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Judgment
Ramaswami, J.—These three Civil Miscellaneous Appeals arise out of three different petitions before the Employees'' State Insurance
Court, Madras. C.M. A. No. 12 of 1968 arises out of E.I.O.P. No. 36 of 1965 in which the Employees'' State Insurance Corporation (hereinafter
mentioned as the Corporation) claimed employees'' contribution to the extent of RS. 3,593 for the period 1st April, 1961 to 27th March, 1965
against Messrs. Dhala Tanning Company, a company which was engaged in running a tannery. C.M.A. No. 191 of 1968 arises out of E.I.O.P.
No. 6 of 1965 in which the Corporation claimed a total sum of Rs. 59,145 against Messrs. Gemini Studios by its proprietor, S.S. Vasan, as
employees'' contribution for the period 20th November, 1955 to 31st December, 1964. C.M.A. No. 192 of 1968 arises out of E.I.O.P. No. 35
of 1965 filed by the Corporation claiming a sum of Rs. 58,84.2 towards employees'' contribution for the period 20th November, 1955 to 31st
August, 1963 against Messrs. Vijaya Productions (Private) Limited, lessees of Vijaya Vauhini Studios. Gemini Studios, the respondent in E.I.O.P.
No. 6 of 1965, and Messrs. Vijaya Productions (Private) Limited, the respondent in E.I.O.P. No. 35 of 1965, are both concerned in producing
motion pictures.
All the three petitions of the Corporation were u/s 75 (2) of the Employees'' State Insurance Act, 1948 (hereinafter called the Act) and the
respective respondent contested the claim on various grounds. However, the Employees'' Insurance Court (hereinafter called the Insurance Court)
negatived the contentions of the respondent and allowed the petitions filed by the Corporation. The respective respondent in the three petitions has
filed the three Civil Miscellaneous Appeals. We are disposing of all the three appeals by a common judgment as the main question raised in all
these appeals is one and the same, viz., question of limitation. As far as C.M.A. Nos. 191 and 192 of 1968 are concerned, all the questions raised
are common to both. But it is not so in respect of C.M.A. No. 12 of 1968. However, as the main question, viz., the question of limitation, is
common to all these appeals, it would be convenient to dispose of them by a common judgment.
The learned Counsel appearing for Messrs. Gemini Studios, the appellant in C.M.A. No. 191 of 1968, argued the question of limitation at great
length and the same arguments had been adopted by the learned Counsel in the other two appeals. For the purpose of this question, viz., the
question of limitation, it is enough to note the relevant facts in C.M.A. No. 191 of 1968. As seen earlier, the claim by the Corporation u/s 75 (2) of
the Act is for employees'' contribution for the period 20th November, 1955 to 31st December, 1964. The petition by the Corporation to the
Insurance Court making the abovesaid claim came to be filed only in 1965, even though the contribution claimed is for the period commencing
from 20th November, 1955. Under the provisions of the Act, the employer shall pay to the Corporation not only the employer''s contribution but
also the employees'' contribution, though employees'' contribution so paid by the employer is recoverable by him from the wages of the employees.
According to the Corporation, the claim is not barred, as no period of limitation had been prescribed under the Act in respect of contributions
claimable by the Corporation. It is also its contention that no Article in the Indian Limitation Act has any application to a petition u/s 75 (2) of the
Act. By the Amendment Act XLIV of 1966, a new provision has been introduced in the Act as Section 77 (1-A) providing that an application
under the Act to the Insurance Court shall be made within a period of 3 years from the date on which the cause of action arose. The abovesaid
new provision came into effect on 28th January, 1968. Therefore, there is no difficulty regarding the question of limitation for petitions to the
Insurance Act made after 28th January, 1968. But the petitions in the present appeals had been filed very much prior to 28th January, 1968 and
they relate to earlier periods and therefore indisputably the new provisions, viz., Section 77 (1-A) prescribing a period of limitation of 3 years, has
no application to the present matters.
u/s 96 of the Act, the State Government has been empowered to make rules in regard to matters enumerated under that section and such rules
should be made after consultation with the Corporation. The State Government has, in fact, made the Madras State Insurance (Court) Rules, 1951
by virtue of the powers conferred on it by Section 96 of the Act. Rule 17 of these rules as it originally stood provided that every application to the
Insurance Court shall be brought within 12 months from the date on which the cause of action arose or, as the case may be, the claim became due.
