Sri G.V.Seethapathy, J

1. This appeal is filed under Section 82 of Employees State Insurance Act, 1945 (for short, "the Act") assailing order dated 24-08-2006 in E.I.Case No.20 of 2003 on the file of the Chairman, Industrial Tribunal-I, Hyderabad, wherein the petition filed by the appellant under Section 75(1)(g) of the Act to declare that the appellant is not liable to pay the contribution, was dismissed.

2. The second respondent passed an order AP/Ins.IX/31-2576-41 dated 18.10.2002 under Section 45-A of the Act demanding contribution in respect of the employees engaged by the contractors with whom the appellant has entered into a contract for transport of the petroleum products.

3. The appellant filed E.I. Case No.20 of 2003 contending that the workers engaged by the contractors are not the employees of the appellant and that the appellant has no control over the said workers and they are not engaged in execution of any work of the appellant, and therefore, the appellant was not liable to pay the contribution.

4. The respondents opposed the said petition contending that Section 40 of the Act casts responsibility on the appellant-petitioner to pay contribution, both in respect of their employees as well as the employees of the contractors and the appellant is exempted from paying contribution only in respect of their regular employees, but not in respect of the employees engaged by the contractors, and therefore, the appellant, being the principal employer of the workers, is liable to pay the contribution.

5. Based on the contentions of both parties, the learned Chairman, Industrial Tribunal-I framed the following issues:

1. Whether the persons engaged by the Transport Contractors are not the employees of the petitioner within the meaning of Section 2(9) and (13) of ESI Act?

2. Whether the regular employees of the petitioner are exempted from the purview of the ESI Act but not the persons engaged by the Transport Contractors, as contended by the ESI Corporation?

3. Whether the petitioner is not liable to pay any amount as demanded in the Section 45A order dt.18.10.2002?

4. To what relief?

6. The Manager of the appellant-Corporation was examined as PW-1 and Exs.P-1 to P-7 were marked. The Branch Manager of the first respondent was examined as RW-1 and Exs.R-1 to R-3 were marked on behalf of the respondents.

7. After hearing both sides, the learned Chairman dismissed the petition holding that as per Section 2(9)(ii) read with Section 2(13) of the Act, the petitioner is liable to pay contribution to the workers engaged by the contractors as a principal employer and to recover the same later on, as per Section 40 of the Act.

8. Aggrieved by the same, the petitioner filed the present appeal.

9. The main contention of the learned counsel for the appellant is that the workers engaged by the contractors for the purpose of transporting petroleum products of the appellant-Corporation to the dealers at various places, are not employees of the appellant-Corporation in any capacity and they are engaged by the contractors independently, over whom, the appellant-Corporation has no supervisory or other control whatsoever, and therefore, the appellant cannot be termed "principal employer" in respect of such workers, and hence, no liability can be fastened on them for payment of contribution in respect of such workers.

10. Learned counsel for the respondents, on the other hand, contended that the workers engaged by the immediate employer, i.e., the contractor, for transport of the products of the appellant do their duty in connection with execution of the work of the appellant, and therefore, they come within the meaning of "employee" under Section 2(9) of the Act and the app