JUDGMENT
A.K. Basheer, J.
1. Does the appellant-Association of Steamer Agents come within the purview of the Employees’ State Insurance Act, 1948? This is the short question in this appeal under Section 82 of the Act, which has been referred to the Full Bench. First, the facts.
2. The appellant is a registered Association consisting of Steamer Agents functioning in the Cochin Port. The appellant-Association has 57 Steamer Agents as members on its roll. The ships/steamers which visit the Cochin Port require services of Steamer Watchmen to do “watch and ward duty”. Earlier the services of Steamer Watchmen were made available to the ships/Steamers by “Watchmen Contractors”. In the year 1981, the labour unions raised a dispute regarding the service conditions of the Steamer Watchmen who were employed through the contractors. A conciliation meeting was convened by the Assistant Labour Commissioner (Central), Ernakulam. Representatives of the Indian Chamber of Commerce, Cochin and the Cochin Chamber of Commerce and Industries, Cochin were also invited to participate in the conciliation talks. A Memorandum of Settlement was signed on 19.5.1981 between the watchmen contractors and the labour unions under Section 12(3) of the Industrial Disputes Act 1947. A copy of the memorandum of settlement has been placed on record as Ext. P2.
3. By Memorandum of Settlement, a seven member committee consisting of representatives of Watchmen Contractors and labour unions was formed “for the purpose of constituting a common pool of Watchmen so as to ensure equitable distribution of work” to the Steamer Watchmen working in the Cochin Port. Further, a Scheme viz., “Cochin Steamer Watchmen Employment Regulation Scheme, 1983” (for short, the scheme) was drawn up “for rotational booking of Steamer Watchmen through a system of pooling”. The Scheme was approved in the talks held on 18.3.1983. A copy of the memorandum of settlement incorporating the terms of the Scheme has been produced by the appellant as Ext. P3. Thereafter on 9.11.1983 the administration of the Scheme was entrusted to a governing body consisting of 4 representatives from the labour unions and two representatives each from the Cochin Chamber of Commerce and Industry and the Indian Chamber of Commerce, Cochin. An administrative agency was also appointed for the management of the day-to-day affairs of the Scheme.
4. It appears that the Governing Body and the Administrative Agency were in control of the situation and the Steamer Watchmen and their contractors were also satisfied with the pooling system envisaged under the Scheme.
5. However on 16.7.1991 the appellant was served with Ext. P10 notice dated 16.7.1991 issued by the Employees’ State Insurance Corporation (for short, the Corporation) informing the appellant that its activities would come within the purview of the Act. The appellant was therefore directed to take immediate steps for registration of the employees working in the establishment. The appellant approached the Employees’ Insurance Court contending, inter alia, that it was not an establishment liable to be covered under the Act, and that the Steamer Watchmen engaged by the ships/steamers were not its employees.
6. The Corporation contended before the Employees’ Insurance Court that the Steamer Agents Association (Appellant) was the Principal Employer of the “Cochin Steamer Watchmen”. However, it was admitted that the Scheme (Ext. P3) was introduced by virtue of a conciliation settlement entered into between the employers and labour unions. It was also conceded that the Scheme was being administered by an administrative agency appointed by the Governing body. The Corporation mainly relied on a communication dated 22.10.1990 which was stated to have been addressed by the appellant Association to the respresentatives of the labour unions and the Governing Body stating that “by convention and practice, the President of Cochin Steamer Agents Association was elected as the Chairman of the Governing Body of the Scheme…..”. It was therefore urged by the Corporation that the Watchmen employed through the Cochin Steamer Watchmen Scheme are working in the ships in the wharf and steamer. They are supervised by the administrative agency appointed by the Governing body of the Scheme”.
7. The E.I. Court by its order dated 9.3.1995 repelled the contentions of the appellant. It was held that the appellant-establishment had been rendering service to the Steamers after receiving consideration and therefore it would come within the purview of the Act. The above order passed by the E.I. Court is under challenge in this appeal.
