Jharkhand High Court
Ms/ Kamal Fabrics (Raymond Retail Shop) ... vs Employee State Insurance Corporation ... on 21 June, 2022
Author: Anil Kumar Choudhary
Bench: Anil Kumar Choudhary
1 M.A. 343 of 2008
IN THE HIGH COURT OF JHARKHAND AT RANCHI
M.A. No. 343 of 2008
(Against the order dated 03.10.2008 passed by learned
Presiding Officer, Labour Court-cum- Employees Insurance
Court, Ranchi in E.S.I. Case No. 12 of 2002)
Ms/ Kamal Fabrics (Raymond Retail Shop) through its proprietor
Madhu Sudan Maheshwari, son of Late K.L. Maheshwari
carrying on business at Main Road, P.O. and District- Ranchi and
resident of Basant Vihar, Kanke Road, P.O. & P.S.- Gonda, District
- Ranchi ...... Petitioner/ Appellant
Versus
1. Employee State Insurance Corporation through its Regional
Director ESIC Bhawan, Bailey Road, P.O. & P.S.- Baily Road,
District- Patna- 800001
2. The Dy. Regional Director, ESIC Corporation, ESIC Bhawan,
Bailey Road, P.O. & P.S.- Baily Road, District- Patna
..... Opposite Parties/ Respondents
For the Appellants : Mr. Nipun Bakshi, Adv.
For the Respondents : Mr. Ashutosh Anand, Adv.
PRESENT
HON'BLE MR. JUSTICE ANIL KUMAR CHOUDHARY
By the Court:- Heard the parties.
2. This Miscellaneous Appeal is preferred against the order dated 03.10.2008 passed by Labour Court-cum- Employees Insurance Court, Ranchi in E.S.I. Case No. 12 of 2002 whereby and where under the Labour Court rejected the petition filed by the appellant under Section 75 (1)(g) of the ESI Act, 1948.
3. The brief facts of this case is that the appellant-applicant, who is the proprietor of M/s Kamal Fabrics, a retail shop of Raymond brand, by letter 24.04.1998 / 01.05.1998, under the signature of the respondent- opposite party no. 2, the Deputy Director of ESI corporation, was intimated that M/s Kamal Fabrics, Raymond Retail shop along with M/s New Kamal Fabrics, was covered 2 M.A. 343 of 2008 Employees State Insurance Act, 1948 and was allotted a code and appellant was directed to submit Form-01 duly filled up and was also directed to deposit the contribution amount for the period from 31.03.98 to 31.07.2000 in total amounting to Rs. 1,36, 794/- @ Rs. 232.642 per person per month for 21 employees. After the receipt of the coverage letter Form C-11, marked as Exhibit F, the applicant represented before the Opposite Party no. 1- Regional Director ESIC contending therein that the establishment is not covered under the provisions under the ESI Act, as the number of the employees in the establishment is only 8 and not 21, as mentioned in said Form C-11. It was also contented that M/s Kamal Fabrics, Raymond Retails shop and M/s New Kamal Fabrics, Park Avenue are totally two different concerns 6 by two different owners, not connected in any way with each other and none of the two establishments ever engaged 21 employees. Though, it is admitted that both the establishments are located at different parts of the same building but it was contended that same cannot be treated as one establishment for the purpose of the Employees State Insurance Act, 1948 :
4. It was further contended by the appellant- petitioner that M/s Kamal Fabrics, Raymond Retail Shop started on 30.12.1981 while M/s New Kamal Fabrics shop started on 20.08.1984. Both the establishments were separately registered with different registration numbers and are independent entities as such workers are different and are separate under their own employers and all their monetary affairs are being dealt with their own employers separately. It was also contended before the Labour Court that before coverage of appellant-petitioner's establishment, no proper opportunity was given to produce relevant records and the appellant-petitioner had not been given any opportunity to be heard. The clubbing of employees of M/s New Kamal Fabrics shop with M/s Kamal Fabrics shop for the purpose of coverage, was not proper, hence, a prayer was made before the Labour Court to set aside the coverage letter. The Labour Court on 30.12.2004, passed an order directing the ESIC to issue fresh notice
3 M.A. 343 of 2008 for verification of their records and fresh notice to the appellant- petitioner for verification of their records and documents giving the appellant-petitioner full opportunity of hearing. The appellant- petitioner subsequently filed a petition to amend the petition filed by it before the Labour Court and made a prayer that the order under Section 45A of the ESI Act dated 11.04.2001 be set aside.
