Jharkhand High Court
M/S Vrindavan vs The Employees' State Insurance ... on 21 July, 2022
Author: Anil Kumar Choudhary
Bench: Anil Kumar Choudhary
M.A.No.52 of 2009
IN THE HIGH COURT OF JHARKHAND AT RANCHI
M.A. No.52 of 2009
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(Against the Order dated 21.01.2009 passed by learned Presiding Officer of the Labour Court, Ranchi, in E.S.I. Case No.02 of 2003)
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M/s Vrindavan, a sweet shop through its proprietor owned by Pradeep Kumar son of Dwarika Prasad carrying on business at 16, Ranchi Club Shopping Complex, Main Road, P.O. & District- Ranchi and resident of P.S. Chutia, P.O. & District- Ranchi .... .... .... Petitioner/Appellant Versus
1. The Employees' State Insurance Corporation through its Director, "Panchdeep Bhawan", Jawahar Lal Nehru Marg, P.O. and District- Patna.
2. The Dy. Director, Employees' State Insurance Corporation "Panchdeep Bhawan" Jawahar Lal Nehru Marg, P.O. and District- Patna.
3. The Recovery Officer, Employees' State Insurance Corporation "Panchdeep Bhawan" Jawahar Lal Nehru Marg, P.O.- Patna, P.S.- Patna.
4. The Insurance Inspector, Employees' State Insurance Corporation Kokar, P.S. Sadar, District- Ranchi .... .... .... Opposite Parties/Respondents
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For the Appellant : Mr. Nipun Bakshi, Advocate
For the Respondents : Mr. Ashutosh Anand, Advocate,
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PRESENT
HON'BLE MR. JUSTICE ANIL KUMAR CHOUDHARY
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By the Court:- Heard the parties.
2. This Appeal under Section 82 (2) of the Employees' State Insurance Act, 1948 has been preferred against the Order dated 21.01.2009 1 M.A.No.52 of 2009 passed by the Labour Court, Ranchi, in E.S.I. Case No.02 of 2003 by which the labour court has dismissed the petition filed under Section 75 (1) (a) and (g) of the Employees' State Insurance Act, 1948 by the appellant herein.
3. The brief facts of this case is that the Insurance Inspector of the Employees' State Insurance visited the sweets and namkeen shop of the appellant in the name and style of M/s. Vrindavan on 01.04.1998 and on the next day i.e. 02.04.1998, he conducted a survey and found that altogether 27 employees were employed by the said M/s. Vrindavan and to other establishments which can be clubbed together for the purpose of the provisions of the Employees State Insurance Act, 1948. Out of the 2 establishments which were brought one chat shop was running in the verandah of M/s. Vrindavan for which payments were collected at the counter of M/s. Vrindavan and another establishment from which sweets and namkeen items were supplied to M/s. Vrindavan was said to be belonging to the father of the owner of M/s. Vrindavan who resides jointly with the owner of M/s. Vrindavan and consequent upon that a demand notice was sent to the appellant on 27.09.2002.
The case of the appellant-petitioner is that the sweet shop of the appellant-petitioner has no functional integrality with the Chat shop run in its verandah by one Manoj Kumar upon taking rent of that place from the appellant-petitioner and the other shop at Niwaranpur which was clubbed with the shop of the petitioner; is run by the father of the proprietor of the petitioner-appellant and these three establishments have separate licence under Bihar Shops and Establishment Act. Hence, it was claimed by the appellant-petitioners that the respondent-opposite parties committed error in clubbing the three establishments together and arriving at the conclusion that the three establishments together employed 27 persons, hence, the establishments of the petitioner is covered by the provisions of Employees' State Insurance Act, 1948. The appellant- petitioner further pleaded that the opposite parties-respondents, thereafter issued notices and letters to the petitioner from time-to-time which have been annexed as Annexure-6, 6/A and 8 to the petition.
