Karnataka High Court
Employees State Insurance Corporation vs M/S Sdm College Of Engineering And ... on 5 February, 2010
Author: V.Jagannathan
Bench: V.Jagannathan
This appeal coming on for hearing, this day, the court delivered the following: JUDGMENT
1. This appeal is by the ESE Corporation callin the order passed by the ES1 Court alloitxririig the appli'cation7filie'd by the respondent herein and settinglllapsideil the 'order. passledvby. u the appellant--Corporation under--v.:$:ection. of
2. The respondent V lC'ollegel_Q_f Engiiieering and Technology Hostel, Dhavallagiri,lDharWadl,runs the educational institution and_ in order tol_ifacilitaLt--e_ students coming from outside 'fl; insti'tutiion also provides for accommodation and for the said purpose the respondent cons_trAL;citecl*iilhostel buildings for both boys and . g_girls_'' it uissuedwithv an order passed under Section 45A of l"._1tl1el'}3.Sl Act byfvthe Corporation and in the said order dated 2'6'f'Al 1»/' stated that the respondent's engineering 'college technology hostel has got a kitchen and in the said l~:itcl1e.n there are 8 to 9 persons and following the judgment of Court in Christian Medical College, Vellore vs. ESI .,.,l¢llQQ"fporation, the hostel/ run by the hospital also is I' I coverable under the E81 Act and therefore following the said decision of the Apex Court, the impugned order was passed by the E81 Court directing the respondent engineeringié'college""to pay the contribution for the period from 23/iJ,_::1 March 2002 and the amount of Rs,6§;1'C4__/ to be paid by the respondent i.e. theiE_rigi_neeringl c0.llegie=J"Z{.tf this order that was called in question xbygthe contending among other ...thing3""th:Vat thought' the respondent runs hostel for boys and hostel facility is concerned it is_m:et..by 'tliarges paid by the mess co.mmitteef'in_peach hostel. and the amount is borne by the students 'and p the__ «respondent has no say in the financial aspect. ,'l'he 'is.7'als'o engaged by the mess committee and if if "everi"thei,pay'ment ofulslalary to the staff was made by the mess respondent does not have any say in the matter of Vpayiment of salary to the staff of hostel. Despite this ii"~v.__f'i.nformation being given by the respondent, the E81 authorities '"if.i_e;.,_the Assistant Director did not accept the said explanation issued the impugned order under 45A of the E81 Act. It }/ g_ i' was also contended before the ESI Court that the total number of staff in the kitchen in the 3 hostels never eXceedecl_..9 and therefore even if the principle laid down by the Apex:
Christian Medical College's case is applied, still the will not come within the scope of E3S_.[».Ar:_t, Anotherfcointenticnuit taken was that the appellant Corporation 'clidiiioit even the stand of the respondent that_'non kitchen staff "are-"not parts!' of the kitchen. As such, the decision in Christian Medical Collegesirass to the case of the respondent. Yet an.ovther:.stancl'&:'.t"hie ESI Court was that there was servant between the kitchen andhosteipsta,ff'~and_ the respondent applicant.
3. The the respondent was contested by V the "Corporation. byi supporting the order passed under lS:ectioln of the E81 Act and also reliance was placed on the in the aforementioned Christian Medical V by Col1ege's ca'se,«"
.. __Based on the stand taken by the respective parties, the it 'Court raised 3 issues for consideration and answered the )4 said issues in favour of the respondent applicant and allowed the application filed under Section 75 of the ES} Act set aside the order passed by the Corporation under of the Act. This is how the Corporation has come Court in this appeal.
5. I have heard learned Counsel S'ri.lA'V.M.SEiceliayan_l;hl.for"C, the appellant~Corporation and ilffiavi Hnegde for the respondent 'SDl\i/ll College of Engineering and Technologyvil-losteli for short).
