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PETITIONER: REGIONAL DIRECTOR, EMPLOYEES STATE INSURANCE CORPORATION,MAD

       Vs.

RESPONDENT: SOUTH INDIA FLOUR MILLS (P) LTD. ETC. ETC.

DATE OF JUDGMENT29/04/1986

BENCH: DUTT, M.M. (J) BENCH: DUTT, M.M. (J) ERADI, V. BALAKRISHNA (J)

CITATION:  1986 AIR 1686            1986 SCR  (2) 863  1986 SCC  (3) 238        1986 SCALE  (1)1315  CITATOR INFO :  RF         1992 SC 573  (36)

ACT:      Employees’ State  Insurance Act,  1948 -  Section  2(9) ’employee’ -  ’work of  the  factory’  -  interpretation  of casual employees - whether fall within purview of Act.

HEADNOTE:      The respondent-company  in Civil Appeal No. 801 of 1976 is engaged in milling wheat into wheat products in its flour mill. It  commenced the  construction of another building in the compound  of the  existing factory  for the expansion of the factory  and engaged  workmen for  such construction  on daily wage  basis. The appellant-Corporation called upon the respondent-company to  make contribution  in respect  of the workmen employed  for the  construction work  of the factory building as  required by  the Employees State Insurance Act, 1948.      The respondent-company disputed its liability and filed a petition  under Art.  226. A  Single  Judge  allowing  the petition took  the view  that the  persons employed  in  the construction of a new unit of the factory were not employees within the  meaning of the definition of the term ’employee’ under s. 2(9) of the Act.      On appeal  by  the  appellant-Corporation,  a  Division Bench relying  upon an  earlier decision  of that  Court  in Employees State  Insurance Corporation  v. Ghanambikai Mills Ltd., [1974]  2 LLJ  530 dismissed  the appeal and held that construction workers  being causal  employees  do  not  come within the purview of the Act.      The connected  appeals and  the special leave petitions are based  on similar facts and involve a common question of law. 864      Allowing the  appeals and  petitions of  the appellant- Corporation the Court. ^      HELD :  1. The  Act  is  a  piece  of  social  security legislation enacted  to  provide  for  certain  benefits  to employees in  case of  sickness,  maternity  and  employment injury. [871 F]      2. Casual employees are employees within the meaning of

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the term  ’employee’ as  defined in  s. 2(9)  of the Act and accordingly come within the purview of the Act.      Andhra Pradesh  State Electricity  Board v.  Employees’ State Insurance  Corporation, Hyderabad,  [1977] 1  LLJ  54, Regional  Director,  ESIC,  Bangalore  v.  Davangere  Cotton Mills, [1977]  2 LLJ  404  and  Employees’  State  Insurance Corporation, Chandigarh  v. Oswal Woollen Mills Ltd., [1980] 2 Lab. I.C. 1064, relied upon.      Employees  State  Insurance  Corporation  v.  Ghanbikai Mills Ltd., [1974] 2 LLJ 530, overruled.      Royal Talkies,  Hyderabad v. Employees’ State Insurance Corporation, [1978] 4 SCC 204, referred to.      3. The  definition of the term "employee" under s. 2(9) of the  Act is  very wide.  It includes within it any person employed  on  any  work  incidental  or  preliminary  to  or connected with  the work of the factory or establishment. It is difficult  to enumerate the different types of work which may be  said to be incidental or preliminary to or connected with the work of the factory or establishment. [871 B-C]      4. In  the instant cases, the additional buildings have been constructed  for the  expansion  of  the  factories  in question. It  is because  of these additional buildings that the existing  factories will  be expanded  and consequently, there will  be increase  in the  production that  is to  say increase in the work of the factories concerned. So the work of construction  of additional buildings has a link with the work of the factories. It cannot, therefore be said that the construction work  has no  connection with  the work  or the purpose of the factories. [871 C-E] 865      5. The  expression ’work of the factory’ should also be understood in  the sense  of  any  work  necessary  for  the expansion of  the factory or establishment for augmenting or increasing the  work of  the factory  or establishment. Such work is  incidental or  preliminary to or connected with the work of the factory or establishment. [873 A-B]

