The Regional Director, Employees State Insurance Corporation vs The Andhra Pradesh Paper Mills Ltd., Rajahmundry

Mrs. Amareswari, J.—This Civil Miscellaneous Appeal is preferred against the order of the Employees'' Insurance Court, Hyderabad (Industrial Tribunal, Andhra Pradesh) dated 25-10-1976 in E.S.I Case No. 30 of 1976. The appellant herein is the Employees'' State Insurance Corporation, Hyderabad, the respondent in the lower Court. The facts of the case are as follows :-

The sole respondent herein, the Andhra Pradesh Paper Mills Limited, Rajahmundry filed a case u/s 75 of the Employees'' State Insurance Act, 1948 (hereinafter referred to as the Act) for a declaration that it is not liable to pay contributions for the employees working in the Lime Kilns as per the notice dated 10-5-1975 issued by the appellant herein i.e., the Regional Director Employees'' State Insurance Corporation, Hyderabad. The case of the respondent was that it owns a factory at Rajahmundry in which paper and allied products are manufactured. It employer large number of workmen in the factory and they are covered under the various labour laws relating to provident fund, Employees'' State Insurance etc., and the respondent-company pays contributions under the Act for its employees. The respondent-company has put up lime kiln in Katheru village for the manufacture of lime and the lime kilns were leased out to one Janardhan Rao under an agreement dated 2-4-1973. The lessee obtained a separate Factory licence to run the lime kiln factory and he was the occupier of that factory. The lime kiln was registered as a separate factory under the Factories Act. As time is required for the manufacture of paper, the respondent company purchases time from its lessee Janardhan Rao, who is the lessee, apart from purchasing additional quantity in the open market. The respondent-company has nothing to do with the operations conducted in or the running of the kiln kiln. The lessee Janardhan Rao, who is the licensee of the factory employed workers for operating and running the lime kilns. Under the Act, it is pointed out that it was in no way connected with the working of the lime kilns factory except for the fact that it owns the kilns which were leased out to Janardhan Rao. Inspite of the said representation, the appellant-corporation wanted the respondent-company to cover employees of lime kilns, who are the employees of Janardhan Rao holding that the lime kiln is part and parcel of the respondent-paper mills. As the appellant-corporation issued a notice dated 10-9-1975 for collection of the contributions, the respondent-company had to file a petition for a declaration that it is not liable to pay contributions for the employees working in the lime kilns operated by the lessee Janardhan Rao. 2. The petition filed by the respondent-company was registered by the appellant-corporation contending that the lime kiln workers stood covered under the Act, that the respondent-company had to comply with the provisions of the Act, that the Insurance Inspector of the corporation inspected the lime kilns and submitted an interim report dated 22-8-1974 that he also sent a detailed report dated 15-1-1976 mentioning that the respondent granted a lease to Janardhan Rao to run the kilns in its premises, that the lime stone and fuel were supplied by the respondent-company through its own vehicles, that the respondent-company which requires about 70 to 80 tons burnt lime per day takes it away from the kilns through its own transport vehicles, that the respondent-factory deputes supervisors to supervise the work in the lime kilns and also posts security men to guard the machinery of lime kilns, that the maintenance of the lime kilns is done by the respondent-company, that the licence to run the lime kilns as a factory had been obtained by the respondent-company by paying prescribed fee in the name of the lessee and that the respondent-company undertakes ail the clerical correspondence of the lime kilns come under the definition of Section 2 (9) of the Act and the lessee executes the work in the premises of the respondent-factory and under the direct supervision of the respondent-company which is principal employer the work carried on in the lime kilns is ordinarily part of the work of the factory of the principal employer, and the lessee Janaradhana Rao is the immediate employer as defined in section 2 (13) of the Act, The respondent-Company as the principal employer is liable order Section 40 of the Act to pay the employer''s contribution as well as the employees'' contribution in through the immediate employer.