5. It was contended by the respondent-opposite party that the petition under Section 75 (1) (g) of ESI Act is not maintainable.
6. It was also contended that on the basis of the survey report furnished by the Area Insurance Inspector after going through the attendance register and physical verification of the units, the said two units of the establishment were treated covered and the same was intimated vide Exhibit C.
7. It was also contended that after coverage, the employer is liable to pay contribution in respect of their employees as per Section 40 of the ESI Act and hence, direction to pay the contribution was made accordingly.
8. The respondent- opposite party also contended that the clarification furnished by the applicant-employer was not correct for the following reasons:-
(a) The proprietors of the two units are the father and the son undisputedly.
(b) One unit of the establishment is located in the ground floor and the other in the first floor of the same building having staircase inside to approach the first floor from the ground floor.
(c) The same staff looked after the work in both the units from time to time and the staff is correlated to the units. In addition to eight employees in one establishment and nine employees in other establishment, four tailoring staff was also employed, bringing the total number of employees as 21.
(d) The nature of the business is same as selling of clothes that is woolen clothes from one unit and Teri cotton clothes from the other unit but payment receipt counter is the same.
9. The appellant-applicant failed to produce ledger/cash book/voucher etc. in spite of several visits by the Area Insurance 4 M.A. 343 of 2008 Inspector on 31.03.1998, 05.09.1998 and 19.11.1998 to their establishments for the purpose of inspection. After conducting the survey of the units, the Area Insurance Inspector showed the reports and the employer put the signature on the same, which goes to show that the figures on the basis of which it has been treated covered was known to the employer.
10. On the basis of the rival pleadings, Labour Court framed for following issues.
(I) Whether the petition filed by the petitioner under Section 75 (1) (g) of ESI Act is maintainable?
(II) Whether the petitioner has got valid cause of action? (III) Whether the petition filed by the petitioner under Section 75(1) (g) of ESI Act is barred by limitation ?
(IV) Whether the respondent has rightly covered M/s Kamal Fabrics, and M/s New Kamal Fabrics, under the provisions of ESI Act by clubbing both the firms ?
(V) Whether the petitioner is entitled to get any relief ?
11. In support of his case, the appellant-petitioner examined six witnesses besides proving the documents while the Area Insurance Inspector was examined as the sole witness on behalf of the respondents- opposite parties. Besides the respondents also proved the following documents which were marked as Exhibit A to F/1.
Ext. A- to Ext. A/1- 2 reports Ext. B- letter dated 31.3.98 Ext. B-1 letter dated 13.11.98 Ext. C- letter dated 24.4.98/1.5.98 Ext. D- letter dated 12.10.96 Ext. D/1- letter dated 13.11.98 Ext. E- letter dated 23.10.98 Ext. F- Form C-18 dated 31.8.2000 Ext. F/1- Order dated 11.4.2001 u/s 45A 5 M.A. 343 of 2008
12. Learned labour Court after considering the evidence in the record came to a conclusion and answered the issue nos. I II, and III in favour of the petitioner-appellant. In respect of issue no. IV, learned Labour Court believed the testimony of O.P.W. No. 1 whose oral testimony was supported by the survey report and taking into consideration the fact that both shops were situated in one building and the owner of the shops were the father and the son respectively; came to a conclusion that opposite parties- respondents have rightly clubbed both the shops and as after clubbing both the shops, the total number of employees were more than 21, and the establishment was using of iron with electricity for tailoring work done, the same amounted to manufacturing process with use of power and rejected the petition filed by the petitioner, as already indicated above.
13. At the time of admission of this appeal, vide order dated 15.04.2009, the Predecessor Judge of this Bench, framed following five substantial questions of law:-
(i) Whether two independent establishments could be clubbed together?
(ii) Whether each of the establishment can be construed to be factory under ESI Act ?
(iii) Whether the order passed under Section 45-A was a reasoned and speaking order ?
(iv) Whether the said order was passed by the competent authority?
(v) Whether the number of eligible employee has been correctly ascertained or not?
