Regional Director, Employees'' State Insurance Corporation vs Sunita Gopal Balani

R.G. Ketkar, J.

Heard Mr. P.M. Palshikar, learned Counsel for the appellant and Mr. T.R. Yadav, learned Counsel for the respondent at length.

The appellant has challenged the judgment and order dated 14.3.2008 passed by the learned Judge, Employees'' Insurance Court, Mumbai in Application (ESI) No. 36 of 1990. By that order, the learned Judge quashed and set aside the order dated 5.10.1989 passed by Appellant-Corporation under section 45-A of the Employees'' State Insurance Act, 1948 (for short ''Act'') and restrained the appellant from recovering the amounts of contribution and interest from the respondent.

The respondent filed an application under section 75 of the Act challenging the coverage and consequent claim of the contribution. It is the case of the respondent that it had never employed 20 or more employees as required in the notification. The employees drawing wages upto limits under the Act were less than 20, therefore, respondent''s establishment is not covered by the Act. The appellant resisted the application and contended that coverage was on the basis of the information furnished by respondent which showed that there were 20 or more persons employed. The appellant contended that 20 or more persons employed meant all persons in employment as far as coverage is concerned and all such persons are required to be considered irrespective of their salaries.

The parties led evidence. After appreciating evidence on record, the learned Judge recorded a finding that the respondent gave her evidence on oath and stated that employees drawing wages upto ESI limits were much less than 20. The particulars in that regard were year wise. The said evidence remained unchallenged in the cross-examination. The appellant also did not lead any evidence. The unchallenged and unrebutted evidence of respondent, coupled with documentary evidence was more than sufficient to prove the contention that number of the coverable employees was much less than 20, therefore, unit was not coverable. Mr. Yadav relied upon the decision of the Apex Court in the case of Employees State Insurance Corporation Vs. M/s. M.M. Suri and Associates (P) Ltd., , and in particular paragraph 5 thereof and submitted that no substantial question of law arises in this appeal.

I have considered the rival submissions made by the learned Counsel appearing for the parties. I have also perused the material on record. After considering the evidence on record, the learned Trial Judge has categorically recorded a finding that employees coverable are less than 20 and therefore, the unit is not coverable. The said finding is based upon appreciation of evidence on record. In paragraph 5 of case of the Employee''s State Insurance Corporation (supra), the Apex Court has observed thus :

"5. There is conflict on decisions of the High Courts. One view is that for Act to be applicable to an establishment total number of employees should be 20 or more (now it is 10 or more) irrespective of the fact whether all the employees fall within the definition of ''employee'' as given in section 2(9) meaning thereby that drawing of any amount of wages is immaterial. Other view is that these 20 or more persons should be those who fall within the definition of ''employee'' as given in section 2(9) of the Act getting wages as prescribed therein. As to what ''wages'' means has also been defined. Second view commends to us. It was submitted that if there are 18 employees drawing the amount of wages prescribed and only two or more are drawing more than that, the Act should be applicable as in any case this is beneficial legislation. Reliance has been placed on a Division Bench decision of the Andhra Pradesh High Court in Andhra Pradesh State Electricity Board, Nellore v. Employees'' State Insurance Corporation, Hyderabad (1997) L.I.C. 1107, where the High Court said that the expression ''wages'' used under section 2(12) must be understood in wider sense as meaning any remuneration paid to any person who is employed in the factory and cannot be restricted only to remuneration paid to the employees, who come within the definition of section 2(9). Section 2(12), no doubt, uses the words "persons are employed or were employed for wages". Stress was, therefore, on the word ''persons'' and it is submitted that for the Act to be applicable only criteria is to see if the establishment has 20 or more persons in its employment. This interpretation ignores the fact of wages as defined in section 2(22). If we refer to the definition of ''factory'' when the Act came into force or at least till 1968 when the Act was amended by amending Act 44 of 1966, ''factory'' meant any premises "wherein 20 or more persons are working". This definition of ''factory'' was changed and at the relevant time it was substituted by the words "employed for wages". The exact amendment we have already noticed above. When the word ''wages'' is specifically introduced in the section it can only mean to have reference to what ''wages'' mean in section 2(22) of the Act. It cannot be given any other meaning as has been done by the Andhra Pradesh High Court. In our view, therefore, the Act would apply to an establishment only when number of employees is 20 or more and all those employees answer the description of employee contained in section 2(9) of the Act."

(Emphasis supplied)

After appreciating the evidence on record, the learned Trial Judge held that number of coverable employees was much less than 20 and therefore, unit is not coverable. The findings recorded by the learned Trial Judge are based upon appreciation of evidence on record. It cannot be said that the findings recorded by the learned trial Judge are perverse being based upon no evidence or that on the basis of evidence on record, it cannot be said that no reasonable or prudent man would have come to the conclusion arrived at by the learned trial Judge. In view thereof, no substantial question of law arises in this appeal. Hence, appeal fails and the same is dismissed.