On the basis of these pleadings, the lower Court framed the following issues;--

(1) Whether Sri Janardhan Rao, who is the lessee of the time kiln is an independent employer in relation to the employees working in the lime kiln or whether Sri Janardhan Rao is the immediate employer whereas the paper mill (respondent herein) is the principal employer in respect of the said employer.

(2) whether the notice dated 10-9-1975 is invalid and unenforceable.

On a consideration of the entire material on record and the evidence (sic) examined on behalf of the respondent-company, and Exs. (sic) filed on behalf of the respondent-company, the evidence of (sic) and Exs. R-1 to R-6 filed on behalf of the Corporation, the (sic) State Insurance Court found that the lime kilns constitute a (sic) that the (sic) belong to the respondent-company. It also (sic) the burning of lime stone and its conversion into lime is done in the (sic) under the supervision of the quality control supervisor deputed (sic) respondent-company. But the employees'' Insurance Court held that (sic) of lime stone into lime is not part of any work which is ordi (sic) the work of respondent-company and converting lime stone into (sic) cannot be said to be an ordinary part of the work of the respondent. It also found that the business in the lime kilns was independence by the lessee in whose name the licence stand and he (sic) staff and workers, pays their wages and exercises disciplinary (sic) over them, that the direct employer as far as the workers employed in the lime Kilns are concerned is the lessee Janardhan Rao and that the corporation may proceed if at all against him and not against the paper mill, the respondent herein.

It is against this order that the present appeal is filed. The learned counsel for the appellant, Mr. I.A. Naidu contends that the lower Court (sic) Insurance Court) has mis-construed the provisions of the Act (sic) held that the work carried on in the lime kilos is not ordinarily part of the work of the respondent-company, The entire material in the case and the evidence reduced on behalf of both the parties clearly shows that the principal employer is the respondent-paper mills and the immediate employer is the lessee Janardhan Rao. Conversion of lime stone into lime is the real foundation for the work carried on by the respondent-company namely, manufacture of paper and allied products.

On the other hand, it is contended by the learned counsel for the respondent paper mills Sri K. Srinivasa Murthy, that the order of the Employees'' Insurance Court is in accordance with law that the lower court was perfectly right in its conclusion and finding that the lessee Janardhan Rao is the principal employer of the workers employed in the lime kilns and that the conversion of lime stone into lime is not part of any work which is ordinarily part of the work of the respondent-company.

In order to appreciate the rival contentions, it is necessary to refer to the relevant provisions of the Employees'' State Insurance Act, 1948. The Employees Sate Insurance Act (Act 34 of 1948.)

Section 2 clause 9 defines an "employee" as any person employed for wages in or in connection with the work of a factory or establishment to which this Act applies and--

(1) 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 is done by the employee in the factory or establishment or elsewhere; or

(2) Who is employed by or through an immediate employer on the premises of the factory or 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.

The other clauses of clause 9 of section 2 are not relevant for the purpose of the present case.

Section 2 clause 13 defines who is an "immediate employer" and it is as follows:--

"Immediate Employer", in relation to employees employed by or through him, means a person who has undertaken the execution in the premises of a factory or an establishment to which this Act applies or under the supervision of the principal employer or his agent of the whole or any part of any work which is ordinarily part of the work of the factory or establishment of the principal employer or is preliminary to the work carried on in, or incidental to the purpose of, any such factory or establishment, and includes a person by whom the services of an employee who has entered into contract of service with him are temporarily lent or let on hire to the principal employer.

Section 2 clause 17 defines a "principal employer" as follows ?--

"Principal Employer" means;--

(i) in a factory the owner or occupier of the factory and includes the managing agent of such owner or occupier, the legal representative of a deceased owner or occupier, and where a person has been named as the manager of the factory under the Factories Act, 1948 (63 of 1948), the person so named.

The other sub-clauses of clause 17 of section 2 are not necessary.

