Delhi District Court
M/S Moti Talkies vs Employees State Insurance Corporation on 3 April, 2013
In the Court of Sh. Praveen Singh: Senior Civil Judgecum Rent
Controller (Central), Tis Hazari Courts, Delhi.
ESIC. No. 18/97
M/s Moti Talkies
Chandni Chowk,
Delhi. ....................... Petitioner.
VERSUS
1. Employees State Insurance Corporation,
D.D.A Flatscumoffice Complex,
Rajindra Place, New Delhi.
(Through its Regional Director).
2. The Deputy Regional, Director,
(at present Sh. M. Chakravarty)
Employees State Insurance Corporation,
D.D.A Flatscumoffice Complex,
Rajindra Place, New Delhi. ..................... Respondents.
Date of Institution : 04.02.1997.
Date of Arguments: 25.03.2013.
Date of Judgment : 03.04.2013.
APPLICATION U/SEC. 77(1A) OF THE ESIC ACT.
ESIC No. 18/97 1 of 10
JUDGMENT :
1. The present petition under section 77 (1A) of the ESIC Act has been filed by the petitioner against the respondents.
2. Briefly stated the case of the petitioner is, that the petitioner is carrying on the business of exhibiting the pictures at the hall popularly known as Moti Talkies, Chandni Chowk, Delhi. The petitioner received notices dated 26.02.1992 and 16.10.1992 from the respondent no. 2 in respect of inspection of the Cinema with regard to canteen and cycle stand being run by an independent person. On receipt of these notices, reply was sent by the petitioner vide its letters dt. 23.03.1992 and 19.10.1992 explaining that the said canteen and cycle stand were being run by some independent person therefore, petitioner management was not responsible for the payment of ESI contribution of the employees of the canteen and cycle stand. Again, on 10.04.1995 and 12.04.1996 notices were received by the petitioner's management that it was required to pay the contribution for the employees of the canteen and cycle stand. The said notices were also replied by the petitioner vide letter dated 12.05.1995. Finally, the petitioner had received notice dated 29.06.1996 from the respondent no. 2. To this notice, the petitioner submitted a detailed reply/representation dated 25.07.1996 to the Regional Director of ESIC. Thereafter, the respondent no. 2 made a comprehensive order directing the petitioner to pay contribution totalling Rs. 36,865.65 for the period w.e.f. 01.04.1977 to May, 1996. It is further ESIC No. 18/97 2 of 10 submitted that the respondent no. 2 had failed to grant proper opportunity to the petitioner to explain and argue their case in the light of representation made on 25/07/1996. Furthermore, it is submitted by the petitioner that the canteen and cycle stand owners were not the contractors of the petitioner's management and therefore, their employees were not the employees of the petitioner. The cycle stand and canteen owners were the tenants of the petitioner and rent deeds were also executed with them. The petitioner management was not obliged to keep the canteen or cycle stand under the provision of Delhi Cinematograph Act. It is further submitted that it was not obligatory on the part of the petitioner to maintain an eating house/ restaurant or cycle stand. Hence the present petition, praying that the order dated 20.12.1996 of respondent no. 2 be set aside and quashed and/or case of the petitioner may be remanded allowing the petitioner a reasonable opportunity of being heard and to explain the facts and circumstances of the case before respondent no. 2 on the basis of the petitioner's representation dated 25.07.1996.
3. On being served with the summons, the defendants filed its written statement.
4. In the written statement, a preliminary objection is taken that the present petition has been filed by the petitioner without any cause of action. A further preliminary objection is taken that the petitioner has not approached to this Court with clean hands. It is further submitted that the ESIC No. 18/97 3 of 10 provisions of the E.S.I. Act is very clear that the principal employer is liable to make contribution at first instance. The Act is also very clear that under Section 2(9) & 2(13), the term 'employees' means any person employed for wages or in connection with the work of factory or establishment to which this Act applies and who is directly employed by the principal employer or by an immediate employer. Thus, the petitioner failed in its obligation to comply with the provisions of the ESI Act.
