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The Regional Director vs M/S.Anandha Silks Paradise on 26 August, 2008

Madras High Court
The Regional Director vs M/S.Anandha Silks Paradise on 26 August, 2008
       

  

  

 
 
 BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT

DATED:  26/08/2008

CORAM
THE HONOURABLE MR.JUSTICE A.SELVAM

Civil Miscellaneous Appeal No.384 of 2002
and
Civil Miscellaneous Appeal No.385 of 2002

The Regional Director,
Employees State Insurance
 Corporation,
143, Sterling Road,
Chennai- 600 034.			...	Appellant in
						  both the appeals/
						     Respondent

Vs.

M/s.Anandha Silks Paradise,
NSB Road, Trichy -12.

represented by its partner
A.K.K.Chandrasekaran. … Respondent in
both the appeals/
Petitioner

Civil miscellaneous appeals have been filed under Section 82 of the
ESI Act, 1948, against the common order dated 28.06.2001 passed in ESIOP.No.12 &
20 of 2001 by the Employees State Insurance Court, Tiruchirapalli.

!For appellant in
both the appeals … Mr.J.S.Murali

^For respondent in
both the appeals … Mr.R.Vijayakumar

:COMMON JUDGMENT

Challenge in these civil miscellaneous appeals is to the common
order passed in ESIOP Nos.12 of 2001 & 20 of 2001 by the Employees State
Insurance Court, Tiruchirapalli.

2.The respondent herein has filed ESIOP Nos.12 of 2001 and 20 of
2001 on the file of the Employees State Insurance Court, Tiruchirapalli, wherein
the present appellant has been shown as respondent.

3.It is stated in the petitions that the petitioner is a partnership
firm and the petitioner has been doing cloth business. At any point of time,
under the petitioner more than 18 employees have not been served. Therefore,
the petitioner has not come within the purview of Employees’ State Insurance Act
(34 of 1948). The Inspector of the respondent has inspected the petitioner on
several occasions and subsequently a notice has been issued, wherein it has been
stated that from 01.04.1987 to 30.06.1990 the petitioner has to pay Rs.7,488.75
paise towards premium and further it has been directed that the petitioner
should make personal appearance on 24.12.1990. The petitioner has given a reply
notice dated 19.12.1990. The persons namely Periyannan, Somasundaram & Shanmugam
have served as partners of the petitioner and therefore, the petitioner is not
liable to pay the amount demanded by the respondent. Further it is stated in
the petitions that as per notice dated 27.07.1990 the petitioner is not liable
to pay the amount of Rs.26,085.70 paise to the respondent. Under the said
circumstances, with regard to the amount of Rs.7,488.75 paise, ESIOP No.12 of
2001 has been filed and likewise, with regard to the amount of Rs.26,085.70
paise, ESIOP No.20 of 2001 has been filed.

4.On the side of the respondent in both the petitions detailed
counter has been filed, wherein it has been stated that the Inspector of the
respondent has inspected the petitioner on 07.04.1988 and ultimately found that
from 01.04.1987 to 30.06.1990 the petitioner is bound to pay Rs.7,488.75 paise
towards premium and likewise, as per notice dated 27.07.1990 the petitioner is
liable to pay Rs.26,085.70 paise towards premium. Under the said circumstances,
the petitioner has been given the concerned notices and therefore, the present
petitions deserve dismissal.

5.The Court below, after considering the divergent contentions
raised on either side, has allowed both the petitions and ultimately set aside
the notices issued by the respondent to the petitioner. Against the common
order passed by the Court below, the present civil miscellaneous appeals have
been filed.

6.Since common questions of law and facts are involved in both the
civil miscellaneous appeals, common judgment is pronounced.

7.The sum and substance of the contention urged on the side of the
petitioner is that the petitioner is a partnership firm and at any point of
time, the petitioner has not employed more than 18 employees and therefore, the
petitioner would not come within the purview of Employees’ State Insurance Act
(34 of 1948) and the respondent has unnecessarily issued the notices in question
and thereby directed the petitioner to pay the amounts mentioned therein and in
order to set aside the same, the present petitions have been filed.