In the light of these definitions, we have to consider the question whether the employees of the lime kiln factory the licensee of which is one Janardhan Rao, who is a lessee of the respondent-paper mills are employees within the meaning of section 2 clause 9 of the Act. We will have to consider whether the lessee Janardhan Rao is an immediate employer with reference to the definition contained in section 2, Clause 13 in relation to the employees working in the lime kilns situate in the premises which is leased out by the respondent-paper mills and registered as a factory.

u/s 40 of the Act, the Principal employer shall pay in respect of every employee, whether directly employed by him or by or through an immediate employer both the employer''s contribution and the employee''s contribution. If the employees employed in the lime kilns are employees within the meaning of section 2 clause 9 and if they are employed through an immediate employer, u/s 40, the respondent-company is liable to pay both the employee''s and employer''s contribution.

As already stated, the only two questions to be considered are whether the employees of the lime kilns factory are employees within the meaning of section 2 clause 9 and whether Janardhan Rao is the immediate employer of the employees working in the lime kilns, and the respondent is their principal employer. u/s 2 clause 9 of the Act a person becomes an employee ii he is employed for wages in connection with the working of a factory or establishment to which the Act applied and he must also be employed for which the Act applies and he must also be employed through an immediate employer on the premises of the factory or 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 it is preliminary to the work carried on or incidental to the purpose of the factory or establishment, in this case there is no dispute that the employees of the lime kilns factory are employed for wages in connection with the work of a factory. The lime kiln is registered as a factory under Factories Act and also the respondent-Company is registered as a factory. So there is no dispute that the Act applies to the employees provided they are employed through an immediate employer on the premises of the factory or establishment or which is preliminary to the work carried on or incidental to the purpose of the factory or establishment Ex. R.-3 is the interim report dated 22-8-1974 of the insurance Inspector of the appellant-corporation, who Inspected the lime kilns. Ex. R-4 is the detailed report dated 15-1-1976 of the Insurance Inspector of the appellant-corporation. In the said report it was mentioned that the lime kilns are situate in the premises leased out to Janardhan Rao by the respondent-company, that the lime stone and fuel were supplied by the respondent-company through its own vehicles, that 70 to 80 tons of burnt lime per day is supplied to the respondent-company, that the supervisors of the respondent-Company supervise the work in the lime kilns and posts security men to guard the machinery of the lime kilns, that the licence for the lime kilns was obtained by the respondent-paper mills by paying the prescribed fee though the licence was taken in the name of lessee and that the respondent-company undertakes all the clerical and correspondence work of the lessee. On behalf of the respondent-paper mills, the Senior Labour Officer of the paper mills, was examined as P.W.1. In his evidence he has stated that the lime kilns were leased out to Janardhan Rao (who is examined as P.W.2) Under Ex.P-1, the lease deed dated 29 12-1974, the lessee entered into agreement Ex. P-2 dated 31-12-1974 for supply of burnt lime which is one of the materials required for manufacture of paper. The agreement, Ex. P-2 shows that P.W.2 undertook to manufacture and supply of lime to the respondent-company out of the material supplied by them and that the respondent-company entrusts the said job of supply and manufacture of lime to the lessee. It is further provided in Ex. P.-2 that the respondent-company shall make available necessary materials like lime atone, firewood, coal etc. required for the manufacture of lime at the lime kilns so that P.W.2 might carry out the necessary operations for the manufacture of lime. It also provides that the lessee PW 2 should manufacture lime to meet the requirements of the respondent company as per the approved specifications and should supply the entire quantity of lime so manufactured exclusively to the respondent-company as per the agreement, P.W. 2 should carry out all operations for converting lime stone into burnt lime according to the specifications approved by the respondent-company and also arrange for loading of lime in the vehicles provided by the respondent-company. P.W. 1 further stated that 200 persons were working in the lime kilns and they were employed by the lessee PW 2. He admitted that the respondent-company''s security staff protect the lime kilns with the object of avoiding, pilferage and that the respondent-company deputes its own supervisors for quality control of the lime produced in the lime kilns. PW 1 has further stated that the respondent company supplies lime stone, coal, firewood etc, to P.W. 2 and that conversion charges are paid by the respondent-company to PW 2 depending upon the quantity of lime supplied by him. He also admitted that the lime is transported from the kilns to the respondent-mill by the respondent-company''s vehicles. P.W. 1 admits that the lime kilns are only about 200 yards from the premises of the respondent-company''s mill. P.W. 2. The lessee has deposed that he has taken the lime kilns on lease from the respondent-company in 1972, that they were registered under the Factories Act of 1967 and that the licence was transferred in his name in 1972. He admits that the Quality Control Supervisor deputed by the respondent-company instructs him as to how to mix lime stone and coal and that these instructions are carried out. He has also stated that as far as quality control of the finished product is concerned, the entire responsibility is that of the paper mills that the lime stone, coal, tire wood etc are supplied in full by the respondent-company and that he supplied on an average 70 to 80 tons of burnt lime to the respondent-company. We have already referred to the reports of R.W. 1, the Insurance Inspector working in the Regional Office at Hyderabad who is examined to prove his reports Exs. R.3 and R-4 dated 22-8-1974 and 15-1-1976 respectively and in his evidence be deposed what he had stated in his reports.