14. Mr. Nipun Bakshi, learned counsel for the appellant assailing the impugned order submits that learned Court below has passed the impugned order contrary to the law and facts and the materials in the record. It is then submitted that the ESI-Corporation failed to comply the order of the learned labour Court dated 30.12.2004 with direction to give full opportunity of hearing and to carry out a fresh process of assessment which was never done by the 6 M.A. 343 of 2008 opposite party- respondent authority. It is next submitted by learned counsel for the appellant that learned labour court ought to have held that clubbing of M/s Kamal Fabrics with M/s New Kamal Fabrics, was illegal in view of their distinct nature of businesses. It is next submitted that the order under Section 45 A of the ESI Act, 1948 is unjustified and untenable in law for the reason that in the same, no consideration was given to factors of unity of ownership, unity of management, unity of control, unity of employment, unity of service condition, functional integrality, unity of purpose and financial unity which were sina qua non for the purpose of clubbing.
15. In this respect, Mr. Bakshi relied upon the judgment of Hon'ble Kerala High Court in the case of Madona Textiles vs. Employees State Insurance Corporation in MFA No. 255 of 2000 dated June 23rd 2000, paragraph 4 and 6, of which reads as under:
"4. S. 38 of the ESI Act, 1948 provides that all employees in factories or establishments to which the Act applies shall be insured. S. 40 casts the liability to pay the contribution for such insurance on the principal employer whether the employees are directly employed by them or through an immediate employer. Under S. 2(17) principal employer in the case of establishments, is the person responsible for the supervision and control of the establishment. The word "establishment" is, however, not defined in the Act. Going by dictionary meaning it refers to a place of commercial activity. Though with reference to the provisions of the Industrial Disputes Act the Supreme Court had occasion to consider the question as to what would constitute one establishment in the ordinary industrial or business sense in ACC Ltd. v. Workmen (1960 I LLJ 1960). This Court itself went into the question of unity of establishments in Employees' Provident Funds and Miscellaneous Provisions Act, 1952 in Eddy Current Controls (India) Ltd. v. Regional Provident Fund Commissioner (1993 II CLR 879). The tests to be applied in such cases could be one of the geographical proximity; unity of ownership, management and control; unity of employment and conditions of service; functional integrity; general unity of purpose; common management and the like. The purpose is to find out the true relationship between the parts, branches, units etc. If in spite of the apparent veil, they constitute one integrated whole, it can be said that the establishments in question are actually one. The relationship between the units will have to be carefully appraised to find out the reality bearing in mind the object of the Statute. Unity of ownership, management and control and unity of employment, will be important tests in this regard. Functional integrality and general unity are also certainly important. Some connection between the activities in the different institutions by itself may not be sufficient to justify an inference one way or the other; but the employer's own conduct in mixing up or not mixing up the capital, staff and management may often provide a certain answer. What is to be looked into is whether there is a real thread of unity.
5. Notwithstanding the persuasive arguments of the learned counsel for the appellant, we are not prepared to interfere with the findings of fact aforementioned. These findings, undoubtedly, show that there is geographical unity, functional integrity and unity of management to a major extent. We, therefore, agree with the findings of the Employees State Insurance Court, Idukki (Industrial Tribunal, Idukki) that the employees in the three firms can be tacked together for the purpose of assessing the employment strength for purposes of coverage under the E.S.I. Act." (Emphasis supplied) 7 M.A. 343 of 2008 and submits that learned labour Court erred by believing that the evidence in the record is sufficient to establish that four persons were engaged in tailoring work in one of the two shops in questions and ironing work was done in the said establishment. It is further submitted by Mr. Bakshi that even assuming for the sake of arguments but not admitting, that 21 persons were engaged by two establishments, still in the absence of any detailed nature of their job profile, it can be said that each of them were involved in manufacturing process. So, all the 21 employees cannot be considered to be the employees under Section 2 (9) of the ESI Act, 1948 and in this respect, learned counsel relied upon the judgment of Hon'ble High Court of Madras in the case of New Taj Mahal Café Ltd., Mangalore vs. Inspector of Factories, Manglore in W.P. No. 41 of 1955 dated 07.09.55 wherein a case relating to factory Act, 'workers' of the Factory Act, 1948 as defined under Section 2 (1) of the Factory Act, the Hon'ble High Court of Madras observed as under:-
" I have pointed out that preparation of food stuffs in the kitchen for sale in the restaurant would satisfy the test that a manufacturing process was carried on in a part of the premises. If such a manufacturing process is carried on without the aid of any power, the minimum number of workers that would make the premises a factory is 20. But they should all be "workers" as defined by S. 2(1) of the Factories Act of 1948. Every employee in a restaurant may not be a "worker" as defined by the Factories Act of 1948. Those employed in the kitchen of the restaurant in preparing articles for sale would certainly be "workers" within the meaning of S. 2(1). They are persons employed directly in a manufacturing process. A person employed in cleaning the premises in any part of which a manufacturing process is carried on would also be a "worker". But a person, for example, who merely cleans the tables in the restaurants or washes the used plates may not be a "worker". That would not amount to cleaning the premises where the manufacturing process is carried on, nor would it amount to cleaning any machinery used for the manufacturing process. It is only the limited work of cleaning that would bring the person engaged in such cleaning, within the definition of "worker" in S. 2(1). Nor would cleaning, other than washing the premises where a manufacturing process is carried on, and cleaning the machinery used for the manufacturing process, for example, cleaning tables or plates, amount to "work incidental to or connected with the manufacturing process or subject of the manufacturing process."