The rule also had a proviso stating that the Court may entertain an application after the abovesaid period of 12 months if it was satisfied that the
applicant had sufficient reason for not making the application within the said period. In Messrs. Solar Works v. Employees'' State Insurance
Corporation, Madras (1964) 2 M.L.J. 223. a Division Bench of this Court held that the above-said rule (Rule 17 of he Madras State Insurance
(Court) Rules, 1951) is ultra vires of the rule-making power of the State, conferred upon it by Section 96 (1) of the Act. The State Government of
Maharashtra had also made a similar rule as the abovesaid Rule 17 and that was struck down as ultra vires by the Bombay High Court in The
Employees'' State Insurance Corporation, Bombay Vs. Bharat Barrel and Drum Manufacturing Co. Private Ltd. and Another, . The said decision
of the Bombay High Court has been confirmed by the Supreme Court in AIR 1972 1935 (SC) . It is after the Courts held that the State
Government had no authority to make a rule prescribing the period of limitation the amendment of 1966 introducing the new provision, Section 77
(1-A), was passed. Therefore, the indisputable position is that as far as these appeals are concerned, there was no period of limitation prescribed
under the Act.
However, the contention of Mr. R.M. Seshadri, the learned Counsel for the appellant in C.M.A. No. 191 of 1968, is that Article 137 of the
Indian Limitation Act of 1963 would be applicable and the period of limitation for an application u/s 75 of the Act is only 3 years from the date on
which the right to apply accrued. His contention is that the claim of the Corporation for employees'' contribution for a period of more than 3 years
prior to the date of the application itself is clearly barred. The question, therefore, is whether Article 137 of the Limitation Act, 1963 would be
applicable to these cases. Learned Counsel invited our attention to a number of decisions in this respect. The first is the Bombay decision which
was referred to earlier, viz., The Employees'' State Insurance Corporation, Bombay Vs. Bharat Barrel and Drum Manufacturing Co. Private Ltd.
and Another, . which held that the rule made by the State Government prescribing a period of limitation for an application under the Act is ultra
vires. In that case, there was a reference by the Insurance Court of Bombay to the High Court u/s 81 of the Act for the decision of two questions,
viz., (1) whether Rule 17 of the Employees'' State Insurance Rules is ultra vires of the rule making power of the State Government u/s 96 (1) of the
Employees'' State Insurance Act and (2) If yes, what, if any limitation applies to applications filed by the Corporation to the Employees'' Insurance
Court? As we said, the Bench of the Bombay High Court answered the first question in the affirmative holding that the rule by the State
Government prescribing a period of limitation was ultra vires. Regarding the second question, they said that if the application u/s 75 of the Act had
been made prior to 1st January 1964, (the date on which the Limitation Act of 1963 came into force), the application is not subject to any period
of limitation, but if the application is one made after the coming into force of the Limitation Act of 1963, the same would be covered by Article 137
of the said Act.
In Bombay Gas Co. Ltd. Vs. Gopal Bhiva and Others, . their Lordships of the Supreme Court have held that Article 181 of the Limitation Act
of 1908 applies only to applications which are made under the Code of Civil Procedure. That is the residuary Article in the old Act and as there is
no other Article which could possibly be applied for an application u/s 75 of the Act, the Bombay High Court held that all applications u/s 75 of
the Act filed prior to 1st January, 1964, would not be subject to any period of limitation. Article 137 of the Limitation Act of 1963 is the one
corresponding to Article 181 of the old Act. The Bombay High Court, without much discussion, observed that Article 137 of the new Act covers
all applications for which no period of limitation is provided by other Articles in the Act and therefore applications u/s 75 of the Act filed after 1st
January, 1964 are subject to the period prescribed in the said Article, viz., Article 137 of the Limitation Act of 1963. The only reason given by the
Bombay High Court for the above conclusion is that the definition of the word ""application"" u/s 2 (b) of the Limitation Act of 1963 includes a
petition. However, with respect to the learned Judges of the Bombay High Court, we are unable to agree with their view that the definition of the
word ""application"" u/s 2 (6) of the new Limitation Act as including a petition makes any difference. The real question is whether Article 137 would
be applicable to applications (including petitions) filed only under the CPC or whether it would apply to applications under special enactments also
and the further question would, be even if the said Article is applicable to applications made under special enactments, whether the said Article is
applicable to applications not filed in a Court but before statutory bodies. The learned Counsel stated at one stage that the abovesaid Bombay
decision having been confirmed by the Supreme Court in AIR 1972 1935 (SC) . it must be taken that the question of limitation has been
concluded. The Supreme Court has no doubt confirmed the decision of the Bombay High Court. But that is only regarding the question, whether
Rule 17 framed by the State Government was ultra vires. The question whether Article 137 of the Limitation Act of 1963 would be applicable to
an application u/s 75 of the Act was not before their Lordships of the Supreme Court. It is to be noted that in the case in which the two questions