JUDGMENT:      CIVIL APPELLATE  JURISDICTION : Civil Appeal No. 801 of 1976 Etc.      From the  judgment and  Order dated  11.12.1973 of  the Madras High Court in Writ appeal No. 288 of 1970.      V.C.   Mahajan,    Dr.   Y.S.   Chitale,   Miss   Kitty Kumaramangalam, Girish  Chandra, S.  Ramasubramaniam, D.  N. Gupta, N.S.  Das Bahal,  Miss Sushma  Ralhan, D.N. Gupta and C.V. Subba Rao for the appearing parties.      The Judgment of the Court was delivered by      DUTT, J.  Civil Appeal No. 801 of 1976 and Civil Appeal No. 819 (NL) of 1976 have been preferred by Special Leave by the  Employees   State  Insurance  Corporation,  hereinafter referred to  as ’ESI  Corporation’. The  ESI Corporation has also filed  Special Leave  Petition  Nos.  1134-1145(NL)  of 1978. These  appeals and  the Special Leave Petition raise a common question  of law  and, as  such, they have been heard together. Indeed,  by an  order of  this Court  the  Special Leave Petitions  were directed  to be heard along with Civil Appeal No.  801 of 1976. Before we indicate thhe question of law we may state a few facts.      In  Civil  Appeal  No.  801  of  1976,  the  respondent company, South  India Flour  Mills (P)  Ltd., is  engaged in milling wheat  into wheat  products in its flour mill. It is not disputed  that the  mill of  the respondent company is a factory within the meaning of the Factories Act, 1948. In or

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about the  middle of  1964, the respondent company commenced the construction  of another building in the compound of the existing factory  for  the  expansion  of  the  factory  and engaged workmen  for such  construction on daily wage basis. The ESI  Corporation called  upon the  respondent company to make contribution in respect of 866 the workmen  employed  for  the  construction  work  of  the factory  building   as  required  by  the  Employees’  State Insurance Act,  1948, hereinafter  referred to as ’the Act’. The respondent  company moved  the Madras  High Court  under Article 226  of the  Constitution against the said demand. A learned Single  Judge of  the High  Court took the view that the persons  employed in  the construction  of a new unit of the factory  were not  employees within  the meaning  of the definition of  the term ’employee’ under section 2(9) of the Act. In  that view  of the matter, the learned Judge allowed the writ  petition of  the respondent  company. On appeal by the ESI  Corporation to  a Division Bench of the High Court, the Division  Bench simply  referred to  and relied  upon an earlier decision  of that Court in Employees State Insurance Corporation v.  Gnanambikai Mills Ltd., [1974] 2 L.L.J. 530. In that  case, it has been held that though casual employees come within  the definition  of the  term  ’employee’  under section 2(9)  of the Act yet, as they may not be entitled to sickness benefit  in case  their employment is less than the benefit period or contribution period, it does not appear to be the  intention of the Act that casual employees should be brought within  its purview.  Accordingly, it  has been held that construction workers being casual employees do not come within the  purview of  the Act. The appeal preferred by the ESI Corporation was dismissed.      In Civil  Appeal No.  819 (NL)  of 1976, the respondent company, Shri  Sakhti Textiles  Pvt. Ltd.,  was  granted  an additional spindleage.  Accordingly, the  respondent company expanded its mill, that is the factory, by putting up of new buildings and, for that purpose, the company had to employ a large number  of workers.  The ESI Corporation demanded from the respondent  company contributions in respect of the said workers for  the period  from July  1, 1963 to September 30, 1967. The  respondent company  instituted proceedings  under section 75  of the  Act in  the Employees’  State  Insurance Court, Coimbatore,  inter alia,  praying for  a  declaration that the  workers employed  for the construction work of the factory buildings  were not  employees within the meaning of section 2(9)  of the  Act. The  Employees’  State  Insurance Court held  that  the  workers  engaged  by  the  respondent company for  putting up  of additional constructions for the factory were not employees within the definition of the term ’employee’ under 867 the Act.  On appeal by the ESI Corporation against the order of the  Employees’ State Insurance Court a Division Bench of the Madras  High Court  took the  view  that  employment  of workers for  putting up  of  additional  buildings  for  the purpose of  commencing manufacturing  process would  not  be employment incidental  or preliminary  to or  connected with the work  of  the  factory  and,  accordingly,  the  workers employed for  the  purpose  of  construction  of  additional buildings were  not employees  within the meaning of section 2(9) of  the Act.  In that  view of the matter, the Division Bench dismissed the appeal.      In the  Special Leave  Petition Nos. 1143-1145 of 1978, the respondent  companies owning  the textile  mills workers for the  construction of  additional factory  buildings. The