6. argued that the ES! 'inyerrolr 'i«ni"*se_ttin_glllaside the order passed u/ s 45-A of the Act: hot take into account the report of the {Inspecto1*..whe'rein' itvhas been mentioned that there are "64'¢'n«.§>1dyee§..in SDilllIlllllCollege I-Iostel and the ESI Court also not applying the ratio laid down by the Apex Couiétlin _Chri£stian Medical College I-iostel's case. It was also 'V'««___lcontendecl_il:that the E81 Court committed error in not noticing yl'theVprii1ciple laid down in several decisions by the Apex Court by this Court and the law laid down to the effect that all 3/ 5 the employees doing work connected with the establishment though not directly connected with manufacturing f0rces___which also covered u / s 2 (9) of the E81 Act and as such the order of the E381 Court is liable to be set aforementioned reasons. The above submission' sought _,toi "
be supported by relying on the decirsiorifofiithee._iApe:: iC5uriti,i_n the cases of Christian Medice'.l_ "College-..\fs.V Enfiploye_eVs'..i3State:' Insurance Corporation (AIR 373) ~ Hyderabad Asbestos Cement Products;_Ltd.;_'l/s;._"vlljir11pl0yees Insurance Court (AIR 1978 sc 35§;.,...c:L¢arx§¢¢lcg ciofunsicilfor the appellant therefore sought aside_theivorder"'of the E81 Court. 7'. Ongthe: other-i'vl2c.ari.d;'rllearhed counsel Sri.Ravi I-Iegde for the responde-nt--S.f).M§College of Engineering and Technology p_Host_e'li,referring it'o*'the__eVidence on record submitted that the i"._VreportVof.Vth~e Inspector itself suffers from various defects as theghsaid ircp'ort:=iidoes not indicate how many persons were *Vemployed"i.in.ithe kitchen of the hostel and secondly the E81 :'Inspe.ctor"icommitted error in taking into account the entire attached to the hostels though they were not in any way i " connected with the kitchen. It is also argued that the hostels could exist even independently of the kitchen and as such there is no connectivity between the kitchen and the hiistels. More over in the report itself it has been mentione_d_that' the inspection was conducted the Inspector found some iriiiné V' persons in the kitchen and in the Courisebf the eyidence,' 'it<ha'S been admitted by Rw-i that he did notii-no1uire'gi~'~ve1vify~:as,iVto_'V how many of the person present.e4p:i"nptheVhkitchenfwereuiactuallyV the employees of the kitchen ant"i"wl?_i'atii'were there names etc., and as such the report contrary to the law laid down use of power is concerned, there_«i__s that power was used in the kitchen_ andVre_f'e«rri11g'"to the Apex Court decision it is argued thatynierel grinder and a refrigerator may not lead to the e.,inferenc'e that the establishment is a factory .lwithinl:.SEel(itio'n&_2 the Act. Therefore, the inspection Kreportlisuffers all these vital defects and in the absence of the A1I1$pC.C3'J1Zi.():Ii'i'..' report giving detailed particulars of the number persons' employed in the kitchen, their father's name, if ideseignpation, length of service etc., mere mention that number "persons were found in the kitchen itself will not be a sufficient requirement of law in order to cover the respondent under the E81 Act. Learned counsel also argued that, the decision of the Apex Court in Christian Medical was rendered in a different context as it was.p_found:,f1=om the facts of the said case that the hospitaliicoui'd.v not-:l*iaiZ.e'-hpeen'iruin with the assistance of the Department of_ Mainitfeniancei Department maintains the equipment ECG,' Radiation Equipment, Kidnpey mete,' aif/1§'i»,,i;,1Nty1e main activity of the hospital could the equipment being in good the patients, the Apex Court therei6ri(é_"..V i:'i.,:>Eo;uipment Maintenance Departrr;_ent_ is' :2 (12) of the Act. Referring to paragraph' .15 of decision in the very same Christian _Medical"Co1lege case, learned counsel for the irespondei-nt argued the facts of the present case are differs-ritkand even without the kitchen the hostels co'uld__be and having a kitchen is the option given to the ii""~.__istudents.___«Under these circumstances, the impugned order of if court calls for no interference.
