Karnataka High Court
The Assistant Director vs M/S Vasu Agarbhatthis on 10 October, 2018
Author: L.Narayana Swamy
Bench: L. Narayana Swamy
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 10TH DAY OF OCTOBER, 2018
BEFORE
THE HON'BLE MR. JUSTICE L. NARAYANA SWAMY
MISCELLANEOUS FIRST APPEAL No.10780 OF 2012 (ESI)
BETWEEN:
THE ASSISTANT DIRECTOR
ESI CORPORATION, NO.10
BINNY FIELDS
BANGALORE - 560 023
REPTD. BY DEPUTY DIRECTOR,
R JAGANNATH ... APPELLANT
(BY SRI.V NARASIMHA HOLLA, ADV.)
AND:
M/S VASU AGARBATTHIS
NO.2203/06, P. B. NO.390
NOW SAYYAJI RAO ROAD
MYSORE - 570 021
BY ITS DEPUTY GENERAL MANAGER
FINANCE & FINANCE & ADMINISTRATION
SRI.A. G. NAGENDRA KUMAR ... RESPONDENT
(BY SRI.MOHAMMED AKHIL &
SRI.RAJARAM SOORYAMBAIL, ADVS.)
THIS MFA IS FILED U/S 82(2) OF ESI ACT 1948 AGAINST
THE ORDER DATED:07.09.2012 PASSED IN ESI APPLICATION
NO.6/2008 ON THE FILE OF THE PRESIDING OFFICER,
INDUSTRIAL TRIBUNAL, MYSORE, ALLOWING THE APPLICATION
FILED U/SEC 75 OF THE EMPLOYEES STATE INSURANCE ACT.
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THIS APPEAL COMING ON FOR PRONOUNCEMENT OF
JUDGMENT THIS DAY AFTER HAVING HEARD AND RESERVED
FOR JUDGMENT ON 16.04.2018, THE COURT DELIVERED THE
FOLLOWING:
JUDGMENT
This appeal is filed by the Corporation against the order dated 7.9.2012 passed in ESI Application No.6/2008 on the file of the Presiding Officer, Industrial Tribunal, Mysore allowing the application filed by the respondent and setting aside the order dated 28.2.2008 holding that amount paid towards outside job work, security charges and commission, no contribution is payable.
2. The appellant issued a notice in Form -C - 18 claiming contribution of Rs.3,28,816/- towards outside job work, security charges and commission to field force vide notice dated 18.6.2007. The respondent submitted the statement on 17.9.2007 and contended that he is not liable to pay the said amount. The respondent stated that he is not liable to pay contribution on the job work done by the outside contractor, 3 because the contractor is engaging his workers or he does the work himself with his family members and carried out the work in his place. The contractor would raise bill against the expenses and other allied charges, which the respondent pays. The respondent has no supervision and control against the work done by the said contractor. The payment to the contractor includes the cost of raw material purchased, rent, electricity bill, transportation, telephone expenses and other expenses including the profit of the contractor.
3. Further the respondent engaged services of security, who are having their independent ESI Code and remitting ESI contribution of their employees including the security personnel working in the security establishment. The appellant claimed contribution on commission paid to field force. The respondent has 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 rolls of the respondent's factory. Thus the 4 respondent contended that he is not liable to pay the contribution as claimed by the appellant.
4. The appellant appeared and filed objection contending that the respondent failed to pay the contribution for the year 2000-01 on omitted wages as per the notice. The appellant gave opportunity of hearing but respondent failed to produce the concerned records. Thus justified the order.
5. I have heard the learned counsel for the appellant and learned counsel for respondent and perused the impugned order.
6. The ESI Court placed reliance on the decision in JHARKHAND (Bihar Rubber Company Ltd., vs., Employees' State Insurance Corporation, Patna and others, reported in 2008 LLR 64 where it is held as follows:
"A Company manufacturing rainwears and air pillows and covered under the ESI Act outsourcing various jobs on piece-rate basis to other units willl not be liable for payment of ESI contribution for such job work done by other establishments the work of which is neither supervised nor controlled by the 5 Company in view of the Supreme Court judgment, the demand as raised by the ESI Authorities being misconceived, hence liable to be quashed".
7. In M/s.Padmini Products vs., Regional Director, ESI Corporation & others, ILR 2000 KAR 2370, it is held that the workers employed in the work of rolling and packing of the agarbathis come within the frame work of the expression "employer" even if they after taking necessary material work outside the premises provided they have been employed by his immediate employer or a person coming within the frame work of immediate employer as per definition of Section 2(13) of the Act.
8. Even in Welcomgroup Windsor Manor, Bangalore v. the Deputy Regional Director, Employees' State Insurance Corporation, Bangalore, 2001(4) Kar.LJ. 422 it is held that burden of proof of payment is on principal employer. It is to be proved on basis of return in Form 7 submitted by immediate employer, showing particulars of employees engaged by him for work on premises of principal employer.
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9. The respondent in the instant case pleaded that he has no supervision or control over the said work. The appellant could not dispute nor made out any contra case nor lead any evidence against the same. As regards the security charges, the respondent engaged security services of security guards from M/s.Group-4 security, Indu putra Security services and Sree Enterprises. The said agencies have independent ESI code and have remitted the ESI contribution to the employees including the security personnel working in the respondent establishment. 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 respondent. They are not drawing salary not liable to pay contribution to commission paid to the said agents. The appellant could not make out any contra case. RW-1 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 7 contribution on work got through outsource, amount paid to security guards and commission paid to the agents.
10. In the circumstances, I am of the view that the claim made by the appellant is without any basis. The impugned order is justified calling for no interference. No substantial question of law involved in the appeal.
Accordingly, the appeal is rejected.
Sd/-
JUDGE akd