Punjab Dairy Development Corporation Ltd. vs Employees' State Insurance Corporation

H. S. Bedi, J.—The present appeal has been filed against the orders of the learned Single Judge dated April 4, 1984.The appellant, the Punjab Dairy Development Corporation Limited has its Milk Plant at Verka but also maintains a number of Milk Collecting Centres at various places wherein it has employed various persons for doing the job of collection and transportation of milk to the plant. The Employees'' State Insurance Corporation (hereinafter called the ''Corporation'') made a demand for special contribution and while doing so, it not only included the employees'' actually working in Milk Plant at Verka but also those who were working in the various Milk Collecting Centres.The appellant thereafter filed a petition u/s 75 of the Employees'' State Insurance Act, 1948 (hereinafter called the ''Act'') before the Employees'' State Insurance Court to challenge the inclusion of those employees who were working in the Milk Collecting Centers for the purpose of the levy of special contribution at the higher rate fixed for the implemented area as per the notification dated February, 1952. The Insurance Court held that in view of the definition of ''employer'' given in Section 2(9) of the Act, the persons working in the Milk Collecting Centers were rightly included. The additional point urged by the appellant was that the Milk Collecting Centres were situated outside the implemented area and the demand of contribution at a higher rate on the basis of some being within the implemented area was not; warranted. The Insurance Court, however, held that as the Milk Plant at Verka was within the implemented area, the rate of special contribution was correctly applied. Aggrieved by the orders of the Insurance Court, the appellant filed F.I.R.; No. 45 of 1981 and the same having been dismissed by the learned Single Judge, the present letters patent appeal has been filed.

Shri Amar Vivek, learned counsel for the appellant has urged that though the employees working at the Milk Collecting Centres were admittedly employees of the appellant, yet as their place of work was outside the implemented area, the rate of special contribution was to be levied on that basis. It has also been urged that the levy; of special contribution was in the nature of a fee and as the employees working in Milk Collecting Centres were not receiving any benefit from the Corporation, the element of quid pro quo was absent and as such its imposition could not be; justified. In this connection he has cited Hindustan Aeronautics Limited (Koraput Division) Vs. Regional Director, Employees'' State Insurance Corporation and Another, .

The stand of the appellants has been controverted by Shri K.L. Kapur, learned counsel for the respondent. He has argued that a bare reading of Section 73A of the Act indicates that the special contribution not exceeding 5 percent was to be determined on the total wage bill of the employer and as a necessary consequence the place where the employees were working was irrelevant. On this basis he has asserted that as the employer was within the implemented area, the demand of the Corporation was fully justified. In support of this plea he has also referred to Section 2(9) of the Act which defines an employee as being a person employed for wages in or in connection with the work of a factory or establishment, who is directly employed by the employer whether such work is done by the employee in the factory or establishment or elsewhere. The argument of the counsel for the appellant with regard to the levy as being a fee and therefore, subject to the element of quid pro quo has also been controverted with reference to the decisions of various High Courts and the Supreme Court in Gasket Radiators Pvt. Ltd. Vs. Employees'' State Insurance Corpn. and Another, ) in which it has been clearly held that the element of quid pro quo was not relevant or necessary in the levy of employees insurance.

A reading of Section 2(9) read with Section 73A of the Act makes it clear that what is to be seen is that the total wage bill of the employer and not the place where some of the employees are working. As the Verka Milk Plant is admittedly within the implemented area the levy of special contribution at the higher rate envisaged in the notification dated February 1, 1952 was, also justified. Shri Kapur also seems to be right in asserting that even the reading of this notification supports his case in as much as what is to be seen in determining the quantum of the special contribution is the place where the factory or establishment is situated and taking into account the total wage bill of the employer.

The second argument of Shri Amar Vivek is also not tenable. In A/A. Gasket Radiators Private Limited (supra) the argument addressed by the learned counsel was repelled by the Supreme Court by observing that the levy of special contribution u/s 73-A of the Act was constitutionally sanctioned and it was wholly unnecessary to determine whether the special contribution was a tax or fee as this was irrelevant to the scheme of the Act. We are further of the view that the factual basis for challenging the levy of special contribution on account of the absence of the element of quid pro quo is lacking in the present proceedings and was never argued at any stage till now.

For the reasons recorded above, we find no merit in the appeal and dismiss the same without any order as to costs.