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2021 Supreme(Mad) 3095
IN THE HIGH COURT OF JUDICATURE AT MADRAS
ABDUL QUDDHOSE, J.
GRT Hotels and Resorts Private Limited, (Formerly G.R. Thangamaligai Private Limited),
Represented by its head HR Dr.Syed Arifullah - Appellant
Versus
Employees State Insurance Corporation - Respondent
C.M.A.Nos.1361, 1362 & 1374 of 2021
Decided on : 20-10-2021
Advocate Appeared:
For the Appellant :Mr.Vijay Narayanan, Senior Advocate for Mr.R.Parthiban
For the Respondent: Mr.S.P.Srinivasan
Headnote:
Employees State Insurance Act, 1948 - Section 2(9), 2(9)(i), 2(22), 45(A) - Contention of Appellant is that Aacharis/Silversmiths engaged by them will not fall within definition of an employee as per section 2(9) of Employees State Insurance Act, 1948 and they are not liable to pay Employees State Insurance contributions for remuneration paid by them to Aacharis - Contention of respondent corporation that Aacharis/Silversmiths engaged by Appellant fall within definition of an employee under section 2(9)(i) of Employees State Insurance Act, 1948 as Aacharis are being regularly employed by Appellant and it is their contention that it is immaterial whether product is manufactured by Aacharis within premises of Appellant or elsewhere - Whether Aacharis/Silversmiths engaged by Appellant for manufacturing ornaments on payment of remuneration are employees falling within definition of section 2(9) of Employees State Insurance Act and whether remuneration paid to Aacharis can be treated as wages falling within definition of “wages” under section 2(22) of Employees State Insurance Act – Held, though Appellant may be registered under Employees State Insurance Act, 1948, only when person engaged by Appellant falls within definition of an employee as per section 2(9) of Employees State Insurance Act, 1948, Appellant is liable to pay Employees State Insurance contributions for those employees - Just because, Appellant is registered under Employees State Insurance Act, 1948, respondent Corporation cannot arbitrarily demand Employees State Insurance contributions for remuneration paid by Appellant to various independent contractors which will not fall within definition of wages under Section 2(22) of Employee's State Insurance Act - Only when respondent Corporation is able to establish that Aacharis/Silversmiths engaged by Appellant fall within definition of an employee under section 2(9) of Act, they can demand Employees State Insurance contributions from Appellant - Respondent Corporation has failed to produce any supporting evidence to prove that Aacharis/Silversmiths engaged by Appellant are infact employees of Appellant - Employee relationship between Appellant and Aacharis/Silversmiths - Aacharis engaged by Appellant are not employees falling within definition of employee under Section 2(9) of ESI Act and remuneration paid to them will also not fall within category of wages as defined under Section 2(22) of Act - Appeals allowed.
JUDGMENT :
These appeals have been filed challenging the separate orders dated 28.10.2020 passed by the Employees State Insurance Court (Principal Labour Court, Chennai) in EIOP.Nos.7, 6 & 5 of 2011 under which the Employees State Insurance Court confirmed the separate orders dated 22.10.2009 passed by the respondent corporation under section 45(A) of the Employees State Insurance Act calling upon the Appellant to pay Employees State Insurance contributions for Aacharis/Silversmiths engaged by the Appellant as detailed hereunder:
| CMA.No. | Period | Employees State Insurance contributions payable (Rs.) |
| 1361 of 2021 corresponds to EIOP.No.7 of 2011 | 1997-99 | 94,378/- |
| 1362 of 2021 corresponds to EIOP.No.6 of 2011 | 2004-2007 | 15,48,351/- |
| 1374 of 2021 corresponds to EIOP.No.5 of 2011 | 1996-97 to 1997 - 2002 | 20,74,532/- |
2. Since the issues involved in these appeals are one and the same, they are disposed of by this common judgment.
3. The contention of the Appellant is that Aacharis/Silversmiths engaged by them will not fall within the definition of an employee as per section 2(9) of the Employees State Insurance Act, 1948 and therefore, they are not liable to pay the Employees State Insurance contributions for the remuneration paid by them to Aacharis.
4. However, it is the contention of the respondent corporation that the Aacharis/Silversmiths engaged by the Appellant fall within the definition of an employee under section 2(9)(i) of the Employees State Insurance Act, 1948 as Aacharis are being regularly employed by the Appellant and it is their contention that it is immaterial whether the product is manufactured by the Aacharis within the premises of the Appellant or elsewhere.
5. These appeals are admitted on the following substantial questions of law:
(a) Whether the Aacharis engaged by the Appellant are the employees of the Appellant falling within the definition of Section 2(9) of the Employees State Insurance Act, 1948;
(b) Whether the Appellant is liable to pay contribution as demanded by the Employees State Insurance Corporation for the sum of money paid to Aacharis by the Appellant.
(c) Whether the Employees State Insurance Court has failed to take into account, the Full Bench Judgment of the Madras High Court in Bethall Engineering case, where the Court has held that in case of lack or absence of supervision, the same cannot establish an employer and employee relationship?
6. Heard Mr.Vijay Narayan, learned Senior Counsel representing Mr.R.Parthiban, learned counsel for the Appellant and Mr.S.P.Srinivasan, learned standing counsel for the respondent.
7. In support of the contentions of the Appellant, the learned Senior counsel for the Appellant drew the attention of this Court to the following authorities:
(a) A decision of the Hon'ble Supreme Court in the case of CESC Limited and Others vs. Subhash Chandra Bose and Others reported in (1992) 1 SCC 441 and in particular, he referred to paragraphs 14, 19 & 20 of the said judgment and would submit that since there is no constant vigil over the work entrusted to the Aacharis and there is no control over the same by the Appellant, Aacharis who were engaged by the Appellant will not fall within the definition of an employee under section 2(9) of the Employees State Insurance Act. He submitted that the Appellant is only concerned with the end product namely the Jewellery item manufactured by Aacharis and the Appellant is not involved in the supervision of the Aacharis during the course of manufacturing process. He would further submit that the Aacharis will also not fall within the definition of “Agent” as defined under section 182 of the Indian Contract Act, 1872;
(b) A decision of the Hon'ble Supreme Court in the case of Bharat Heavy Electricals Ltd. vs. Employees State Insurance Corporation reported in (2008) 3 SCC 247.
Relying upon the said d