5. On merits, it is admitted by the respondent that the petitioner is a tenant of the premises. It is denied that the employees of the cycle stand and canteen were not covered under the Act. It is further submitted by the respondent that the order passed by the respondent is legal, justified and demand is fully payable.
6. From the pleadings of the parties, following issues were framed by my learned predecessor vide his order dated 01.03.2001:
1. Whether the employees of the canteen and cycle stand are not employees of the petitioner and as such the demand made in respect of them is liable to be set aside ?
2. Relief.
7. Thereafter, the petitioner examined Sh. Kirti C. Desai as PW1. On the other hand, the respondent examined Mr. D.K. Sethi as RW1 and Ms. Manju Chakraverty as RW2.
8. I have heard learned counsels for the parties and perused the ESIC No. 18/97 4 of 10 record very carefully. My issue wise findings are as under: ISSUE NO. 1: Whether the employees of the canteen and cycle stand are not employees of the petitioner and as such the demand made in respect of them is liable to be set aside ?
9. PW1 deposed that the canteen owner and cycle stand owner were the independent tenants under them. He did not know the number of employees employed by both the tenants. The employees of the tenants were always appointed by the tenants only. The petitioner did not have any control regarding their services or employment. Their salaries were paid by the tenants themselves. He had no knowledge regarding the payment of bonus to the employees of the tenants. He did not know whether the bonus was applicable to the said employees or not. He did not have any knowledge whether the employees of the tenants were working as permanent or temporary employees.
10. During his cross examination, he deposed that he had not brought the letter by which he was authorized to keep sub tenants. He further deposed that they were the tenants in the premises since 1938. he further deposed that the canteen and cycle stand were essential for the operation of cinema hall. He denied that the sub tenants were their contractors. He deposed that he did not go for the personal hearing on 26.07.1996.
11. The fact which emerged from the above evidence is, that the cycle stand and the canteen are situated within the premises of the cinema ESIC No. 18/97 5 of 10 hall, being run by the petitioner. The another admission/ fact which came out from the cross examination of the PW1 was, that the canteen and cycle stand are essential for the operation of the cinema hall.
12. In the light of these facts, it has been contended on behalf of the petitioner that as the petitioner does not have any control, either direct or supervisory, over the tenants and over the business of canteen and cycle stand being run by them, the case of the petitioner is clearly and squarely covered by the judgment of Hon'ble Supreme Court in Employers in relation to the Management of Reserve Bank of India v. Their Workmen, AIR 1996 SC 1241. It is, thus, contended that in the light of this judgment, the respondent could not have sought from the petitioner a contribution of ESI for the employees of the cycle stand and canteen.
13. On the other hand, learned counsel for the respondent has contended that the case of the petitioner is squarely covered under section 2 (9) (ii) of ESI Act and as the work of canteen and cycle stand is being done within the premises of cinema hall and is essential for the working of cinema hall, the owner of the cinema hall or the cinema hall has to be essentially considered as principal employer of the persons employed in the canteen and the cycle stand. He has relied upon the judgment of Hon'ble Supeme Court in Royal Talkies, Hyderbad & Ors. v. Employees State Insurance Corporation, (1978) 4 SCC 204.
14. I have carefully considered the rival contentions made on ESIC No. 18/97 6 of 10 behalf of the parties and have perused the record very carefully.
15. After carefully perusing the judgments cited by both the parties, I find that the judgment of Employers in relation to the Management of RBI (supra) is not applicable to the facts of the present case. I say so because, firstly, it did not directly relate to the case of ESI contribution and but was in respect to the definition of worker, workman and employer and their relationship as provided under Industrial Disputes Act, 1947. Secondly, in that case, the canteen was being run for the welfare of the employees and the said canteen was not essential for the running of the RBI. Not only that, it was not even ancillary to or having any link with the object of the establishment. It was not a kind of amenity or facility which would have enhanced the business prospects of RBI.
