Payments for transport charges do not constitute wages under the Employees' State Insurance Act, and contractors are not considered employees as per the Act's definitions.

JUDGMENT :

HEMANT M. PRACHCHHAK, J.

1. Present appeal is filed by the appellant – E.S.I.C. against the judgment and award dated 21.07.2006 passed by the learned Judge, Employees Insurance Court, Ahmedabad (hereinafter be referred to as “the ESI Court”) in ESI Application No. 28 of 1994, whereby the ESI Court has allowed the application and restrained the appellant from recovering the amount of contribution and interest etc from the respondent.

2. Brief facts of the present case are that the respondent herein is engaged in supplying, distributing and refilling the gas cylinders to the customers in the Ahmedabad. That the respondent is providing gas cylinders to the industrial units in the city. For that purpose, the respondent has engaged number of employees, allegedly known as contractors, only on oral agreement, to ply tempos, auto rickshaw, loading rickshaw and pedal rickshaw to supply and provide the gas cylinders at the residence as well as industrial unit of its own customers on the basis of lump sum amount, to be paid as wages and the amount of wages has been paying in the name and style of transport charges to its employees.

2.1 The respondent is paying the said amount as wages to its employees, who have been supplying cylinders to their customers since inception. After the respondent has already been covered under the Provisions of the Employees’ State Insurance Act, 1948 (hereinafter be referred to as “the Act”), the respondent was not deducting contribution from the amount paid to those employees and not depositing with the appellant. That after verifying the record, the appellant issued notice to comply with the Act and directed to deposit the amount of contribution and the respondent was given an ample opportunity before covering them under the Act. That despite of various notices and reminders and the reasons best known to them, the respondent did not opt to follow the direction issued to produce relevant record. Thereafter the appellant has no other option but to issue notice under Section 45A demanding the amount of contributions with interest.

2.2 It is alleged that after issuance of the certificate and giving full opportunity of hearing and affording sufficient opportunity to pay the contribution on such wages, the respondent instead of paying contribution on wages filed an application under Sections 77 /75 of the Act.

2.3 The learned Judge, after appreciating the evidence on record, has framed the following issues at Exhibit 13.

(1) Whether the applicant proves that the amount paid towards petrol driven tempos hiring charges, transport charges for shifting the cylinders from one godown to another and the delivery charges paid to individual contractors for delivering cylinders (does not) forms the part of wages u/s. 2(22) of the ESI Act?

(2) Whether such agencies as referred to above can be said to be the employees as defined under Sec. 2(9) of the ESI Act?

The ESI Court answered the aforesaid issue No.1 in the affirmative and issue No.2 in the negative.

2.3 The ESI Court has, after hearing the respective parties and considering the evidence available on record, allowed the application and restrained the appellant not to recover the contribution dues.

3. Being aggrieved and dissatisfied with the impugned judgment and award, the appellant has preferred the present appeal.

4. On 09.02.2007, the Division Bench of this Court admitted the appeal and the civil application was disposed of as not pressed.

5. Heard Mr.Sachin Vasavada, learned counsel appearing for the appellant and Mr.Dipak Dave, learned counsel appearing for the respondent at length and perused the material available on record.

6. Mr.Vasavada, learned counsel has submitted the same facts which are narrated in the memo of appeal and has submitted that the impugned judgment and award is based on surmises, conjectures and presumption and, therefore, the same deserves to be quashed and set aside. He has submitted that the appellant issued notice under Section 45 A (2