were referred to the Bombay High Court, the application u/s 75 of the Act had been filed on 7th October, 1963 and the contribution claimed by
the Corporation in that application was for the period 1st September, 1957 to 31st July, 1963. As the Bombay High Court answered the second
question stating that in respect of applications filed prior to 1st January, 1964 there was no period of limitation at all the Corporation which filed the
application before the Insurance Court succeeded fully. It was the opposite party viz., the employer who had been contending that under Rule 17
of the Employees'' State Insurance Rules made by the State Government, the period of limitation was only 12 months from the date on which the
right to claim arose, took the matter in appeal to the Supreme Court. The only question, therefore, before the Supreme Court was whether Rule 17
was ultra vires or not. They agreed with the view of the Bombay High Court on that point and the appeal came to be dismissed. Under such
circumstances, there is no substance in the contention of the learned Counsel that as the decision of the Bombay High Court has been confirmed by
the Supreme Court, the question of limitation has been concluded. As a matter of fact, even the findings of the Bombay High Court on the second
question referred to it, that in respect of applications made after 1st January, 1964. Article 137 of the Limitation Act of 1963 would be applicable,
is in the nature of obiter because that question did not directly arise in that case. As already seen, the application by the Corporation u/s 75 of the
Act in that case had been filed prior to 1st January, 1964 and the Bombay High Court held, following the earlier Supreme Court decision in
Bombay Gas Co. Ltd. Vs. Gopal Bhiva and Others, . that the application was not governed by any period of limitation. Whether the observation
of the Bombay High Court that applications u/s 75 of the Act made after 1st January, 1964 would be governed by Article 137 of the Limitation
Act of 1963 is in the nature of obiter or not, with respect to the learned Judges, we are unable to agree with that view. Before giving our reasons
therefor, we would like to refer to the other decisions relied on by the learned Counsel in this respect.
Chari and Ram Vs. The Employees State Insurance Corporation and Another, . is a decision by a single Judge of this Court. The learned Judge,
following the abovesaid Bombay decision, held that Article 137 of the new Limitation Act would be applicable to applications u/s 75 of the Act
filed after 1st January, 1964. Venkatadri, J., in disposing of Writ Petitions Nos. 843 of 1965, 3093 of 1965 and 4594 of 1965 by a common
judgment followed the above Bombay decision. Incidentally it may be stated that one of the above three writ petitions was by Gemini Studios, the
appellant in C.M.A. No. 191 of 1968 and that related to employer''s special contribution under the transitory provisions of the Act. As the
Corporation sought to recover certain amounts towards employer''s special contribution under the provisions of the Revenue Recovery Act not
only against the Gemini Studios, but also against certain other studios, the above writ petitions came to be filed.
There are two decisions of the Supreme Court throwing light on this question. In Town Municipal, Council, Athani Vs. The Presiding Officer,
Labour Courts, Hubli and Others etc., . their Lordships of the Supreme Court had to consider whether Article 137 of the Limitation Act of 1963
would govern applications u/s 33-C (2) of the Industrial Disputes Act or not. They held, overruling a Bombay decision, that the said Articles would
not govern such applications on two grounds, viz., (1) Article 137 governs only applications under the CPC and (2) to attract Article 137, the
application must be presented to a Court governed by the Code of Civil Procedure. It had been contended before their Lordships that Article 137
of the new Limitation Act is much wider in scope than the corresponding Article in the old Act, viz., Article 181 and that therefore Article 137
must be held to govern even applications to the Labour Court under the Industrial Disputes Act. In dealing with this, their Lordships observe at
page 1342, para. 10, as follows : --
It appears to us that the view expressed by this Court in those cases must be held to be applicable, even when considering the scope and
applicability of Article 137 in the new Limitation Act of 1963. The language of Article 137 is only slightly different from that of the earlier Article
181 inasmuch as when prescribing the three years'' period of limitation, the first column giving the description of the application reads as ""any other
application for which no period of limitation is provided elsewhere in this division"". In fact, the addition of the word ""other"" between the words
any"" and ""application"" would indicate that the legislature wanted to make it clear that the principle of interpretation of Article 181 on the basis of
ejusdem generis should be applied when interpreting the new Article 137. This word ""other"" implies a reference to earlier Articles, and,
consequently, in interpreting this Article, regard must be had to the provisions contained in all the earlier Articles. The other Articles in the third
division to the schedule refer to applications under the Code of Civil Procedure, with the exception of applications under the Arbitration Act and
also in two cases applications under the Code of Criminal Procedure. The effect of the introduction in the third division of the schedule of reference
to applications under the Arbitration Act in the old Limitation Act has already been considered by this Court in the case of Sha Mulchand and Co.
