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IN THE HON’BLE SUPREME COURT OF INDIA
In the matter of
ESI Corporation
(Appellant)
Vs.
M/S Harrison Malyalam Pvt.Ltd. & Ors.
(Respondent)
DATE OF SUBMISSION -06/04/
On submission to the Hon’ble Supreme Court of India
Counsel on behalf of the Appellant
Sounak verma
ROLL NO. – 158
Semester -V, Sec- A
INDEX OF AUTHORITIES
Acts/ Statutes/ Legislations:
- Employee State Insurance Act, 1947
Cases:
- E.S.I.C Trichur v poopally foods, Alleppy (1985) ILLJ 10 Ker.
- M.D.,Hassan Coop.Milk society union vs Asstt. Regnl.Director HCMPSU Ltd 1993 4 SCC 361.
- ESI Corporation vs By Adv. Sri.Thomas Mathew M/s.Popy Umbrella Mart (1988) ILLJ 24 Ker.
- Bombay Wires Healds vs Employees State Insurance corp 1986) IILLJ 121 Bom.
Books:
STATEMENT OF FACTS
- The respondent is a public limited construction company engaged in the
business and the work of undertaking construction work at various places in the State of Kerala. During the period 1971 to 1982 it had undertaken construction work for building factory premises of M/s. McDowell Company at Ghertallei, so they employed contractor to execute the work which they had undertaken.
- (^) During the relevant time the Employees' State Insurance Act, 1948 (hereinafter referred to as "the Act") was applicable in the State of Kerala. The appellant-Corporation raised the demand against the respondent- Company in connection with the contribution which should have been remitted to the Corporation both consisting of employees' contribution as well as employer's contribution amounting to Rs. 2 lakhs and odd for the period from 1971 to 1982. This demand by the Corporation resulted in an application by the respondent-Company before the Employees' Insurance .The Insurance Court after hearing the parties took the view that as the claim pertains to an earlier period i.e. from 1971 to 1982 and there was no clear evidence to show whether the workmen concerned, who were said to be employed by the respondent-Company during the relevant time, were available on the payroll of the Company and as the appellant Corporation had not taken steps in time to activise the respondent in this connection, the claim put forward by the Corporation against the respondent for that period could not be effectively entertained. However, the Insurance Court noted that there was some evidence regarding continuity of employees at least from 1983 onwards till the coverage was effected in 1986. The appellant- Corporation was held entitled to collect contribution in respect of those employees who are employed by the respondent during 1983 and who
- Whether the employees of the contractor employed contractor comes under the definition of employee or not?
- Whether the respondent company is liable to pay employees contribution which is employed by the contractor or not?
Summary of Arguments
ISSSUE-1 Whether the employees employed by contractor comes under the definition of employee?
No the Employees does not come within the definition of employees under the ESI act, because there is not any supervision or control by the principle employer as persection 2(9) of the ESI act.
ISSUE-II- Whether the respondent company is liable to pay employee contribution which is employed by the contractor or not?
No the respondent are not liable to pay contribution in respect of employees because they were not employees as per the definition of employee of the ESI act ; so how the payment of contribution will come as per section 40 of the ESI act.
ARGUMENT ADVANCED
ISSSUE-1 Whether the employees employed by contractor comes under the definition of employee or not?