8.In order to remonstrate the contention urged on the side of the
petitioner, it is stated on the side of the respondent that the petitioner has
been inspected on various occasions and no acceptable answers have been given
and under the said circumstances, the notices in question have been issued to
the petitioner and thereby directed the petitioner to pay the amounts mentioned
therein towards premium and therefore, the petitioner is not entitled to get the
reliefs sought for in the petitions.

9.The only point that has now winched to the fore is;

“Whether the petitioner would come within the contour of Employees’ State
Insurance Act (34 of 1948)?”

10.The learned counsel appearing for the appellant/respondent has
repeatedly contended that during the relevant period, under the petitioner more
than twenty employees have served and under the said circumstances, the
respondent has issued the order dated 16.01.1992 and thereby directed the
petitioner to pay Rs.7,488.75 paise and likewise, the respondent has issued
another order dated 25.01.1991 and 18.06.1991 and thereby directed the
petitioner to pay Rs.26,085.70 paise and it is false to contend that the persons
namely Periyannan, Somasundaram & Shanmugam are the partners of the petitioner
and they are the employees of the petitioner and the Court below, without
considering the contentions urged on the side of the appellant/respondent, has
erroneously allowed ESIOP Nos.12 of 2001 & 20 of 2001, and therefore, the common
order passed by the Court below is liable to be set aside.

11.Per contra, the learned counsel appearing for the
respondent/petitioner has also equally contended that the petitioner is a
partnership firm and at any point of time, the petitioner has not employed more
than 18 employees and the persons namely Periyannan, Somasundaram & Shanmugam
have been appointed only to look after the business of the petitioner and they
have not been given wages and for the service to be done by them, only
renumeration would be given out of profits and they are not the employees of the
petitioner and the Court below, after considering the rival contentions raised
on either side, has rightly allowed the petitions and therefore, the argument
advanced by the learned counsel appearing for the appellant/respondent is liable
to be rejected and altogether the present civil miscellaneous appeals deserve
dismissal.

12.As adverted to earlier, the specific contention of the
respondent/petitioner is that the persons namely Periyannan, Somasundaram &
Shanmugam are not the employees of the petitioner and they have been directed to
look after the business of the petitioner and for their service remuneration
would be paid out of profits.

13.The entire case of the respondent/petitioner hinges upon Ex.A22.
Ex.A22 is an agreement which has come into existence between A.K.K.Karuppiah and
the persons namely Periyannan, Somasundaram & Shanmugam. In Ex.A22, it has been
clearly stated that the persons namely Periyannan, Somasundaram & Shanmugam have
to look after the business of the petitioner and they would be paid renumeration
to the extent of 20% from net profits. From the close reading of Ex.A22, the
Court can unflinchingly come to a conclusion that the persons namely Periyannan,
Somasundaram & Shanmugam are not the employees of the petitioner. Under Ex.A22
a power has been given to them so as to administer the petitioner. Since the
said persons have not been appointed as employees of the petitioner and since
they agreed to receive 20% out of net profits by way of renumeration, the Court
cannot come to a conclusion that they are the employees of the petitioner.

14.At this juncture, it would be more useful to look into the
following decisions;

a)In AIR 1985 Supreme Court Cases 278 (Regional Director, Employees’
State Insurance Corporation, Trichur Vs. Ramanuja Match Industries), the
Honourable Apex Court has held as follows;

“A partner who belongs to the class of employer cannot rank as employee
because he also works for wages for the partnership. Undoubtedly the term
employee is the correlative of employer. In common parlance the status of a
partner qua the firm is different from employees working under the firm, it may
be that a partner is being paid some remuneration for any special attention
which he devotes but that would not involve any change of status and bring him
within the definition of employee. The contention that on the basis of the
statute being beneficial, a partner should also count as an employee is
unsustainable.”

b)In AIR 1963 Supreme Court 1737 (Champaran Cane Concern Vs. State
of Bihar) the Honourable Apex Court has held that in a partnership each partner
acts as an agent of the other. The position of a partner qua the firm is thus
not that of a master and a servant or employer and employee which concept
involves an element of subordination but that of equality. The partnership
business belongs to the partners and each one of them is an owner thereof. In
common parlance the status of a partner qua the firm is thus different from
employees working under the firm, it may be that a partner is being paid some
remuneration for any special attention which he devotes but that would not
involve any change of status and bring him within the definition of employee.