4. The appellant-petitioner prayed for the following reliefs:-
2 M.A.No.52 of 2009(a) to injunct permanently and to stay the operation of the aforesaid notices as contained in Annexures-6, 6/A and 8 and also to injunct permanently any other action or proceedings in pursuance of or in furtherance of the same;
(b) to hold that the coverage of the provisions of E.S.I. Act to the petitioner's establishment is illegal, arbitrary, untenable and to set aside the same;
(c) to hold that the petitioner's establishment cannot be clubbed or combined with other establishments of M/s Dwarika Prasad and M/s Manoj Kumar and
(d) the purported order dated 11.05.2005 under Section 45A passed by the Deputy Director of the ESI Corporation at Ranchi be set aside with or without such directions and observations as may be deemed to be fit and proper and the said order be stayed until disposal of this case, and
(e) to pass any other or further order or orders as may be considered to be fit and proper on the facts and in the circumstances of this case.
5. The respondents-opposite parties entered appearance before the Labour Court and in their show-cause, challenged the maintainability of the petition on various technical grounds besides they have pleaded that though the appellant-petitioner claims that his establishment was not a restaurant but it was found that in the establishment of the appellant- petitioner, there is arrangement for the customers to eat sweets, namkeen, chat and kulfi in standing position. It is further pleaded that though as per the attendance-cum-wage register maintained by the proprietor of the appellant-petitioner's firm contained the name of five employees on 01.04.1998 but the Insurance Inspector on survey on 02.04.1998, visited M/s. Vrindavan, M/s. Dwarika Prasad and M/s. Manoj Kumar and found that though the three establishments are running their business through separate licences as per Bihar Shops and Establishments Act but all the three establishments are functionally integrated and only to escape from the provisions of the Employees' State Insurance Act, 1948 and other Labour Laws, they deliberately got separate licences. Accordingly, the 3 M.A.No.52 of 2009 Form C-11 was issued on 24.04.1998 for coverage of all the three clubbed units and a direction was also given by the Employees' State Insurance Corporation to fill up Form- 01.
6. On the basis of the rival pleadings, the learned labour court framed the following issues for adjudication:-
(I) Whether M/s. Vrindavan shop of Sweets and Namkin, M/s.
Dwarika Prasad, Manufacturer of sweets and Namkeen and shop of Manoj Kumar of Chat and Kulfi etc. in front of M/s. Vrindavan are fit to be clubbed having functional integrity and are fit to be covered under the provisions of Employees' State insurance Act? (II) Whether the petitioner is entitled to get any relief?
7. In support of their case, the appellant-petitioner examined three witnesses who claimed to be the owner of the three establishments namely P.W.1- Pradeep Kumar of M/s. Vrindavan, P.W.2.- Manoj Kumar who is said to be the owner of chat, kulfi and other allied shop run in the verandah of the establishment of the petitioner and P.W.3- Dwarika Prasad who is the father of the proprietor of M/s. Vrindvan and who is stated to be independently running the manufacturing-cum-selling unit of sweets and namkeen situated at Niwaranpur at a distance of 1 Km from the establishment of the petitioner. The appellant-petitioner besides the oral testimonies also proved the documents which have been marked Ext. 1 to 12.
8. From the side of the respondents-opposite parties, one witness was examined namely Krishna Das who is the concerned Insurance Inspector and the respondents-opposite parties also proved the documents which were marked Ext. A to F.
9. The learned labour court considering the fact that it was the admission made by the P.W.-1 the proprietor of the appellant-petitioner in his deposition that the payment of chat, kulfi and other allied items of the shop running in the verandah in the establishment of the petitioner, was received in the counter of his establishment namely M/s. Vrindavan and that there was common electric supply meter of the establishments as well as the oral testimony of the O.P.W.1- the inspector who conducted the survey, came to a conclusion that there was functional integrality of the 4 M.A.No.52 of 2009 three establishments and after clubbing the three units as altogether 27 persons were working as employees whose names have been mentioned in Ext. A/3 and also the fact that the P.W.3- the father of the P.W.1 and P.W.1 were residing jointly; held that the clubbing of the three units was proper and dismissed the petition filed under Section 75 (1) (a) and (g) of the Employees' State Insurance Act, 1948.