Ltd. (In Liquidation) Vs. Jawahar Mills Ltd., . We think that on the same principle, it must be held that even the further alteration made in the
articles contained in the third division of the schedule to the new Limitation Act containing reference to applications under the Code of Criminal
Procedure cannot be held to have materially altered the scope of the residuary Article 137 which deals with other applications. It is not possible to
hold that the intention of the legislature was to drastically alter the scope of this Article so as to include within it all applications, irrespective of the
fact whether they had any reference to the Code of Civil Procedure.
Then, in para, 11, their Lordships pointed out that at best the further amendment made by introducing Article 137 in the new Act in the place of
Article 181 of the old Act, would at best enlarge the scope of the third division to the schedule so as also to include some applications presented to
Courts governed by the Code of Criminal Procedure. They stressed that one factor at least remains constant and that is that the applications must
be to Courts if they are to be governed by the Articles in the third division. Their Lordships observed : --
The scope of the various articles in this division cannot be held to have been so enlarged as to include within them applications to bodies other than
Courts, such as a quasi-judicial tribunal, or even an executive authority. An Industrial Tribunal or a Labour Court dealing with applications or
references under the Act are not Courts and they are in no way governed either by the CPC or the Code of Criminal Procedure. We cannot,
therefore, accept the submission made that this Article will apply even to applications made to an Industrial Tribunal or a Labour Court. The
alterations made in the Article and in the new Act cannot, in our opinion, justify the interpretation that even applications presented to bodies, other
than Courts, arc now to be governed for purposes of limitation by Article 137.
In Nityananda, M. Joshi and Others Vs. Life Insurance Corporation of India and Others, . a similar question arose. That was also in relation to an
application to a Labour Court. After referring to Town Municipal, Council, Athani Vs. The Presiding Officer, Labour Courts, Hubli and Others
etc., . and the two reasons given therein for coming to the conclusion that Article 137 of the Limitation Act, 1963 does not apply to applications to
the Labour Court, it was observed at page 210 :
In our view Article 137 only contemplates applications to Courts. In the third division of the schedule to the Limitation Act, 1963, all other
applications mentioned in the various Articles are applications filed in a Court. Further Section 4 of the Limitation Act, 1963, provides for the
contingency when the prescribed period for any application expires on a holiday and the only contingency contemplated is ''''when the Court is
closed"". Again u/s 5 it is only a Court which is enabled to admit an application after the prescribed period has expired if the Court is satisfied that
the applicant had sufficient cause for not preferring the application. It seems to us that the scheme of the Indian Limitation Act is that it only deals
with applications to Courts, and that the Labour Court is not a Court within the Indian Limitation Act, 1963.
Therefore, it must be taken to be concluded that On the second ground, viz. that in order to attract Article 137 of the Limitation Act, 1963, the
application should"" be to a Court; an application to a statutory body would not be governed by the said Article.
The Insurance Court is only a statutory body and not a Court governed by the Code of Civil Procedure. Section 74 of the Act says that the
State Government shall, by notification in the official Gazette, constitute an Employees'' Insurance Court for such local area as may be specified in
the notification. u/s 78 of the Act, certain powers of a civil Court are given to the Insurance Court. But it is not contended that because of such
conferment of certain powers of a civil Court, the Insurance Court would be a civil Court itself. As a matter of fact, if the Insurance Court is a civil
Court there would be no occasion for conferring certain of the powers of the civil Court on the said Insurance Court. Only for purposes of
summoning and enforcing the attendance of witnesses, compelling the discovery and production of documents and material objects, administering
oath and recording evidence, the powers of a civil Court are conferred on the Insurance Court. The abovesaid section also provides that the
Insurance Court shall be deemed to be a civil Court within the meaning of Section 195 and Chapter XXXV of the Code of Criminal Procedure,
1898. These provisions, far from making the Insurance Court a civil Court, only highlight the distinction between the Insurance Court and the civil
Court. It is significant to note that u/s 75 (3) of the Act, it is provided that no civil Court shall have jurisdiction to decide or deal with any question
or dispute for which provision is made in the earlier sub-sections of that section. It is u/s 75 the present applications are made to the Insurance
Court and a sub-section of the very section provides that no civil Court shall have jurisdiction to entertain such disputes. That again goes to show
that the Insurance Court is not a civil Court. We are unable to find any distinction between a Labour Court constituted under the Industrial
Disputes Act and an Insurance Court constituted under the Employees'' State Insurance Act, regarding this aspect of the matter.
