Judgment

RANGANATH MISRA, J. :- The short point which arises for determination in this appeal by special leave is as to whether a partner of a firm is an "employee" within the meaning of Section 2(9) of the Employees State Insurance Act, 1948 (hereinafter called the Act). Respondent Ramanuja Match industries which is a firm engaged in manufacturing of matches within the Trichur area of Kerala State and the question as to whether it is covered under, the provisions of the Act fell for consideration. The Inspector found that there were 18 regular employees and three of the partners who worked regularly for wages were to be put together. Thus the number of 20 employees as required by the Act was satisfied and the respondent did incur liability for contribution. The respondent challenged its liability before the Employees Insurance Court at Calicut by contending that partners were not employees and when the three partners were excluded, the total number of employees did not exceed the statutory minimum. The Insurance Court found in favour of the respondent and an appeal under the Act was carried to the High Court by the appellant and a Division Bench of that Court following its earlier decision in. Regional Director of E. S. I. Corporation v. M/s. Oosmanja Tile Works, Alwaye ILR (1975) 2 Kerala 207, held that partners were not employees. It is against this decision that the present appeal has been carried.

2. There is no dispute that under the Act liability to pay contribution arises only when 20 or more persons are employed for wages. It is also not disputed that in the case of the respondent unless the three partners are included, the basic number of 20 is not reached and no liability under the Act accrues.

3. The term employee has been defined in S. 2(9) of the Act to mean "any person employed for wages in or in connection with the work of a factory or establishment to which the Act applies and" one of the alternative in clause (i), (ii) or (iii). Wages has been defined in sub-s. (22) of that Section to mean "all remuneration paid or payable, in cash to an employee, if the terms, of the contract of employment, express or implied, were fulfilled ........." It is thus clear that in order that some one may be an employee within the meaning of the Act, he has to be employed for wages. The concept of wages would bring in the contract of employment. The Shorter Oxford English Dictionary gives the meaning of employ to be "to use the services of for some special business; to have or maintain in ones service. " In common parlance the concept of employee would take with it the correlation of the employer. The term employer had not been defined in the Act but in the absence of an employer who would provide the employment there, would indeed be no employee. In fact, that concept is clear, in the scheme of the Industrial Disputes Act of 1947 and the definition of the term employer in S. 2(g) of that Act makes the position clear.

4. It is appropriate that at this stage we refer to the position of a partner qua the firm. Section 4 of the Partnership Act, 1932, defines partnership and one of the essential requisites of a partnership is that there must be mutual agency between the partners. A Full Bench of the Patna High Court in Seth Hira Lal v. Sheikh Jamaluddin (1946) 224 Ind Cas 106, rightly emphasised upon the position that an important element in the definition of partnership is that it must be carried on by all or any one of the partners acting for all. Section 18 of the Partnership Act statutorily declares every partner to be an agent of the firm for the purposes of the business of the firm and Section 19 states that an act of a partner which is done to carry on, in the usual way, business of the kind carried on by the firm, binds the firm. A partnership firm is not a legal entity. This Court in Champaran Cane Concern v. State of Bihar (1964) 2 SCR 921 pointed out that in a partnership each partner acts as an agent of the other. The positio