Abdul Azeez K. vs Regional Director, Employees'' State Insurance Corporation

K. Padmanabhan Nair, J.—The appellant in I.C. 37/96 on the file of Employees Insurance Court, Palakkad is the appellant in this M.F.A. The appellant is the proprietor of a hotel under the name and style Indian Hotel at Nilambur. According to the appellant, he took the building on lease (in which the hotel is situated) from Kannanari Moideenkutty as per an agreement dated June 30, 1991 and started the business from July 2, 1991, after obtaining necessary licence from Nilambur Panchayat. It was averred that in that building Sr. K. Muhammed Basheer was running a hotel. He closed the establishment on March 15, 1999 after terminating the services of the workers, The workers were given all the benefits admissible to them. It was averred that the business started by the appellant is neither a continuing one nor a transferred one. It was also averred that the appellant had not engaged more than the minimum number of employees so as to bring the same within the meaning of factory or establishment. It was averred that on September 5, 1991 and July 6, 1992 the Insurance Inspector, Ferroke had inspected the establishment and was satisfied that the establishment was not liable to be covered. It was alleged that after the lapse of 5 years, the appellant was served with a notice stating that his establishment was covered under the provisions of the Employees'' State Insurance Act, 1948 (for short, ''the Act'') and he was directed to comply with the provisions of the Act and to pay contribution from July 2, 1991. The appellant filed reply on May 13, 1996 denying his liability. The competent authority rejected the contention of the appellant and directed to pay the contribution. The appellant filed I.C. 37/96 before the Insurance Court challenging the order of the Regional Director. The Employees Insurance Court, Palghat, found that the establishment run by the petitioner is a continuation of another establishment which was already covered by the Act. It was held that in view of the provisions contained Section 1(6) of the Act, the appellant''s establishment is also liable to be covered. Challenging that decision, this M.F.A. is filed.

Advocate Sri Ajaykumar appearing for the respondent raised a preliminary objection that the M.F.A. itself is not maintainable. It is argued that in view of the provisions contained in Section 82 of the Employees'' State Insurance Act, an appeal can be admitted and heard only on a substantial question of law. It is argued that no substantial question of law arises in this M.F.A. and no such question was also framed in this M.F.A. It is argued that whether the present establishment is a continuation of the old establishment is essentially a question of fact and no question of law arises in such a case. The learned counsel for the respondent relied on a decision reported in Regional Provident Fund Commissioner v. C.K.M, Saw Mills ILR 1981 Ker 293. In C.K.M. Saw Mill''s case, the decision was rendered u/s 19-A of the Employees'' Provident Fund Act 1998. The question arose for consideration in that case was also whether the establishment was in fact the continuation of the old establishment. A Division Bench of this Court after considering the law on the point held that whether the old establishment was extinguished and a new establishment came into being is essentially a question of fact. In C. K. M. Saw Mill''s case the Division Bench followed the principles laid down by the Supreme Court in SLP (Civil) No. 4583 of 1997 (sic), in which it has held as follows:

"The sole question that arises in such a situation is as to whether a new establishment has been set up or whether there is a continuation of the old establishment. This is essentially a question of fact depending on many variables."

The learned counsel appearing for the appellant relied on a decision reported in T.A. Zainulabdeen v. Regional P.P. Commissioner Ker 1975 LIC 412. It was held as follows:

"An establishment need not in all circumstances continue to be the same establishment : a disruption of that establishment is possible on a real and bona fide partition of the estate.

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The Supreme Court thus clearly recognised the position that for the purpose of the Act it cannot be said once an establishment always the same establishment."

It is true that an establishment need not in all circumstances continue to be the same establishment and disruption of that establishment is possible. It is the duty of the in Insurance Court to appreciate the entire evidence in its proper perspective and render a finding whether the disputed establishment is a new one or continuation of old establishment. That finding of the Insurance Court is essentially a finding of fact and no substantial question of law arises from such finding. Since the only question arising for consideration in the Miscellaneous First Appeal is whether the establishment run by the appellant is a new one or the continuation of the old one, then the Miscellaneous First Appeal is not maintainable,

Now I shall consider the case of the appellant on its merits also. The building in which the hotel is housed belongs to the father of the appellant. The former employer is the brother of the appellant. The evidence on record show that the building was constructed for the purpose of conducting hotel. Prior to July 1, 1995, brother of the appellant was conducting a hotel in that building. According to the appellant the brother stopped that business on March 15, 1991 and thereafter the building was lying vacant. His further case was that he took the building on rent from his father along with utensils, chairs, almirahs etc., for the purpose of starting a hotel. The stamp papers for writing the lease deed were purchased by the mother of the appellant and not by the landlord or the tenant. A reading of the document shows that such a document was executed only to make it appear that it is a new establishment. The competent authority passed an order by which it was held that the establishment of the brother of the appellant was liable to be covered is also admitted. Challenging that order, I.C. 11/1994 was filed before the Insurance Court. Insurance Court confirmed the decision of the competent authority and that decision had become final and conclusive. The Employees'' Insurance Court, after taking into consideration of the fact that the building with furniture belonging to the father, and appellant''s brother was doing the very same business etc., found that the present establishment is only a continuation of the earlier establishment.

The appellant produced licence issued by the local authority with effect from September 14, 1991. The appellant started business in the building with effect from July 1, 1991, The counsel for the respondent contended that when the period of the existing licence expired, the appellant renewed the same in his own name and that fact alone is sufficient to hold that the present establishment is a continuation of the establishment run by his brother.

The counsel appearing for the appellant relied on the report filed by the Insurance Inspector to argue that the present establishment is a new one started by the appellant. It is true that in the report submitted by the Insurance Inspector, there is a statement to the effect that earlier the business was closed with effect from March 15, 1991 and the appellant started business on July 1, 1991. The Employees'' Insurance Scheme was enacted for the welfare of the workmen. So, the view favourable to the workmen is to be accepted. In Transport Corporation of India Vs. Employees'' State Insurance Corpn. and Another, it was held as follows:

"... it is necessary to keep in view the salient fact, that the Act is a beneficial piece of legislation intended to provide benefits to employees in case of sickness, maternity, employment injury and for certain other matters in relation thereto ....

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When two views are possible on its applicability to a given set of employees, that view which furthers the legislative intention should be preferred to the one which would frustrate it".

The totality of the evidence on record leads to the conclusion that the present establishment is a continuation of the earlier establishment. So in view of the proviso is contained in Section 1(6) of the Act, the establishment is liable to be covered.

It is argued by the appellant that number of employees now working is less than 10 and hence the establishment is not liable to be covered. In this context, provisions contained in Section 1(6) of the Act is also relevant. Section 1(6) provides that a factory or establishment to which the Act applies shall continue to be governed by the Act notwithstanding that the number of persons employed therein (sic) at any time falls below the limit specified by or under the Act or the manufacturing process ceased to be carried on with the aid or power. The reduction of number of employees is not a ground to hold that the appellant''s establishment is not liable to be covered. So the finding of the Employees'' Insurance Court that the establishment is liable to be covered does not call for interference. I confirm the order. So the appeal is only to be dismissed.

In the result, the Miscellaneous First Appeal is dismissed.