Regarding the other reasons given in Town Municipal, Council, Athani Vs. The Presiding Officer, Labour Courts, Hubli and Others etc., . viz.
that Article 137 would apply only to applications under the Code of Civil Procedure, Nityananda, M. Joshi and Others Vs. Life Insurance
Corporation of India and Others, . said that it is not necessary to express their Lordships'' view on the said ground and that it seemed to them that
the question may require serious consideration whether applications to Courts under other provisions, apart from the Code of Civil Procedure, arc
included within Article 137 of the Limitation Act, 1963, or not. In view of the above observations of their Lordships of the Supreme Court in the
subsequent judgment, viz., Nityanand v. Lift Insurance Corporation of India?, and in view of the statement of objects and reasons of the Limitation
Act, 1963, which said that the object is to provide a period of limitation for original applications and petitions under special laws, the learned
Counsel contends that Article 137 cannot be confined to the applications under the Code of Civil Procedure. Though it is strictly not necessary to
go into this question in great detail, as we are satisfied that Article 137 of the new Limitation Act would not be applicable to applications under the
Act made to bodies which are not Courts, as the point was argued in some detail, we would deal with it in passing.
The submission was that Article 137 of the Limitation Act prescribes a period of three years for applications other than those which are not
provided for under the third division, that is, it would include applications under special enactments other than Civil Procedure Code. In support of
this contention, reference Was made to the statement of objects and reasons of the Limitation Act, 1963 which states as follows : --
A new definition of application is being inserted so as to include a petition original or otherwise. The object is to provide a period of limitation for
original applications and petitions under special laws as there is no such provision now.
The intention therefore in enacting the amended Limitation Act is to provide a period of limitation for original applications and petitions under
special laws. The question is whether this object has been achieved.
Section 29 (2) of the Limitation Act provides as follows : --
Where any special or local law prescribes for any suit, appeal or application a period of limitation different from the period prescribed by the
Schedule, the provisions of Section 3 shall apply as if such period were the period prescribed by the Schedule and for the purpose of determining
any period of limitation prescribed for any suit, appeal or application by any special or local law, the provisions contained in Sections 4 to 24
(inclusive) shall apply only in so far as, and to the extent to which, they are not expressly excluded by such special or local law.
Under the sub-section, where a period of limitation is prescribed for any suit, appeal or application by any special or local law different from the
period prescribed by the Schedule, the provisions of section 3 shall apply as if such period were the period prescribed by the schedule, and for the
purpose of determining any period of limitation prescribed for any suit, appeal or application by any special or local law, the provisions contained
in sections 4 to 24 shall apply only in so far as, and to the extent to which they are not expressly excluded by such special or local law. The
provision made for suit, appeal or application under special or local laws would indicate that the Limitation Act would also apply to suits, appeals
and applications under special or local laws, provided they are entertainable by the civil Courts. When the special or local law prescribes a period
of limitation different from the period prescribed therefore by the first schedule, by virtue of the sub-section, the period prescribed by the special or
local law will be applicable for determining the period of limitation. In the Limitation Act IX of 1908, the third division related to applications and
Article 181 which is one of the Articles in the third division provided a period of three years for applications for which no period of limitation is
provided elsewhere in the schedule. This has been construed as applications under the Civil Procedure Code. This Article has been construed as
being applicable to applications under the CPC for which no period of limitation is provided for elsewhere. But under the new Act, XXXVI of
1963, the third division which relates to applications is divided into two parts and Article 137 is found in the second part. The second part is stated
to be applicable to ""other applications"". Article 137 states that the period of limitation is three years for any other applications for which no period
of limitation is provided elsewhere in the division. This Article would relate to applications which are not provided for in the third division and that
would include applications which are maintainable by civil Courts whether under the CPC or under any other special or local law for which no
period of limitation is provided elsewhere in this division. The wording of Section 29 (2) of the Act would support this view as the period
prescribed by any special or local law would prevail over the period prescribed in the schedule to the Limitation Act. But where no period is
prescribed by any special or local law, the period mentioned in the schedule to the Limitation Act will be applicable. But the Article will be
applicable only to applications made to a civil Court. This construction of Article 137 of Act XXXVI of 1963 would achieve the object and
reasons of the Limitation Act in providing the period of limitation for original applications and petitions under special law.
