{"id":127744,"date":"2008-05-26T00:00:00","date_gmt":"2008-05-25T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/the-regional-director-vs-choice-boards-woods-industries-on-26-may-2008"},"modified":"2017-10-08T21:37:23","modified_gmt":"2017-10-08T16:07:23","slug":"the-regional-director-vs-choice-boards-woods-industries-on-26-may-2008","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/the-regional-director-vs-choice-boards-woods-industries-on-26-may-2008","title":{"rendered":"The Regional Director vs Choice Boards & Woods Industries on 26 May, 2008"},"content":{"rendered":"
Kerala High Court<\/div>\n
The Regional Director vs Choice Boards & Woods Industries on 26 May, 2008<\/div>\n
       \n\n  \n\n  \n\n \n \n  IN THE HIGH COURT OF KERALA AT ERNAKULAM\n\nIns.APP.No. 4 of 2004()\n\n\n1. THE REGIONAL DIRECTOR,\n                      ...  Petitioner\n\n                        Vs\n\n\n\n1. CHOICE BOARDS & WOODS INDUSTRIES,\n                       ...       Respondent\n\n                For Petitioner  :SMT.T.D.RAJALAKSHMI\n\n                For Respondent  : No Appearance\n\nThe Hon'ble MR. Justice M.N.KRISHNAN\n\n Dated :26\/05\/2008\n\n O R D E R\n                     M.N. KRISHNAN, J.\n               = = = = = = = = = = = = = =\n                INS. APPL. NO. 4 OF 2004\n            = = = = = = = = = = = = = = =\n          Dated this the 26th day of May, 2008.\n\n                      J U D G M E N T\n<\/pre>\n
     This appeal is preferred against the order of the<\/p>\n
Industrial Tribunal, Kozhikode in EIC 36\/00 whereby the said<\/p>\n
tribunal held that the demand of Rs.17,555\/- towards<\/p>\n
contribution on omitted wages is unsustainable.       It is<\/p>\n
challenging that the present appeal is filed.   Substantial<\/p>\n
questions of law 1 and 2 are raised in this appeal and they<\/p>\n
are as follows:\n<\/p>\n
            (1)  Whether on the facts and circumstances<\/p>\n
      of the case and Sec.2(9) clause (ii) of the ESI Act<\/p>\n
      the Court below was right in declaring that the<\/p>\n
      demand of Rs.17,555- towards contribution on<\/p>\n
      omitted wages is unsustainable?<\/p>\n<\/blockquote>\n
            (2)  Is not the E.I. Court bound by Sec.41 of<\/p>\n
      the ESI Act which categorically state that the<\/p>\n
      Principal employer is entitled to recover from the<\/p>\n
      immediate employer any contribution paid on behalf<\/p>\n
      of them.\n<\/p><\/blockquote>\n
INS. APPL. 4 OF 2004
\n                               -:2:-<\/span><\/p>\n
     Points 1 and 2:\n<\/p>\n
     2.    The point that arises for determination in the<\/p>\n
appeal is regarding the correctness of the order passed by<\/p>\n
the Industrial Tribunal. An application was filed before the<\/p>\n
Tribunal to hold that the claim by the Employees State<\/p>\n
Insurance Corporation towards contribution for the work<\/p>\n
done by a outside agency namely M\/s Famous Timber<\/p>\n
Industries is not valid. A perusal of the award would reveal<\/p>\n
that the respondent\/company herein is mainly engaged in<\/p>\n
black board frame manufacturing. It is also submitted that<\/p>\n
they have given some work to the other Company and<\/p>\n
therefore the said Company will be the immediate employer<\/p>\n
who is liable to pay and as per the provisions of S.40 of the<\/p>\n
Employees’ State Insurance Act the principal employer is<\/p>\n
bound to pay the contribution first and later recover it under<\/p>\n
Sec.41 from the immediate employer.\n<\/p>\n
     3.    The learned counsel appearing for the appellant<\/p>\n
had drawn my attention to the definition of employee under<\/p>\n
Section 2(9) of the Employees’ Insurance Act.<\/p>\n
          “Employee” means any person employed for<\/p>\n
        wages in or in connection with work of a factory or<\/p>\n
INS. APPL. 4 OF 2004
\n                                -:3:-<\/span><\/p>\n
        establishment to which this Act applies and –<\/p>\n
             (i)   who     is directly employed    by   the<\/p>\n
        principal employer, or any work of, or incidental or<\/p>\n
        preliminary to or connected with the work of, the<\/p>\n
        factory or establishment, whether such work is<\/p>\n
        done   by    the   employee   in  the   factory   or<\/p>\n
        establishment or elsewhere.”\n<\/p>\n
     4.    In such cases under Section 40 of the Act, the<\/p>\n
principal employer shall pay in respect of every employee,<\/p>\n
and under Section 41 the principal employer’s right is<\/p>\n
preserved to collect it from the immediate employer.<\/p>\n
      5.   A reference to the facts in this case admittedly<\/p>\n
would reveal that the respondent is a factory mainly dealing<\/p>\n
with the manufacture of black boards. What it has done is to<\/p>\n
direct M\/s Famous Timber Industries to do certain works<\/p>\n
through their employees.      Now it is contended before the<\/p>\n
Tribunal since Famous Industries is an independent firm<\/p>\n
having independent existence the wages paid by them to the<\/p>\n
said employees cannot be take on as the wages paid by the<\/p>\n