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Division Bench  of the  Madras High  Court has following its earlier decisions  taken the  same  view  that  the  workers employed  for   the  construction   of  additional   factory buildings of  the mills  in question are not employed within the meaning  of section  2(9) of  the  Act.  Hence  the  ESI Corporation has  filed these  Special Leave Petitions which, as aforesaid, have been heard along with the above appeal.      In view  of the  facts stated  above, the only question that is  involved in  these appeals  and the  Special  Leave Petitions  is   whether  the   workers  employed   for   the construction of  additional buildings for the expansation of the factories  in question  are employees within the meaning of section  2(9) of  the Act. Section 2(9) of the Act before the same  was amended  by  the  Amendment  Act  44  of  1966 provided as follows :           "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  if           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 868           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 so lent or           let  on  hire  has  entered  into  a  contract  of           service."      It appears from the definition that three categories of persons as  mentioned in  clauses (i),  (ii)  and  (iii)  of section 2(9)  can be  employees. We  are, however, concerned with the  category under  clause (i)  inasmuch as in all the cases before us the workers concerned were directly employed by  the   principal  employers,   namely,   the   respondent companies. Under  category (i), in order to be an employee a person must  be employed  directly by the employer for wages in the  factory or establishment on any work which should be incidental or  preliminary to  or connected with the work of the factory  or establishment.  The definition  seems to  be very wide  and brings  within the  purview various  types of employees. As  soon as  the conditions  under the definition are fulfilled, one becomes an employee within the meaning of the definition.      Before we  proceed to  consider the principal question, we may  deal with  a connected question, namely, whether the construction workers,  who are  admittedly  casual  workers, come within  the purview of the Act. We have already noticed that in  the case  of Gnanambikai  Mills (Supra) referred to and relied  upon by  the Division  Bench of  the Madras High Court in Civil Appeal No. 801 of 1976, it has been held that the casual workers do not come within the purview of the Act although they  are covered  by the  definition of  the  term ’employee’ under section 2(9) of the Act. The reason for the said finding  is that  in view  of their  short duration  of employment, they  will not  be entitled  to sickness benefit