10. Mr. Nipun Bakshi- the learned counsel for the appellant submitted that the learned court below failed to appreciate the evidence in the record in its proper perspective and the learned court below ought to have held that the respondent-opposite party erred in clubbing the three units together as the criteria and condition which must be present predominantly being:-
(1) Unity of ownership;
(2) Geographical proximity;
(3) Unity of management and control;
(4) Unity of employment;
(5) Unity of service condition;
(6) Functional integrality;
(7) Unity of purpose.
11. Mr. Nipun Bakshi further submitted that in para-69 of his deposition, the P.W.1 has stated that altogether 7 employees were with M/s. Vrindavan who were involved in supplying and serving the food articles to the customers, so, they cannot be treated as employees involved in manufacturing process and similarly since it is stated that one G.M. was also employed by M/s. Dwarika Prasad so, he cannot be treated as an employee under the definition of Employee as defined under Section 2 (9) of the Employees' State Insurance Act, 1948. Hence, the labour court erred by holding that the unit of the appellant-petitioner is fit to be covered under E.S.I. Act as per the definition of 'Factory' as stood before its amendment by Employees' State Insurance (Amendment) Act, 2010 (18 of 2010) with effect from 01.06.2010. Hence, it is submitted that the impugned order passed by the learned labour court be set aside and the petition filed under Section 75 (1) (a) and (g) of the Employees' State Insurance Act, 1948 be allowed and reliefs, as prayed for therein, be 5 M.A.No.52 of 2009 granted.
12. Mr. Ashutosh Anand- learned counsel for the respondents on the other hand defended the impugned order passed by the labour court and drew the attention of this Court towards Section 82 of the Employees' State Insurance Act, 1948 which reads as under:-
"82. Appeal - (1) Save as expressly provided in this section, no appeal shall lie from an order of an Employees' Insurance Court. (2) An appeal shall lie to the High Court from an order of an Employees' Insurance Court if it involves substantial question of law. (3) The period of limitation for an appeal under this section shall be sixty days.
(4) The provisions of sections 5 and 12 of the [Limitation Act, 1963] shall apply to appeals under this section." (Emphasis supplied) and submits that as an appeal will lie to the High Court only if it involves a substantial question of law but in this case there is absolutely no substantial question of law. Hence, it is submitted that this appeal is not maintainable.
13. It is next submitted by Mr. Anand that the case was decided by the learned labour court purely on the basis of facts and the learned labour court has rightly appreciated the evidences in their proper perspective. It is further submitted that as the petitioner could not substantiate his contention that M/s. Manoj Kumar was let the verandah of M/s. Vrindavan on rent by admitting that there is no written agreement and P.W.2- Manoj Kumar also could not produce any rent receipt in that respect hence the labour court has rightly held that the said two establishments could be clubbed together. Mr Anand further submits that the evidence in the record establishes that M/s. Dwarika Prasad is the diversified unit of M/s. Vrindavan and M/s. Vrindavan was the selling outlet of the said M/s. Dwarika Prasad. It is next submitted that as the insurance inspector is not the final authority to determine the applicability of the E.S.I. Act to the establishment of the appellant-petitioner, hence, he reported his observation to the higher authority and the insurance inspector is not duty bound to supply a copy of survey/inspection report to the employer of the factory/establishment which he surveyed. It is next submitted that there is no provision in the Employees' State Insurance Act, 1948 to afford opportunity of hearing to the representative of the 6 M.A.No.52 of 2009 establishment prior to its registration. Mr. Anand next submitted that the appellant-petitioner was informed about the coverage of his establishment vide letter in Form C-11 dated 24.04.1998 and he was advised to begin compliance with provisions of E.S.I. Act vide letter dated 29.01.1999/17.02.1999. It is further submitted by Mr. Anand that after failure of the appellant to comply with the provisions of the E.S.I. Act, which he was liable to comply with for the period from 01.01.1997 to 30.09.2003, after due process of law, the respondent-Corporation has issued notice in Form C-18 (ad-hoc) dated 18.12.2003/22.12.2003 calling upon the appellant-employer to show-cause as to why an amount of Rs.5,08,204/- should not be determined as contribution due from him and he was afforded an opportunity of personal hearing on 02.01.2004 and the said date was extended to 25.03.2004. But the appellant failed to respond to the said notice and under compulsion, the respondent-Corporation passed the order under Section 45-A dated 11.05.2005 i.e. after disposal of Injunction petition of appellant by learned Employees Insurance Court vide its judgment dated 16.02.2005.