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8. To fortify the above submissions, learned counsel for the 3 respondent relied on the decisions in the cases of Employees State Insurance Corporation Vs. Karnataka Asbesto's<.Cerri--ent Products (1991 ILR page 775), M /s. Employees Corporation Vs. Super Tailors [ELR Nalanda Vs. Regional Director, ESI :Corp'oratiioni 1015) and E.S.l.Corporation Vs."-.S.ubbaraya Adi'ge;p{..i_t9s8 (sryf FLR 613).
9. In the light of the afolre.sai.dii-a1'§firrie.ritnadvanced and the decisions cited, the VsubsAtan't--i.:{il qu.efs_tions.eof=llaw raised has to be iare«"the substantial questions raised 'th:isV._appeal by the ESI Corporation.
"a) employees employed in the . ., 1:e5pof1Cl6.ntestablishment who are directly not in the manufacture process are liable to under Section 2 (9) of the ESI Act?
Whether the order of the E.S.I.Court holding that the respondent establishment is not liable to be covered under the provisions of the 13.8.1. Act is legal and sustainable?
K 1 10
c) Whether the appreciation by the E.S.I. Court of the Supreme Court judgment in the case of Christian Medical College Vs. E.S.I. Corporation.isiuproperp and correct?"
10. All these questions overlapgvandii't.herefore.:
commonly dealt with hereunder, _
11. The basis of the order * by the Corporation which is the SDM College before the ESI Court, is thev.i.nspe-cptioniiireportthat is filed and the said report 12:1. Tli11e"said report in column No.16 m.entioins'iIthaF :1ii1.hre.eil1ostels are run by the SDM College and though the contended that the employees workinA.g..in the three' hostels are not coverable under the E81 'Act, V'and:,.A"the'l'employeriihas also given a letter to this effect dated 15.11.2001, the report says that the coveivgrge as decision of the Supreme Court in Christian 117-'«.___Medical" College Vs. ESI Corporation. In the order that is "p1as.sed'A.'based on the said inspection report i.e., under Section
1. :45 ?(A) there is mention that coverage is decided on the basis of «$7 aw 11 the Supreme Court judgment in Christian Medical College's case and the said impugned order also mentions that in the kitchen it is alleged that 89 workers were there and_4vi.ti_i'i-siia.lso stated that since they are connected with the hostel and kitchen is meant for the inmates of the-. ~ is a clearly employer~employee relatii-onshipphi principal employer and the em:5loyees.ii7.'l'he saidilordier (A) however does not speak abouit*alny_uuseii 'o{i_it13poweri}while the inspection was conducted':e- and observation which is more in the the effect that usage of power in ruled out. The number of persons employed is 10+ and lt'herefore»i_.tihie'iisiiltoheri of the hostel is treated as a factory.'izitchen/hAo'stel and': as such the kitchen of the hostel 'comes vvithin"t.he purviiiew of Section 2 (12) of the ES} Act. 12'... Court, the evidence was let in by both the _ parties behalf of SDM College, AW»»1 was examined and isgin the evidence of this witness that the hostel has got a _lV1--ess. Committee and the persons who work in the hostel are
-.paid out of the amount given by the students themselves and 12 in the hostel there are about 500 students and in the kitchen there was only two or three persons. It is also brought out through this witness that in the kitchen there is and four pressure cookers weighing 453 kgs, gas "line vautomatic cleaning machine, food processor,jcha'p'ati '-,mal:in'g._rnachin'e etc., Even in the course of the cross__--e2:arI1ination-A'W--»1"has,V stuck to his stand that there are*v.only three. per.s_o_ns'3workiing int the kitchen and the restxof the"'person's_ haVC'VI'IO"C;0I'1I1eClZ]:OI1 whatsoever with the kitchen," ii
13. RW--1, the of the Clorpoiration in the course of his evidencpe statediiithatrrwhen he went to the SDM College :for' Erincipal gave the documents pertaining ~the.hos_tels_ he goes on to saylin the course of
---his c»1'<i2sSfeXamina'tio;1___that the coverage was decided by the ":_VCorp*o.ratio'ni on the Apex Court decision in Christian Medical (V3iollegeVA'cVase and admits that the hostel has got a Mess
--pCornrriitte"e.p far as the kitchen is concerned it is deposed iithatio zvhenii he went to the kitchen he found 10 persons present' and he noticed that the persons mentioned in Ex.R.4 * "wee present and according to RW--l there were four cooks and E/-
1 5 14 Kidney dialysis etc., and therefore held that as manufacturing process also includes repairing, the said department"'.is a factory u/s 2 (12) of the Act. Apart from observing.iiy'thius;the Apex Court after considering the definition of factory it u/s 2 (12) of the ESE Act and manufacturing. proctesshias .deiineic?'_ u/s 2 (k) of the Factories Act went on o'bserveAt1nder::r' it "19. Thus, under this desiiiniitiony things, if any repairing takesplaee with to use the equipme.iit_' 'i.pthej:11vi.""V--it.t'~amounts to manufacturing process..__ tl'ieiv'iap'pe.llant's own case that_.the:V Maintjenaniceii Department maintains repairs...' their V equipment for the effieient the in the hospital.
