M/S MODERN EQUIPMENT COMPANY, AMBALA CANTT Vs. THE REGIONAL DIRECTOR, EMPLOYEES, STATE INSURANCE CORPORATION, CHANDIGARH

JUDGEMENT

(1.) MESSRS Modern Equipment Company, Ambala Cantt, (hereinafter called 'the company') is engaged in the manufacture of scientific goods. The Employees State Insurance Corporation, Chandigarh (hereinafter called 'the Corporation') raised a demand of Rs. 1800/ - from the company on account of payment of contributions under the Employees State Insurance Act, 1948 (hereinafter called 'the Act'). The company filed a petition under Section 75 of the Act to challenge the demand on the basis that the number of employees was less than the prescribed one and, therefore, the Act was not applicable. Their case was that they were employing less than 10 workmen and, therefore, were not liable to pay contributions. This was disputed by the Corporation and they placed material on the record which was obtained from the company's records. The admitted position on record is as follows:

(2.) ON 6th April, 1974, there were eight regular employees and in addition one man was engaged as a part -time gardener and another person as part -time sweepress. There was yet on" more part -time worker who, according to the Corporation, was another gardener, whereas, according to the company, he was not an employee but used to be called sometimes for cleaning the car of the Proprietor of the company. The further found fact was that on 2nd December, 1976, there were eight regular employees and the Corporation considered the part -time sweepress to be the ninth employee and an electrician who had done some repair work for the company was considered as the tenth employee. On this basis, the demand was raised that the employees at the two relevant periods were 10 or more The Court below by order dated 14th January, 1980, dismissed the petition of the company after recording a finding that on both dates, the company had employed 10 or more employees and, therefore, was covered under the Act. The company has come to this Court in this appeal.

(3.) ADVERTING to the position of employees on 2nd December, 1976, the evidence on the record shows that the electrician, who was considered as the 10th employee was running his electrician shop eke -where and the company used to get its machinery repaired from him. In the instant case the Corporation placed a bill of Rs. 380/ - on the record to show payment for the repair work done, made by the company to that electrician and, therefore, he can be termed as a casual or part -time employee. Apart from this there is no evidence on the record. 'Employee' as per definition contained in Section 2(9) of the Act, means any person employed for wages in or in connection with the work of a factory or establishment and includes the persons employed either directly as envisaged in Clause (i) or employed by or through an immediate employer as envisaged in Clause (ii) and the services of those employees who 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 as envisaged in Clause (iii) thereof All through there has to be contract of service, whether directly with the principal employer or by or through an immediate employer or with the person from whom the services of the employee have been temporarily taken. Then it has reference to the wages paid to such an employee. Therefore, even a casual or part -time employee has to be an employee under contract of employment and unless that is proved he will not fall within the definition of 'employee' and would not be covered by the Act. The facts on the record show that the company got specified work repaired from the electrician, who was having his shop separately and was working there. For the repair charges, he used to send bills to the company, which were used to be paid to him. This was in pursuance of a contract for the repair work to be done, but not a contract of service on payment of wages. He was not under the control of the company and had the character of a contractor and the relations were as principal to principal or employer to employer. Without elaborating in this judgment, I would prefer to refer to my reasoning in M/s. Ganesh Foundry Works v. Smt. Bhagwanti F.A.O 107 of 1979 (FAO No. 107 of 1979 decided on 27th March, 1984). For the detailed reasons given therein, I hold that the electrician would not fall within the definition of 'employee' and he will not be counted while finding out the number of employees working in the company. Accordingly, to this extent I reverse the finding of the Court below and hold that his name was wrongly counted in the number of employees. If the name of the electrician is removed, then the position left is that on 2nd December, 1976, there were nine employees and the Act was not applicable and under the Act even if the number of employees ceased to be less than the minimum, the Act continues to apply for an year. It was on 6th April, 1974, that there were 10 or more employees and thereafter they came down to 9. Therefore, the Act continued to apply till 5th April, 1975, and thereafter it ceased to apply. Hence after 5th April, 1975, the Corporation could not ask for contributions from the company and to this extent the demand was unjustified.