{"id":195711,"date":"2005-07-04T00:00:00","date_gmt":"2005-07-03T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/the-regional-director-vs-hindustan-lever-ltd-on-4-july-2005"},"modified":"2016-07-13T08:12:48","modified_gmt":"2016-07-13T02:42:48","slug":"the-regional-director-vs-hindustan-lever-ltd-on-4-july-2005","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/the-regional-director-vs-hindustan-lever-ltd-on-4-july-2005","title":{"rendered":"The Regional Director vs Hindustan Lever Ltd on 4 July, 2005"},"content":{"rendered":"
Kerala High Court<\/div>\n
The Regional Director vs Hindustan Lever Ltd on 4 July, 2005<\/div>\n
       \n\n  \n\n  \n\n \n \n  IN THE HIGH COURT OF KERALA AT ERNAKULAM\n\nMFA No. 337 of 2000\n\n\n1. THE REGIONAL DIRECTOR, ESI CORPN\n                      ...  Petitioner\n\n                        Vs\n\n\n1. HINDUSTAN LEVER LTD\n                       ...       Respondent\n\n                For Petitioner  :SMT.RAJALAKSHMI\n\n                For Respondent  :SRI.ANTONY DOMINIC\nThe Hon'ble MR. Justice P.R.RAMAN\nThe Hon'ble MR. Justice K.T.SANKARAN\n\n Dated :     04\/07\/2005\n O R D E R\n<\/pre>\n
.PL 54
\n P.R.RAMAN & K.T.SANKARAN, JJ.@@
\njAAAAAAAAAAAAAAAAAAAAAAAAAAAAA\n<\/p>\n
 —————————————@@
\nj<\/p>\n
 M.F.A.No. 337 of 2000@@
\njAAAAAAAAAAAAAAAAAAAAA\n<\/p>\n
 —————————————@@
\nj<\/p>\n
 Dated this the 5th  day of July, 2005@@
\nj               AAAAAAAAAAAAAAAAAAAAAA<\/p>\n
 JUDGMENT@@
\njEEEEEEEE<\/p>\n
((HDR 0
\nM.F.A.NO.337 OF 2000<\/p>\n
 :: # ::@@
\nj<\/p>\n
))
\n.HE 1
\n        Raman, J.@@
\n        EEEEEEEEE<\/p>\n
.SP 2
\n        \tThe appellant is the  Regional  Director  of  the
\n        Employees’ State  Insurance  Corporation,  Thrissur.  The
\n        appellant challenges the order passed by  the  Employees’
\n        Insurance Court in I.C.No.76 of 1996 to a limited extent.
\n        Respondent  herein  is  a  company incorporated under the
\n        Companies Act and is an establishment covered  under  the
\n        Employees’  State Insurance Act and who was the applicant
\n        before the  Employees’  Insurance  Court.    Though   the
\n        application  was  originally  filed  by  M\/s.Brooke  Bond
\n        Lipton India Ltd., since M\/s.Hindustan Lever Limited took
\n        over the said company, a plea was made to amend the cause
\n        title,  which  was  allowed  by  the  court   below   and
\n        thereafter,  the  matter  was prosecuted by M\/s.Hindustan
\n        Lever Limited, the respondent herein.\n<\/p>\n
        \t2.    The   respondent   is   engaged   in    the
\n        manufacturing,   marketing   and   exporting  of  various
\n        products including tea and is having office at Willingdon
\n        Island, Kochi.  The employees of the  respondent  Company
\n        are  covered under the Employees’ State Insurance Scheme.
\n        However, on an inspection  conducted  by  the  Employees’
\n        State  Insurance Corporation through its officers, it was
\n        found that certain items were omitted to  be  taken  into
\n        consideration for the purpose of payment of contribution.