From these facts, it is clear that the respondent-company is engaged in the manufacture of paper and allied products and for manufacturing process it requires materials, one of which is burnt lime. About 80 to 90 tons of burnt lime for the respondent-company is required as stated by P.W 2. The three lime kilns owned by the respondent-company situate in the village of Katheru adjoin the mill premises belong to the respondent-company. The site on which the lime kilns are situate belong to the respondent-company. The respondent-company calls for quotations for the supply of lime. It is the respondent-company that supplies the raw-materials such as lime stone, coal and fire-wood etc., which are used for converting lime stone into burnt lime. The respondent-company disputes its own supervisors under whose supervision the conversion process takes place The lessee does not sell the burnt lime to the respondent-company nor the respondent-company purchases burnt lime from PW 2. The lessee merely supplies burnt lime to the respondent-company from time to time in accordance with its requirements The respondent-company appoints its own security staff. The burnt lime is loaded into the respondent-company''s vehicles. It is no doubt true that the factory licence stands in the name of P.W. 2 u/s 2 clause 13 of the Act. an "immediate employer'' is a person who has undertaken the execution, on the premises of a factory or an establishment to which this act applies or under the supervision of the principal or his agent, of the whole or any part of any work which is ordinarily part of the work of the factory or establishment of the principal employer or is preliminary to the work carried on in, or incidental to the purpose of, any such factory of establishment. There is no doubt of the fact that the lime kilns constitute a factory and that the premises belong to the respondent-company. The only question to be considered is whether P.W. 2 the lessee comes within the ambit of section 2 Clause 13 of the Act so as to make the respondent-Company liable to pay the contributions as contemplated u/s 40 of the Act and whether the work carried on by P.W.2 is ordinarily part of the work of the factory or establishment of the principal employer or is preliminary Jo the work carried on or incidental to the purpose of any such factory or any such establishment. From the facts stated above, it is clear that the burning of lime stone and its conversion into lime is done in the lime kilns under the supervision of the quality control supervisors deputed by the respondent-company. The conversion of lime stone into burnt lime is done according to the specifications of the respondent-company and under the supervision of the respondent company. P.W. 2 has to supply the burnt lime only to the respondent company and the material required for conversion namely, lime stone, coal etc., are supplied by the respondent company. The respondent company also engages security staff to see that the material is protected. Under these circumstances, we have no doubt that the work carried on in the lime kilns is ordinarily part of the work of the respondent-factory. We also find that it is preliminary of the respondent-factory. We also find that it is preliminary to the work carried on by the respondent company. It is also incidental to the purpose of the respondent-factory or establishment.

In this connection, we may refer to a few decisions cited at the bar.

