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FA/2941/2007 11/ 13 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
FIRST
APPEAL No. 2941 of 2007
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REGIONAL
DIRECTOR
Versus
SHRI
ANANG A. LALBHAI MANAGING DIRECTOR AND OTHERS
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Appearance
:
MR HEMANT S SHAH for
Appellant.
MR KM PATEL for Respondents.
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CORAM
:
HONOURABLE
MR.JUSTICE KS JHAVERI
Date
: 25/07/2008
ORAL
ORDER
1. The
appellant Corporation has challenged judgment and order of the
Employees State Insurance Court, Ahmedabad, dated 20th
September 2005, whereby the notice issued by the Corporation dated
26th October 1995 was declared to be illegal and contrary
to law.
2. The
facts in brief, as emerging from record, are as under:
3. The
respondents herein are the original applicants, who have filed an
application before Employees State Insurance Court and stated that
Ashok Spintex is a division of Arvind Mills Limited and that
applicant is an undertaking registered under the Bombay Industrial
Relations Act and provisions of Employees State Insurance Act are
also applicable to the applicant. Therefore, all the employees of
the applicant respondent herein have been covered under Employees
State Insurance Scheme. It is also the case of the respondents
herein in that application that its employees have been classified
into different categories, which includes apprentice appointed under
the Apprentice Act and Standing Orders. It is also the case of the
original applicant that inspector of State Insurance Corporation
inspected the applicant company on 23-11-1994 and found that
‘apprentices’ have not been included as employees under Section 2 (9)
of the Act and, therefore, from the date of joining their
contribution may be sent immediately. Therefore, Deputy Regional
Director gave a notice dated 25-8-1995 to the original applicant,
which was replied on 25-9-1995 and it is stated that the original
applicant is not responsible to make contribution on behalf of the
apprentices because they are not the employees, who are included in
the provisions of Section 2 (9) of the Employees State Insurance Act
and as they are trainees, there is no relationship of employer and
employee between the applicant and such employees. It is also stated
that the amount paid to them is stipend, which cannot be considered
as ‘wages’. It is also the case of the applicant therein that
without considering said reply or the documentary evidence produced
by it, notice dated 26-10-1995 was issued to the applicant. Against
this notice, the respondents herein – original applicants have filed
ESI Application No.41 of 1995.
4. The
application was resisted by the appellant Corporation by filing
reply at Exh.14, whereby the averments made in the application were
denied. It is also stated by the Corporation that as per the
definition of ‘apprentice’, there should be an agreement between the
parties and it should have been sent to apprenticeship registrar,
however, since the original applicant has not complied with this
provision, it is liable to make contribution towards such employees
and the application filed by it is required to be dismissed. After
framing issues and after hearing both the sides and considering the
material on record, it is found by ESI Court that notice dated
26-10-1995 is illegal and the Corporation is not entitled to ask for
contribution on the amount of stipend which is paid to the trainees.
Accordingly, notice dated 26-10-1995 was quashed and the application
filed by the original applicant was allowed. Being aggrieved by it,
the appellant has filed present appeal.
5. I
have heard learned advocates appearing for both the sides.
6. The
learned advocate for the appellant has relied upon provisions of
Employees State Insurance Act and particularly, Section 2 Sub-section
(9) thereof, which reads as under:
?S2
(9). ?Semployee?? 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, or
(ii) who
is employed by or through an immediate employer on the premises of
the factory or establishment or which is preliminary to the work
carried on in or incidental to the purpose of the factory or
establishment; or
(iii) whose
services are temporarily lent or let on hire to the principal
employer by the person with whom the person whose services are so
lent or lent on hire has entered into a contract of service.
and
includes any person employed for wages on any work connected with the
administration of the factory or establishment or any part,
department or branch thereof or with the purchase of raw materials
for, or the distribution or sale of the products of the factory or
establishment or any person engaged as an apprentice, not being an
apprentice engaged under the Apprentices Act, 1961 (Act No.52 of
1961), or under the standing orders of the establishment; but does
not include:
a) any
member of the Indian naval, military or air forces; or
b) any
person so employed whose wages (excluding remuneration for overtime
work) exceed (such wages as may be prescribed by the Central
Government) a month;
Provided
that an employee whose wages (excluding remuneration for overtime
work) exceed (such wages as may be prescribed by the Central
Government a month 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)??.