\n        The  items  which  were  thus excluded for the purpose of
\n        payment of contribution were:  (1) repair and maintenance
\n        of quarters;  (2)  processing  charges;  (3)  processing,
\n        conversion and packing; and (4) repair and maintenance of
\n        office building.\n<\/p>\n
        \t3.   It was contended that the omitted items were
\n        not wages paid to the employees, but only  payments  made
\n        to  various  organisations for carrying out certain works
\n        on contract basis and that the contracting establishments
\n        were employing sufficient number of  employees  to  cover
\n        themselves independently under the ESI Scheme.  The above
\n        contention was not accepted by the ESI Corporation.  When
\n        they  took  coercive steps for recovering the amount, the
\n        respondent approached the Employees’ Insurance Court  for
\n        necessary reliefs.\n<\/p>\n
        \t4.  The Employees’  Insurance  Court  found  that
\n        major  portion  of  the  contribution demanded relates to
\n        service charges, packing and conversion charges  paid  to
\n        three contracting  establishments.    It was contended by
\n        the  respondent  that  payments  were   made   to   those
\n        contracting  agencies  on  the  basis  of  the  terms and
\n        conditions of the contract and it cannot  be  treated  as
\n        wages  for  the  purpose  of assessment and collection of
\n        contribution.  It was also contended that those  agencies
\n        are  independent  establishments carrying on similar work
\n        not only for the  respondent  but  also  for  some  other
\n        establishments who are also engaged in the export of tea,
\n        coffee, spices  etc.  The Employees Insurance Court found
\n        that  the  three  contracting  agencies  are   registered
\n        establishments   and  that  the  present  demand  is  not
\n        confined to the wage part of  the  contracting  agencies,
\n        but  it would cover the whole payment made which includes
\n        the contracting  agencies’  other  expenses  and  profit.
\n        What  portion of the amount paid by the respondent to the
\n        three contracting agencies will satisfy the definition of
\n        the term “wages”, however, does not, being a question  of
\n        fact,  arise for consideration in this Appeal and no such
\n        determination is made by the Employees  Insurance  Court.
\n        However,  the  E.I.Court found that the three contracting
\n        agencies  could  themselves  be  covered  as  independent
\n        establishments under  the  Act.    Therefore, it was held
\n        that it would be appropriate on the part of the appellant
\n        to   issue   notice   of   coverage   to  all  the  three
\n        contracting agencies and only if it is found that none of
\n        them would come under the purview of the ESI Scheme,  the
\n        liability  will  be  shifted  to  the  respondent  in the
\n        capacity as the principal employer  for  the  purpose  of
\n        payment of contribution at the first instance.  The above
\n        said finding give rise to a substantial question of law.\n<\/p>\n
        \t5.   It  is  not  disputed  that  the processing,
\n        conversion and  packing  were  done  for  the  respondent
\n        Company  on contract basis by three independent agencies.
\n        There is also no dispute that the actual work is  carried
\n        on in  the  respondent’s  premises.  The question whether
\n        the  three  independent  agencies  have  more  than   the
\n        required minimum strength to cover them as establishments
\n        under the ESI Act and if so whether that will absolve the
\n        liability  of  the principal employer under Section 40 of
\n        the   Employees’   State   Insurance   Act,   arise   for
\n        consideration.  As per Section 40 of the Employees’ State
\n        Insurance Act the principal employer shall pay in respect
\n        of every employee, whether directly employed by him or by
\n        or  through  an  immediate  employer, both the employer’s@@
\n            CCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCC
\n        contribution and the employee’s contribution.   The  rest
\n        of  the  provisions  contained in Section 40 may not have
\n        any relevance in the present case.  Section  41  provides
\n        for recovery of contribution from the immediate employer.
