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Judgment
B. Akbar Basha Khadiri, J.—This C.M.A has arisen in this way:
The appellant herein, E.S.I. Corporation, passed an order u/s 45A of Employees State Insurance Act (hereinafter called in short as ''E.S.I. Act'')
directing the respondent to pay contribution towards the employees engaged for loading and unloading the furniture. The respondent SR.S.
Brothers are the dealers in Godrej Products, Furniture and office equipments. For the purpose of their business, they had to load and unload
furniture in lorries, for which purpose, skilled labourers were to be engaged. The respondent engaged an independent agency run by one
Meenakshi Sundaram to send skilled persons for loading and unloading. The E.S.I. Corporation held those persons also as employees of the
respondent and directed the respondent to pay contribution for these persons also. The respondent preferred a petition u/s 75 of the E.S.I Act for
a declaration that the order passed by the E.S.I Corporation in this regard is illegal.
The learned trial judge, after enquiry, came to the conclusion that the persons employed for loading and unloading are not the direct employees
of the respondent, that the payments were not made to them directly, that the payments made them through separate agency situate in different
place, and that there is nothing to show that the employees used for loading and unloading were persons under the supervision and control of the
respondent herein and accordingly allowed the claim made by the respondent herein. As against that order, the E.S.I. Corporation has come
forward with the instant C.M.A.
Heard both the sides. Section 2(19) of the E.S.I. Act recites as under:
(9) ""employee"" means any person employed for wages in or in connection with the work of a factory or establishment to which this Act applies
and-
(i)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 this factory or establishment or elsewhere; or
(ii) 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; or
(iii) whose services are temporarily, lent or let on hire to the principal employer by the person whose services are so lent or let on hire has entered
into a contract of services;
and includes any person employed for wages on any work connected with the administration of the factory or establishment or any part,
department or branch thereof or with the purchase of raw materials for, or the distribution or sale of the products of, the factory or establishment;
or any person engaged as an apprentice, not being an apprentice engaged under the Apprentices Act, 1961, or under the standing orders of the
establishment; but does not include
(a) any member of the Indian Naval, military, or air forces;or
(b) any person so employed whose wages (excluding remuneration for over-time work) exceed such wages as may be prescribed by the Central
Government;
provided that an employee whose wages (excluding remuneration for overtime work) exceed such wages as may be prescribed by the Central
Government at any time after and not before the beginning of the contribution period, shall continue to be an employee until the end of that period.
Section 2(9) contemplates three categories of employees:
(i) Those who are directly employed by the principal employer in 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 employees in the factory or establishment or elsewhere are in first category. By the
amending Act 44 of 1996 the employees working on any work connected with the administration of the factory or establishment or any part,
department or branch thereof, or with the purchase of raw materials for the factory or establishment or for the distribution have been specifically
included in this category.
(ii) Those who are employed by or through an immediate employer are employees of second category. In order to come within the purview of the
act those persons must work in 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 or in or incidental to the purpose of
the factory or establishment.
(iii) Those whose services are temporality lent or let on hire to the principal employer by the persons with whom the persons whose services are so
lent or let has entered into a contract of services are in third category.
The learned counsel for the appellant argued that the payments made for loading and unloading, even though entrusted to different agencies,
would amount to wages within the meaning of section 2(22) of the E.S.I Act. Section 2(22) of the E.S.I. Act recites as under:
Wages"" means all remuneration paid or payable in cash to an employee, if the terms of the contract of employment, express or implied, were
fulfilled and includes any payment to an employee in respect of any period of authorised leave, lock-out, strike which is not illegal or lay-off and
other additional remuneration, if any, paid at intervals not exceeding two months, but does not include-
(a) any contribution paid by the employer to any pension fund or provident fund, or under this Act;
(b) any traveling allowance or the value of any travelling concession;
(c) any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment; or
(d) any gratuity payable on discharge;
According to the respondent, no wages are paid to the loadmen directly, but the independent contractor who engages the loadmen receives
liquidated sum every month irrespective of the number of the employees sent by him for loading and unloading purpose. The learned counsel had
also contented that the payment of wages alone is not the criterion in deciding whether such employees come within the purview of the E.S.I
scheme. According to the learned counsel, the main ingredient to be considered is whether the employer has supervision and effective control over
such loadmen.
The learned counsel for the respondent cited the decision reported in M/s. Rajkamla Transport & another v. The E.S.I. Corporation
Hyderabad, 1999 (2) LLJ 435. In that case M/s. Rajkamal Transport, engaged in carrier business engaged certain Hamalis for loading and
unloading purpose, they collected the charges for loading and unloading from the customers and paid the amount to Hamalis. In that case, their
Lordships of the Supreme Court of India have held that the source from which the payments emanates is not a main test to be considered, but
what is important is if the Hamalis work in connection with the work of establishment. Their Lordships have held that the loading and unloading
works were done with their direction and control. In that case, the Hamalis were directly engaged by the carrier himself. Though payment was
collected and paid through the customers. It was evident that the employer had direct control and supervision over the work of Hamalis. But, the
facts of the case on hand is different, the loadmen were the employees of the different agency. They were directed to go to the respondent concern
to load and unload furniture, office equipments etc. An independent agency was employed by the respondent to send loadmen because of their
skill in loading and unloading work. The employer may not be aware of the number of workmen engaged by the contractor. The employer may not
know the names and other details of these persons. He was not aware the amount payable to each of the workmen. He could not have insisted on
the attendance of any personality at any time. He had no control over the manner of which the work was performed by them. There is nothing to
show that any master and servant relationship existed between the loaders and employer. As such the loaders are casual employees deputed to the
respondent concern by an independent contractor, to whom the payments were made. Under these circumstances, it cannot be said that the
loadmen would fall within the category (iii) referred to in paragraph No.4 of this judgment. I do not find any error apparent in the findings of the
trial judge. This C.M.A. is therefore dismissed. No costs.