In Royal Talkies, Hyderabad and Others Vs. Employees State Insurance Corporation, a question arose whether a canteen and cycle stand situated in the premises of a theatre and which are leased out to the contractors under an agreement of lease and where the contractors employ their own servants to run the canteen and the cycle stand, whether the owners of the theatre can be said to be the principal employer with reference to the persons employed by the (sic) tors in the canteen and cycle stands attached to the theatre. The Insurance Court found that the owners of the theatres were principal employed with reference to the persons employed by the contractors in the canteens and the cycle stands attached to the theatres and rejected the applications filed by the owners of the theatres u/s 75 of the Act. The (sic) filed by the theatre owners was rejected by the High Court and was dismissed upholding the findings of the Insurance Court. The matter was carried to Supreme Court observing that the employees in the canteens and cycle stands, though not directly employed by the cinema proprietors, they come under sub-clause (11) of clause 6 of section 2 The observations of Supreme Court are as follows:--

The language used is extensive and diffusive imaginatively embracing all possible alternatives of employment by or brought an independent employer, In such cases, the ''principal employer'' has no direct employment relationship since the ''immediate employer'' of the employee concerned is some-one else. (sic) an employees, if he works (a) on the premises of (sic) or (b) under the supervision of the principal employer or his agent "on work which is ordinarily part of the work of the establishment or which is preliminary to the work carried on in or incidental to the purpose of the establishment, qualifies under Sec. 2 (9) (ii) The plurality of persons engaged in various activities who are brought into the definitional not is wide and considerable: and all that is necessary is that the employee be on the premises or be under the supervision of the principal employer or his agent. Assuming that the last part of Sec. 2 (9) (ii) qualified both these categories, all that is needed to satisfy that requirement is that the work done by the employee must be (a) such as is ordinarily (Not necessarily non-statutorily) part of the work of the establishment, or (b) which is merely preliminary to the work carried on in the establishment, or (c) is just incidental to the purpose of the establishment. No one can seriously say that a canteen or cycle stand or cinema magazine booth is not even incidental to the purpose of the theatre. The cinema goers ordinarily find such work an advantage a facility an amenity and sometimes a necessity All that the statute requires is that the work should not be irrelevant to the purpose of the establishment. It is sufficient if it is incidental to it. A thing is incidental to another if it merely appertains to something else as primary. Surely, such work should not be extraneous or contrary to the purpose of the establishment but need not be integral to it either. Much depends on time and place, habits and appetites, ordinary expectations and social circumstances. In our view clearly the two operations in the present case, namely, keeping a cycle stand and running a canteen are incidental or adjuncts to primary purpose of the theatre.

It is further stated in paragraph 20 that;--

In section 2 (9), the definition has been cast deliberately in the widest terms and the draftsman has endeavored to cover every possibility so as not to exclude even distant categories of men employed either in the primary work or cognate activities, it will defeat the object of the statute to trueucate its semantic sweep and throw out of its ambit those who obviously are within the benign contemplation of the Act, Salvationary effort when the welfare of the weaker sections of society is the statutory object and is faced with stultifying effect, is a permissible judicial exercise.

