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1994 Supreme(Bom) 550
IN THE HIGH COURT OF BOMBAY
Vaidyanatha R.G., J.
Cemendia Company Ltd..... Appellant.
Versus
Employees’ State Insurance Corporation.... Respondent.
F.A. No. 446 with F.A. No. 806 of 1987, decided on 4-10-1994.
Advocates appeared :
P.K. Rele i/b. Crawford Bayley Co. in F.A. No. 446/1987, for appellant in F.A. No. 806/1987, for respondent.
H.V. Mehta with Vatsal Verma i/b. H.V. Mehta Co., in F.A. No. 446/1987, for respondent in F.A. No. 806 of 1987, for appellant.
The extended definition of 'employee' under section 2(9) of the ESI Act applies to employees who are connected with the work of the factory either directly or incidentally.
Headnote:
ESI ACT - EMPLOYEES' STATE INSURANCE ACT, 1948 - SECTION 2(9) - EMPLOYEES OF HEAD OFFICE AND WORK SITES - WHETHER COVERED UNDER THE ACT - INTERPRETATION OF EXTENDED DEFINITION OF 'EMPLOYEE' - APPLICATION TO EMPLOYEES NOT DIRECTLY WORKING IN THE FACTORY.
Fact of the Case:
Cemendia Company, a construction company with a head office in Bombay and a workshop, laboratory, and godown in Wadala, challenged the demand by the ESI Corporation to pay contributions for employees in the head office and various work sites. The company argued that these employees were not 'employees' within the meaning of section 2(9) of the ESI Act and hence not coverable under the Act.
Finding of the Court:
The court held that the employees of the head office were covered under the Act but the employees working at the work sites were not. The court interpreted the extended definition of 'employee' under section 2(9) and applied it to employees who were not directly working in the factory.
Issues: 1. Whether the employees of the head office of the Company at Bombay are liable to be covered under the ESI Act? 2. Whether the employees of the Company working at different work sites are liable to be covered under the ESI Act?
Ratio Decidendi: The court held that the employees of the head office were covered under the Act because they were connected with the work of the factory at Wadala. The head office controlled the movement of machinery and equipment, attended to labor problems, and sent cash to the workshop for payment of wages. The court found that the employees at the work sites did not do any work in connection with the workshop and hence could not be treated as employees of the workshop to attract the provisions of the ESI Act.
Final Decision: The court dismissed both appeals, holding that the employees of the head office were covered under the ESI Act but the employees working at the work sites were not.
2. The parties are referred to as per their title in the Court below:
M/s. Cemendia Company is a construction company. It has a head office at Bombay. It has a workshop, a Soil Testing Laboratory and a godown at Wadala. It is an engineering and construction company which takes up construction of buildings all over India. It is an admitted fact that the workshop, the laboratory and the godown are covered by the provisions of the Employees' State Insurance Act, 1948, hereinafter referred to as “the ESI Act”. The ESI Corporation demanded the company to pay the contribution regarding employees employed in the head office and also at various sites where construction activity is going on. The applicant refused this claim. Subsequently, the company filed the present application stating that the employees in the head office or the employees at different work spots are not 'employees' within the meaning of section 2(9) of the E.S.I. Act and hence they are not coverable under the E.S.I. Act and sought the relief accordingly in the Court below.
The ESI Corporation filed its written statement asserting that the employees in the head office and the employees at the sites are also be treated as employees of the workshop and all of them are coverable under the provisions of the ESI Act, 1948.
After recording evidence, the learned ESI Court held that the employees of the head office are to be covered under the Act. It rejected the claim of the Corporation regarding the employees working at sites where construction activity is undertaken by the company. Being aggrieved by the order of the Court below regarding the employees at the head office the company has come up with Appeal No. 446 of 1987 The Corporation has come up in appeal in First Appeal No. 806 of 1987 challenging that part of the order under which the ESI Court held that the employees working at the sites are no coverable under the ESI Act.
3. The learned Counsel for the Company contended that employees of the head office are not coverable under the Act and the finding of the trial Court is erroneous. He further supported the finding of the ESI Court that the employees at the work sites are not coverable under the Act. While supporting the order of the trial Court on the question of employees of head office, the learned Counsel for the Corporation contended that even the employees at the work spots are liable to be covered under the E.S.I. Act and the finding to the contrary recorded by the trial Court is not sustainable.
4. In the light of the arguments addressed before me, two points fall for determination viz.: —
(1) Whether the employees of the head office of the Company at Bombay are liable to be covered under the ESI Act?
(2) Whether the employees of the Company working at different work sites are liable to be covered under the ESI Act?
5. The appeals raise a question of law about interpretation to the definition of an 'employee' under section 2(9) of he E.S.I. Act and its application to employees who are not directly working in the factory.
Admittedly, the workshop, the laboratory and the godown are treated as one unit and they are situated at Wadala and this unit has been treated as a factory and has been registered under the ESI Act. The Court can take judicial notice that Wadala is at a distance of about 10-15 kms. from Bombay proper where the head office is situated. Then the sites where the construction activity of the Company is gong on are spread all over India. Before going to consider the application of the E.S.I. Act to the head office and the work sites, let me consider the question of law about the extended definition of an “employee” under section 2(9) of the E.S.I. Act which was pressed into service by the learned C
