IMPORTANT POINT
When a person worked in connection with the work of establishment and such establishment had control over the work then mere fact that establishment was not paying charges directly from their pocket but from charges collected from customers could not be a factor to hold person not to be an employee for benefit of Employees State Insurance Act.

ORDER

These appeals arise from the order of the Division Bench of the Andhra Pradesh High Court dated February 7, 1985 made in C.M.A. Nos. 868 and 297/81. The admitted facts are that the appellants had engaged hamalis for loading and unloading of the goods undertaken by them for carriage as carriers. The respondent has applied the Employees State Insurance Act, 1948 (Act No. 34 of 1948) (for short, the Act ) to the appellants establishment and called upon them to pay their contribution for the periods mentioned in the notice served on them with interest at 7% thereon. The appellants have disputed the liability and made an application for determination under Section 76 of the Act. The Insurance Court had held that the hamalis are employees within the meaning of Section 2(9) of the Act. Though the appellants collect the charges from the customers and pay the amount to the hamalis at the piece rate for the work they do, they have got supervision of loading and unloading by the hamalis. The hamalis are not appointed or controlled by any other agency. Accordingly appellants are liable to contribute the amount called upon towards the insurance benefit of the workmen under the Act. The appeals came to be dismissed by the High Court. Thus these appeals by special leave.

2. Shri C. Sitaramiah, learned senior counsel appearing for the appellants contended that there is no relationship of master and servant; no regular salary is paid by the appellants to the hamalis and there is no fixed hours of work for the hamalis. Under those circumstances, the hamalis cannot be considered to be the employees nor the appellants be treated as employer under the Act. We find no force in the contention.

3. Section 2(9) of the Act defines "employee" to mean any person employed for wages in or in connection with the work of a factory or establishment to which the Act applies. Clause (ii) envisages that they need not necessarily be directly employed by the employer. Those who are 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 is an employee within the meaning of Section 2(9) of the Act. The controversy is no longer res integra.

4. This Court in Royal Talkies, Hyderabad & Ors. v. Employees State Insurance Corpn.1, was called upon to consider whether workmen engaged in the cycle stand and canteen of a cinema theater were employees of the theater within the meaning of Section 2(9) of the Act. This Court, on interpretation, held that the reach and range of the definition is apparently wide and deliberately transcends pure contractual relationships. In the field of labour jurisprudence, welfare legislation and statutory construction which must have due regard to Part IV of the Constitution, a teleological approach and social perspective must play upon the interpretative process. The primary test in the substantive clause being thus wide, the employees of the canteen and the cycle stand may be correctly described as employed in connection with the work of the establishment. A narrower construction may be possible but a larger ambit is clearly imported by a purpose-oriented interpretation. The whole object of the statute is to make the principal employer primarily liable is to make the principle employer primarily liable for the insurance of kind of employees on the premises, whether they are there in the work or are merely in connection with the work of the establishment.

5. Accordingly it was held thereon that they were the workmen or employees within the meaning of Section 2(9) of the Act. The same ratio was followed in E.S.I. Corpn. v. South Flour Mills2, where even the casual employees employed by the employer were held to be employees within the m