The main legal point established in the judgment is the interpretation of the definition of the term 'employee' as defined in section 2(9) of the Employees State Insurance Act, 1948 and its amendment by Act 44 of 1966, and its application to the employees in the sales depots.

P. Subramonian Poti, J.

1. An important question relating to the application of certain provisions of the Employees State Insurance Act, 1948 arises for decision in this appeal. Whether the employees in the various sales depots of the respondent concern which is running a rubber factory at Changanacherry come within the scope of coverage of the Employees State Insurance Act, 1948 (in short, the Act) is the question so arising in this case. The respondent in the appeal, the Ruby Rubber Works Limited, filed an application under section 75 of the Act for a declaration that the persons employed in their sales depots were not covered under the Act. Such sales depots are situate in various parts of India. The Regional Director of the Employees State Insurance Corporation (referred to as Corporation hereinafter) called upon the respondent to register such employees too and to pay contribution in respect of them. It was then that the application was filed by the respondent. The claim for such coverage was only for the period from 28th January 1968 on which date the amendment of the definition of the term 'employee' in the Act came into force. According to the Corporation the employees in the sales depots were also brought within the scope of coverage by reason of the said amendment. The respondent application was allowed by the Employees Insurance Court, Alleppey and that court made a declaration that the personnel employed in the sales depots were not liable to be insured since the depots were not factories. This is challenged by the Corporation in this appeal.

2. The Employees State Insurance Act was enacted by Parliament to provide for benefits to the working class in case of sickness, maternity and employment injury and to confer on them disablement and medical benefits. The benefits so conferred by the Act extend to employees as defined in section 2 (9) (i) of the Act and that is the class of persons who are covered by the Act. That is evident from section 38 of the Act which provides that :

"Subject to the provisions of this Act, all employees in factories, or establishments to which this Act applies shall be insured in the manner provided by this Act."

How such employees are to be insured is provided for in section 39 and section 40. It is to be by payment of contribution payable by the employer and the employee at the specified rates. The contribution payable by the employee is also payable in the first instance by the principal employer.

3. There was controversy as to the scope of the term employee as defined in section 2 (9) of the Act. That definition read:

"2(9) employee means any person employed for wages in or in connection with the work of a factory or establishment to which this act applies and-

(i) who is directly employed by the principal employer on any work of or incidental or preliminary to or connected with the work of the factory or establishment, whether such work is done by the employee in the factory or establishment or elsewhere ; or

(ii) who is employed by or through an immediate employer on the premises of the factory or establishment or under the supervision of the principal employer or his agent on work which is ordinarily part of the work of the factory or establishment or which is preliminary to the work carried on in or incidental to the purpose of the factory or establishment; or

(iii) whose services are temporarily lent or let on hire to the principal employer by the person with whom the person whose services are lent or let on hire has entered into a contract of service;

This was how the definition stood prior to amendment by Act 44 of 1966. That Act added an inclusive clause to the definition and the portion so added read:

and includes any person employed for wages on any work connected with the administration of the factory or establishment or any part, department or branch thereof or with the purchase of raw materials for, or the distribution or sale of the products of the factory or establishmen