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2003(6) Supreme 775
SUPREME COURT OF INDIA
(From Kerala High Court)
Shivaraj V. Patil & D.M. Dharmadhikari, JJ.
K.R. Anitha & Ors. -Appellants
versus
Regional Director, E.S.I. Corporation & Anr. -Respondents
Civil Appeal Nos. 6486-6494 of 2001
Decided on 17-9-2003
Counsel for the Parties :
For the Appellants : Sunil Gupta, Sr. Advocate, Roy Abraham, Ms. Seema Jain and Himinder Lal, Advocates.
For the Respondents : C.S. Rajan, Sr. Advocate, V.J. Francis, P.I. Jose and Jenis Francis, Advocates.
Held : In order to take shelter under the proviso to sub-Section (4) of Section 1 of the Act the appellants have to satisfy that (1) their establishments belonged to or were under the control of the Government; and (2) the employees in their establishments were otherwise receiving benefits substantially similar or superior to the benefits provided under the Act. The High Court rightly took the view that the toddy shops of the appellants neither belonged to the Government nor they were under the control of the Government. If the first requirement of the proviso itself is not satisfied, it becomes unnecessary to examine as to the satisfaction of second requirement of the proviso. No doubt, the State has the monopoly in liquor trade but it is open to the State to part with that right for a consideration so as to grant privilege of carrying on trade in liquor to the licensees. Under Abkari Act right to run toddy shops is auctioned annually and licences are granted to carry on business in liquor subject to the provisions of Abkari Act, Rules and conditions of licence. The provisions contained in the Abkari Act and Rules and conditions of licence having regard to the nature of business, namely, dealing with liquor, are regulatory. None of these provisions of the Act, Rules and conditions of licence interfere with a right to carry on business by licensee subject to the regulatory measures contained therein. In the matter of carrying on business and trade of liquor under licences granted to the appellants it is not shown to us as to how financially, functionally and administratively the State either dominated or controlled. Looking to the facts of the case, keeping in view the provisions of Abkari Act and Rules and conditions of licence, the control of the State Government in regard to the trade in liquor by the licensees was merely regulatory. (Para 9)
The High Court was right in its conclusion that the said proviso did not cover the toddy shops of the appellants and that neither the State Government nor the Excise Department came in the picture of management of the business of the appellants. It is clear from the facts that the State had no participation in terms of finance and there was no Government participation in carrying on the business of liquor by the appellants either functionally or administratively. (Para 9)
JUDGMENT
Shivaraj V. Patil, J.-The appellants were contractors in respect of today shops during the given period. Toddy shops were run on the basis of yearly auction conducted by the Excise Department of the Government of Kerala. Various guidelines were issued by the Board of Revenue and the State Government from time to time for running toddy shops. The employees working in the toddy shops during the period in question were not brought under the coverage of the ESI Scheme mainly on the ground that the provisions of ESI Scheme were not applicable to the toddy shops according to the appellants: assuming that the Employees State Insurance Act, 1948 (for short the Act ) was applicable to the toddy shops in the previous years, that did not create any continuing liability of the appellants. On the basis of the inspection conducted by the officers of the respondent Corporation, respondents took up the position that the toddy shops were covered under the Act and assessed to the contribution; recovery proceedings also were initiated for collection of contribution amount. At that stage the appellants approached the Employees Insurance Court (EI Court) seeking declaration that the toddy shops run by the appellants during the period 1991-1994 could not have been brought under the ESI Scheme and, therefore, no liability to pay contribution could be foisted on them.
2. According to the respondents the toddy shops were covered by the ESI Scheme from 1983 onwards and only when the inspection was conducted it was noticed that the appellants did not pay the contribution during the period of their licence; in spite of the communication of the coverage and demand for payment of contribution the appellants did not respond and in those circumstances revenue recovery proceedings were initiated. According to the respondents there was no illegality in the action taken by them. The appellants elaborated their case in reply statement contending, even assuming, that the previous contractors were complying with the ESI Scheme, that did not make the appellants liable in any manner to continue the coverage as the very applicability of the Act to the workers of toddy shops was quite uncertain. It was their further case that the appellants could not be treated as principal employers insofar as the toddy shops were concerned because the responsibility to run the toddy shops through some agent was purely that of the Excise Department under the Act; therefore, Excise Department was the owner and principal employer of the toddy shops; the functioning of the toddy shops was covered by the provisions of the Abkari Act and Rules and not by the provisions of Kerala Shops and Commercial Establishments Act; for the benefit of the workers in toddy shops there is separate enactment and schemes framed thereunder, i.e., Kerala Toddy Workers Welfare Fund Act and Scheme; benefits to the workers under the Kerala Toddy Workers Welfare Fund Act and the Scheme were more beneficial to them; the licence given to a contractor to run a toddy shop is not similar to the licence issued to the owners of the shops and other establishments under the Shops and Establishments Act. The toddy shops constitute different class of establishments; if the Government had any intention to include the toddy shops also under the purview of the ESI Scheme, they would have found place in the notification issued under Section 1(5) of the Act. According to the appellants as contractors of toddy shops, at the most, they had only the role of an immediate employer; even assuming the Act is applicable to toddy shops the primary responsibility to pay contribution was that of the Excise Department being the principal employer.
3. The EI Court after considering facts, respective contentions and referring to the provisions of the Act and the Abkari Act and Rules concluded that toddy shops were the establishments belonged to or were under the control of the Department of the Government and the employees w
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