8. It is not in dispute that the appellant is an Association of Steamer Agents operating in the Cochin Port. The Appellant has placed on record a copy of the Memorandum of Association (Ext. P1). Some of the objects which are sought to be achieved by the association, as revealed from the memorandum of Association are extracted hereunder:
“(a) To promote and maintain an organisation to deal with matters relating to shipping in general.
(b) To examine and safeguard as far as possible and as far as it lies within its powers, the interest of the Steamer Agents in Cochin in their dealings with Central and State Governments and their Departments, Port Trust, Customs, Mercantile Marine Department, Shippers, Importers, Stevedores, Contractors, Railways, Dock Labour Board and other officials and quasi-official Boards and trade association.
(c) To discuss, consider and take such steps as necessary for promoting the growth and development of shipping in general and Steamer Agents in particular and to promote or support any plans, proposals or schemes for the growth, development and safeguarding of shipping interests.
(d) ……..
(e) ………
(f)………
(g) to take up any other matter concerning Steamer Agents and affecting their interest when action demands.
(h) ………
(i) To view the cost of various services provided by the Cochin Port Trust, Customs, Dock Labour Board and other authorities/bodies with a view to ensuring that the services provided are of acceptable standard and the cost thereof is commensurate with the quality of service provided.
The above clauses in the Memorandum would reveal that the members of the appellant-Association have formed the above organization with a view to have a common platform to safeguard their interests. But the pertinent question is whether the appellant is the “employer” as envisaged under the Act.
9. In the above context, it will be useful to refer to the definition of “Principal Employer” and “Immediate Employer” in the Act. Sub-section (17) of Section 2 of the Act defines Principal Employer, which reads 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 a manager of the factory under the Factories Act, 1948; the person so named;
(ii) in any establishment under the control of any department of any Government in India, the authority appointed by such Government in this behalf or where no authority is so appointed, the head of the department;
(iii) in any other establishment, any person responsible for the supervision and control of the establishment”
Immediate employer is defined in the Act in Section 2(13) of the Act, which reads as follows:
“2( 13) “immediate employer”, 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”.
It is evident from a reading of the definition of “principal employer” that in the case of a factory, the owner or occupier of the factory is the principal employer. Sub-clause (ii) deals with Establishments under the control of any department of any Government in India. Sub-clause (iii) refers to “any other establishment”. Principal employer of such “other establishment” is the person responsible for the supervision and control of the establishment.
10. It is contended by the learned counsel for the Corporation that the appellant-association would come within the purview of “other establishment” as defined under Sub-clause (iii). On the contrary, the contention of the appellant is that it is not an establishment which employs any workman so as to fall within the scope and ambit of the Act.
11. As mentioned earlier, Memorandum of Settlement dated 19.5.1981 (Ext.P2) was executed between the representatives of the watchmen contractors on one side and representatives of the four labour unions on the other. The Assistant Labour Commissioner (Central), Ernakulam was also present. The settlement was to settle the dispute regarding the service conditions of steamer watchmen who were employed through the contractors. After executing the Memorandum of Settlement it was noticed that some practical difficulties had cropped up in implementing certain clauses of the settlement. Therefore the Assistant Labour Commissioner (Central), Ernakulam had convened a meeting of all the representatives concerned. Consequently, it was agreed that the administration of the Scheme shall be vested in a governing body consisting of one representative each from the 4 labour unions and also 4 representatives from the Watchmen contractors. An addendum to the Memorandum of settlement was executed. It has been placed on record as Ext. P4. An administrative agency was appointed and it was entrusted with the day-to-day management of the Scheme. Mr. Kurisinkal Thomas was appointed as the Administrative Agency. By communication dated 17.4.1984 the Association had informed its members about the appointment of Sri. Kurisinkal Thomas as the Administrative Agency. Members were also informed about the wages, mode of payment etc. payable to the Watchmen,
12. Mr. Anand, learned counsel for the appellant contended that the E.I. Court has misdirected itself in assuming that the appellant is the employer of the steamer watchmen. It is contended that the Watchmen are never employed by the Appellant-Association. It is being done by the Administrative Agency. Appellant has no control over the Agency. The said agency was appointed by the Governing Body. It is evident from the Scheme that the responsibility to regulate the rotational pooling of the watchmen is vested in a governing body consisting of one representative each of the 4 labour unions and also 4 representatives from the Watchmen contractors. Therefore apparently the labour unions have a vital role to play in the administration of the Scheme.