Applying the principles laid down in the judgment of Supreme Court. Section 2 9 (ii) covers employees who are on the premises or under the supervision of the principal employers or his agent. The decision further lays down that if the work done by the employee in ordinarily part of the work of the establishment or preliminary to the work carried on or is incidental to the purpose of the establishment, the employees doing the said work are covered by the Act. It is further observed that all that is necessary is the work should not be irrelevant to the purpose of the establishment it is sufficient if it is incidental and it is incidental if it appertains something else as primary. The work should not be extraneous or contrary for the purpose of the establishment but it need not be an integral part of it either. In the present case there is sufficient evidence of the respondent-company''s witnesses themselves that the employees work under the supervision of the Principal employer. The lime kilns are on the premises of the respondent-company and in fact the finding of the lower Court is also to the effect that the lime kilns are situated in the premises of the factory and they are (sic) to the factory. The work carried on is conversion of lime stone into some which is essentially required for the purpose of manufacturing paper (sic) done as per the specifications of the respondent company and the (sic) supplied only to the company and no one else and the project is sufficiently protected by the security staff of the respondent-company. In these circumstances, it cannot be said that the work carried on in the lime (sic) is irrelevant or extraneous or contrary to the purpose of the respondent-company. Mr. Srinivasa Murthy, the learned Counsel for the respondent-company argues that it is not an integral part of the manufacturing process of paper, but it is only a raw-material which is required just as bamboo and other things and that is not an integral part of the process earned on (sic) establishment. But Supreme Court has observed that it need not (sic) integral part of the work carried on by the factory, and it is (sic) it is merely incidental and not extraneous or irrelevant to bring the (sic) under the category of Section 2 (9) (ii) From the judgment of the (sic) Court it is evident that even some connection between the two (sic) enough to bring the employees of the subsidiary work within the category of Section 2 (9) (ii) and that Section 2 (9) has been deliberately worded in the widest terms so as not to exclude even distant categories of men employed either in the primary work or cognate activities.

Next we may refer to a decision of the Supreme Court in B.M. Lakshmanamurthy Vs. The Employees'' State Insurance Corporation, Bangalore, where the connotation of the (sic) ''premises'' has been considered and it is observed at page 763 (sic) word" Premises "is a generic term meaning open land or land with buildings or buildings alone". It was further held in para 24 that if there is (sic) and functional unity it can be said that the work is carried on the premises, of the factory. In the said case the main factory and the contractors'' factory were separated by a wall in which there was a door which sometimes was closed it was considered as work carried on in the premises of the factory. It was further held that the work undertaken by the contractors and carried on in their portion of the area was componential to make it a part of the complex whole. The principal requirement of the definition, namely, that the work or the construction is undertaken on the premises of the factory was held to be satisfied in view of the proximity of the place where the contractors'' factory is situate and the functional unity between the two portions. It was further held that though the contractor''s factory was separately registered under the Factories Act or that after meeting the prior requirements of the principal employer, work of some other parties was also permissible, did not mitigate against the predominant purpose of the principal employer-factory for which the contractors mainly worked. In the present case the evidence is that the lime kilns are situate just behind, 200 yards from the premises on which the respondent factory is situate, that it was just separated by road and that the lime kilns are situate in the premises owned by the respondent-company. It is also in evidence that the lessee supplies burnt lime only, to the respondent-company and to no one else. In fact the insurance court itself has found that the lime kilns is a factory situate on the premises of the respondent-factory.

In Hussainbhai, Calicut Vs. The Alath Factory Thezhilali Union, Kozhikode and Others, the Supreme Court considered the questions whether the workmen who were employed by the contractors were not the workmen of the owner of the main factory and in considering that question it is observed as follows:--

The true test may, with brevity, be indicated once again. Where a worker or group of workers labours to produce goods or services and these goods or services are for the business of another that other is, in fact, the employer...........If he, for any reason, chokes off, the worker is, virtually, laid off. The presence of intermediate contractors with whom alone the workers have immediate or direct relationship ex-Contract is of consequence when, on lifting the veil or looking at the conspectus of factors governing employment, we discern the naked truth, though draped in different prefect not the immediate contractor.........

If the livelihood of the workmen substantially depends on labour rendered to produce goods and services for the benefit and satisfaction of an enterprise, the absence of direct relationship or the presence of dubious intermediaries or the make believe trappings of detachment from the Management cannot snap the real life bond. The story may vary but the inference defies ingnetity. The liability cannot be shaken off.