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and, as such, it is not the intention of the Act that casual employees  should   be  brought   within  its   purview.  In expressing that  view, it appears that the Madras High Court has overlooked  some other  provisions of the Act which will be referred to presently. 869      Section 39 provides for contributions payable under the Act. Sub-section (4) of section 39 provides as follows :           "The contributions payable in respect of each week           shall ordinarily  fall due  on the last day of the           week, and  where an  employee is employed for part           of the  week, or  is employed  under two  or  more           employers during  the same week, the contributions           shall fall due on such days as may be specified in           the regultion."      Sub-section  (4)  clearly  indicates  employment  of  a casual employee  when it  provides "and where an employee is employed for part of the week". When an employee is employed for part  of a  week, he cannot but be a casual employee. We may also  refer to sub-section (3) of section 42 relating to general provisions  as to  payment  of  contributions.  Sub- section (3) reads as follows:           "Where wages  are payable  to an  employee  for  a           portion of  the week, the employer shall be liable           to pay  both the  employer’s contribution  and the           employee’s contribution  for the  week in full but           shall be entitled to recover from the employee the           employee’s contribution."      Sub-section (3),  inter  alia,  deals  with  employer’s liability  to  pay  both  employer’s  contribution  and  the employee’s  contribution  where  wages  are  payable  to  an employee for a portion of the week. One of the circumstances when wages  may be  payable to  an employee for a portion of the week  is that  an employee  is employed  for less than a week, that  is to say, a casual employee. Thus section 39(4) and section  42(3)  clearly  envisage  the  case  of  casual employees. In  other words,  it  is  the  intention  of  the Legislature that  the casual employee should also be brought within the  purview of  the Act.  It is  true that  a casual employee may  not be entitled to sickness benefit as pointed out in  the case  of Gnanambikai  Mills (Supra). But, in our opinion, that  cannot be  a ground  for the  view  that  the intention of  the Act is that casual employees should not be brought within  the purview  of the Act. Apart from sickness benefit there are other benefits under the 870      Act including  disablement benefit  to which  a  casual employee will  be entitled  under section  51  of  the  Act. Section  51   does  not  lay  down  any  benefit  period  or contribution period.  There may  again be  cases when casual employees are  employed over the contribution period and, in such cases,  they will  be entitled  to  even  the  sickness benefit. In the circumstances, we hold that casual employees come within  the purview of the Act. In Andhra Pradesh State Electricity Board v. Employee’s State Insurance Corporation, Hyderabad,  [1977]   1  LLJ  54;  Regional  Director,  ESIC, Bangalore v.  Davangere Cotton  Mills, [1977]  2 LLJ 404 and Employees’ State  Insurance Corporation, Chandigarh v. Oswal Woollen Mills  Ltd., [1980]  2 Lab.  I.C. 1064,  the  Andhra Pradesh High  Court, Karnataka High Court and the Punjab and Haryana High  Court have  rightly taken the view that casual employees are  employees within  the  meaning  of  the  term ’employee’ as  defined in  section  2(9)  of  the  Act  and, accordingly, come within the purview of the Act.      Indeed Dr. Chitale, learned counsel appearing on behalf

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of the respondent company in Civil Appeal No. 819 (NL) 1976, franckly concedes  that it  will be  difficult  for  him  to contend  that   casual  workers   are  not  covered  by  the definition of  the term ’employee’ under section 2(9) of the Act. He,  however, submits that in the instant case the work in which  the casual workers were employed by the respondent company, namely,  Shri Shakthi Textiles Mills Pvt. Ltd., not being the  work of  the factory or incidental or preliminary to or  connected with  the work of the factory, such workers cannot be  employees within  the meaning  of section 2(9) of the Act.  The contention  of the learned counsel is that the work of  the factory being ’weaving’, an employee within the meaning of  section  2(9)  must  be  employed  on  any  work incidental or  preliminary to  or connected with the work of weaving that  is carried  on in the mill or factory. Counsel submits that  the work  of construction of factory buildings cannot be  said to be an activity or operation incidental to or connected with the work of the factory, which is weaving. Mr. D.N.  Gupta, learned  counsel appearing on behalf of the respondent  companies   in  the   other  cases   adopts  the contention of  Dr. Chitale  and  submits  that  the  workers employed for  the construction  of the  factory buildings do not come  within the purview of the definition of ’employee’ under section 2(9) of the Act. 871      Therefore,  the   investigation  under   the  principal question A  formulated above  boils down  to  this,  namely, whether  the  construction  of  factory  buildings  for  the expansion  of   the  existing  factories  is  incidental  or preliminary to  or connected with the work of the factory or not. It  has been already noticed that the definition of the term ’employee’  under section 2(9) of the Act is very wide. It includes  within it  any  person  employed  on  any  work incidental or  preliminary to  or connected with the work af the factory or establishment. It is  difficult to  enumerate the different  types  of  work  which  may  be  said  to  be incidental or  preliminary to  or connected with the work of the factory or establishment. It seems that any work that is conducive to  the work  of the  factory or  establishment or that is  necessary for  the augmentation  of the work of the factory or  establishment will  be incidental or preliminary to  or   connected  with   the  work   of  the   factory  or establishment.  In   the  instant   cases,  the   additional buildings have  been constructed  for the  expansion of  the factories in  question. It  is because  of these  additional buildings that  the existing factories will be expanded and, consequently, there will be increase in the production, that is to  say, increase in the work of the factories concerned. So the  work of  construction of  these additional buildings has a link with the work of the factories. It cannot be said that the  construction work  has no connection with the work or the  purpose of the factories. So it is difficult to hold that the  work of  construction of  these additional factory buildings is  not  work  incidental  or  preliminary  to  or connected with the work of the factories.      The Act  is a  piece  of  social  security  legislation enacted to provide for certain benefits to employees in case of sickness,  maternity and  employment injury. To hold that the  workers  employed  for  the  work  of  construction  of buildings for the expansion of the factory are not employees within the  meaning of section 2(93 of the Act on the ground that such  construction is  not incidental or preliminary to or connected  with the  work of  the factory will be against the object  of the  Act. In an enactment of this nature, the endeavour of the Court should be to interpret the provisions

