IMPORTANT POINT
The principal test to connect the workmen and employer under ESIC Act, 1948 is to ensure health to the employee being covered under the Act and for this the true test is control by the principal employer over the employee. The test of pre-dominent business activity adopted by Orissa High Court is not correct.

ORDER

In these appeals short question that arises for consideration is : Whether the Employees State Insurance Act, 1948 (for short the Act ) would apply to the regional offices of the appellant at Secunderabad in Andhra Pradesh and Bangalore in Karnataka States. The appellant had established its registered office at Poona for sale and distribution of its products from three factories-one situated at Kirloskarvadi, second at Karad in State of Maharashtra and the third one at Deewas in the State of Madhya Pradesh. Admittedly factories situated in Maharashtra are not covered under the Act. They set up regional offices at several places. The Governments of Andhra Pradesh and Karnataka have applied the provisions of Section 2(g) of the Act to the aforesaid regional offices situated at Secunderabad and Bangalore and the respondent had issued notice under Section 3(g) of the Act calling upon them to contribute their share of the health insurance of the workmen working in the respective regional offices. Disputing the liability, the appellant filed application before Insurance Court under Section 75 of the Act. The Court had held that the appellant s regional offices are covered under the Act and accordingly it directed them to pay their contribution. The High Courts of Andhra Pradesh and Karnataka have upheld the said orders. Hence these appeals by special leave.

2. In point of time, the judgment of the Andhra Pradesh High Court is the earliest rendered in C.M.A. No. 593 of 1976. It had followed the decision of this Court in Hyderabad Asbestos Cement Products Ltd. v. The Employees Insurance Court & Anr.1 and held that the regional offices are established for sale or distribution of the appellant s products, which have their connection to its factory at Deewas and as such the appellant is liable to pay contribution. When similar question had arisen in the Orissa High Court, in Misc. Appeal No. 187 of 1982, by an order dated March 5, 19872, the learned single Judge had held that since the percentage of sale of products from Deewas at Bhubaneswar regional office is not predominantly higher but is only incidental, it is not covered under the Act. Therefore, the appellant is not liable to contribute to the insurance of the workmen. SLP No. 7372 of 1987 against the said judgment was dismissed by a Bench of two Judges of this Court on January 28, 1988 holding that having regard to the peculiar facts of the case, no interference under Article 136 of the Constitution was called for. When the appeals came for hearing before a Bench of two Judges, by an order dated January 17, 1990, the appeals were referred to this Bench for decision. Thus these appeals have come before us.

3. Shri R.F. Nariman, learned counsel for the appellant, raised two-fold contentions. It is contended that as per material on record, the regional offices at Secunderabad and Bangalore are transacting business of the products manufactured by Deewas factory ranging between 3% to 33%. It is not predominantly products of the factory at Deewas and the other factories are not covered under the Act. Therefore, the view expressed by the Orissa High Court is correct interpretation of the law and that of the High Courts of Andhra Pradesh and Karnataka is incorrect. It is also contended that the decision said of the High Court of Orissa between the same parties become final, it operates as res judicata. Therefore, the appellant is entitled to be excluded from the purview of the Act.

4. Shri V.C. Mahajan, the learned senior counsel appearing for the State, contended that regional offices having been established by the appellant at different places to sell or distribute their products at the respective places, the quantum of business transaction is not relevant consideration. Equally, the test of predominant business turnover of the products manufactured by Deewas factory is not a relevant consideration. The test laid down in Hyderabad Asbestos Cement P