EMPLOYEES STATE INSURANCE CORPORATION, SUB REGIONAL OFFICE Vs. THE EMPRESS MILLS, A UNIT OF MAHARASHTRA STATE TEXTILE CORPORATION LIMITED
HIGH COURT OF BOMBAY
Employees State Insurance Corporation, Sub Regional Office
The Empress Mills, A Unit Of Maharashtra State Textile Corporation Limited
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(1.) This appeal filed under section 82 of the Employees' State Insurance Act, 1948 (in short, "ESI Act") questions the legality and correctness of the judgment and order, delivered in Application (ESI) 8 of 1995 by Judge, Employees State Insurance Court, Nagpur on 25.7.2006. The facts of the case, insofar as they are relevant for determining the substantial questions of law involved in the present appeal are narrated as under :
i) the respondent, a factory or establishment covered under the ESI Act and engaged in the activities of manufacture and sale of textile goods, had taken services of a contractor, appointed by inviting tenders or quotations to remove coal ash, heaped in the dumping yard in its premises. The contractor so engaged by respondent would remove the coal ash from the dumping yard by engaging various labourers. The coal ash heaped in the dumping yard would be brought there by the permanent employees of the respondent. The coal ash was a residual product of coal fired boilers, about 3 to 4 in numbers, which were operating in the factory of the respondent for the purpose of manufacture of textile and textile goods. The generation of the coal ash, its being dumped in the dumping yard and its removal used to be a continuous process as long as the manufacturing activity remained alive. If the coal ash already occupying the space was not removed from the dumping yard, no place would be left in the yard for temporary storage of the coal ash generated anew. This made it essential for the respondent to ensure that sufficient space was always available at the dumping yard for bringing in for temporary stacking the newly generated coal ash. This required that the coal ash was regularly removed from the dumping yard. That was the reason why, on regular basis, contracts for removal of the coal ash from the dumping yard were being awarded to the contractor/s by inviting tenders or submitting quotations and these contracts were in the nature of sale and purchase of the coal ash.
ii) In the present case, it was noticed by the appellant that the services of one contractor were engaged by the respondent for removal of the coal ash and the contractor so engaged employed 14 labourers for removing the coal ash during the period from 3.10.1986 to 30.11.1993. The activity of removal of the coal ash from the dumping yard was taken by the appellant as incidental or ancillary to the main activity of manufacture of textile and textile goods and since there was a clause in the purchase agreement entered into between the respondent and the contractor who purchased the coal ash, that coal ash would be removed by the contractor under the supervision of employees of the respondent, the respondent was considered as the principal employer and the labourers engaged by the contractor as the employees within the meaning of Section 2(17) and Section 2(9)(ii) of the ESI Act and accordingly, after issuing show cause notice and following the procedure, the appellant passed an order under section 45A of the ESI Act, on 20th March 1995, determining the contribution payable under the provisions of ESI Act by the respondent to be at Rs. 84,361/for the period from 3.10.1986 to 30.11.1993 together with interest of Rs. 44,361/as of 20.2.1995 and called upon the respondent to pay the same.
iii) The respondent challenged the order by filing an application under section 75(1)(g) of the ESI Act before the Insurance Court, Nagpur. It was contested by the appellant . However by the order passed on 25.7.2006, the Insurance Court allowed the application and quashed and set aside the order dated 20th March, 1995 passed by the appellant. Now, the appellant has questioned the legality and correctness of this order in the present appeal.
(2.) This appeal has been admitted by framing two substantial questions of law and accordingly, I have heard learned counsel for the appellant and learned counsel for the respondent. Learned counsel for the appellant submits that the activity of removal of coal ash was incidental to the main work of the respondent and therefore, the respondent could be safely termed as principal employer and the labourers engaged by the contractor who purchased the coal ash as the employees of the principal employer as defined under Section 2(17) and Section 2(9)(ii) of the EST Act. This is however disputed by learned counsel for the respondent who submits that the respondent has no control over the work of labourers engaged by its contractor who had purchased the coal ash and that there was no privity of contract whatsoever between the respondent and labourers of such other contractor and so, the provisions of ESI Act were at all attracted in the present case.
(3.) The substantial questions of law on which this appeal has been admitted and which are now required to be determined in the light of the arguments canvassed before me by both sides are as follows :
1. Whether the workers engaged by the respondent for removing the coal ash from the dumping yards are "employees" within the meaning of section 2(9) of the Employees' State Insurance Act, 1948 ?
2. Whether the respondent is the "principal employer" within the meaning of Section 2(17) of the Employees' State Insurance Act, 1948 in respect of the employees employed for removal of coal ash from the dumping yards which is situated within the premises ?;
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