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liberally in  favour of  the persons  for whose  benefit the enactment has been made. 872      In this  connection, we may refer to a decision of this Court  in  Royal  Talkies,  Hyderabad  v.  Employees’  State Insurance Corporation,  [1978] 4  SCC 204. The question that came up  for consideration  by this  Court was  whether  the workers employed  to run  the canteen  and the  cycle  stand situate within  the compound  of  a  ’cinema  theatre’  were employees within  the meaning of section 2(9) of the Act. It was held  the workers  employed to  run the  canteen and the cycle stand  were employees  within the  meaning of  section 2(9) of  the Act.  Krishna Iyer,  J. speaking for the Court, observes:           "The expression "in connection with the work of an           establishment" ropes  in a wide variety of workmen           who may  not be  employed in the establishment but           may be engaged only in connection with the work of           the establishment.  Some nexus  must exist between           the establishment and the work of the employee but           it may  be a loose connection. ’In connection with           the work of an establishment’ only postulates some           connection between  what the employee does and the           work of  the establishment. He may not do anything           directly for  the establishment;  he  may  not  do           anything    statutorily    obligatory    in    the           establishment; he  may not  even do anything which           is primary or necessary for the survival or smooth           running of  the establishment  or integral  to the           adventure. It  is enough if the employee does some           work  which   is  ancillary,  incidental  or,  has           relevance to  or  link  with  the  object  of  the           establishment..... Taking  the  present  case,  an           establishment like  a cinema  theatre is not bound           to run  a canteen or keep a cycle stand (in Andhra           Pradesh) but  no one  will  deny  that  a  canteen           service, a  toilet service,  a car  park or  cycle           stand, a  booth for sale of catchy film literature           on actors,  song hits  and the  like, surely  have           connection  with   the  cinema  theatre  and  even           further the venture."      In our  opinion, the work of construction of additional buildings required  for the  expansion of  a factory must be held to be ancillary, incidental or having some relevance to or link with the object of the factory. It is not correct to 873 say that  such work  must always have some direct connection with the  manufacturing process  that is  carried on  in the factory. The expression "work of the factory" should also be understood in  the sense  of  any  work  necessary  for  the expansion of  the factory or establishment or for augmenting or increasing the work of the factory or establishment. Such work is  incidental or  preliminary to or connected with the work of the factory or establishment.      We are,  therefore, unable  to accept  the view  of the Madras High  Court in  all  these  cases  that  the  workers employed  for   the  construction  work  of  the  additional buildings  for  the  expansion  of  the  factories  are  not employees within the meaning of section 2(9) of the Act.      For the reasons aforesaid, we allow Civil Appeals Nos. 801 of 1976 and 819 (NL) of 1976 and set aside the judgments of the Madras High Court.      So far  as Special  Leave Petitions Nos. 1143-1145 (NL) of 1978  are concerned,  we grant special leave in all these matters, set aside the judgment of the Madras High Court and

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Allow the connected appeals.      The parties are directed to bear their own costs in all these matters. A.P.J.                                     Appeals allowed. 874