Madras High Court
Messrs Farm Products Private Limited vs Regional Director on 28 March, 2006
Author: A.C.Arumugaperumal Adityan
Bench: A.C.Arumugaperumal Adityan
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED : 28/03/2006 CORAM: THE HONOURABLE MR.JUSTICE A.C.ARUMUGAPERUMAL ADITYAN C.M.A.No.1654 of 1996 and C.M.P.No.16212 of 1996 Messrs Farm Products Private Limited Thanjavur, represented by the Managing Director. ... Appellant Vs Regional Director, Employees' State Insurancwe Corporation, 143, Sterling Road, Madras-600 034 ... Respondent Prayer Appeal filed under Section 82 of the Employees State Insurance Act against the fair and final order passed by the learned Principal District Judge,Thanjavur made in E.S.I.O.P.No.13 of 1995 dated 23.4.1996. !For Appellant ... Mr. R.Sivamanogaran ^For Respondent ... Mr.J.S.Murali :JUDGMENT
This appeal has been preferred against the order of the E.S.I.Court/the Principal District Judge, Thanjavur in E.S.I.O.P.No.13 of 1995 dated 23.4.1996. The petitioner in E.S.I.O.P.No.13 of 1995 is the appellant herein.
2. The short facts of the case are as follows:
The respondent, in the order passed under Section 45A of the E.S.I.Act, has directed the petitioner to pay E.S.I. Contribution for the expenses incurred to the tune of Rs.60,907.60ps under maintenance charges of the building for the period from April 1991 to January 1992 and a sum of Rs.7708.30ps being the charges incurred towards loading and unloading of the goods relating to the appellant's company for the period from April 1991 to February 1992 and for the wages given to the employees for over time amounting to Rs.4,86,865.67ps was also taken into consideration and E.S.I.Contribution was demended under the said order and for exgratia payment of Rs.2,19,039.00 for the period from April 1990 to March 1992 also they have demanded E.S.I.Contribution and for incentive paid to the employees for the period from April 1992 to March 1993 to the tune of Rs.1,21,110/- also E.S.I.Contribution was demanded and the charges given to the contract labourers for cleaning the bottles were also taken into account and E.S.I.Contribution was also demanded which according to the petitioner, will not be construed as wages under Section 2(22) of the E.S.I. Act and they would contend that the petitioners are not entitled to pay E.S.I.Contribution for the expenses incurred under the above heads.
3. The respondent in his counter has contended that the amount has been spent meeting the expenses of the maintenance of the building, and also for the carpentry work and for the expenses incurred towards loading and unloading of the goods, the exgratia payment, over time payment and the incentive given to the workers will also come under the purview of Section 2(22) of the E.S.I.Act and they are liable to pay E.S.I.Contribution as per order passed under Section 45A of the E.S.I.Act.
4. Before the E.S.I.Court/The Principal District Judge, Thanjavur P.W.1 was examined and Exs P1 to P7 were marked on the side of the petitioner and on the side of the respondent no one was examined and no document was marked.
5. After going through the documentary and oral evidence let in before the E.S.I.Court/The Principal District Judge, the E.S.I.Court had come to a conclusion that the petitioner is liable to pay E.S.I.Contribution for the over time payment, exgratia payment and has held that the petitioner is liable to pay the E.S.I.Contribution for the demand made under other heads namely maintenance of the building including carpentry work , loading and unloading of the goods, incentive payments for the period from April 1992 to March 1993 and for the wages paid towards cleaning the bottles. Aggrieved by the orders of the E.S.I.Court in E.S.I.O.P.No.13 of 1995,the petitioner has preferred this appeal. E.S.I.Corporation has not preferred any cross appeal.
6. Now the substantial question of law that arose for determination in this appeal is whether the amount spent for maintaining the building including the carpentry work for the period from April 1991 to March 1992, the wages paid for loading and unloading of the goods for the period from April 1991 to March 1992, the incentive payment made to the employees for the period from April 1992 to March 1993 and the amount spent for cleaning the bottles will come under the ambit of Section 2(22) of the E.S.I.Act and would attract E.S.I.Contribution as ordered under Section 45A of the E.S.I.Act by the respondent ?
7.The Point:
Learned counsel appearing for the appellant would contend that the maintenance work of the building and carpentry work were not carried out by his employees and only through by way of engaging contractors, the said work was done and that the appellant is not entitled to pay any contribution for the amount spent on the contractors. In support of his contention, the learned counsel for the appellant relied on the decision reported in Sree Sivakami Mills Ltd., Madurai- vs-E.S.I Corporation (2001 (1) LLN 466) and contended that 25% out of the total amount taken into consideration for assessing the E.S.I.Contribution may be excluded towards the cost of materials. But a reading of the said dictum(supra)will go to show that out of the wages arrived at by the E.S.I.Corporation for assessing the E.S.I.Contribution, it included the cost of machinery and other materials . So in the said case, both the parties agreed for a deduction of 25% towards the material costs, while assessing the E.S.I. Contribution. But that is not the case here. Here, the respondent has not admitted for deduction of 25% from the wages towards cost of machinery and other materials. Further there is no evidence on record to show that the wages spent for maintenance of the building and carpentry work included the cost of machinery and other materials . So the dictum in 2001(1)LLN 466(supra) will not be applicable to the present facts of the case.