and it is submitted by Mr. Bakshi that the definition of workers under the Factory Act, 1948 being akin to the definition of the employees of under Section 2 (9) of the ESI Act, 1948, the ratio of the judgment of the Hon'ble High Court of Madras can be applied in the present case and it can be held that the evidence in the 8 M.A. 343 of 2008 record is insufficient to establish that all the 21 alleged employees of the two establishments were engaged in manufacturing process.
16. Mr. Bakshi next relied upon the judgment of a co-ordinate Bench of this Court in the case of Gopal Krishna Bagaria vs. Employees State Insurance Corporation & Ors. reported in 2012 SCC Online Jhar 2264, paragraph 10 of which, reads as under:
"10. On going through the proviso to section 45-A, it is clear that mandatory provision has been made for giving a reasonable opportunity of hearing to the employer or the person in charge of the factory before passing any order."
and submits that learned labour Court ought to have held that the opposite party- respondent failed to give any reasonable opportunity of hearing to the appellant. Mr. Bakshi next relies upon the judgment of Hon'ble Supreme Court of India in the case of Hotel New Nalanda vs. Regional Director, Employees' State Insurance corporation reported in (2009) 14 SCC 558, wherein in the facts of that case, where the High Court seemed to have taken the inspection report as non-rebuttable and conclusive piece of evidence and filled-up, what remained unsaid in the inspection report and the testimony of the Area Insurance Inspector by presuming that the establishment must have kitchen, where the food could be cooked, using the appliances running with the aid of power and set aside the order of ESI Court, which allowed the prayer of the employer, wherein it was contended that the employer establishment sought declaration that it was not covered by the ESI Act, 1948, the Hon'ble Supreme Court of India held that the insurance Court had come to a reasonable finding of facts that neither any appeal was maintainable under Section 82(2) of the Act nor the High Court was justified in interfering with it.
17. Mr. Bakshi next relied upon the judgment of Hon'ble Supreme Court of India in the case of Sumangali vs. ESI Corporation reported in 2008 (9) SCC 106, wherein in the facts of that case, the factual findings were recorded by both the ESI Court and the High Court; went to show that there was unity in management, 9 M.A. 343 of 2008 supervision and control, geographical proximity, financial unity, general unity of purpose and functional integrality between different units and for the sake of ESI coverage, the different units could be treated as one establishment and the concurrent conclusions are essentially factual and were legitimate inferences, the Hon'ble Supreme Court of India dismissed the appeal.
18. Mr. Bakshi also drew attention of the Court to paragraph 74 of the deposition of OPW1, wherein in his cross examination, the Area Insurance Inspector has stated that he has not written in his report that in both the establishments, unstitched and stitched cloths were sold and in paragraph 75, he has stated that in his report, he has not mentioned the names of the four tailor masters or what was their wages.
