Decided on May 26,1974

Regional Director, E.S.I. Corporation, Trichur Appellant
Ruby Rubber Works Ltd., Changanacherry Respondents


P.SUBRAMONIAN POTI,J. - (1.) AN important question relating to the application of certain provisions of the Employees ™State Insurance Act,1948 arises for decision in this appeal.Whether the employees in the various sales depots of the respondent concern which is running a rubber factory at Changanacherry come within the scope of coverage of the Employees ™State Insurance Act,1948(in short,the Act)is the question so arising in this case.The respondent in the appeal,the Ruby Rubber Works Limited,filed an appli­cation under section 75 of the Act for a declaration that the persons employed in their sales depots were not covered under the Act.Such sales depots are situate in various parts of India.The Regional Director of the Employees ™State Insurance Corporation(referred to as Corporation hereinafter)called upon the respondent to register such employees too and to pay contribution in respect of them.It was then that the application was filed by the respondent.The claim for such coverage was only for the period from 28th January 1968 on which date the amendment of the definition of the term employee in the Act came into force.According to the Corporation the employees in the sales depots were also brought within the scope of coverage by reason of the said amendment.The respondent's appli­cation was allowed by the Employees ™Insurance Court,Alleppey and that court made a declaration that the per­sonnel employed in the sales depots were not liable to be insured since the depots were not factories.This is challenged by the Corporation in this appeal.
(2.) THE Employees ™State Insurance Act was enacted by Parliament to provide for benefits to the working class in case of sickness,maternity and employment injury and to confer on them disablement and medical benefits.The benefits so conferred by the Act extend to employees as defined in section 2(9 )(i)of the Act and that is the class of persons who are covered by the Act.That is evident from section 38 of the Act which provides that " Subject to the provisions of this Act,all employees in factories,or establishments to which this Act applies shall be insured in the manner provided by this Act. How such employees are to be insured is provided for in section 39 and section 40.It is to be by payment of contri­bution payable by the employer and the employee at the specified rates.The contribution payable by the employee is also payable in the first instance by the principal employer. There was controversy as to the scope of the term employee as defined in section 2(9)of the Act.That definition read: 2(9)employee means any person employed for wages in or in connection with the work of a factory or establishment to which this 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 lent or let on hire has entered into a contract of service; This was how the definition stood prior to amendment by Act 44 of 1966.That Act added an inclusive clause to the definition and the portion so added read: and includes any person employed for wages on any work con­nected with the administration of the factory or establishment or any part,department or branch thereof or with the purchase of raw materials for,or the distribution or sale of the products of the factory or establishment;but does not include " The amendment came into force with effect from 28th January 1968.
(3.) EVIDENTLY the stand taken by the Corporation which directed coverage of the employees in sales depots with effect from 28th January 1968 was that though such employees might not have been within the scope of the definition of the term prior to the amendment,the amended definition would cover them also and therefore the Corporation could claim contribution in respect of such employees too.It was this that was the core of controversy between the parties.According to the respondent that would not be the case because notwithstanding the amendment of the definition of the term employee,there would be no enlargment of the scope of section 38 of the Act which applied only to employees in factories or establishments to which the Act applied and not to all employees.;

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