Thiereforeiivthisldegpartmentai is clearly covered by theiiterinp the ESE Act. Once, it squarely»fa'llsVwithini'this term the provisions of the 'Actibecome'*app_1icable to this department. No '.iqiieistion'warises of applying the test of dominant test of dominant nature would have inViibiecomeiiiapplicable only if on the basis of this iidepartment falling within the definition of the term .. __"faCtory" the respondent had sought to make the it x appellant hospital also amenable to the provisions of the ESI Act. As that is not the case here no question arises of applying the dominant nature if 15 test. In this case the ratio laid down in Andhra University (AIR 1986 SC 463)) and Osmani'ar». University (AIR 1986 SC 466) cases squarely applies. We see no conflict between i"
principles laid down in those cases*'**a--niCl.. thie. principles laid down in the cases cited They apply to different sitt1atioris_an_d areithus 11.o"L.:".
conflicting. We alSO'>_S'€~€: nov-st1bstanc:e~---..in.> submission that decision iniiiiAndhVra Un-ivflersityilsand Osmania University' 'cases'i'vvas.:l;baise.d on lfactithat the Department 01:' Press were independent =--and/ or " that A 'théfy I to third parties a1§'ilt()i.i":;1:,'-gt' plain % ;~e'.?.td'ing' tit these judgments shows principle that if the.---Departmei::;ts_ V._coveredV_ the provisions of the Acts be excluded.
20.? Thus it hbfiti have to be lufld that the provisions "of 't_.he~, Act are applicable to the ..?E;quipment'~..Maintenance Department of the " ";~.pp5;11e_Lnt..
l2=1,:'*.._i\?try;.._'therefore, see no infirmity in the ljudgment. Accordingly, the appeal li"sta'nds'"dismissed. There will be no order as to _ T costs.
Appeal dismissed."
$6 I' E6
15. Keeping the above observations of the Apex Court, the present case will have to be examined. it is not in dispute that the respondent--SDM Coilege runs hostels separately...fo-rrboys and girls and as far as the kitchen is concerned, thfieMeV--ir§1je--nce-poi' _ RW--1 does not indicate as to how many kitchens .. him on the date of his inspection though. wiitizessihas stated in the course of his cros's¢_eXaminati0n atpara 4 of his'.
evidence that when he went to persons there and also refers to persons and he also noticed the persons which is the wage registeriigept it is also in the evidence: Supervisor Thimmanna Bhat Joshi thatthe psalarjr the hostel workers from out of the amount collected' from "the students and there is a person '"ca11¢;j.. iRé-ibltor" in whoseiiname the Bank Account is kept and in lcrois.~s~eXamination AW31 has stated that the amount is-collected from the students by the SDM College itself 3"-'««___ionce in" aryear and the amount so collected is given to the V' uhiositeliband kitchen maintenance purposes and further admits % 17 that to the persons who work in these two places i.e., hostel and kitchen, salary is also paid by the SDM College.
