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BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
N. MALA, J.
The Joint Director, The Employees State Insurance Corporation, Madurai & Another - Appellantss
Versus
Sundaram Textiles Limited, Registered Office: Lakshmi Building, Madurai - Respondent
C.M. A(MD)No. 861 of 2022
Decided On : 23-03-2023
ESI Act - Liability to pay contribution for stipend paid to apprentice employees - Section 2 (22), Section 2 (9), Section 45 A - The court analyzed the definition of employee in Section 2 (9) of the E.S.I. Act and concluded that apprentice appointed under the standing orders of the establishment were excluded from the definition of employee. The court referred to various judgments and legal provisions to support its decision. The court also considered the amendment to Section 2(9) of the ESI Act with effect from 01.06.2010 and held that apprentice engaged under certified standing orders were not employees for the purpose of contribution prior to 01.06.2010. The court found no illegality or impropriety in the order of the Labour Court and dismissed the appeal.
Fact of the Case:
The respondent company engaged apprentice employees for learning skilled works and claimed that the stipend paid to the apprentice did not come under the definition of wages under Section 2 (22) of the ESI Act. The ESI Corporation filed a petition to set aside the order of the Assistant Director, ESI and to declare the apprentice employees as not employees under Section 2 (9) of the ESI Act.
Finding of the Court:
The court found that the apprentice appointed under the standing orders of the establishment were not entitled to claim employment as a matter of right and that the stipend paid to them did not qualify as wages. The court referred to various judgments and legal provisions to support its finding.
Issues: The issues revolved around the liability of the respondent to pay contribution to the ESI Corporation for stipend paid to the apprentice employees and the interpretation of the definition of employee under Section 2 (9) of the ESI Act.
Ratio Decidendi: The court's decision was based on the interpretation of the definition of employee under Section 2 (9) of the ESI Act, the exclusion of apprentice appointed under the standing orders, and the amendment to Section 2(9) of the ESI Act with effect from 01.06.2010.
Final Decision: The court confirmed the order of the Labour Court, finding no illegality or impropriety, and dismissed the appeal.
JUDGMENT
(Prayer: This Civil Miscellaneous Appeal is filed under Section 82 (2) of the E.S.I Act to set aside the fair and decreetal order passed in E.S.I.O.P.No.53 of 2009 on the file of E.S.I. Court (Labour Court), Madurai dated 06.12.2021.)
1. The appeal is filed against the order, dated 06.12.2021 in E.S.I.O.P.No. 53 of 2009 declaring the order of the Assistant Director, ESI in No.57-10388- II/INS.II/MEC/SRO/MDU/3/09 to the tune of Rs.4,62,070/- as null and void.
2. The ESI Corporation is the appellant in the appeal. The respondent is a public limited company registered under the Companies Act. According to the respondent company, it has certified standing orders under which the company engages apprentice employees for the purpose of learning any skilled works which do not exceed three years. The respondent is having its main factory at Nambi Nagar, Nagunari Tirunelveli District and open end unit at Therkkutheru, Melur Taluk, Madurai District. The respondent inspected the petitioner''s concern on 24.07.2008, 25.07.2008 and on 30.07.2008 and found out the omission of contributions under certain heads. The second respondent on the basis of the inspection report, dated 30.07.2008 sent a notice in Form C-18, dated 12.08.2008 claiming contribution of Rs.4,62,070/- towards stipend paid to the apprentice claiming that the payment was not stipend but wages. The respondent therefore passed the impugned order on 30.04.2009 claiming contribution of Rs.4,62,070/- for the period 4/2002 to 3/2007 towards contribution on wages under Section 2 (22) of the ESI Act.
3. The appellants aggrieved by the order of the Assistant Director, ESI filed petition under Section 77 (I) (g) of the ESI Act to declare the impugned order of the Assistant Director, ESI in his proceedings No.57-10388- II/INS.II/MEC/SRO/MDU/3/09 to the tune of Rs.4,62,070/- as null and void and set aside the same, for a declaration that the apprentice employees engaged by the appellants were not employees as defined under Section 2 (9) of the ESI Act and that the stipend paid to the apprentice employees did not come under the definition of the term wages under Section 2 (22) of the ESI Act and for other reliefs.
4. The labour Court, Madurai vide order dated 06.12.2021 in E.S.I.O.P.No.53 of 2009 allowed the petition by setting aside the order dated 30.04.2009 of the Assistant Director, ESI and also granted the relief of declaration and other reliefs prayed for.
5. Aggrieved by the judgment and decree of the Tribunal, the ESI Corporation has filed the above appeal.
6. The appeal is admitted on the following substantial question of law:
a) Whether the Labour Court in analyzing the definition of Employee in Section 2 (9) of E.S.I. Act had overlooked the fact that those apprentices as covered by the Apprentices Act, 1961 alone are excluded and others are treated as employees?
b) Whether the Labour Court is right in concluding that the so called apprentices not as employees engaged by the establishment, on the basis of standing order of an establishment as the employer is a Factory?
c) Whether the Labour Court is right in concluding that the amendment in the year 2010 to the definition of employer in Section 2 (9) of E.S.I. Act prospective?
7. The short point to be considered in the civil miscellaneous appeal is whether the respondent is liable to pay contribution to the ESI Corporation for stipend paid by it to the apprentice employees engaged by it under the standing orders of the respondent.
8. The learned counsel for the appellants submitted that the labour Court failed to note that the stipend paid to the apprentice was covered under the definition of wages under Section 2 (22) of the ESI Act and therefore, the authority under the ESI Act namely, Assistant Director, ESI, Madurai was justified in passing the order dated 30.04.2009 under Section 45 A of the ESI Act claiming contribution to the tune of Rs.4,62,070/- for the period from 4/2002 to 3/200
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