JUDGMENT
H.N. Narayan, J.
1. The appellant filed an application before the Employees’ State Insurance Corporation, Bangalore, under Section 75 of the Employees’ State Insurance Act (“the Act” for short), to declare that the applicant is not obliged to pay Employees’ State Insurance contribution on the packing charges paid to Tea Trading Corporation of India and to restrain the respondent from recovering a sum of Rs. 17,6857- being its contribution.
2. It is the case of the appellant that the appellant is a company, engaged in blending and packing of tea having its factory at Bangalore. It employed 250 workmen at Bangalore and all of them are covered under the Act. The appellant has given the joh of packing of tea to an outside contractor. The Tea Trading Corporation of India which is a Government of India undertaking, unit at Coimbatore, was given contract for packing and despatch of tea. There is no supervision done by the appellant in regard to packing work done at Coimbatore. The appellant is in no way connected with the method of packing by Tea Trading Corporation. The persons employed by Tea Trading Corporation neither work in the premises of the appellant nor under its supervision. Therefore, the employees of Tea Trading Corporation cannot be deemed to be the employees for the purpose of payment of contribution under the Act and they cannot be construed to fall within the definition of Section 2(1) of the Act.
2-A. A notice issued by the Corporation has been replied suitably. However, respondent 1 therein has passed an order under Section 45-A directing the appellant to pay a sum of Rs. 17,585/- with interest as contribution on packing charges. Aggrieved by the said order, it preferred an application under Section 75 before the Employees’ State Insurance Court and the Employees’ State Insurance Court dismissed the application, against which this appeal is filed.
3. Heard the learned Counsel on both sides and perused the records.
4. The substantial question which arises for consideration is whether the workmen of an establishment which awarded contract for packing of tea in the premises of the factory of the Contractor will be employees within the meaning of Section 2(9) of the Employees’ State Insurance Act, 1948.
5. This very question is answered in the negative by the Trial Court.
6. Sri K. Kasturi, learned Counsel for the appellant contended that the work of packing of tea is entrusted to Tea Trading Corporation which has agreed to do the said work at its Coimbatore premises and that they collect certain charges for carrying out the said work. It is contended that the employees engaged in packing the tea at Coimbatore factory, totally belonged to Tea Trading Corporation of India and that the appellant had no control over them nor they were employed by them.
7. Sri M. Papanna, learned Counsel for the respondent failed to furnish any particulars rebutting these contentions.
8. It is undisputed that the Tea Trading Corporation of India is a Government Corporation floated by the Central Government was entrusted with the work of packing and despatch of tea in their factory premises at Coimbatore. The Employees’ State Insurance is unable to furnish the particulars that the workers of Tea Trading Corporation of India in Coimbatore were insured under the Act or not. The question is whether the appellant who has entrusted this work of packing on payment basis is liable to pay insurance contribution towards the workers of tea contractor. Section 2(9) defines an “employee” which 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 the factory or establishment or elsewhere.
9. This very question came up for consideration before the Division Bench of this Court in World Wide Traders and Others v The Regional Director, Employees’ State Insurance Corporation, Bangalore . In that case the appellants were owners of the Government factory and entrusted with the work of stitching, processing, dyeing, button making etc., to outside agencies by giving out clothes and other materials with specifications. The appellants had also reserved the right to inspect the same and to reject and return for restitching, rectifying the mistake etc. Considering the question whether the right to reject amounts to supervision under Section 2(9) of the Act, the Bench relied upon the Supreme Court judgment in C.E.S.C. Limited v Subkash Chandra Bose and Others . In the case on hand, no such supervision is alleged nor any right to reject the packing. Even otherwise, a right to reject the items brought from outside agency/job contractors for wanting any quality of work as per job specification by the principal employer cannot be said to be an act of supervision by him under Section 2(9) nor for the very said reason the outside agencies/job contractors can be held to be immediate employer under Section 2(13) of the Act. Learned Counsel for the Insurance Company has relied on Section 2(9)(i) of the Act to bring home his contention. Neither clause (i) nor (ii) of Section 2(9) of the Act is attracted to the facts of this case. The Trial Judge has misdirected himself accepting the demand made by the Employees’ State Insurance Corporation, which in my opinion, is not justifiable. Therefore, on this very question, the appeal has to succeed.
10. Accordingly, the appeal is allowed. The impugned order ia set aside. The demand made by the Employees’ State Insurance Corporation for Rs. 17,685/- made by the Regional Director under Section 45A of the Act is set aside.