In Ram Kumar Kajaria Vs. Chandra Engineering (India) Ltd., . the Court held that the scope of Article 137 under the Limitation Act, 1963
has been widened by making the Act applicable to applications as also petitions under special enactments. The Supreme Court in Town Municipal,
Council, Athani Vs. The Presiding Officer, Labour Courts, Hubli and Others etc., . expressed its view that Article 137 and the Schedule to the
Limitation Act do not apply to special enactments and that the law was not changed by the introduction of Article 137 of the new Limitation Act of
1963. In a subsequent decision in Nityananda, M. Joshi and Others Vs. Life Insurance Corporation of India and Others, . the Supreme Court held
that its earlier view in Town Municipal, Council, Athani Vs. The Presiding Officer, Labour Courts, Hubli and Others etc., . requires serious
consideration. This question is therefore open and there is considerable force in the contention raised by the learned Counsel for the appellant. It is
unnecessary to decide the point raised as we are of the view that the Limitation Act is applicable only to applications made to a civil Court and as
the present applications were not before civil Courts, Article 137 is not applicable.
Under these circumstances, we cannot hold that the question of limitation has been correctly decided in the decision relied on by the learned
Counsel viz., Chari and Ram Vs. The Employees State Insurance Corporation and Another, . The learned Judge who decided the said case in one
part of his judgment, has held that the Limitation Act of 1963 does not provide any period of limitation in respect of applications before the
Insurance Court. There, before the learned single Judge, the Corporation, instead of contending that the application to the Insurance Court is not
governed by any period of limitation, put forward a contention that by virtue of Section 17 of the Limitation Act, the period of limitation is
extended. The contention was that the employer had failed to file the necessary returns and therefore Section 17 of the Limitation Act was
attracted. In rejecting that contention, the learned Judge observed that there is no specific period prescribed under the Limitation Act of 1963 in
respect of applications to the Insurance Court. The reasoning is, as there is no period of limitation prescribed under the Limitation Act for such an
application, Section 17, which starts with the words ""where, in the case of any suit or application for which a period of limitation is prescribed by
this Act."" would have no application and that therefore there would be no question of the Corporation getting an extended period of limitation. This
is what the learned Judge says : --
Section 17 (1) begins by saying : --
Where, in the case of any suit or application for which a period of limitation is prescribed by this Act."" There is no prescription, and hence Section
17 cannot be invoked for the benefit of the respondent''s contentions.
The above observation of the learned Judge would mean that no Article, including Article 137 of the Limitation Act, 1963, has any application to
an application to the Insurance Court, though further down in the judgment the learned Judge stated that Article 137 would apply. Whatever that
be in view of the Supreme Court decisions referred to earlier, we hold that there was no period of limitation in respect of the three applications
with which we are concerned in these three appeals, as all of them had admittedly been filed prior to the 1966 amendment under which Section 77
(1-A) of the Act came to be incorporated in the statute book.
Then taking the individual appeals, in C.M.A. No. 12 of 1968 the only other point raised is that casual workers are not employees as defined
under the Act. According to the Corporation, the appellant in this case was having 30 employees, though some of them were only casual
labourers. On the contrary, the case of the appellant put forward before the Insurance Court was that on no day more than 15 or 16 men worked
in his factory and therefore the provisions of the Act cannot be applied. From the evidence on record, the Insurance Court came to the conclusion
that the number of employees working in the appellant''s factory exceeded 20 and that therefore the provisions of the Act applied and the appellant
was bound to pay the employees'' contribution. However, though a sum of Rs. 3,593 had been claimed on the basis that 30 employees were to be
covered, the Insurance Court held that the insurance cover was available only to 20 employees and that therefore only 2/3 of the total amount of
Rs. 3,593 claimed is payable by the appellant to the Corporation towards employees'' contribution.