14. It is next submitted that the proprietor of M/s. Dwarika Prasad, sweet shop at Niwaranpur and proprietor of M/s. Vrindavan, sweet shop at Ranchi Club Complex are son and father. Undisputedly, they used to live together at the relevant point of time and were carrying out same business and profession i.e. manufacturing of sweets and namkeen. The father used to supervise the business of son at times as stated by the P.W.1 at para-41 of his deposition as a witness before the labour court. Thus, the evidence in the record is sufficient to show unity of ownership and unity of purpose, interconnection and interdependence, unity of management and control and geographical unity are also in existence for clubbing the units together. It is then submitted by Mr. Anand that M/s. Manoj Kumar, the so-called tenant of proprietor of M/s. Vrindavan is the owner of extension counter located in verandah of M/s. Vrindavan which used to sell chat, Chhola, Samosa, Chinese kulfi and panipuri to the customers on production of coupons issued from the cash-counter of M/s. Vrindavan. Both the units have the same electrical/generator connection. They have common path and exit and here the test for clubbing the units together 7 M.A.No.52 of 2009 such as geographical unity, unity of management and control, unity of finance, functional integrality and interdependency, all are satisfied.
15. It is further submitted by Mr. Anand that the purpose of Sales Tax or for some other purpose, the three units may be treated as separate unit but the principle of Industrial Law is different from the other law and merely because the three units have separate licence under the Bihar Shops and Establishment Act, that cannot be a ground for not clubbing the 3 units when they satisfy the ingredient which is already mentioned above, for clubbing the units. It is then submitted that the fact that the settlement deed/rent agreement was effected between M/s. Vrindavan and M/s. Manoj Kumar on 25.04.2001 i.e. after receipt of coverage intimation in Form C-11 dated 24.04.1998/01.05.1998 and the subsequent request for compliance with the provisions of E.S.I. Act dated 29.01.1999/17.02.1999 shows that the same has been prepared to escape the three units being brought under the provisions of Employees' State Insurance Act by way of clubbing them. It is next submitted that the employees' strength has been ascertained by the insurance inspector as under:-
Units Workers as per Workers whose Total
wage record names not reflected
in wage record
1. M/s Vrindavan 05 02 07
2. M/s Manoj 04 nil 04
Kumar
3. M/s Dwarika 05 11 16
Prasad
Total 14 13 27
16. Mr. Anand relied upon the judgment of Hon'ble Supreme Court of India in the case of Royal Talkies, Hyderabad and Others Vs. Employees' State Insurance Corporation through its Regional Director, 8 M.A.No.52 of 2009 Hill Fort Road, Hyderabad reported in AIR 1978 SC 1478 para-13 and 14 of which reads as under:-
"13. The reach and range of the definition is apparently wide and deliberately transcends pure contractual relationships. We are in the field of labour jurisprudence, welfare legislation and statutory construction, which must have due regard to Part IV of the Constitution. A teleological approach and social perspective must play upon the interpretative process.
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 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) 9 M.A.No.52 of 2009
17. It is next submitted that the applicability is to be decided on the facts, evidences and circumstances of each case and as in this case the learned Labour Court has appreciated the evidence in the record in its proper perspective in the impugned order, hence, the same does not warrant any interference of this Court in exercise of its jurisdiction under Section 82 of the Employees' State Insurance Act, 1948. Hence, it is submitted that this appeal, being without any merit be dismissed.