19. It is lastly, submitted by Mr. Bakshi that the order of the labour court being not sustainable in law, be set aside.
20. Mr. Ashutosh Anand, learned counsel for the respondents, on the other hand defends the impugned order passed by learned labour Court and submits that the scope of appeal under Section 82 (2) of Employees' State Insurance Act, is very narrow and such appeal can be entertained if and only if, it involves any substantial question of law and in other words, it means that if the finding of facts is perverse or based on no evidence, then only this court can interfere with the finding of facts recorded by the ESI Court. It is further submitted by Mr. Anand that keeping in view the unchallenged testimony of the OPW1 supported by his report and other documents in the record, the fact remains undisputed that both M/s Kamal Fabrics and M/s New Kamal Fabrics are situated in the same building in the first floor and the ground floor and that there is staircase from ground floor to the first floor inside the said building. The payments for the purchases from both the shops were made at one counter. There is no material to suggest that the two shops were maintaining separate books of account. There were eight employees in one unit and nine employees in another unit. It is next submitted that the mere fact that the OPW1 has not mentioned the names of the four tailor masters or their 10 M.A. 343 of 2008 wages, as stated in paragraph 75 of his cross-examination, the report of the OPW1, which was signed by the employer, goes to show that 21 persons were employed in the two establishments together and this clearly goes to show that there was unity in management, supervision and control, geographical proximity, financial unity and general unity of purpose and functional integrality between the two establishments. It is next submitted that under such circumstances, the findings of the labour Court that the opposite party- respondents were proper in clubbing the two establishments, cannot be termed as perverse; warranting interference of this Court in exercise of limited power under Section 82(2) of ESI Act in exercise of its appellate jurisdiction. It is further submitted by Mr. Anand that so far as the judgment of Hon'ble Madras High Court is concerned, the same relates to definition of 'workers' of a factory as defined in the Factory Act, wherein the definition mandates employment of any person interalia in any manufacturing process which is not the case in the definition of "employee" under Section 2 (9) of the ESI Act. (58.21.97), hence, the ratio of that judgment in the case of New Taj Mahal Café, Mangalore vs. Inspector of Factories, Manglore (supra) is not applicable in the facts of this case, hence, it is submitted by Mr. Anand that this appeal being without any merit be dismissed.
21. Having heard the submissions made at the Bar and after going through the materials in the record, so far as the first substantial question of law, as to whether the two independent establishments can be clubbed together is concerned, it is pertinent to mention here that the word "establishment" is not defined in the Employees State Insurance Act, 1948. The Hon'ble Supreme Court of India in the case of The Associated Cement Companies, Ltd., Chaibasa Cement Works, Jhinkpani vs. Their Workmen, (AIR 1960 SC 56) observed as under while considering the word "establishment" of course in respect to the Providence of the Industrial Disputes Act, 1947 in paragraph 11 which reads as under:
11 M.A. 343 of 2008 "11. The Act not having prescribed any specific tests for determining what is 'one establishment', we must fall back on such considerations as in the ordinary industrial or business sense determine the unity of an industrial establishment, having regard no doubt to the scheme and object of the Act and other relevant provisions of the Mines Act, 1952, or the Factories Act, 1948. What then is 'one establishment' in the ordinary industrial or business sense? The question of unity or oneness presents difficulties when the industrial establishment consists of parts, units, departments, branches etc. If it is strictly unitary in the sense of having one location and one unit only, there is little difficulty in saying that it is one establishment. Where, however, the industrial undertaking has parts, branches, departments, units etc. with different locations, near or distant, the question arises what tests should be applied for determining what constitutes 'one establishment'. Several tests were referred to in the course of arguments before us, such as, geographical proximity, unity of ownership management and control, unity of employment and conditions of service, functional integrality, general unity of purpose etc. To most of these we have referred while summarising the evidence of Mr. Dongray and the findings of the Tribunal thereon. It is perhaps impossible to lay down any one tests as an absolute and invariable tests for all cases. The real purpose of these tests is to find out the true relation between the parts, branches, units, etc. If in their true relation they constitute one integrated whole, we say that the contrary they do not constitute one integrated whole, each unit is then a separate unit. How the relation between the units will be judged must depend on the facts proved, having regard to the scheme and object of the statute which gives the right of unemployment compensation and also prescribes a disqualification therefor. Thus, in one case the unity of ownership, management and control may be important test; in another case functional integrality or general unity may be the important test; and in still another case, the important test may be the unity of employment. Indeed, in a large number of cases several tests may fall for consideration at the same time. The difficulty of applying these tests arises because of the complexities of modern industrial organisation; many enterprises may have functional integrality between factories which are separately owned; some may be integrated in part with units or factories having the same ownership and in part with factories or plants which are independently owned. In the midst of all these complexities it may be difficult to discover the real thread of unity. In an American decision (Donald L. Nordling v. Ford Motor Company, (1950) 28 ALR 2d.
272) there is an example of an industrial product consisting of 3800 or 4000 parts, about 900 of which came out of one plant; some came from other plants owned by the same Company and still others came from plants independently owned, and a shutdown caused by a strike 12 M.A. 343 of 2008 or other labour dispute at any one of the plants might conceivably cause a closure of the main plant of factory. (Emphasis supplied)."