The contention now is, the word ""employee"" as defined under the Act would not take in casual labourers. It is stated that even according to the
corporation, out of the 30 workers found working on the dates of inspection by the Insurance Inspector, only 17 were permanent employees and
the rest were casual labourers. The word ""factory"" has been defined as ""any premises, including the precincts thereof, whereon twenty or more
persons are employed or were employed for wages on any day of the preceding twelve months, and in any part of which a manufacturing process
is being carried on with the aid of power,"" etc. Therefore, even if on one single day 20 or more persons had been employed for wages, it would be
a factory, provided in any part of the premises a manufacturing process is carried on with the aid of power, etc. That would prima fade show that
even a casual labourer has to be counted in order to determine whether a particular premises is a factory as defined under the Act or not. But
whether a casual worker is entitled to insurance cover under the Act may be a different question. In Gnanambikai Mills v. Employees'' State
Insurance Corporation (1970) 2 L.L.J. 233. Ramamurti, J. has held that the provisions of the Act would not apply to casual workers. But we think
it is not necessary to go into this aspect of the matter because, from the materials on record, we have to proceed on the footing that there were
really 20 permanent workers in the premises in question. The Insurance Court has pointed out that apart from the 17 workers shown as permanent
workers, there were admittedly three members of the supervisory staff by name Narayanan Nair, Vaidyanathan and Ansar who gave evidence as
R.W. 1. The Insurance Court has pointed out that they are also employees. The Insurance Court, after referring to Exhibits B-1 to B-4 and B-7 to
B-10 relied on by the appellant, says : ""It is evident from some of the entries in these Exhibits coupled with the fact that there were 3 other monthly
paid employees, viz., P. Narayanan Nair, Vaidyanathan and the witness himself, the total number of employees at a time exceeded 20 and more
on specified dates"". It was never contended before us that this observation of the Insurance Court is wrong. We hold, therefore, that there is no
merit in C.M.A. No. 12 of 1968 and that has to be dismissed.
Coming to the other two C.M. As. the points raised are one and the same. As a matter of fact, the learned Counsel appearing for the appellant
in C.M.A. No. 192 of 1968 did not add anything to what the learned Counsel in the other appeal (C.M.A. No. 191 of 1968) said. It is to be
noted that the appellant in C.M.A. No. 192 of 1968 as well as that in C.M.A. No. 191 of 1968 is a studio engaged in film, production. Mr.
Seshadri, the learned Counsel in C.M.A. No. 191 of 1968, contends that because of a Bench decision of this Court in In re, K.V.V. Sarma ILR
1953 Mad. 775 : (1952) 2 M.L.J. 917 : AIR 1953 Mad. 269. which was one under the Factories Act, both the parties, viz., the Corporation as
well as the appellant, proceeded on the footing that employees working in some of the departments of the studios are not entitled to insurance
cover under the Act and that only after the decision of another Bench of this Court in Employees State Insurance Corporation, Madras Vs. S.M.
Sriramulu Naidu, . the Corporation began to claim employees'' contribution in respect of the employees in some of the departments in the studio,
that in respect of such employees for whom contribution is now claimed, there had never been insurance cover and as many of such employees
might have even left the employment, there is no chance of the appellant recouping the employees'' contribution from their wages and that therefore
the Corporation''s claim should be negatived. But this contention is not sound. We may take it that the delay on the part of the Corporation in
demanding the employees'' contribution from the appellant was on the misapprehension that those employees, who were working in some of the
departments of the studios, are not covered by the provisions of the Act. But when the employer has a statutory liability to pay not only the
employer''s contribution but also the employees'' contribution (see Section 40 of the Act), we do not understand how the appellant can escape
liability, even if it be that the concerned employees had not had the benefits under the Act. The scheme of the Act is summarised by their Lordships
of the Supreme Court in AIR 1972 1935 (SC) . at page 1940, paragraph 13, and we think we can usefully extract the same. It is as follows :
An examination of the purpose and intendment of the Act and the scheme which it effectuates leaves no doubt that it was enacted for the benefit of
the employees and their dependants, in case of sickness, maternity and ''employment injury'' as also to make provision for certain other matters.
Section 40 makes the employer liable in the first instance to pay the contributions of the employer as well as the employee to the Corporation
subject to the recovery from the employee of the amount he is liable to contribute. This liability on the employer is categorical and mandatory. He is
further required u/s 44 to submit to the Corporation returns as specified therein. Chapter V comprised of Sections 46 to 73, deals with the benefits
which includes among others, sickness and disablement benefit of the employee, his eligibility, for receiving payments and the compensation
payable to his dependants. If the employer fails or neglects to pay the contributions as required, the corporation has the right to recover from him
u/s 68, the amounts specified in that section as an arrear of land revenue. Section 94 provides that the contributions due to a Corporation are
deemed to be included in the debts under the Insolvency Acts and the Companies Act and are given priority over other debts in the distribution of
the assets of a Company in liquidation. Chapter VI deals with adjudication of disputes and claims, of which Section 74 provides for the constitution
of the Insurance Court. Section 74 specifies the matters to be decided by that Court; Section 76 and Section 77 deal with the institution and
commencement of proceedings and Section 78 with the powers of the Insurance Court. Section 80 deals with the non-admissibility of the claim, if
not made within twelve months after the claim is due, while Section 82 (3) prescribes the period within which an appeal should be filed against the
order of the Insurance Court. These provisions, in our view, unmistakably indicate that the whole scheme is dependent upon the contributions
made by the employer not only with respect to the amounts payable by him but also in respect of those payable by the employee. No limitation has
been fixed for the recovery of these amounts by the Corporation from the employer; on the other hand Section 68 empowers the Corporation to
resort to coercive process. If any such steps are proposed to be taken by the Corporation and the employer is aggrieved, he has a right to file and
apply to the Insurance Court and have his claim adjudicated by it in the same way as the Corporation can prefer a claim in a case where the
liability to pay is disputed.
