Shivaraj V. Patil, J. - (1.) The appellants were contractors in respect of toddy shops during the given period. Toddy shops were run on the basis of yearly auction conducted by the Excise Department of the Government of Kerala. Various guidelines were issued by the Board of Revenue and the State Government from time to time for running toddy shops. The employees working in the toddy shops during the period in question were not brought under the coverage of the ESI Scheme mainly on the ground that the provisions of ESI Scheme were not applicable to the toddy shops according to the appellants; assuming that the Employees State Insurance Act, 1948 (for short the Act) was applicable to the toddy shops in the previous years, that did not create any continuing liability of the appellants. On the basis of the inspection conducted by the officers of the respondent-Corporation, respondents took up the position that the toddy shops were covered under the Act and assessed to the contribution; recovery proceedings also were initiated for collection of contribution amount. At that stage the appellants approached the Employees Insurance Court (EI Court) seeking declaration that the toddy shops run up by the appellants during the period 1991-1994 could not have been brought under the ESI Scheme and, therefore, no liability to pay contribution could be foisted on them.
(2.) According to the respondents the toddy shops were covered by the ESI Scheme from 1983 onwards and only when the inspection was conducted it was noticed that the appellants did not pay the contribution during the period of their licence; in spite of the communication of the coverage and demand, for payment of contribution the appellants did not respond and in those circumstances revenue recovery proceedings were initiated. According to the respondents there was no illegality in the action taken by them. The appellants elaborated their case in reply statement contending, even assuming, that the previous contractors were complying with the ESI Scheme, that did not make the appellants liable in any manner to continue the coverage as the very applicability of the Act to the workers of toddy shops were quite uncertain. It was their further case that the appellants could not be treated as principal employers insofar as the toddy shops were concerned because the responsibility to run the toddy shops through some agent was purely that of the Excise Department under the Act; therefore, Excise Department was the owner and principal employer of the toddy shops; the functioning of the toddy shops was covered by the provisions of the Abkari Act and Rules and not by the provisions of Kerala Shops and Commercial Establishments Act; for the benefit of the workers in toddy shops there is separate enactment and schemes framed thereunder, i.e., Kerala Toddy Workers Welfare Fund Act and Scheme; benefits to the workers under the Kerala Toddy Workers Welfare Fund Act and the Scheme were more beneficial to them; the licence given to a contractor to run a toddy shop is not similar to the licence issued to the owners of the shops and other establishments under the Shops and Establishments Act. The toddy shops constitute different class of establishments; if the Government had any intention to include the toddy shops also under the purview of the ESI Scheme, they would have found place in the notification issued under S. 1(5) of the Act. According to the appellants as contractors of toddy shops, at the most, they had only the role of an immediate employer; even assuming the Act is applicable to toddy shops the primary responsibility to pay contribution was that of the Excise Department being the principal employer.
(3.) The EI Court after considering facts, respective contentions and referring to the provisions of the Act and the Abkari Act and Rules concluded that toddy shops were the establishments belonged to or were under the control of the Department of the Government and the employees working in those shops were enjoying the benefits substantially similar to the benefits provided in the cases covered by the ESI Scheme. In this view the EI Court held that the provisions of ESI Scheme were not applicable to the employees working in toddy shops of the appellants during the relevant period. The Court also made it clear that since the proviso to S. 1(4) of the Act was added to the statute book only with effect from 20-10-1989, any demand for contribution for the prior period had to be viewed differently. In this view the EI Court allowed the applications filed by the appellants and granted relief to them. The respondents challenged the validity and correctness of the orders passed by the EI Court by filing miscellaneous first appeals before the High Court. The High Court, after hearing the learned counsel for the parties and considering the respective contentions raised by them, allowed the appeals and set aside the judgment of the EI Court. Hence these appeals are filed by the appellants questioning the validity and correctness of the impugned common judgment.;