6.1 He
has also relied upon Section 2 Sub-section (22) of said Act, which
reads as under:
2(22)
?S wages?? means all remuneration paid or payable in cash to an
employee, if the terms of the contract of employment, express or
implied, were fulfilled and includes [any payment to an employee in
respect of any period of authorized leave, lock ? out, strike which
is not illegal or lay-off and] other additional remuneration, if any
[paid at intervals nor exceeding two months] but does not include-
any
contribution paid by the employer to any pension fund or provident
fund, or under this Act;
any
travelling allowances or the value of any travelling concession;
any
sum paid to the person employed to defray special expenses entailed
on him by the nature of his employment; or
any
gratuity payable on discharge.
6.2 In
view of above provision, learned advocate for the appellant submitted
that the apprentices are covered under the Employees State Insurance
Act unless respondent herein proves that by an agreement with the
employees under the Apprentice Act, they are not covered under the
Act.
7. Learned
advocate for the appellant submitted that the agreement under the
Apprentice Act, which is at Exh.42, 43 and 44 is wrongly relied by
the ESI Court and the agreement is entered under Standing Order and
the same is not under the Apprentice Act. Counsel for the appellant
has stated that the respondent company is not paying contribution
even for its regular employees. However, this statement runs
contrary to the notice dated 25th August 1995 inasmuch as
the Deputy Regional Director himself has observed that the
contribution paid for employees do not include vehicle and leave
travel allowance. In that view of the matter, submission of the
learned advocate is devoid of any merits.
8. Learned
advocate for the appellant has placed reliance on paragraph 5 of
cross-examination of Jaymalbhai, who is representative of management
of the respondent mill, wherein it has been stated that though he is
prepared to produce agreement with apprentice, he has not produced it
on record and, therefore, adverse inference is required to be drawn
against the concerned employer. Learned advocate for the appellant
has also contended that since the agreement was not produced pursuant
to notice at Exh.30, action taken by the appellant ? corporation is
just and proper.
8.1 The
argument for the appellant that adverse inference is required to be
drawn against respondent ? employer for not providing agreement of
appointment of apprentices under the Standing Orders cannot be
accepted because the impugned show-cause notice dated 26-10-1995,
Exh.32, issued by appellant Corporation was for non-payment of
contribution only in respect of apprentices engaged as per the
Standing Orders. When the notice itself proceeds on the basis that
apprentices are engaged under Standing Orders, there was no necessity
to produce agreements of engagement of apprentices under the Standing
Orders. Moreover, the record shows that said agreements are provided
at Exh.42,43 and 44. Thus, the argument for drawing adverse
inference cannot be accepted.
9.
On the other hand, learned advocate, Mr.Patel, appearing for the
respondent has drawn my attention to notice at Exh.32, which reads as
under :
?SI
am directed to inform you that the factory/establishment known as
M/s. The Ashoka Mills Ltd., A’bad failed to comply with the
provisions of the EST Act, in respect of the following items inspite
of several letters from this office.
1. Submissions
of Declaration Forms under EST (General) Regulation No.11, 12 &
14 in respect of some of the employees. – all apprentice engaged
under Standing Order.
2. Submission
of return of contribution for the wage period from ________ to
_________ included in the
contribution period ended on, since their dtd. Appointment
in r/o apprentice under S.Ord.
as
required under Regulation 26 of the ESI (General) Regulation, 1950.
3. Payment
of contribution for the wage period from since their dts. Of
appointment in apprentices as required under Regulation 31 of the
ESI (General) Regulation, 1950.
4. Submission
of particulars in Form-01 as required under section 2-A read with
Regulation, 1950.
5. Production
of records for inspection as required under section 45 of the Act
under S for the wage period from _____ to _______ inspite of
Insurance Inspector’s request on ____________ this office request in
registered letter dated _____ for inspection.??
9.1 He
submitted that it is clear from said notice that it was only for the
apprentice under Standing Orders and there was no notice under the
Apprentice Act or for non-payment of contribution of regular
employee.
10.
Mr.Patel also submitted that Jaymalbhai, who is representative of
management of the respondent mill, in paragraph 7 of his
cross-examination has clearly stated that if the persons appointed
under the Apprentice Act meet with an accident then they are paying
them compensation, for which a separate insurance is taken with New
India Insurance Company. It is also stated by him that for the
apprentices also, who are appointed under the Standing Orders, they
have taken insurance. Thus no claim is made for apprentices from
appellant.
11. Mr.Patel,
has relied upon various judgments of Supreme Court and different High
Courts. He stated that as per the decision of the Supreme Court in
the case of Mukesh K. Tripathi & Ors. v. Sr. Divisional
Manager, LIC, reported
in 2004 III LLJ 740, the apprentice, which are appointed
under the Apprentice Act or under a private scheme are not workmen.
