Judgment

GOSWAMI, J. :- The appellant and his brother, Srinivasamurthy are partners of a firm carrying on the business of manufacturing and exporting of polish granite memorial stones in the name and style of Messrs Narayanswami & Sons. The firm is admittedly a factory both under the Factories Act as well as under the Employees State Insurance Act (briefly the Act). The appellant claims to directly employ about 35 persons in his factory and has been paying contribution under the Act on their account. It is stated that adjacent to his own factory there in another factory situated on the appellant s land leased out by him to two persons, Chidambarchari and Shankarasubbachari (hereinafter referred to as the contractors). The contractors employ about 50 workers in their factory for purposes of cutting and dressing the grantie stones. The lorry drivers bring granite from the surrounding areas and unload them outside the factory. The contractors get these to their portion of the leased land for cutting them. After cutting these are sent back to the appellant s factory where these are designed and polished and thereafter exported.

2. The Employees s State Corporation (briefly the Corporation) applied to the Employees State Insurance Court at Bangalore (briefly the Court) for recovery of an amount of Rs. 8893/- being the employees contribution payable by the appellant for the period commencing from 27-7-1958 to 31-1-1964 on account of the workers employed by the two contractors described as immediate employers under the Act. The Court decided against the Corporation holding that the contractors were not immediate employers within the meaning of Section 2 (13) of the Act and they were independent contractors and hence the appellant was not the principal employer in respect of the employees working under the contractors. The Corporation appealed to the High Court of Mysore against the aforesaid order under Section 82 (2) of the Act. The High Court held that the appellant order under Section 82 (2) of the Act. The High Court held that the appellant was the principal employer and the contractors were the immediate employers under the Act. The High Court further held that the workers under the contractors were employees within the meaning of Section 2 (9) (ii) of the Act. The High Court thus accepted the appeal of the Corporation. Hence this appeal by special leave.

3. Before the Court evidence was given by both sides and the following findings of the Court are adverted to by the High Court.

"All that can be said to have been proved by the applicant corporation in this case is that RWs 2 and 3 (the contractors) work at a place belonging to the respondent and execute part of the work which is necessary to manufacture the final finished product for sale. All that can be said to have been proved in this case is that the contractors are doing some work which would be the foundation for the work that is finally done by the respondent".

After examining the evidence the High Court also found as follows :-

"There is evidence to show that these employees (under the contractors) are employed in connection with the work of the respondent factory."

The respondent in the High Court s judgment refers to the appellant herein. As stated earlier, the High Court answered both the question in favour of the Corporation.

4. The same points are raised for consideration in this appeal and Mr. Natesan on behalf of the appellant submits that the contractors owned a separate factory and are independent contractors and cannot be held to be immediate employers within the meaning of Section 2 (13) of the Act and hence the appellant is not liable as principal employer to pay the contribution on account of the persons working under the contractors.

5. Before we deal with the question of law raised in this appeal, it will be appropriate to refer to the material provisions of the Act.

6. The Act, as it appears from the preamble, is passed "to provide for certain benefits t