ORDER

Leave is granted.

2. The appellant M/s Saraswath Films is the lessee of the cinema hall named Padma Movie House at Ernakulam owned by Mr. A.L. Sreenivasa Shenoy. The controversy raised in the case relates to the point whether the establishment is covered under the Employees State Insurance Act, 1948. Served with the demand of contribution the appellants approached the Employees Insurance Court seeking a declaration that its establishment is not covered under the Act since the number of employees employed therein are only 14. In that connection a dispute arose whether two security guards working on the premises could be considered as employees of the appellant. The case of the appellant was that the security guards were not to be included as employees of the establishment for the purpose of determination of the controversy raised. In support of the plea it was pleaded that the security guards concerned were employees of the agency which used to send two security guards by rotation for duty at the premises of the cinema hall. Since there was no relationship of employer and employee between the appellants and the security guards, they could not be counted as part of the appellant s establishment for the purpose of registration under the Act.

3. The insurance court on consideration of the matter held that the security guards were employees of the appellant s establishment according to the definition in section 2(9) of the Employees State Insurance Act (for short the Act ). On inclusion of two security guards the number of employees of the establishment stood at 20, and therefore, the establishment was covered under the provisions of the Act. The first appeal filed by the appellants before the High Court assailing the order of the insurance court proved unsuccessful. Hence this appeal.

4. The core question that arises for consideration is whether the establishment of the appellant comes within the purview of the Act? The answer to the question in the context of the case of the parties, depends on determination of the question whether the security guards are employees within the meaning of section 2(9) of the Act. Section 2(9) of the Act reads as follows:

"2(9) "employee" means any person employed for wages in or in connection with the work of a factory or establishment to which 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."

5. In this connection the definition of the expression "immediate employer" under section 2(13) and "principal employer" under section 2(17) are also relevant. They are quoted below:

"2(13) "immediate employer", in relation to employees employed by or through him, means a person who has undertaken the execution, on the premises of a factory or an establishment to which this Act applies or under the supervision of the principal employer or his agent, of the whole or any part of any work which is ordinarily part of the work of the factory or establishment of the principal employer or is preliminary to the work carried on in, or incidental to the purpose of, any such factory or establishment, and includes a person by whom the services of an employee who has entered into a contract of servi