\n        As  per  Section  41,  a principal employer, who has paid
\n        contribution in respect of an  employee  employed  by  or
\n        through  an  immediate  employer,  shall  be  entitled to
\n        recover the amount of contribution so paid  (that  is  to
\n        say the employer’s contribution as well as the employee’s
\n        contribution, if any) from the immediate employer, either
\n        by  deduction  from  any  amount  payable  to  him by the
\n        principal employer under  any  contract,  or  as  a  debt
\n        payable by the immediate employer.\n<\/p>\n
        \t6.   The  word  “immediate  employer”  is defined
\n        under Section 2(13) of the Employees’ State Insurance Act
\n        as follows:\n<\/p>\n
……………L…….T…….T…….T…….T…….T.J
\n……………L…….T…….T…….T…….T…….T.J
\n.SP 1
\n               \t“”immediate employer”, in  relation
\n               to  employees  employed  by or through him,
\n               means  a  person  who  has  undertaken  the
\n               execution,  on the premises of a factory or
\n               an establishment to which this Act  applies
\n               or  under  the supervision of the principal
\n               employer or his agent, of the whole or  any
\n               part  of  any work which is ordinarily part
\n               of the work of the factory or establishment
\n               of the principal employer or is preliminary
\n               to the work carried on in, or incidental to
\n               the  purpose  of,  any  such   factory   or
\n               establishment,  and  includes  a  person by
\n               whom the services of an  employee  who  has
\n               entered into a contract of service with him
\n               are  temporarily lent or let on hire to the
\n               principal   employer   and    includes    a
\n               contractor;”\n<\/p>\n
……..L…….T…….T…….T…….T…….T…….T…….J
\n.SP 2
\n        So also the word “principal employer”  is  defined  under
\n        Section 2(17) of the Act, which reads as follows:\n<\/p>\n
……………L…….T…….T…….T…….T…….T.J
\n……………L…….T…….T…….T…….T…….T.J
\n.SP 1
\n               \t“”principal employer” means-\n<\/p>\n
               (i) in a factory, the owner or occupier@@
\n                  i
\n                       of  the  factory  and  includes the
\n                       managing agent  of  such  owner  or
\n                       occupier,  the legal representative
\n                       of a deceased  owner  or  occupier,
\n                       and  where  a person has been named
\n                       as the manager of the factory under
\n                       the  Factories  Act,  1948  (63  of
\n                       1948), the person so named;\n<\/p>\n
               (ii) in   any  establishment  under  the@@
\n                   i
\n                       control of any  department  of  any
\n                       Government  in India, the authority
\n                       appointed  by  such  Government  in
\n                       this  behalf  or where no authority
\n                       is so appointed, the  Head  of  the
\n                       Department;\n<\/p>\n
               (iii) in  any  other  establishment,  any@@
\n                    i
\n                       person    responsible    for    the
\n                       supervision   and  control  of  the
\n                       establishment;”\n<\/p>\n
……..L…….T…….T…….T…….T…….T…….T…….J
\n.SP 2\n<\/p>\n
        \t7.  It is thus clear from the definition  of  the
\n        term  “immediate  employer”  that  it is sufficient if he
\n        undertakes the execution on the premises of a factory  or
\n        an  establishment  of  the  principal employer or is done
\n        under the supervision of the principal  employer  or  his
\n        agent,  of  the  whole  or  any part of any work which is
\n        ordinarily  part  of  the  work   of   the   factory   or
\n        establishment of the principal employer or is preliminary
\n        to  the  work carried on in, or incidental to the purpose
\n        of, any such factory or establishment.   That  the  three
\n        contracting   agencies   who  have  thus  undertaken  the
\n        execution of any part of the work which is  part  of  the
\n        work  of  the  establishment  of  the principal employer,
\n        namely, the respondent Company herein,  would  therefore,
\n        satisfy the   definition   “immediate   employer”.    The
\n        “immediate employer” may  be  an  individual,  a  company
\n        incorporated  under  the  Companies  Act  or  a firm or a
\n        statutory  corporation  as  the  case  may  be,  who  may
\n        themselves   be   registered   establishments  under  the
\n        Employees’ State Insurance Act.  But for the  application
\n        of  Section 40 of the Employees’ State Insurance Act, the
\n        fact that the immediate  employer  itself  is  a  covered