15.From the close reading of the decisions referred to earlier, it
is pellucid that the person who is being paid some renumeration for any special
attention, would not come within the contour of Employees’ State Insurance Act
(34 of 1948).

16.In the present civil miscellaneous appeals the main contention of
the appellant/respondent is that the said three persons are also employees of
the respondent/petitioner. It has already been pointed out that as per Ex.A22,
the said three persons have been appointed only to look after the administration
of the petitioner and they have not been paid monthly salary and for the service
to be done by them, they would get only renumeration at the rate of 20% out of
net profits. At the most they can be called as power of attorney agents of the
petitioner. As per the dictum rendered by the Honourable Apex Court, the
persons who have been appointed under Ex.A22, cannot be treated as employees of
the respondent/petitioner. Since the persons who have been appointed under
Ex.A22 cannot be treated as employees, it is needless to say that the provision
of Employees’ State Insurance Act (34 of 1948) would not apply to the
petitioner.

17.In the light of the discussion made earlier, it is very clear
that the argument advanced by the learned counsel appearing for the appellant/
respondent does not hold good and whereas the argument advanced by the learned
counsel appearing for the respondent/petitioner is really having subsisting
force.

18.The next contention urged by the learned counsel appearing for
the appellant/respondent is that the petition has filed only a xerox copy of the
partnership deed and the same is inadmissible in evidence and the Court below
without considering the admissibility of the same, has erroneously relied upon
the same and therefore, common order passed by the Court below is liable to be
set aside.

19.Of-course, it is true that Ex.A21 is a xerox copy of partnership
deed dated 01.04.1984. At the time of marking Ex.A21, no objection has been
raised on the side of the appellant/respondent. Even assuming without conceding
that Ex.A21 is inadmissible in evidence, as per Ex.A22 the Court cannot come to
a conclusion that the provision of Employees’ State Insurance Act (34 of 1948),
would cover the petitioner.

20.In order to analyse the aforesaid legal position, it would be
more useful to look into the decision reported in 2003(8) Supreme Court Cases
752 (R.V.E.Venkatachala Gounder Vs. Arulmigu Viswesaraswami & V.P. Temple and
another), wherein the Honourable Apex Court has culled out the stage at which
objection can be raised with regard to secondary evidence;

A)Objection that the document sought to be proved is itself
inadmissible; and
B)Objection directed not against the admissibility of the document
but against the mode of proof thereof on the ground of irregularity or
insufficiency.

The objection under category ‘A’ can be raised even after the
document has been marked as an exhibit or even an appeal or revision. But, the
objection under category ‘B’ can be raised when the evidence is tendered but not
after the document has been admitted in evidence and marked as an exhibit.

21.In the instant case, as animadverted to earlier, no valid
objection has been raised at the time of marking Ex.A21 either with regard to
the admissibility of the same or with regard to the mode of proof thereof.
Therefore, the second contention raised on the side of the appellant/respondent
is also sans merit.

22.The Court below, after considering all the contentions raised on
either side, has rightly allowed the petitions. In view of the foregoing
narration of both the factual and legal aspects, this Court has not found any
illegality nor infirmity in the common order passed by the Court below and
therefore, the present civil miscellaneous appeals deserve dismissal.

23.In fine, Civil Miscellaneous Appeal Nos.384 of 2002 and 385 of
2002 deserve dismissal and accordingly are dismissed without costs. The common
order passed in ESIOP No.12 of 2001 & 20 of 2001 by the Employees State
Insurance Court, Tiruchirapalli is confirmed.

gcg

To

1.The Employees State Insurance Court,
Tiruchirapalli.

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