He has relied upon paragraphs 24, 27, 28, 36, 39 and 42 of the said
judgment, which are as under:
?S24. From
a perusal of the award dated 28-5-1996 of the Tribunal, it does not
appear that the Appellant herein had adduced any evidence whatsoever
as regard the nature of his duties so as to establish that he had
performed any skilled, unskilled, manual, technical or operational
duties. The offer of appointment dated 16-7-1987 read with the Scheme
clearly proved that he was appointed as an apprentice and not to do
any skilled, unskilled, manual, technical or operational job. The
onus was on the Appellant to prove that he is a workman. He failed to
prove the same. Furthermore, the duties and obligations of a
Development Officer of the Corporation by no stretch of imagination
can be held to be performed by an apprentice.
27.
The expression ‘Apprentice’ has been included in the definition of
‘workman’ contained in Section 2(s) of the Industrial Disputes Act,
1947 but by reason of a subsequent Parliamentary legislation, namely,
Apprentices Act, 1961 (the 1961 Act), the term ‘apprentice’ has been
defined in Section 2(aa) to mean ‘a person who is undergoing
apprenticeship training in a designated trade in pursuance of a
contract of apprenticeship. Section 18 of the 1961 Act provides that
apprentices are trainees and not workers save as otherwise provided
in the Act. Clauses (a) and (b) of Section 18 of the 1961 Act read
thus:
“(a)
every apprentice undergoing apprenticeship training in a designated
trade in an establishment shall be a trainee and not a worker; and
(b)
the provisions of any law with respect to labour shall not apply to
or in relation to such apprentice.”
28. The
term ’employee’ under various labour laws has been defined by
different expressions but Section 18 of the 1961 Act carves out an
exception to the applicability of labour laws in the event the
concerned person is an apprentice as contra-distinguished from the
expressions ‘worker’, ’employee’ and ‘workman’, used in different
statutes.
36.
A ‘workman’ within the meaning of Section 2(s) of the Industrial
Disputes Act, 1947 must not only establish that he is not covered by
the provisions of the Apprenticeship Act but must further establish
that he is employed in the establishment for the purpose of doing any
work contemplated in the definition. Even in a case where a period of
apprenticeship is extended, a further written contract carrying out
such intention need not be executed. But in a case where a person is
allowed to continue without extending the period of apprenticeship
either expressly or by necessary implication and regular work is
taken from him, he may become a workman. A person who claims himself
to be an apprentice has certain rights and obligations under the
statute.
39.
The interpretation clause contained in a statute although may deserve
a broader meaning having employed the word ‘includes’ but therefor
also it is necessary to keep in view the scheme of the object and
purport of the statute which takes him out of the said definition.
Furthermore, the interpretation section begins with the words ‘unless
the context otherwise requires.
42. The
question as to who would answer the description of the term ‘workman’
fell for consideration before this Court in Dharangadhra Chemical
Works Ltd. v. State of Saurashtra and others, AIR 1957 SC
264:1957-I-LLJ-477, wherein this Court held at p.480 of LLJ :
“The
essential condition of a person being a workman within the terms of
this definition is that he should be employed to do the work in that
industry, that there should be, in other words, an employment of his
by the employer and that there should be the relationship between the
employer and him as between the employer and employee or master and
servant. Unless a person is thus employed there can be no question of
his being a workman within the definition of the term as contained in
the Act.””
12. Mr.Patel
has relied on the decision of Supreme Court in the case of The
Employees’ State Insurance Corporation and another v. The Tata
Engineering & Co., Locomotive Co. Ltd. and another
reported in AIR 1976 SC 66 wherein
it is held as under in paragraphs 11, 12 and 13 :
?S11.
From the terms of the agreement it is clear that apprentices are mere
trainees for a particular period for a distinct purpose and the
employer is not bound to employ them in their works after the period
of training is over. During the apprenticeship they cannot be said to
be employed in the work of the company or in connection with the work
of the company. That would have been so if they were employed in a
regular way by the company. On the other hand the purpose of the
engagement under the particular scheme is only to offer training
under certain terms and conditions. Besides, the apprentices are not
given wages within the meaning of that term under the Act. If they
were regular employees under the Act, they would have been entitled
to additional remuneration such as daily allowance and other
allowances, which are available to the regular employees. We are,
therefore, unable to hold that the apprentice is an employee within
the meaning of Section 2 (9) of the Act.
