Anil K. Narendran, J.

Insurance Appeal No. 63 of 2009 arises out of the judgment of the Employees Insurance Court, Alappuzha dated 29.6.2009 in I.C. No. 35 of 2006 and Insurance Appeal No. 64 of 2009 arises out of another judgment of the said court dated 29.6.2009 in I.C. No. 25 of 2004. In both the appeals filed on behalf the Employees State Insurance Corporation (hereinafter referred to as 'the appellant Corporation') under Section 82(2) of the Employees State Insurance Act (hereinafter referred to as 'the ESI Act') common questions of law are raised, which read thus;

"A. Whether the Insurance Court was justified in declaring that the persons doing assembling work of umbrellas outside the factory premises will not come within the purview of 'employee' as defined in Section 2(9) of the ESI Act?

B. Whether the Insurance Court was justified in declaring that the wages paid to the persons doing assembling work of umbrellas outside the factory premises do not constitute 'wages' as defined under Section 2(22) of the ESI Act?

C. Whether the principal employer is liable to pay contribution in respect of the employees employed through the immediate employer for the purpose of assembling work of umbrellas outside the factory premises?"

2. Since the factual matrix and substantial questions of law in both the appeals are identical, we deem it appropriate to deal with both the cases in this common judgment.

2.1. We heard arguments of the learned Standing Counsel for the appellant and also the learned counsel for the respondent in both the appeals.

3. The factual matrix in Insurance Appeal No.63 of 2009 is as follows;

3.1. The respondent in this appeal, namely, the Proprietrix of M/s. Popy Umbrella Mart, Alappuzha is the applicant in I.C. No. 35 of 2006 on the file of the Employees Insurance Court, Alappuzha, an application filed under Section 75 read with Section 77 of the ESI Act, seeking for a declaration that assembling charges paid to outside parties do not constitute wages as per Section 2(22) of the Act and hence the assessment and demand of 8,22,318/- towards ESI contribution on assembling charges assessed as per Ext.A3 order dated 20.10.2005 issued under Section 45A of the Act is unsustainable.

3.2. M/s. Popy Umbrella Mart is an establishment covered under the ESI Act, engaged in the business of assembling umbrellas and its sale. The assembling work of umbrellas is being done through outside agencies and home workers. They do the work at their own places, with the help of their family members and neighbours. The establishment has no manner of control or supervision over them. Further, no assembling work of umbrellas is done within the premises of the establishment. The outside agencies/home workers used to collect the materials from the establishment and after assembling the umbrellas, they return it to the establishment and collect the assembling charges and disburse it to their people. Therefore, the persons who are doing assembling work of umbrellas outside the factory premise will not come within the purview of 'employee' as defined in Section 2(9) of the ESI Act and that, the wages paid to persons doing assembling work of umbrellas outside the factory premises do not constitute 'wages' as defined under Section 2(22) of the ESI Act. Despite this, the appellant Corporation assessed and demanded contribution as per Ext.A3 order dated 20.10.2005. Being aggrieved, the respondent/applicant has approached the court below seeking appropriate reliefs.

3.3. Before the court below, the appellant Corporation contended that, the Insurance Inspector, who conducted an inspection in the establishment on 16.12.2004 and verified the records for the period from 4/2000 to 11/2004, reported that the establishment has paid an amount of 1,70,73,186/- as assembling charges for which no contribution was paid to the appellant Corporation. On the basis of the said report, the contribution due on the above expenditure amounting to 11,09,758/- was propo