13. However, the learned counsel for the Corporation contended that the appellant-Association is the principal employer. It is pointed out that the President of the appellant Association is admittedly being elected as the chairman of the Governing Body of the Scheme. The Governing Body has appointed the administrative agency. The Administrative Agency is in charge of the functioning of the scheme. The wages and other benefits payable to the watchmen are being remitted by the Steamer Agents to the Administrative Agency. The agency disburses the wages to the Watchmen. It is therefore contended by the learned counsel that the Administrative Agency is the immediate employer as defined under Section 2(13) of the Act, whereas the appellant-Association whose members are the employers is the principal employer.
14. It may be true that the governing body which consists of 4 representatives of the workmen contractors who in turn are the members of the appellant-Association had appointed an administrative agency for management of the day-to-day affairs of the Scheme. This does not mean that the appellant-Association will become the employer, either principal or immediate.
15. It may be noticed that the appellant-Association has no administrative control over the affairs of the Committee constituted in terms of the Memorandum of Settlement. Appellant Association was not a signatory to Ext. P2 Memorandum of Settlement. The signatories were representatives of workmen contractors and that of the four Trade Unions. However in Ext. P3 Memorandum of Settlement by which the Scheme was approved, the workmen contractors were represented by the two Chambers of Commerce mentioned above. It is not disputed by learned counsel for the appellant that some of the workmen contractors are members of one of the two Chambers of Commerce. Some others may be members of the Appellant- Association also.
16. A perusal of the Memorandum of Settlement dated 19.5.1981 (Ext. P2) and the terms of the Scheme formulated on 18.3.1983 would clearly show that the appellant-Association has no exclusive administrative or supervisory control over the affairs of the committee. The terms of Ext. P3 Scheme formulated by virtue of Clause 4 will also show that the appellant-association has not been treated as the employer by the labour unions or their members. Clause 5 of Ext. P3 scheme reads as follows :
5. Employers :
All Steamer Watchmen Contractors who are presently working in the Cochin Port shall be eligible for registration as employers under the Scheme on such terms and conditions as may be laid down. The registration of any persons or agencies offering to become ’employers’ under the Scheme shall be decided by the Administrative Body”.
The above clause clearly indicates that the Appellant Association has no exclusive or independent status as an employer vis-a-vis the Steamer Watchmen who are working in the Port. No document has been produced to show that the appellant Association was registered as the employer under the Scheme.
17. In this context it may be pertinent to refer to some of the clauses in the Addendum to the Memorandum of Settlement (Ext. P4). This document was executed to incorporate certain amendments to some of the clauses in the Scheme (Ext. P3). Clause 3(i) was modified to provide for setting up of a Governing Body to administer the affairs of the Scheme. The above clause further stipulated that the Governing Body shall include four representatives from the Appellant Association. More importantly Clause 3(vi) was amended to read as follows:
“the Governing Body shall decide on disputes arising out of the running of the Scheme and enforce discipline and lay down policies”.
It is true that in Ext. P4 Addendum to the Memorandum of Settlement, the involvement of the appellant in the management of the affairs of the Scheme was spelt out for the first time. It is also provided therein that Chairman of the Governing Body shall be , elected from the representatives of the Appellant Association. But the amended Clause 3(vi) in our view, clearly shows that the Appellant Association has no control of any kind over the affairs of the Scheme, much less than as an employer. That it is so is more evident from the definition given to the word “employer” in the Scheme which is extracted in the preceding paragraph. The mere fact that one of the representatives of the Association in the Governing Body shall be elected as its Chairman will not by itself transform the status of the appellant as the “employer”.