16. On the other hand, under section 2 (9) (ii) of ESI Act, an employee who is working in the premises of an establishment and is doing a work which is ordinarily part of the work of the establishment or is preliminary to the work of establishment or is incidental to the purpose of establishment, such a person is an employee within the meaning of ESI Act.
17. In the present case, admittedly the cycle stand and the canteen are situated within the premises of the cinema hall being run by the petitioner. It is an admission during the cross examination of PW1 that a cycle stand and the canteen are essential for the running of cinema hall. This means that though it may not be obligatory on the part of the cinema hall ESIC No. 18/97 7 of 10 under any statute or law to maintain/ have any place for canteen and cycle stand but, the provision of cycle stand and canteen was essential for a successful cinema hall. In absence of these two, the business of cinema hall could not be successfully carried out. In that case, the cycle stand and the canteen were not incidental to the purpose of establishment but were ordinarily a part of work of establishment of the cinema hall. That being the case, I find that the judgment of Hon'ble Supreme Court squarely covers the present case and the petitioner, being the principal employer, the employees of the canteen and the cycle stand are to be considered as employees of the petitioner for the purpose of ESI contribution.
18. Learned counsel for the petitioner has further contended that the demand as raised is otherwise liable to be set aside as the principle of natural justice was not followed and no opportunity of being heard was given to the petitioner.
19. In this regard, PW1 appeared and stated that the petitioner was never called by the respondent for a personal hearing. However, during his cross examination, he admitted that he did not go for personal hearing on 26.07.1996. The letter Ex.RW2/3 clearly gives the petitioner an opportunity to appear and explain its case before the concerned authorities and the date of such appearance was given as 26.07.1996. Admittedly, the petitioner did not appear for such a hearing. RW2 proved that she had issued the letter Ex.RW2/2 and that it had her signatures at point C. During her cross ESIC No. 18/97 8 of 10 examination, it was not even suggested to her that no such letter was issued or no such letter was received by the petitioner.
20. Therefore, it stands proved that the letter Ex.RW2/3, giving the petitioner an opportunity for personal hearing, was issued and received by the petitioner. Further, in view of the testimony of PW1, it stands proved that the petitioner did not appear for such a hearing despite opportunity being given.
21. I also have to notice that RW1 had also deposed that the letter Ex.RW1/2 was also sent to the petitioner. The said letter is dated 26.02.1992 and it asked the petitioner to appear with relevant record before the concerned authorities on 23.03.1992.
22. Therefore, it is to be seen that there were two opportunities given to the petitioner to explain its case. Therefore, it is not the case where the personal hearing was not given to the petitioner but it is the case, where, despite an opportunity being given, the petitioner himself did not appear for the personal hearing. Thus, the petitioner cannot now claim that as it was not given an opportunity of personal hearing, the matter should be remanded back for a fresh assessment.
23. The next argument of learned counsel for the petitioner is, that the DW1 had clearly admitted that he had not noted down any particulars of the employees working in the cycle stand and the canteen on the date of his inspection, that he did not send any notice to the owner of the cycle stand ESIC No. 18/97 9 of 10 and the canteen for production of record, that he did not make any inspection report of his visit on 23.03.1992 and that he had never made any physical inspection of the canteen and therefore, it is very much clear that this is an arbitrary report and the same should be set aside. However, in this regard, I find that the petitioner had two opportunities to appear before the concerned authorities to prove its case and to raise these pleas. Admittedly, the petitioner did not appear before the concerned authorities to prove its case and when the demand was raised, the petitioner raised these grounds before the court. Thus, I find that after a very long time, on these grounds, the demand cannot be set aside. Thus, I find that the petition is devoid of merits. The same is accordingly dismissed with cost. File be consigned to the record room.
Announced in open Court (PARVEEN SINGH) on 03.04.2013. Senior Civil Judge- cum- Rent (This judgment contains 10 pages Controller (Central), and each paper bears my signature.) Tis Hazari Courts, Delhi. ESIC No. 18/97 10 of 10