18. Having heard the rival submissions made at the Bar and after carefully going through the materials in the record it is pertinent to mention here that 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 para-14 and 16 of which read as under:-
"14. The High Court noted that the ESI Corporation was justified in clubbing Jose Cut Piece Centre with Jos Textiles, Jose Brothers Silks and Sarees and M/s. Jos Associates with M/s. Rose Fabrics and M/s. Jos Silks and Sarees, M/s. Gents Fabrics, M/s. Jacobs and M/s. Jos Brothers Trades and Investments with M/s. Sumangali and treating Jos Textiles, M/s. Rose Fabrics and M/s. Sumangali as "single establishments" for the purpose of coverage under the ESI Scheme as there was functional integrality, unity in management, financial unity, geographical proximity, unity in supervision and control and general unity of purpose. Even if each unit was an establishment having separate registration under the Sales Tax Act, Shops and Establishments Act and the Income-Tax Act, all the units were interdependent and were supplementary and complementary to each other for the sake of their textile business.
16. In Associated Cement Cos. V. Their Workmen,1 (AIR 1960 SC 56) it was inter alia observed as follows :
"The Act not having prescribed any specific tests for determining what is one establishment. In considering the question whether a cement factory and the adjacent lime stone quarry supplying lime stone to it, are one establishment, one 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 Industrial Disputes Act and other relevant provisions of the Mines Act, 1952, or the Factories Act, 1948. It is perhaps impossible to lay down any one test as an absolute and invariable test 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 the establishment is one, if one the contrary they do not constitute one integrated whole, each unit is then 10 M.A.No.52 of 2009 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 therefore. Thus, in one case the unity of ownership, management and control may be the important or general unity may be the important test; and in still another case the important test may be the unity of employment."
(Emphasis supplied)
19. It is a settled principle of law that it is impossible to lay down any one case as an absolute and invariable case for determining what is one establishment in all cases. The relation between the units will be judged depending on the facts having regard to the scheme and object of the statute which gives the right of unemployment compensation and also describes a disqualification therefor. So far as the contention of the appellant that the persons who are serving the food articles to the customers or for that matter one G.M. who was working for administrative purposes, cannot be considered as employees to bring the total number of employees to twenty or more for the establishment being considered a factory as it stood before its amendment is concerned, the said contention is no more res integra. 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 has held 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 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 11 M.A.No.52 of 2009 in W.Ps. 144-149 and 331 of 1971 dated 14th October, 1976 (Mad) has also taken a similar view. We agree with the view taken by the judgments of the Andhra High Court and of the Calcutta High Court and dismiss these appeals with costs." (Emphasis supplied)
20. In view of the settled principle of law in the cases of Hyderabad Asbestos Cement Products Ltd. Vs. Employees Insurance Court & Another (supra) and Royal Talkies, Hyderabad and Others Vs. Employees' State Insurance Corporation through its Regional Director, Hill Fort Road, Hyderabad (supra) this court do not find any force in the submission of the appellants that the persons who are serving the different kind of eatables to the customers or for that matter the G.M. cannot be counted in arriving at the total number of employees employed in the establishment concerned. Similarly 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 (supra) even if each of the 3 units was an establishment having separate registration under the Sales Tax Act, Shops and Establishments Act as all the units were interdependent and were supplementary and complementary to each other for the sake of their business hence they can still be clubbed together. After considering the aforesaid facts, this Court after going through the materials in the record, is of the considered view that the learned labour court has appreciated the evidence in the record in its proper perspective after threadbare discussion of the evidence in the record the labour court has rightly came to the conclusion that the clubbing of the 3 units to constitute one establishment is proper. This court do not find any substantial question of law involved in this appeal.
21. Accordingly, this appeal, being without any merit, is dismissed.
22. Let a copy of this judgment along with the lower court records be remitted back to the learned concerned court below forthwith.
(Anil Kumar Choudhary, J.) High Court of Jharkhand, Ranchi Dated the 21st of July, 2022 AFR/ Animesh 12