respondent and therefore there cannot be any claim for<\/p>\n
contribution.\n<\/p>\n
INS. APPL. 4 OF 2004
\n                               -:4:-<\/span><\/p>\n
      6.   At the first blush the argument raised by the<\/p>\n
respondents may appear to be persuasive.        But the fact<\/p>\n
remains that it is by entrustment of the responsibility to do a<\/p>\n
part of the work which they are expected to do with the<\/p>\n
known firm namely M\/s Famous Timber Industries, they had<\/p>\n
done the work. When such work is not done in a satisfactory<\/p>\n
manner there is always power left with the respondent<\/p>\n
company herein to reject it.     The definition of employee<\/p>\n
takes in the very work done elsewhere as well and such<\/p>\n
positions are clearly covered by Sections 40 and 41 by use of<\/p>\n
the word direct employer and immediate employer.           This<\/p>\n
position has been considered by this Court in a decision<\/p>\n
reported in Regional Director, E.S.I. Corporation v. Ramlal<\/p>\n
Textiles<\/a> (1990 (1) KLT 548) which has held as follows:<\/p>\n
              “Work is admittedly done by workers<\/p>\n
         engaged by the master weavers in premises<\/p>\n
         outside the establishment of the respondent.<\/p>\n<\/blockquote>\n
         Finished    fabrics  are   returned  to    the\n\n         respondent who makes payments.       Amounts\n\n<\/pre>\n
         required to be paid as wages are separately<\/p>\n
         shown in the accounts. It is evident that the<\/p>\n
         master-weavers will retain their commission<\/p>\n
INS. APPL. 4 OF 2004
\n                              -:5:-<\/span><\/p>\n
        or remuneration due to them for their<\/p>\n
        investment in time.     Right of rejection of<\/p>\n
        substandard cloth spells out effective degree<\/p>\n
        of supervision and control. Identical work as<\/p>\n
        is done by outside workers is done in the<\/p>\n
        premises of the factory of the respondent who<\/p>\n
        employ employees for that purpose.        The<\/p>\n
        out-workers who are paid wages through<\/p>\n
        contractor are employees as defined in S.2<\/p>\n
        (9)(ii) of the Act since they do the work<\/p>\n
        which is ordinarily part of the work of the<\/p>\n
        factory of the respondent and which is<\/p>\n
        incidental to the purpose of the factory and<\/p>\n
        which is subject to the supervision of the<\/p>\n
        principal employer.   This conclusion cannot<\/p>\n
        be faulted merely because respondent has<\/p>\n
        tried to camouflage the real relationship by<\/p>\n
        creating smoke-screen of sale of yarn and<\/p>\n
        purchase of woven cloth.”<\/p><\/blockquote>\n
     7.    Therefore the entire case law on the subject has<\/p>\n
been discussed and the Court came to the conclusion that it<\/p>\n
is done by the outside agency and when the power is there<\/p>\n
with the principal employer to reject the work then<\/p>\n
necessarily it will come under the ambit of the definition of<\/p>\n
the employee under Section 2(9) of the ESI Act to which<\/p>\n
INS. APPL. 4 OF 2004
\n                               -:6:-<\/span><\/p>\n
Sec.40 and 41 will apply. When it is so in the present case it<\/p>\n
has to be held that the Court below has erred in giving an<\/p>\n
interpretation that M\/s Famous Timber Industries is an<\/p>\n
independent establishment, it has nothing to do with the<\/p>\n
principal employer.    The amount has been paid to the<\/p>\n
Famous Timber Industries for the work which was ordered to<\/p>\n
be done by the respondent\/company and therefore Famous<\/p>\n
Timber Industries can only be considered as an immediate<\/p>\n
employer as defined under Section 41 and the liability as<\/p>\n
fixed in S.40 and 41 of the Act. Therefore the order under<\/p>\n
challenge suffers from infirmity and so it is set aside and the<\/p>\n
Employees’ State Insurance Corporation is permitted to<\/p>\n
proceed in accordance with law for the realisation of the<\/p>\n
amount.\n<\/p>\n<\/p>\n
                            M.N. KRISHNAN, JUDGE.\n<\/p>\n
ul\/-<\/p>\n","protected":false},"excerpt":{"rendered":"
Kerala High Court The Regional Director vs Choice Boards & Woods Industries on 26 May, 2008 IN THE HIGH COURT OF KERALA AT ERNAKULAM Ins.APP.No. 4 of 2004() 1. THE REGIONAL DIRECTOR, … Petitioner Vs 1. CHOICE BOARDS & WOODS INDUSTRIES, … Respondent For Petitioner :SMT.T.D.RAJALAKSHMI For Respondent : No Appearance The Hon’ble MR. Justice […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[8,21],"tags":[],"class_list":["post-127744","post","type-post","status-publish","format-standard","hentry","category-high-court","category-kerala-high-court"],"yoast_head":"\nThe Regional Director vs Choice Boards & Woods Industries on 26 May, 2008 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/the-regional-director-vs-choice-boards-woods-industries-on-26-may-2008\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Regional Director vs Choice Boards & Woods Industries on 26 May, 2008 - 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