8. Per contra, the learned counsel appearing for the respondent relying on the decision reported in Regional Director, Employees' State Insurance Corporation-vs-P.Manickam, Proprietor, Thirumurugan Engineering Works(2004(2)L.L.N.1098) and would contend that if any work is carried out within the premises of the factory even by engaging the contractors, the company is liable to pay E.S.I.Contribution for the wages paid to the said contractors. The relevant observation runs as follows:
"The learned counsel appearing for the appellant has contended that in view of the definition of the word"employee" as defined under S.2(9) of the Act, there is no escape from the conclusion that the employees under the contractor, who were working within the premises of the factory, were also to be considered as employees of the present respondent".
9. The learned counsel appearing for the respondent also relying on the decision reported in EID Parry (I) Ltd.,-vs-E.S.I.Corporation (2002(3) L.L.N.164 and would contend that for loading and unloading of the goods, the company has engaged private coolies and paid wages and for the said wages also respondent had claimed E.S.I.Contribution which is not permissible as per the dictum in 2002(3)L.L.N.164(supra). But in the said case, the company had employed Hamalies to handle the other stocks in various go downs and they have produced the Registers to show that they have engaged Hamalies exclusively for this work and they are not the permanent employees of the factory .Only under such circumstances, it has been held in the said case that the said hamalies will not come under the definition of "Employees" as per Section 2(9) of the E.S.I.Act. But in the case on hand, there is no separate registers produced by the appellant to show that the coolies were engaged for loading and unloading of the goods and they have paid wages separately and that they are not the regular employees of the company. Under such circumstances, the dictum relied on by the learned counsel appearing for the respondent in 2004(2)L.L.N.1098(supra) will be applicable to the present facts of the case wherein it has been held that even for contract labourers the company is liable to pay E.S.I.Contribution for the wages paid to the said contractors.
10. The learned counsel appearing for the appellant would contend that E.S.I.Corporation has amended the order passed under Section 45A of the E.S.I.Act by way of amendment dated 13.9.2004 wherein it has been stated that for bottle washing charges, the Deputy director has opined as no contribution is payable. But it is not specifically stated that by way of this amendment, Ex P1 order passed under Section 45 A on 25.1.1995 was amended. No retrospective effect was given in the amendment order dated 13.9.2004 relied on by the learned counsel appearing for the appellant. Even though the cleaning the bottles was done only outside the premises of the factory, it is admitted that only through the contractors the bottles were periodically collected from the factory and removed to outside for cleaning and it was again brought back to the factory after cleaning. So the fact that the cleaning the bottles was done by the contractors will not absolve the appellant from paying E.S.I.Contribution for the wages paid to the contractors engaged for cleaning the bottles as held in 2004(2) L.L.N.1098(supra) .
11. The learned counsel appearing for the appellant would rely on the decision reported in Handloom House, Ernakulam-vs-Regional Director, E.S.I.(1999-2-L.W.637)and contended that for the incentive paid to the workers,the company need not pay the E.S.I.Contribution. A perusal of the Judgment of the Apex Court will go to show that there was no finding given in the Judgment but only the matter was remanded to the High Court for disposal and in that case, there was evidence to the effect that the Insurance Company has found that incentive bonus were not made within a period of two months.Only under such circumstances, the company was held not liable to pay E.S.I.Contribution for the incentive bonus and sales commission payable at the intervals not exceeding two months.But in the case on hand, there is no evidence on record to show that the incentive and sales commission were made within a period of two months. So the dictum relied on by the learned counsel for the appellant in 1999(2)L.W.637(Supra) will not be applicable to the present facts of the case. As against the findings of the learned Principal District Judge, in respect of over time wages, and exgratia payment in favour of the appellant, there is no cross appeal or appeal preferred by the respondent.
12. In the result, this appeal is dismissed , confirming the order passed in E.S.I.O.P.No.13 of 1995 on the file of E.S.I.Court/The Principal District Judge, Thanjavur dated 23.4.1996. Consequently, connected C.M.P.No.16212 of 1996 is also dismissed. The learned counsel appearing for the appellant would represent that he has deposited 50% of the ordered amount before the E.S.I.Court/Principal District Judge in E.S.I.O.P.No.13 of 1995 and that he may be permitted to withdraw the said amount and pay the E.S.I. Contribution. But instead of doing so, the appellant can adjust the said amount in deposit towards the E.S.I.Contribution to be paid by him within a period of four weeks. No costs.
sg To The Employees State Insurance Court/ The Principal District Judge, Thanjavur