It is not contended--and rightly, in our opinion that the Corporation is in any way estopped by its conduct from claiming employees'' contribution
after long lapse of time. Therefore there is no escaping the position that the appellant is bound to pay the employees'' contribution, subject to the
question of quantum.
Regarding the quantum of contribution, there is no dispute before us regarding the number of employees for whom contribution has to be paid.
However, the learned Counsel contends that the Corporation is claiming contribution on an ad hoc basis to which they are not entitled. Admittedly,
the appellant has not filed the necessary returns as contemplated u/s 44 of the Act,
Inspection of books had also not been given. Therefore, the Corporation assessed the employees'' contribution on an ad hoc basis of Rs. 100
as the monthly wage of an employee. Section 45-A introduced by the amending Act (LXIV of 1966) says that where in respect of a factory or
establishment no returns, etc. are furnished, the Corporation may, on the basis of information available to it, by order, determine the amount of
contributions payable by it in respect of the employees of that factory or establishment. Sub-section (2) of that section further says that such an
order made by the Corporation shall be sufficient proof of the claim of the Corporation u/s 75 of the Act. But this provision is not applicable to the
present appeals. Therefore in the present cases the assessment made by the Corporation cannot be taken as sufficient proof of its claim. The
Insurance Court has to take evidence on the point. As a matter of fact, the Insurance Court had called upon the appellant to produce the necessary
books and accounts, but the appellant did not produce even a scrap of paper. The excuse is that the records are so voluminous that they could not
be produced. It failed to give inspection of the records to the Corporation even after the filing of the application in the Insurance Court. Under such
circumstances, even though adoption of the ad hoc figure of Rs. 100 per mensem, as the wage of an employee is not strictly within the provisions
of the Act and the matter might require further enquiry, the learned Counsel for the appellant stated that he will accept the assessment of the
employees'' contribution on the basis of Rs. 100 per mensem as the wage of an employee and that the matter need not be remitted to the Insurance
Court for further enquiry. Under these circumstances, we accept the quantum of employees'' contribution arrived at by the Insurance Court as
correct.
The only other point raised by the learned Counsel is that the Corporation ought to have referred the question whether a particular employee
comes within the definition of the word ""employee"" under the Act, to the Insurance Court before ever it makes a claim regarding employees''
contribution. We have already referred to the scheme of the Act and there is absolutely nothing in the various provisions in support of such a
contention. u/s 75, no doubt the question whether any person is an employee within the meaning of the Act is one within the jurisdiction of the
Insurance Court to be decided. But that does not mean that before ever the Corporation makes a claim, it has necessarily to make a reference to
the Insurance Court as to whether a particular person is an employee or not. Under Sub-section (2) of Section 75, the Insurance Court is
empowered to decide the claim for the recovery of contributions from the principal employer. It is under that provision the petition has been filed.
In this very petition it is open to the employer to raise the question that a particular person is not an employee and therefore no contribution is
payable regarding such person.
Before the Insurance Court it had not been contended (in the petitions out of which C.M.A. Nos. 191 and 192 of 1968 arise), that any of the
persons regarding whom employees'' contribution was claimed was not an employee as defined under the Act. Even before us it is not the case of
the learned Counsel that any of the persons regarding whom employees'' contribution is claimed is not an employee as defined under the Act, But
the point raised, as we said, is that the Corporation was bound to refer the question whether a particular person is an employee or not, before ever
contribution is claimed. Such a contention is quite untenable, in the face of the various provisions of the Act.
The result is, all the three Civil Miscellaneous Appeals fail and they are dismissed. But, under the circumstances, there would be no order as to
costs.