstances of the present case, the ESIC miserably failed to discharged the burden so placed upon it.
Therefore, in view of the consistent and unrebutted testimonies of PW-4 to PW-9, coupled with documentary record i.e. Ex. PW-9/1(colly), this court is satisfied that the petitioner has successfully discharged the initial burden of proving that it never employed 20 or more coverable employees so as to attract statutory coverage under the ESI Act.
Digitally
signed by
RICHA
RICHA SHARMA
SHARMA Date:
2026.04.01
16:15:53
+0530
ESIC 5/22 M/s Trehun Sons Vs ESIC Through Deputy Director SRO (north) Page No. 34 /35
39. Respondent had to prove the alleged commission agents were employees under Section 2(9) of ESI Act establish the term of employment, nature of duties, and integration into the business of petitioner and to prove functional control, supervision or administrative authority over such persons. However, nothing stands proved on behalf of the respondent.
40. Accordingly, in view of the foregoing discussion, this Court holds that the petitioner establishment did not employ 20 or more coverable employees within the meaning of Section 2(9) read with Section 2(12) of the Employees' State Insurance Act, 1948 during the relevant period. The delivery personnel engaged on commission basis cannot be treated as regular salaried employees, as no employer-employee relationship, supervision, control, attendance requirement or fixed service conditions have been established. Accordingly, in the teeth of the above analysis and finding this Court is of the considered opinion that the present petition stands allowed.
41. File be consigned to Record Room, after due compliance.
Digitally signed by RICHA Announced in the open Court RICHA SHARMA SHARMA Date:
on 01.04.2026.
2026.04.01 16:15:58 +0530 (Richa Sharma) Sr. Civil Judge - Cum - RC THC / Delhi / 01.04.2026 ESIC 5/22 M/s Trehun Sons Vs ESIC Through Deputy Director SRO (north) Page No. 35 /35