IMPORTANT POINTS
Any person who is directly employed by the principal employer on any work of or incidental preliminary to or connected with the work of, the factory or establishment such work is done by the employee in factory or establishment or elsewhere. Here in this case of the respondent is that the work was not done in the premises of the principal employer or the sub contractor. Further the works were done on the floating vessels so the supervision and control of the respondent is not required-The person who worked are not coming under the definition of Section 2(9) of the above said Act. As per the Section 2(9)(1), it is stated that the work is to be done within the premises of factory or establishment or elsewhere. No where it is stated that the work is done on the floated vessels that will not come under the provision of the Act and further it is submitted that the most of the work were carried out in the premises of the principal employer and sub contract.

ANNIE JOHN, J.

The above appeal is filed against the Judgment of the Employee's Insurance Court declaring that Ext.P2 order passed by the appellant under Section 45 A of the ESI Act assessing Rs.5,05,971/-as ESI contribution on omitted wages relating to the period from 2005-2006 to 2007-2008 is unsustainable as it is against the provision contained in the ESI Act.

2. The respondent is an establishment engaged in the business of undertaking job works relating to marine vessels which is covered under the ESI Act w.e.f. 11.07.1983.

3. On inspection conducted by the Social Security Inspector of the ESI Corporation on 25th and 28th of May 2009 at the respondent, it was found out that during the period from 2005-06 to 2007-08, major portion of the works of the respondent were got done by M/s Sea Blue Marine Engineering (P) Ltd. on the basis of Ext.D1 agreement dated 01.01.2004 executed between them.

4. As per the Ext.D1 agreement, the respondent agreed to give on sub contract the works procured by them to M/s Sea Blue Marine Engineering (P) Ltd. and latter has agreed to execute those works. As per Ext.D1, latter company is entitled to utilize all the machineries and equipments, slip way, factory sheds, office building and other infrastructure facilities of the respondent. The latter company has to employ the permanent workers of the respondent. The above works are to be executed by M/s Sea Blue Marine Engineering (P) Ltd., in time to the satisfaction of the respondent. Hence there is supervision and control over the aforesaid works by the respondent.

5. In the above circumstances, the employees of the respondent as well as others engaged for the above works by M/s Sea Blue Marine Engineering (P) Ltd. Could come within the definition of the 'employee' as provided under Section 2(9) of the ESI Act and the payments made to them are wages under Section 2(22) of the Act. Hence the respondent, being the principal employer of those employees, is liable to pay contribution in respect of those employees as provided under Section 40(1) of the ESI Act.

6. In the above view, the appellant passed Ext.P2 order determining ESI contribution for an amount of Rs.4,05,971/- on omitted wages relating to the period 2005-06 to 2007-08. I.C No.74/2010 had been filed by the respondent, challenging Ext.P2 order. The EI Court after considering the evidence on record declared that Ext.P2 order is unsustainable. Highly aggrieved by the said order, this appeal has been preferred before this Court.

7. According to the appellant, findings entered by the EI Court that the employee of the respondent received wages as per the sub contract arrangements will not constitute employees under Section 2(9) of the ESI Act and the payments made to them will not constitute wages as per Section 2(22) of the ESI Act are incorrect. The EI Court has found that there was no control or supervision by the applicant or his agent over the contract workers, who carried out the relevant works, and these works are not carried out in the premises of the applicant establishment. Now, the appellant has approached this Court by challenging the said finding in the order passed in I.C. No.74/2010.

8. M/s Western Marine Engineers is a factory situated at Edakochi covered under the provisions of the ESI Act w.e.f. 11.07.1983 under code No.47-5488-67. It is accepted case of the applicant that the respondent has employed 30 regular employees and the compliance of the provisions of the ESI Act with regard to their regular employees is satisfactory. The insurance Inspector attached to the appellant Corporation conducted verification of general ledger of the respondent establishment on 26.05.2009 and 28.05.2009 relating to the period 2005-06 to 2007-08 and filed a report on 01.06.2009, which is marked as Ext.D2 series. Ext.D1 is an agreement executed between the respondent and M/s Sea Blue Marine Engineering (P) Ltd. As per the above agreement, the respondent gives sub contract of the works procure