It is also a settled principle of law that even if each unit was an establishment having separate registration under the Sales Tax Act, Shops and Establishments Act and the Income-Tax Act, when all the units were interdependent and were supplementary and complementary to each other for the sake of their textile business the units can be treated as one establishment, as has been held by the Hon'ble Supreme Court of India in the case of M/s. Sumangali Vs. Regional Director, E.S.I. Corporation reported in 2008 4 JCR (SC) 3 in paragraph 18 by observing thus:
" In the instant case factual findings as recorded by the ESI Court and the High Court go to show that there was unity in management, supervision and control, geographical proximity, financial unity, general unity of purpose and functional integrality between the different units and for the sake of ESI coverage, the different units could be treated as "one establishment"
As the labour Court, based on the evidence that the both the establishments are situated in the same premises, one on the ground floor and another on the first floor, interlinked by a stair case, being run by the father and the son and where father is the proprietor of one shop and son is the proprietor of the another establishment, the payment for purchases made in the both the shops were made at one counter and there is no material in the record to show that the two establishments were having separate books of account, came to the conclusion that both the units constitute one establishment for the purpose of the provisions of The Employees State Insurance Act, 1948 hence this Court is of the considered view that evidence in the record is sufficient to indicate the unity of management, supervision and control, geographical proximity, financial unity and general unity of purpose and functional integrality, hence, the same could be clubbed together. Thus if each unit was an establishment having separate registration under the Sales Tax Act, Shops and Establishments Act and the Income-Tax Act, when 13 M.A. 343 of 2008 all the units were interdependent and were supplementary and complementary to each other for the sake of their business, the units can be treated as one establishment by way of performing of the units together The first substantial question of law is answered accordingly.
22. So far as the second substantial question of law as to whether each establishment can be is construed as a factory under the ESI Act is concerned, this Court is of the considered view that the evidence in the record and even the admitted case of the opposite party- respondent is that each establishment cannot be construed as a factory under the ESI Act and only upon their clubbing, they can be treated as one establishment for the purpose of the provisions of The Employees State Insurance Act, 1948. The second substantial question of law is answered accordingly.
23. So far as third substantial question of law as to whether the order passed under Section 45-A was a reasoned and speaking order is concerned, after perusal of the same, it is crystal clear that true it is that a printed form with blank spaces at appropriate places which has been filled up by writing in the gaps, has been used for the said purpose but after going through the same, it is crystal clear that it has been mentioned therein that though a notice was issued to the principal employer to show cause within 15 days and the employer was given opportunity for personal hearing on 25.09.2000 neither the employer nor his representative appeared before the respondents-opposite parties on 25.09.2000, for personal hearing and later on, the contribution amount totaling to Rs. 1,36,794/- for the period from 31.03.1998 to 31.07.2000 besides interest amount upto Rs. 30,575/- till 31.12.2000 has been mentioned therein.
24. Had it been the case that the employer would have appeared for personal hearing and would have produced documents, made contention and still a printed form would have been used, then there was scope for consideration, whether the same was a reasoned order or not but this is a case, where the employer neither turned up nor sent any representative nor produced any 14 M.A. 343 of 2008 document, so, there was nothing to be considered by the opposite parties- respondents. Under such facts, no fault can be found with the order passed under Section 45A of the ESI Act, 1948 on the ground that the same is not a reasoned or speaking order. The third substantial question of law is answered accordingly.
25. So far as the 4th substantial question of law "Whether the said order was passed by the competent authority?" is concerned Mr. Nipun Bakshi, learned counsel for the appellant submits that since the notification has already been made in this respect, he fairly submits that the Deputy Director, ESI was the competent authority. In view of the fair submission by Mr. Nipun Bakshi, the fourth substantial question of law is answered in the affirmative.