12.
Incidentally we may note that Section 18 of the Apprentices Act,
1961, provides that-
“Save
as otherwise provided in this Act, every apprentice undergoing
apprenticeship training in a designated trade in an establishment
shall be a trainee and not a worker……”
13.
The concept of apprenticeship is, therefore, fairly known and has now
been clearly recognised in the Apprentices Act. Apart from that, as
we have noticed earlier, the terms and conditions under which those
apprentices are engaged do not give any scope for holding that they
are employed in the work of the company or in connection with its
work for wages within the meaning of Section 2 (9) of the Act. The
appeal, therefore, fails and is dismissed. There will be, however, no
order as to costs.??
13. Mr.Patel
has also relied on the decision of Employees’ Insurance Court, Bombay
in the case of Employees’ State Insurance Corporation, Bombay
v. Indian Hume Pipe Company Ltd., Bombay
reported in 1963 II LLJ 104 wherein
after referring to various provisions of the Employees’ State
Insurance Act and various decisions of different Courts, it is held
that apprentice is not an employee within the meaning of the Act and
stipend or allowance paid to him are not wages as per the provisions
of the Act. It is also held that merely because stipend or allowance
is received by an apprentice, he does not become an employee as per
the provisions of the Act and no contribution is payable in respect
of such apprentices.
14. Mr.Patel
has also relied on the decision of Andhra Pradesh High Court in the
case of Employees’ State Insurance Corporation, Hyderabad v.
Andhra Prabha Pvt. Ltd., Vijaynagar
reported in 2000 II LLJ 709 wherein
the Court has held that stipend paid to the trainees could not answer
the definition of wages as per Section 2 (22) of the ESI Act.
15. He
also relied on the decision of Madhya Pradesh High Court in the case
of Bharat Commerce and Industries Ltd., Birlagam Nagda v.
Regional Director, Employees’ State Insurance Corporation, Indore
reported
in 2005 I LLJ 482 wherein
the Court has held that apprentice is not an employee within the
meaning of Section 2 (9) of the Act and, therefore, they cannot be
equated with employees working in the company for the purpose of Act
in question. It is also held that overtime amount paid by employer
was part of ‘wages’ as defined in Section 2 (22) of the Employees’
State Insurance Act.
16. Mr.Patel
has also relied on the decision of Andhra Pradesh High Court in the
case of Employees’ State Insurance Corporation and Ors. v.
Chirala Co-operative Spinning Mills Ltd.
reported in 2005 II CLR 501 wherein
it is held that trainees cannot be treated as employees of the
establishment where they are undergoing training. A similar view is
also taken by High Court of Karnataka in the case of Regional
Director, ESI Corporation v. M/s. F.Fibre Mangalore (P) Ltd.
reported in 1985 I LLJ 247
upon which reliance is also placed by Mr.Patel.
17. Mr.Patel
has further relied on the decision of Himachal Pradesh High Court in
the case of Mohan Meakin Ltd. v. Employees’ State Insurance
Corporation and Ors.
reported in 2006 I CLR 359 wherein
also it is held that the appellant is not liable to pay ESI
contribution on the stipend paid to the apprentices.
18. It
is also required to be noted that on facts it is established that by
agreement under Standing Orders employees are protected by insurance
company.
19. I
have considered the submissions made on behalf of the appellants and
also gone through the judgment of the trial Court and other relevant
documents. As held in the case of Mukesh K. Tripathi (Supra) the
interpretation clause contained in a statute although may deserve a
broader meaning having employed the word ‘includes’ but it is
necessary to keep in view the scheme of the object and purport of the
statute which takes him out of the said definition. The
interpretation of the section in question begins with the words
?Sunless the context otherwise requires??. After considering the
evidence on record and after considering the judgments of different
High Court and Supreme Court, the Court below came to the conclusion
that apprentice under the Apprentice Act or under the Standing
Orders are not included within the definition of ‘workmen’ and their
stipend or training expenses are not included within the meaning of
‘wages’, more particularly when they have taken insurance for the
employee who are covered under the Apprentice Act under the
agreement. I am in complete
agreement with the reasonings adopted and finding arrived at the
trial Court and no evidence is shown to me to take a contrary view of
the matter. Apart from that learned Advocate for the appellant is
not able to point out any question of law much less substantial
question of law involved in the appeal. Therefore, I do not find any
reason to interfere with the impugned judgment.
20. In
the premises aforesaid, the appeal is dismissed. No order as to
costs.
(K.S.Jhaveri,
J.)
*malek
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