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CASE NO.: Appeal (civil)  702-709 of 2001

PETITIONER: Hyderabad Industries Ltd

RESPONDENT: ESI Corporation

DATE OF JUDGMENT: 24/09/2007

BENCH: Dr.  ARIJIT PASAYAT & D.K. JAIN

JUDGMENT: J U D G M E N T

CIVIL APPEAL NOS. 702-709 OF 2001 (With C.A. Nos. 710-717/2001)

Dr. ARIJIT PASAYAT, J.

1.      Challenge in these appeals is to the order passed by a  Division Bench of the Andhra Pradesh High Court, which by  the impugned order dismissed all the appeals  filed under  Section 82(2)  of the Employees State Insurance Act, 1948 (in  short  the ’Act’).  The question involved in the appeals was  whether the workmen engaged were encompassed by the  definition of an ’employee’ under Section 2(9) of the Act. The  High Court held that the appellants were the principal  employers so far as the concerned workers who are employed  are concerned and, therefore, they are liable to pay  contribution under the Act.  The High Court after quoting  Section 2(9) of the Act referred to the decision of this Court in  Rajkamal Transport v. E.S.I.C., Hyderabad (1996 (3) SCALE  806) and held that the orders passed by the courts below are  correct and the appeals lack merit.    

2.      In support of the appeals, learned counsel for the  appellants submitted that without analyzing the factual  position and formulating the right issues, the High Court in an  abrupt manner dismissed the appeals. It was submitted that  there were different categories of persons involved and one  uniform yardstick cannot be applied so far as they are  concerned.  

3.      In response, learned counsel for the Corporation  supported the judgment of the High Court.   

4.      The issues which require to be considered are as follows: (a) Whether the persons engaged by the contractors for  loading and unloading at the railway sidings are  employees of the contractor? (b) Whether statutorily such persons would qualify  as insured persons as defined under Section 2(14)  of the Act or was their engagement of a sporadic  nature with liberty in them to work for several  employers? (c) Whether for the work of loading and unloading at  the railway sidings there was supervision by the  appellant or its agent? (d) Whether persons engaged by the clearing and  forwarding agents of the appellant in the various

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places can be said to be employees of the clearing  and forwarding agents in the sense of there being  continuity and regularity in the engagement of those  persons and further whether such work was carried  out by them for or on behalf of the appellant? (e) Whether such persons engaged by the clearing  and forwarding agents were also working for other  clearing and forwarding agents? (f) Whether the clearing and forwarding agents who  were separate juristic entities would thus be  establishments covered under notification issued  under section 1(4) extending the applicability of the  Act as held in  M/s Cochin Shipping Co. v. E.S.I.  Corporation (1992 (4) SCC 245)? (g) Whether clearing and forwarding agents come  within the definition of immediate employer under  section 2(13) of the ESI Act? (h) Further, whether the workers engaged by the  contractors could be said to be employees of the  contractor and whether the appellant has  supervision over the work either by itself or by its  agent? If yes what should be the apportionment  towards the labour component from the amount  paid to the contractor? (i) Whether on the aspect of repairs and  maintenance the apportionment of 25% of the  amount paid to the contractor as labour component  is correct and if not what would be the  apportionment? (j) Whether the activity of constructing staff quarters  and other could be said to be an activity which is  ordinarily part of the work of the appellant or  incidental to the purpose of the factory or  establishment of the appellant?  

5.      As rightly submitted by learned counsel for the  appellants no finding has been recorded on the following  aspects:   (a) Whether the persons engaged by the  contractors at the railway sidings are  employees of the contractor; (b) Whether the contractor is in the nature of  immediate employer u/s 2(13) of the ESI Act  and as such the appellant is liable as principal  employer; (c) Whether the work done by the persons  engaged by the contractor at the railway  sidings, there was supervision by the appellant  or its agent. (d) Whether the work carried on by these  persons engaged by the contractor at the  railway sidings is ordinarily part of the work of  the factory or establishment or is preliminary  to the work carried on or incidental to the  purposes of the factory or the establishment.   (e)  Whether the persons engaged by the  clearing and forwarding agents of the appellant  were employees of the clearing and forwarding  agents in the sense that certain number of  workers were regularly doing the work of the  appellant for the clearing and forwarding  agent. (f) Whether for work done on repairs and  maintenance 25% apportionment towards  labour charges, in the amount paid to the

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contractor was not the correct apportionment. (g) Whether the persons engaged by the  contractors for construction of staff quarters  were the employees of the contractor or that  the construction of the staff quarter in the  present case was an activity which is  ordinarily part of the work of the factory or  establishment of the appellant or that it is  preliminary to the work carried on or  incidental to the purpose of the factory or  establishment of the appellant.

6.      Various decisions have been cited to submit that Raj  Kamal’s case (supra) is distinguishable on facts. It is pointed  out that the clearing and forwarding measure is to be taken as  an establishment itself.  

7.      As the High Court has not considered the factual aspects  and has abruptly concluded that the Raj Kamal’s case (supra)  covers the case there is no scope for analyzing the factual  aspects in these appeals. The High Court while dealing with  the appeals under Section 82(2) of the Act is required to  analyse the factual position to see whether the definition of  employee in terms of Section 2(9) of the Act applies to the facts  of the case. Whether Raj Kamal’s case applies to the facts of  the case was to be adjudicated by taking note of the factual  background. Since the High Court has not analysed the  factual position it would be appropriate to remit the matter to  the High Court for analyzing the factual position to decide  whether provisions of the Act are applicable to the category of  persons engaged.  

8.      The appeals are disposed of accordingly with no order as  to costs.