18. We have carefully perused the various clauses in the memorandum of Settlement (Ext. P2), the Scheme (Ext.P3) and also the Addendum to the Memorandum of Settlement (Ext. P4). We are satisfied that none of these clauses indicates that the appellant-association is having any control over the Steamer Watchmen working in the Cochin Port. The appellant does not appoint them. Nor does it dismiss anyone. The Steamer Watchmen are affiliated to the labour unions who are signatories to the Memorandum of Settlement. These Steamer Watchmen are free to take up employment as and when their services are required by the ships/steamers which are berthed in the Port. The engagement of these Steamer Watchmen will be temporary and for a short duration. They are disengaged as and when the ship/steamer leave the Cochin Port. The role of the administrative agency or the Governing Body is only to streamline the engagement of these Steamer Watchmen. Whenever the services of Steamer Watchmen are required by the ships/steamers, the administrative agency would make available their services to the Steamers/ships on a rotational basis. The terms of the Memorandum of settlement clearly indicate that the memorandum in question is more in the interest of the Steamer Watchmen rather than to the benefit of the Steamer Agents. The Memorandum of Settlement was signed when a dispute arose among the members of the labour unions about the equitable distribution of work to the Steamer Watchmen. It was in the above circumstances that a pooling system was evolved. A committee was formed in terms of the memorandum of settlement. A governing body was later constituted consisting of one representative each of the 4 unions and also 4 representatives of the Watchmen contractors. The fact that the Chairman of the governing body was elected from the representatives of the Appellant Association will not in any way prove that the appellant is the Principal employer as contended by the Corporation. The administrative agency was appointed for the day-to-day administration of the pool Scheme.
19. The Act was promulgated “to provide for certain benefits to employees in case of sickness, maternity and employment injury……”. Under the Act, contribution means “the sum of money payable to the Corporation by the principal employer in respect of an employee……”. Injury, under Section 2(8), is “a personal injury to an employee……… arising out of and in the course of his employment…….”. The employee is a person who is employed for wages “in or in connection with the work” of an establishment. Section 2(17) defines a principal employer. In the context of the controversy in the present case, it means “any person responsible for the supervision and control of the establishment.” Under Section 2(13), the immediate employer has been defined to mean “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…..”.
20. Under Section 38, only the employees “in factories or establishments have to be insured”. Under Section 39, the contribution has to be made by the employer at the prescribed rate.
21. There is nothing on record to show that the appellant engages the employees. They do no work for the appellant. The indents for Watchmen will be placed by the Steamer Agents through their Watchmen Contractors with the administrative agency. The watchmen keep guard on the ships not in the premises of the appellant. There is no relationship of employer and employee between the appellant and the Watchmen. Factually, the Watchmen keep guard on the ships and their wages are payable by the employer. Wage bills are raised on the Watchmen Contractor. These are deposited with the appellant and are disbursed in accordance with the rate fixed by the representatives of the agents and the Watchmen. In fact, it is the admitted position that the appellant gets paid for the services that it provides, viz., managing the affairs of the workmen and their employees. It is not under any liability to pay to anyone. At best, the appellant oversees the employment of the Watchmen. It does not employ.
22. Since the Watchmen do not work in the establishment of the appellant in or in connection with the work of the establishment and the appellant is not the employer, it is under no obligation to insure the Watchmen or to make contribution in respect of the persons who are not employed with it.
23. Having regard to the entire facts and circumstances, we are of the view that the findings of the E.I. Court that the appellant-association is liable to be covered under the Act cannot be sustained. From the materials available on record, it cannot be held that the appellant is either a “principal employer” or an “immediate employer”, as defined in the Act. Therefore the judgment of the E.I. Court, Alappuzha dated 9.3.1993 in I.C. No. 111/1991 is set aside.
The appeal is allowed. No costs.