Karnataka High Court
M/S Vrl Logistrics Ltd vs The Asst. Director on 4 February, 2022
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IN THE HIGH COURT OF KARNATAKA
DHARWAD BENCH
DATED THIS THE 04th DAY OF FEBRUARY, 2022
BEFORE
THE HON'BLE MR. JUSTICE R. NATARAJ
MFA NO.20858/2010 (ESI)
BETWEEN
M/S VRL LOGISTICS LTD
VARUR, HUBLI,
REP. BY ITS GENERAL MANAGER (HRD),
SRI. S G PATIL
...PETITIONER
(BY SRI.HANUMANTHAREDDY SAHUKAR, ADV.)
AND
1. THE ASST. DIRECTOR
EMPLOYEES STATE INSURANCE COPORATION,
SUB REGIONAL OFFICE,
NO.4, DOLLARS HEIGHTS, IV FLOOR,
DOLLARS COLONY, ADJ. NEW BUS STAND,
GOKUL ROAD, HUBLI.
2. THE RECOVERY OFFICER
EMPLOYEES STATE INSURANCE COPORATION,
NO.4, DOLLARS HEIGHTS, IV FLOOR,
DOLLARS COLONY, ADJ. NEW BUS STAND,
GOKUL ROAD, HUBLI.
....RESPONDENTS
(BY SRI.V M SHEELVANT, ADV. FOR R1 and R2)
MFA FILED U/S 82(2) OF THE EMPLOYEE'S STATE INSURANCE
ACT 1948, AGAINST THE ORDER DATED 02-02-2010 PASSED IN
E.S.I.NO.22/2007 ON THE FILE OF THE EMPLOYEE'S STATE
INSURANCE COURT, HUBLI, DISMISSING THE ESI APPLICATION FILED
BY THE APPLICANT U/SEC.75 OF THE EMPLOYEES STATE INSURANCE
ACT 1948.
THIS APPEAL COMING ON FOR DICTATING ORDERS, THIS DAY,
THE COURT DELIVERED THE FOLLOWING:
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JUDGMENT
The appellant has challenged the order dated 02.02.2010 passed by the Employees' State Insurance Court, Hubli in E.S.I. Application No.22/2007. The appellant has also sought for a declaration that its vehicle depot/ place of work at Varur is not covered under the provisions of the Employees' State Insurance Act, 1948 (for short, "the Act, 1948") and therefore the employees on the rolls of the appellant at the depot at Varur are not required to be covered under the provisions of the Act, 1948. The appellant has challenged the validity of the order of the respondents dated 17.04.2007 under Section 45A of the Act, 1948 as illegal.
2. The appellant is engaged in the business of transportation/logistics and has its registered office at Hubli. The appellant established its vehicle traffic section at Varur, which was not covered under a notification issued under Section 1(3) of the Act, 1948. The appellant claims that all vehicles belonging to it are parked at its depot at Varur from where the drivers operate. It contended that the starting point of the trip is from depot at Varur and the vehicle reports back to the depot at Varur and therefore the employees at Varur were not covered under :3: the provisions of the Act, 1948. When things stood thus, the official attached to the respondent visited the depot of the appellant at Varur on various dates between 14.02.2006 and 13.04.2006 and verified the records from April 1998 to January 2006. Later the respondent No.1 issued a demand in Form No.C18 dated 10.07.2006 demanding contribution of Rs.45,33,420/-. After the respondent filed the records, a final order was passed demanding a sum of Rs.5,31,852/- as contribution on the security charges paid by the appellant to the security agencies and contribution of Rs.11,80,098/- on the wages paid to the drivers. The appellant paid the contribution sought for on the security charges but contested the claim made on account of the wages paid to the drivers. An application was filed before the ESI Court in E.S.I.No.22/2007 challenging the contribution on the wages paid to the drivers on the ground that Varur was not covered under the provisions of the Act, 1948. The ESI Court in terms of its order dated 02.02.2010, rejected the application. Being aggrieved by the aforesaid, the present writ petition is filed.
3. Learned counsel for the appellant invited the attention of this Court to Section 1(3) of the Act, 1948 to :4: contend that the provisions of the Act, 1948 would apply only after a notification is issued bringing into force the provisions of the Act, 1948 to those places that are notified. Learned counsel placed on record, the notification issued by the respondents which indicate that Varur was notified under Section 1(3) of the Act, 1948 with effect from 01.04.2012 and therefore, the provisions of the Act, 1948 was not applicable prior to it. He therefore contended that the contribution demanded by the respondents was not in accordance with the Act, 1948 and that the said contribution was not legal.
4. Per contra, the learned counsel for the respondents submitted that the registered office as well as the corporate office of the appellant is in Hubli which is covered under the provisions of the Act, 1948 and merely if the depot of the appellant is situated outside the limits of Varur, the appellant cannot claim exemption from the provisions of the Act, 1948. Learned counsel for the respondents relied upon the judgment in the case of Employees' State Insurance Corporation, Bangalore Vs. Siddarameshwar and Co., Raichar and others 2001-II-LLJ page 769. He also relied upon the judgment in the case of Employees' State Insurance :5: Corporation Vs. Karnataka State Seeds Corporation Ltd., 2002-II-LLJ page 1069 as well as the judgment of the Apex Court in AIR 1996 SC 3261 in the case of Kirloskar Brothers Ltd., Vs. Employees' State Insurance Corporation to contend that if the Act, 1948 applies to the registered office, then, any operation outside the limits would be treated as part of establishment which is covered under the provisions of Act, 1948.
5. It is not in dispute that the appellant has its registered office as well as its corporate office in Hubli. Therefore, the appellant is covered under the provisions of the Act, 1948. The appellant was not able to demonstrate that the depot at Varur was a stand alone establishment and therefore was not covered under the provisions of Act, 1948. Section 2(9)(i) of the Act, 1948 defines an employee as follows:
"2. Definitions. -- XXXXX (9) "employee" means any person employed for wages in or in connection with the work of a factory or establishment to which this Act applies and --
(i) who is directly employed by the principal employer on any work of, or incidental or preliminary to or connected with the work of, the factory or establishment, whether such work is done by the employee in the factory or establishment or elsewhere.":6:
Hence, so long as the drivers of the appellant are employed with it, mere establishment of a depot outside the limits does not insulate the appellant against the claim for contribution under the provisions of Act, 1948.
6. In that view of the matter, there is no merit in this appeal and the same is dismissed.
Sd/-
JUDGE KGK