HYDERABAD INDUSTRIES LTD.versusESI CORPORATION

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A                   HYDERABAD INDUSTRIES LTD.
                                      v.                                         ·{-
                           ESI CORPORATION

                          SEPTEMBER 24, 2007
B
             [DR. ARIJIT PASAYAT AND D.K. JAIN,JJ.)


        Employees State Insurance Corporation Act, 1948; Ss. 2(9), 2(14)
    and82:
c      Persons engaged by a contractor for doing work at Railway-
  Employees-Classification ofin the context ofs.2 (g) ofthe 1948 A ct-
  Whether employees ofcontractor or Railway-Held: High Court did
  not analyze the factual position to see the applicability ofs.2(g) ofthe
  Act-Under the circumstances, it would be appropriate to remit the
D
  matter to High Court to decide by analyzing the factual position for
  applicability ofthe provisions ofthe Act-Directions issued.
                                                                                 l.
         The question involved for determination in the appeals was as
    to whether the workmen engaged by the appellant".'organisation were
E   encompassed by the definition of an 'employee' under Section 2(9)
    of the Employees State Insurance Act.
         Appellant contended that without analyzing the factual position
    and formulating the right issues, the High Court in an abrupt manner
    dismissed the appeals; and that there were different categories of
F   persons involved and one uniform yardstick cannot be applied to
    them.
         Disposing of the appeals, the Court
         HELD: The High Court while dealing with the appeals under
G Section 82(2) of the Employees State Insurance 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 the decided case, RajKamal Transport v. E.S.l.C.,

H                                    272
  HYDERABAD INDUSTRIES LTD. v. ESI CORPORATION 273
                [PASAYAT,J.]
Hyderabad, applies to the facts of the case was to be adjudicated by A
taking note of the factual background. Since the High Court ha~
not analysed the factual position, it would be appropriate to remit
the matter to the High Court for analyzing the factual position tQ
decide whether provisions of the Act are applicable to the category
of persons engaged. [276-E-F-G]                                    .B
     Raj Kamal Transportv. ES.LC., Hyderabad, (1996) 3 SCALE
806, relied on.
    CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 702-
709of2001.                                                c
    From the Judgment and Order dated 12.11.1998 of the High Court
of Andhra Pradesh in A.A. Order Nos. 690-696 & 722 of 1994.
                               WITH
     C.A. Nos. 710-717of2001.                                         D
     K.V. Viswanathan, Vishal Gupta and Shabyashachi Patra (for
Sanjeev Kumar) for the Appellant.
     Vijay K. Mehta for the Respondent.
     The Judgment of the Court was delivered by                        E

     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'). F
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 G
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.l 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 H
     274            SUPREME COURT REPORTS                   [2007] 10 S.C.R.

. A 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.
B          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
 c          contractor?
            (b) Whethe_r 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
D           several employers?
            (c) Whether for the work of loading and unloading at tht;! railway
            sidings there was supervision by the appellant or its agent?
            (d) Whether persons engaged by the clearing and forwarding agents
E           of the appellant in the various 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?
F           (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
 G          notification issued under section 1(4) extending the applicability of
            the Act as held in Mis Cochin Shipping Co. v. E.S.J.
            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
 H
~
       HYDERABAD INDUSTRIES LTD. v. ESI CORPORATION 275
                     [PASAYAT,J.]
           Act?                                                                   A
.r
           (h) Fwther, 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
                                                                              B
           component from the amount paid to the contractor?
           (i) Whether on the aspect of rep~irs 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?                                                         c
           G) 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?
                                                                                  D
           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;
                                                                                  E
           (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 F
           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 G
           on or incidental to the purposes of the factory or the establishment.
           (e) Whether the persons engaged by the clearing and f01warding
           agents of the appellant were employees of the clearing and
           forwarding agents in the sense that certain number of workers were
                                                                                  H
    276             SUPREME COURT REPORTS                    [2007] 10 S.C.R.


A            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
             contractor was not the correct apportionment
B
             (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
c            establishment of the appellant or that it is prelimiruuy 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
D 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
E High Court while dealing with the appeals under Section 82(2) of the Act
  is iequired 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
F 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 ofaccordingly with no order as to
G costs,

    S.K.S.                                                 Appeal disposed of.
                                                                                      .
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