Of course, if there is total disassociation in fact between the disowning management and the aggrieved workmen; the employment, is, in substance and in real life terms, by another, the Management''s adventitious connections cannot ripen into real employment,

Applying the principles laid down in these decisions of the Supreme Court, we have no doubt that the respondent-company is the principal employer and the lessee Janardhan Rao is only an immediate employer and the workers employed in the lime kilns are employees within the meaning of Section 2 (9) (ii). The work carried on by them is incidental to the manufacturing of paper by the respondent-company, it is neither extraneous nor irrelevant to the manufacturing process operated by the respondent-company. In fact, if we may say so, it is one of the important works carried on by the employees required for manufacturing paper, which is admittedly the business carried on by the respondent-company. It is sufficient that if it has some nexus or connection with the work carried on by the respondent-company. We therefore, held that the workers of the time kilns are employees within the meaning of section 2 (9) (ii) and the immediate employer is Janardhan Rao and the principal employer is the respondent-company. We do not agree with the view of the lower court that the work carried on in the lime kilos is not ordinarily the part of the work carried on by the respondent-company. Apart from that, we also hold that it is a work which is preliminary or incidental to the work that is carried on in the respondent-company. We cannot accede to the construction of the learned Counsel for the Respondent Mr. Srinivasa Murthy that since the lime kilns are separately registered under the Factories Act and the Licence stands in the name of Janardhan Rao under no circumstances the licensee of another factory can be construed as an immediate employer of the workmen working in the factory and he should be construed as a principal employer himself. For this proposition, the decision in 1974 S.C. 759 is a complete answer. The decision In Charge and Patil Concerns Employees'' Union Vs. G & P (Transports) 1968 (1) LLJ 566 wherein it Was observed that the business of a printing press and the newspaper run by the same employer were held to be two separate and distinct industrial units for such purposes. In that case the question was whether the two activities in which the single owner is engaged are one industrial unit or two distinct industrial units and it was held that no bard and fast rule can be laid down for the decision of the question and each case has to be decided on us own peculiar facts, in some cases the two activities each of which by itself comes within the definition of ''industry'' or so closely linked together that no reasonable man would consider them as independent industries. There may be other cases where the connection between the two activities is not by itself employer''s own conduct in mixing up or not mixing up the capital, staff and management may often provide a certain answer, We do not think that these observations help the respondent in any way. Each case depends upon the (acts of that case. Hence this decision lends no support to the case of the respondent.

The learned counsel for the respondent relies upon a decision of the supreme court in B. M. Lakshmanamurthy Vs. E.S.I. Corporation AIR 1974 SC 1959 and contends the work in the two places must have an intimate correlation and may be a price of an integrated whole. He emphasises on the word ''integrated whole'' and contends that the work carried on at one place must be an integral part of the work tarried on in the other factory. But we may observation that in the very same case while dealing with the meaning of 2 (9) (ii) of (sic) Goswami J., speaking for the Supreme Court observed that "the (sic) by the contractors in the adjoining vicinity, even though (sic) might have been subsequently registered under the Factories Act (sic) or incidental to the work in the principal employer-factory, burning out the finished product for export. The work in the two places had an intimate correlation and was a piece of an integrated whole and the said work by the contractors through their labour was ordinarily part of the work of the principal-factory, undertaken by the contractors." It was further observed that in that case the factory was situated in the premises of the principal employer''s factory which according to the definition clause included the precincts thereof. Far from helping the respondent-company, (sic) are of the opinion that the observations in this judgment are against the contention raised on behalf of the respondent-company. The word ''integrated whole'' cannot be read in isolation and relying upon it, it cannot be agued that the work carried on at the two places should be integral part of the other. Further in the later decision of the Supreme Court in Royal Talkies, Hyderabad and Others Vs. Employees State Insurance Corporation, to which we have already referred, it was clearly observed that the work carried on in one factory need not be (sic) integral part of the other factory while deciding the question whether the workers employed in the factory comes within the definition of Section (sic) (9)(ii). For all the reasons stated above, we ret aside the order of the employee�s Insurance Court and we hold that the respondent-company is the principal employer and is liable to pay contributions in respect of every employee employed in the lime kilos leased out to the immediate employer Janardhan Rao. We hold that the notice dated 10.9.1975 issued by the appellant corporation is in accordance with law.

In the result, the Civil Miscellaneous Appeal is allowed with Costs.