16. On behalf of the E81 Corporation through RW~1 the documents marked also includes .the register Ex.R.2 which is the report an»nexed.'inspiecti"on report and the information contained Vithereilri. Was from the SEN! College. The saidldocurnent that!' there were 42 male er_nployee_s_.flaI1_ciiw.;_22 .fem.aleia-mployees totaling 64 and the said doici3rnent., Form 01 was filled up by the Principalvof the.'S'i)M"&Col1egel. is the Mess Bill statement' SDlv'i"C'ollege and it is signed by the Chie:i'.'i'E~?r:i'1Vj__cipal and the Rector as well as the Account"SVt1perin_tein_denlt and Ex.R.4 is the Salary Bill for the Ocito'ber_,____2{)01 in respect of the Boys Hostel and 1s_thev.sala_1y bill for the same month in respect of the ladie.s'--.hoste-l.;g:---- ljnuthese two documents, the designation of the ',employe.e"s_V are also mentioned and among the said "'p.design_ations, we find those of Assistant Cook, Helper, Mess ._j'Ass,isltance, Supplier, Scavenger, Sweeper, Watchman, S "--.,piiTelephone Operator, Room Boy etc., Ex.R.6 is the Attendance 3% X 1 I' 18 Register Extract for different months. However, it is not clear from the names and designations mentioned in the said documents as to whether how many of them are ..pac4tually working in the kitchen. EX.A.12 is one document. the respondents before the E81 Court which in the» kitchen of the Boys Hostel number em.-plioyeesiwereit*iVo__frr;:r:i December 2000 to March 200:-:..___At E:<.l?'.10 it»'is_As:tated; there are five wet grinders in the iiikitclien and ppoxiveriiiis used to operate these grinders.
17. Thus, as tothe employees employed in the kitche'n'is_conciei?A;c1ed';--there i's"no": definite indication in the documents 1produceid~.by~.the:iCorporation. Merely because 10 persons were-. found-_in'..thc.s.i~~1<itchen when RW--1 went there it doesvfnotimean thact«a_1l_yof them were employees of the kitchen V"._Vcorisid.eria:igatiiatv the hostel had 200 rooms and as such there were"0theri--i.employees as Well to attend the needs of the 'Vstudents in the hostel. If the number of girl students are also it V' into account the total number of students would be 700. }r 20 of refrigerator and grinder itself may not lead to inference that the establishment is a factory within Section 2 (12) of the Act.
19. In the instant case, though it may be possib1evto"~.ai*gue that the kitchen comes within the expression 'fac.tlory"' is a manufacturing activity in the kitchen Wh.€:I'1"f0:(:)d items are'"~ prepared, yet it is essential for the Corporatiieni Ato"-piroy-e__ th_a't the number of persons working-.__in the._kitchee.n"'was_ actuallygi; more than 10 with the help of So Tarias the use of power is concerned, the »t_h"epequipment used in the kitchen as mentioned the court below in its j11dg'ment. indicates"--that""the're was use of power to prepare food as the number of employees working in thekitchen 'concerned, the Corporation ought to havevplyaced convincinggevidence to show that there were 10 or .empIoyeesvin the kitchen. But, in the instant case, the documents iiprodiuced by the respondents show that there were 'only two employees working in the kitchen. In the evidence of stated only two persons were working in the kitchen
-.ifafIdiil;l'li{3rCf0I'€ in the absence of the Inspection Report and the "evidence of RW--1 establishing that all the 10 persons who were £/ , a 22 applicable to the respondent~SDM College does not and_.c__annot arise.
20. For the aforesaid reasons, the impugned"'~--order of court below cannot be faulted and the riiIi11.gl"referred' learned counsel for the appellan.t-Corporation also ca'n7not*.c.o'me'up to the aid of the appellant asl'thi§"i.Corpo1'atiori.= has failed to establish before the that ten or more persons were actually Department of the SDM Collegehostel. of law are accordingly lllappeal therefore stands disrnissed"."'* -. V' .....