Back
1974 Supreme(Ker) 189
Judges : P.SUBRAMONIAN POTI,P.JANAKI AMMA
ESI CORPORATION - Appellant
Versus
UNITED ELECTRICAL INDUSTRIES LTD. - Respondent
Case No : A. S. No. 76 of 1973
Decided On : 12/11/1974
Advocates Appeared :
K. Prabhakaran; For Appellant B. S. Krishnan; For Respondent
The main legal point established in the judgment is the interpretation of the definition of 'employees' under the Employees' State Insurance Act, 1948, and the determination of whether canteen employees and casual workers are covered under the Act based on the nature of their work and their connection to the factory premises.
Headnote:
Employees' State Insurance Act - Employees of Canteen - S.2 (9) of the Employees' State Insurance Act, 1948 - S.46 of the Factories Act, 1948 - [S.2 (9), S.46] - The court discussed the definition of 'employees' under the Employees' State Insurance Act and the provisions of S.46 of the Factories Act, 1948 in relation to the employees of a canteen run by an independent contractor within the premises of a factory. The court considered the nature of work incidental to the factory and the purpose of providing amenities to the factory workers. It referred to previous judgments and legal principles to determine the coverage of canteen employees under the Act.
Fact of the Case:
The case involved a dispute regarding the coverage of canteen employees and casual workers under the Employees' State Insurance Act, 1948. The Employees Insurance Court held that no contribution was payable by the employer for casual workers and that the demand for contribution on wages paid to casual workmen was barred by limitation. It also found that the canteen employees were not doing any work incidental to the factory's manufacturing process.
Finding of the Court:
The court found that the demand for contribution on wages paid to casual workmen was not barred by limitation under the Employees' State Insurance Act. It held that the casual workers were not 'employees' within the scope of the Act. However, it determined that the canteen employees were liable to be covered under the Act as they were employed in connection with work incidental to the purpose of the factory.
Issues: The main issue was whether the employees of a canteen run by an independent contractor within the premises of a factory were engaged in the business of the factory as defined in S.2 (9) of the Employees' State Insurance Act, 1948. Other issues included the liability of the employer for contributions on wages paid to casual workers and the applicability of limitation under the Act.
Ratio Decidendi: The court's decision was based on the interpretation of the definition of 'employees' under the Act, the nature of work incidental to the factory, and the purpose of providing amenities to the factory workers. It also relied on previous judgments and legal principles to determine the coverage of canteen employees and casual workers under the Act.
Final Decision: The court declared that the demand for contribution on wages paid to casual workmen was not barred by limitation and that the casual workers were not covered by the Act. However, it granted a declaration in respect of the canteen employees, holding them liable to be covered under the Act.
1. Are the employees of a canteen run by an independent contractor within the premises of a factory engaged in the business of manufacture and sale of meters and other goods, employees of that factory, as the term is defined in S.2 (9) of the Employees' State Insurance Act, 1948 (hereinafter referred to as the Act)? This is the main question which arises for decision in this appeal. There are two other questions, the. answer to which need not detain us for long.
2. M/s. United Electrical Industries Limited, Quilon applied to the Employees Insurance Court, Alleppy for a declaration that the demand made by the Employees' State Insurance Corporation for payment of contributions under the Act on wages paid to the canteen employees for the period from 7-6-1960 to 20-11-1966 and also payment of contributions on wages paid to casual workers for the period from the first quarter of 1952 to the last quarter of 1962 were illegal. Besides the question which we have formulated earlier, two other questions arose for decision before the Insurance Court. One of them was whether the casual workers were 'employees' in respect of whom contribution was payable and the other was whether the claim for recovery by the Employees State Insurance Corporation was barred by limitation.
3. The Employees Insurance Court held that in respect of casual workers as well as canteen employees no contribution was payable by the employer and further that the demand for contribution on wages paid to casual workmen was barred by limitation.
4. On the question of limitation, the Employees Insurance Court was clearly in error. It observed that the court had dealt with a good number of similar cases and had passed judgments therein declaring that any demand or application made by any party after a period of three years from the date the cause of action arose was barred by limitation under Art.137 of the Indian Limitation Act. Reference is also made to the decision of the Supreme Court reported in Bharat Barrel & Drum Mfg. Co. Ltd v. E.S.I. Corporation (1971 (2) LLJ. 647). Evidently the Insurance Court was in error in applying the provisions of the Limitation Act to an application under the Employees' State Insurance Act. It has been held by this court in South India Corporation (Tray.) P. Ltd. v. E.S.I. Corporation (1973 KLT 571) that the period of limitation under the Indian Limitation Act is not applicable to proceedings before the Employees Insurance Court. Apart from that, it is strange that the question of limitation is considered not with reference to any application before the Employees Insurance Court but with reference to the claim of the Employees State Insurance Corporation to recover otherwise than through any application before the Employees Insurance Court. Evidently, therefore, the view as to limitation expressed in the judgment under appeal cannot be sustained. But in regard to casual labourers, the Employees State Insurance Corporation is not entitled to claim contribution for the reason that they are not "employees" within the scope of the definition of that term in the Act. The Corporation has no case that the persons in respect of whom contribution was claimed as payable are not casual workmen. The mere fact that certain workmen are referred to as casual workmen does not, of course, determine their character but if, from the facts, it is found that they are not "employed" by the employer but are mainly engaged for casual labour, then, of course, there is no scope for demanding contribution in respect of such workmen. We need not go into this question further in view of what we have expressed on this in our decision in A S Nos. 789 of 1972 and 55 of 1973.
5. The canteen in the premises of the factory is run by an independent contractor. The employees in the canteen are those employed by him. The applicant has no direct connection with such employees. The work in the factory is one of manufacture of meters and other similar goods. On these fa
