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1980 Supreme(P&H) 222

PUNJAB & HARYANA HIGH COURT
S.S.Sandhawalia, Kulwant Singh Tiwana and Harbans Lal JJ.
Employees State Insurance Corporation, Chandigarh
Versus
Oswal Woollen Mills Ltd., Ludhiana
F.A.F.O. No. 451 of 1978,452 of 1978,
Decided On : JULY 16, 1980

Casual employees employed in a factory or establishment are covered under the definition of "employee" in Section 2(9) of the Employees State Insurance Act and are entitled to the benefits provided under the Act.

Headnote:

EMPLOYEES STATE INSURANCE ACT - SECTION 2(9) - DEFINITION OF EMPLOYEE - CASUAL EMPLOYEES - INTERPRETATION AND APPLICATION: Whether a person employed casually in a factory or establishment is within the ambit of the definition of an employee as laid in Section 2 sub-section (9) of the Employees State Insurance Act?

Fact of the Case:

The respondent-Mill challenged a notice by the Employees State Insurance Corporation (ESIC) requiring them to deposit certain sums of money as contribution both of the employer and the employees. The dispute arose over the inclusion of casual laborers employed for construction and maintenance of the factory premises, whose payments were made under the head "Building repairs and factory construction". The ESIC contended that these casual laborers were also employees within the meaning of the Act, while the respondent-Mill argued that they were not.

Finding of the Court:

The Court held that a person employed casually in a factory or establishment is within the ambit of the definition of an employee as laid in Section 2 sub-section (9) of the Employees State Insurance Act. The Court found that the definition of an employee under the Act is wide-ranging and includes any person employed for wages in or in connection with the work of a factory or establishment, irrespective of the nature of the work or the mode of engagement.

Issues: 1. Whether casual employees are covered under the definition of "employee" in Section 2(9) of the Employees State Insurance Act? 2. Whether the contributions are payable for employees employed for a part of the week or under multiple employers during the same week?

Ratio Decidendi: 1. The Court interpreted Section 2(9) of the Employees State Insurance Act and found that the definition of an employee is broad and encompasses all persons employed for wages in or in connection with the work of a factory or establishment, regardless of the nature of the work or the mode of engagement. 2. The Court also considered Sections 38, 39(4), and 42(3) of the Act and found that they support the inclusion of casual employees within the definition of "employee". 3. The Court rejected the argument that a distinction should be made between work of the factory and work for the factory, holding that such a distinction is difficult to draw and that the language of the Act does not support it. 4. The Court further held that the definition of "employee" under the Act is wider than that of "worker" under the Industrial Disputes Act, 1947, and that precedents interpreting the latter are not helpful in construing the former.

Final Decision: The Court allowed all four appeals filed by the ESIC and held that the respondent-Mill was liable to pay contributions for the casual laborers employed for construction and maintenance of the factory premises.

Judgment

S.S.SANDHAWALIA, J.

1. Whether a person employed casually in a factory or an establishment is within the ambit of the definition of an employee as laid in Section 2 sub-section (9) of the Employees State Insurance Act ? is the somewhat meaningful question which has necessitated its consideration by the Full Bench.

2. Learned counsel for the parties are agreed that in essence the answer to the aforesaid question would govern all these four appeals which will be disposed of by this single judgment.

3. To provide the necessary matrix of facts for the legal issue, it suffices to advert briefly to those in Employees State Insurance Corporation, Chandigarh v. Oswal Woollen Mills Ltd. Ludhiana, F. A. O. No. 451 of 1978. The respondent-Mill had moved an application before the Employees State Insurance Court challenging a notice by the Employees State Insurance Corporation (hereinafter called the Corporation requiring them to deposit certain sums of money as contribution both of the employer and the employees. The material item pertains to persons who, according to the respondent-Mill were casual labourers employed only for the construction and maintenance of the premises of its factory. Payments to these casual employees had been made under the head "Building repairs and factory construction". The stand of the respondent-Mill was that the amounts so paid to casual labourers were not wages paid to employees and therefore, they were not liable to pay any contribution with regard thereto. The firm stand of the appellant-Corporation, on the other hand, was that these casual labourers were also employees within the meaning of the Act. and therefore, the respondent- Mill was liable, both for the employees share and the employers share therefor. The Court below, after noticing some conflict of authority chose to follow the Division Bench judgment in Emplovees State Insurance Corporation, Chandigarh v. Onkar Nath Gupta, (1975) 77 Punj LR 79, and held that these casual workers were not covered by the statutory provisions. The Corporation has come up by way of appeal and at the motion stage the case was admitted to a hearing by the Full Bench in view of an apparent conflict of authority within this Court itself.

4. As would be evident from the formulation of the legal question, at the very outset, one must inevitably first turn to the relevant provision of the statute and for facility of reference, Section 2 (9) of the Employees State Insurance Act 1948, (hereinafter called the Act), may be read:

" 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 so lent or let on hire has entered into a contract of service;

(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 establishment but does not include)

* * * *

Now a bare look at the aforesaid provisions would make manifest the anxiety of the Legislature to couch the definition in such wide ranging terms so as to bring within its ambit all persons employ

































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