26. Now coming to the fifth substantial question of law as to whether the number of eligible employee has been correctly ascertained or not is concerned, it is a settled principle of law that an employee may be working with the factory or outside the factory or may be employed for administrative purposes or may be employed for purchase of raw materials or for sell of units goods, all such employees are included under the Section 2 (9) of the Employees' State Insurance Act, 1948 as has been held by the Hon'ble Supreme Court of India in the case of Hyderabad Asbestos Cement Products Ltd. Vs. Employees Insurance Court & Another reported in AIR 1978 SC 356 by observing thus as under in paragraph-13:-
"13. It was submitted that the test as to whether an employee is an employee "in a factory" is the test of not physical presence or absence outside the precincts of the factory but the test is whether he is under the control of the factory and is on the factory wage roll, or other similar tests. We are unable to accept the contention for on a reading of the relevant sections it is clear that the word "employee" would include not only persons employed in the factory but also person connected with the work of the factory. The employee may be working within the factory or outside the factory or may be employed for administrative purposes or for purchase of raw materials or for sale of the finished goods all such employees are included within the definition of "employee". A recent decision of the Bench of the Madras High Court in W.Ps. 144-149 and 331 of 1971 dated 14th October, 1976 (Mad) has also taken a similar view. We agree with the 15 M.A. 343 of 2008 view taken by the judgments of the Andhra High Court and of the Calcutta High Court and dismiss these appeals with costs."
(Emphasis supplied) In this respect the Hon'ble Supreme Court of India in the case of Royal Talkies, Hyderabad and Others Vs. Employees' State Insurance Corporation through its Regional Director, Hill Fort Road, Hyderabad reported in AIR 1978 SC 1478 observed in paragraph-14 as under:-
"14. Now here is a break-up of Sec. 2 (9). The clause contains two substantive parts. Unless the person employed qualifies under both he is not an 'employee'. Firstly, he must be employed "in or in connection with"
the work of an establishment. The expression "in connection with the work of an establishment" ropes in a wide variety of workmen who may not be employed in the establishment but may be engaged only in connection with the work of the establishment. Some nexus must exist between the establishment and the work of the employee but it may be a loose connection. 'In connection with the work of an establishment' only postulates some connection between what the employee does and the work of the establishment. He may not do anything directly for the establishment; he may not do anything statutorily obligatory in the establishment; he may not even do anything, which is primary or necessary for the survival or smooth running of the establishment or integral to the adventure. It is enough if the employee does some work which is ancillary, incidental or has relevance to or link with the object of the establishment. Surely, an amenity or facility for the customers who frequent the establishment has connection with the work of the establishment. The question is not whether without that amenity or facility the establishment cannot be carried on but whether such amenity or facility, even peripheral may be, has not a link with the establishment. Illustrations may not be exhaustive but may be informative. Taking the present case, an establishment like a cinema theatre is not bound to run a canteen or keep a cycle stand (in Andhra Pradesh) but no one will deny that a canteen service, a toilet service, a car park or cycle stand, a booth for sale of catchy film literature on actors, song hits and the like, surely have connection with the cinema theatre and even further the venture. On the other hand a book-stall where scientific works or tools are sold or a stall where 16 M.A. 343 of 2008 religious propaganda is done, may not have anything to do with the cinema establishment and may, therefore, be excluded on the score that the employees do not do any work in connection with the establishment, that is, the theatre. In the case of a five-star hotel, for instance, a barber shop or an arcade massage parlour, foreign exchange counter or tourist assistance counter may be run by someone other than the owner of the establishment but the employees so engaged do work in connection with the establishment or the hotel even though there is no obligation for a hotel to maintain such an ancillary attraction. By contract, not a lawyer's chamber or architect's consultancy. Nor, indeed, is it a legal ingredient that such adjunct should be exclusively for the establishment, if it is mainly its ancillary." (Emphasis supplied) Now coming to the facts of the case, it is the undisputed fact that eight employees were working in one establishment and nine employees were working in another establishment. The only dispute is regarding the four tailor masters and the appellant assailed the said finding principally because the Area Insurance Inspector (OPW1) has not mentioned their names or wages paid to them in his report but it is undisputed fact that the employer was served with the report, in which 21 persons were said to have been employed in the two establishments clubbed together, still the employer has chosen not to go for personal hearing on 25.09.2000 before Deputy Director, ESIC- the opposite party no. 2- respondent, hence, under such circumstances, this court is of the considered view that preponderance of probability leads one to come to a conclusion that number of employees to be considered for the purpose of the provisions of the ESI Act, 1948, has been correctly ascertained to be 21. The 5th substantial question of law is answered accordingly.
27. In view of the discussions made above, this court is of the considered view that there is no merit in this appeal, accordingly, the same is dismissed.
28. No order as to costs.
17 M.A. 343 of 2008
29. Let a copy this Judgment along with the Lower Court Records be sent back to the Labour Court, Ranchi forthwith.
(Anil Kumar Choudhary, J.) High Court of Jharkhand, Ranchi Dated, the 21st June, 2022 Smita /AFR