C.M.A(MD)No.861 of 2022

BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT

RESERVED ON : 27.01.2023

PRONOUNCED ON : 23.03.2023

CORAM

THE HONOURABLE MRS.JUSTICE N.MALA

C.M.A(MD)No.861 of 2022

1.The Joint Director,

The Employees State Insurance Corporation,

Sub Regional Office,

4^th Main Road, K.K.Nagar,

Madurai-20.

2.The Assistant Director,

The Employees State Insurance Corporation,

Sub Regional Office,

4^th Main Road, K.K.Nagar,

Madurai-20.

... Appellants/Respondents

Vs

Sundaram Textiles Limited,

Registered Office: Lakshmi Building,

Usilampatti Road, Kochadai,

Madurai-625016.

… Respondent/Petitioner

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.

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C.M.A(MD)No.861 of 2022

For Appellants

: Mr.R.Ravikumar

For Respondent

: Mr.C.Karthikeyan

JUDGMENT

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

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C.M.A(MD)No.861 of 2022

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:

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C.M.A(MD)No.861 of 2022

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