(b) any person so employed whose wages (excluding remuneration for overtime work) exceed 22 [such wages as may be prescribed by the Central Government] a month: Provided that an employee whose wages (excluding remuneration for overtime work) exceed 22 [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;]
If you refer to subsection 2 if the section 2(9) of the act it is clearly mentioned that there must be supervision by the principle employer which is not present in this case so it is not employee. In case of E.S.I.C Trichur v poopally foods, Alleppy 1 The respondent is a firm carrying on business in export of fish (prawns). Peeling and/or grading are clone through independent contractors at their premises. it is not done either by the firm or in its premises and ESI corporation were demanding contributions from the respondent .So, the respondent contended There is no relationship of employer- employee between the firm and the persons who do the work. The firm has no knowledge of the persons who do the work or the number of persons who are engaged in the work nor exercises any supervision over the work. The contractors do their contract work for different persons. In such circumstances, the firm contended that it is not liable to pay any contribution to the ESI Corporation for persons who were doing peeling and grading and that the Corporation is not entitled to claim the same. So the High court of Kerala held that there were contract for service not contract of service and the firm had no supervision or control in the peeling or grading works done so, there was no contract of employment. Hence the employees does not come within the definition of the
1 (1985) ILLJ 10 Ker
employee under the ESI act andtherefore respondent are not liable to pay contribution to ESI corporation In case of M.D.,Hassan Coop.Milk society union vs Asstt. Regnl.Director HCMPSU Ltd 2. is a federal society. Its main business is purchasing milk and
pasteurization of the same. The milk procured by member societies is transported in lorries/vans to the appellant's dairy. For that purpose, contract is awarded on the basis of rate per kilometer to the lowest bidder. The contractor collects the milk
from the various societies in cans on specified routes and transports to the appellant's dairy. The empty cans are retransported and returned to the respective member societies. On September 23, 1994, a show cause notice was issued by the
Assistant Regional Director, Employees' State Insurance Corporation, Bangalore to the HCMPSU Ltd. calling upon them to furnish explanation and show cause as to why action should not be taken against them for non-payment of contribution
under the Employees' State Insurance Act, 1948 (for short, `1948 Act') in respect of the 2employees of the appellant. It is not in dispute that this notice related to the employees engaged by the contractors for the transportation of milk. The appellant responded to the show cause notice by filing their reply on October 10, 1994, inter- alia, stating there in (a) that the main business of the appellant is to process milk, receive and sell the same to the public in the concerned districts through their agents. The appellant does not appoint the officers and subordinates to collect the milk from the societies located in different places and (b) that appellant calls for tenders and awards the contract for transportation of milk for specified period at a particular rate per kilometer. The contractors engage workers for that work but such workers are neither directly nor indirectly employees of the appellant and; the appellants have no control over such employees nor they supervise their work. The wages or salary of such workers have also not been paid by the appellant. Another
2 (1993) 4 SCC 361
act ; so how the payment of contribution will come. If you refer section 40 of the ESI act-
Principal employer to pay contribution in the first instance.^ 0 09 7 (1) The principal employer shall pay in respect of every employee, whether directly employed by him or by or through an immediate employer, both the employers contribution and the employees contribution. (2) Notwithstanding anything contained in any other enactment but subject to the provision of this Act and the regulations, if any, made thereunder, the principal employer shall, in the case of an employee directly employed by him (not being an exempted employee), be entitled to recover from the employee the employees contribution by deduction from his wages and not otherwise: Provided that no such deduction shall be made from any wages other than such as relate to the period or part of the period in respect of which the contribution is payable, or in excess of the sum representing the employees contribution for the period. (3) Notwithstanding any contract to the contrary, neither the principal employer nor the immediate employer shall be entitled to deduct the employers contribution from any wages payable to an employee or otherwise to recover it from him. (4) Any sum deducted by the principal employer from wages under this Act shall be deemed to have been entrusted to him by the employee for the purpose of paying the contribution in respect of which it was deducted. (5) The principal employer shall bear the expenses of remitting the contributions to the Corporation.
Immediate employer , Principle employer deals with section 2(13), 2(17) respectively. Section- 2(13)- immediate employer 0 09 4, in relation to employees employed by or through him, means 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 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 a contract of service with him are temporarily lent or let on hire to the principal employer [and includes a contractor] Although immediate employer includes contractor but in the present case the contractor has not undertaken the execution on the premises of a factory or an establishment and has not work 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. So, he does not come under the definition of the immediate employer, he is just an independent contractor. In case of ESI Corporation vs By Adv. Sri.Thomas Mathew M/s.Popy Umbrella Mart 3 is an establishment covered under the ESI Act, engaged in the business of assembling umbrellas and its sale. The assembling work of umbrellas is being done through outside agencies and home workers. They do the work at their own places, with the help of their family members and neighbours. The establishment has no manner of control or supervision over them. Further, no assembling work of umbrellas is done within the premises of the establishment. The outside agencies/ home workers used to collect the materials from the establishment and after assembling the umbrellas, they return it to the establishment and collect the assembling charges and disburse it to their people. so the court held that the persons who are doing assembling work of umbrellas outside the factory premise
3 (1988) ILLJ 24 Ker
PRAYER FOR RELIEF
Therefore in the light of facts of the case, issues raised, arguments advanced and authorities cited, the appellant please the the honourable Supreme court to adjudge and declare that-
- The Respondent is not liable to pay contrbution.
- The Respondent contractors are not employee according to the section 2(9) of the ESI act. .
All of which is respectfully submitted. Sounak verma (Counsel for the Respondent)
Date: 06.04.