\n        establishment is not relevant.  It is not the case of any
\n        of   the  three  contracting  agencies  or  that  of  the
\n        respondent Company before the court below that  employees
\n        of the three contracting agencies who were actually doing
\n        the  work  in  the principal employer’s business premises
\n        were registered under the ESI Scheme or that contribution
\n        was paid by any one of them in respect of the wages  they
\n        earned  while  doing  the  work  at  the  premises of the
\n        principal employer.  Hence the mere fact that  the  three
\n        contracting  agencies have sufficient number of employees
\n        to cover themselves independently under the Act will  not
\n        however take away the statutory liability fastened on the
\n        principal   employer   to  pay  the  contributions,  both
\n        employer’s and employee’s, as contemplated under  Section\n<\/p>\n
        40.  Further the principal employer is enabled by Section
\n        41  to recover such amounts which they have discharged on
\n        behalf of the immediate  employer,  to  adjust  the  same
\n        against  any  payment  due to the immediate employer from
\n        the principal employer or to treat the  same  as  a  debt
\n        recoverable.\n<\/p>\n
        \t8.  In  this  connection  we  may  refer  to  the
\n        decision   of  the  Apex  Court  in  Saraswath  Films  v.@@
\n                                             EEEEEEEEEEEEEEEE
\n        Regional Director, E.S.I.Corporation (2003  (1)  KLT  886@@
\n        EEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEE
\n        (SC)),  wherein  the question as to whether the duties of
\n        security guards who were engaged on  the  premises  of  a
\n        cinema theatre are directly and intrinsically part of the
\n        work of the establishment was considered.  It took notice
\n        of  the  definition  contained  in  Section  2(9)  of the
\n        Employees’ State Insurance Act as well as the  definition
\n        of the term “immediate employer” and “principal employer”
\n        under Sections  2(13)  and 2(17) of the Act.  It was held
\n        that  on  a  plain  reading  of  the  definition  of  the
\n        expressions “principal employer” and “immediate employer”
\n        the  position  is  manifest  that  the  appellant  is the
\n        principal employer of the security guards  in  the  case.
\n        It  may  be that their immediate employer is the security
\n        agency with whom there has been a contract either by  the
\n        lessor  or  the lessee of the cinema hall for the purpose
\n        of the service.   On  a  fair  reading  of  the  relevant
\n        statutory  provisions  and keeping in view the object and
\n        purpose for which the legislation  was  enacted,  it  was
\n        held  that  in  the case on hand the security guards came
\n        within the purview of “employee” as  defined  in  Section
\n        2(9) of the Act.  There also a contention was raised that
\n        the  two  security  guards  were  not  to  be included as
\n        employees  of  the  establishment  for  the  purpose   of
\n        determining the total number of employees employed by the
\n        cinema theatre.   It was also contended that there was no
\n        employer-employee relationship between  the  said  cinema
\n        theatre  and  the  security  guards,  which  was  however
\n        repelled.\n<\/p>\n
        \t9.  We are, therefore,  of  the  considered  view
\n        that   merely   because  the  “immediate  employer”  have
\n        sufficient  strength  to  cover   them   as   independent
\n        establishment  under the Act by itself is not a reason to
\n        hold that the liability of the principal  employer  under
\n        Section 40  is  taken  away.   In a case where there is a
\n        principal employer and an immediate employer  as  in  the
\n        present  case,  the  liability to pay contribution at the
\n        first instance is on the principal employer who  in  turn
\n        has  remedy  to  recover  the  same  from  the  immediate
\n        employer.  Hence we set aside the judgment passed by  the
\n        court below and remand the matter for fresh consideration
\n        on the   other   questions.    It  is  open  to  the  ESI
\n        Corporation to produce relevant materials to show  as  to
\n        what  portion  of  the  amount  represents wages on which
\n        contribution is  liable  to  be  paid  by  the  principal
\n        employer, respondent  herein.   Both sides shall be given
\n        an opportunity to  adduce  additional  evidence  in  this
\n        regard.\n<\/p>\n
        \tAppeal is allowed as above.\n<\/p>\n
.SP 1
\n.JN
\n        \t\t\t\t\tP.R.RAMAN@@
\n             AAAAAAAAA
\n        \t\t\t\t\t  Judge@@
\n             AAAAAAA<\/p>\n
        \t\t\t\t\tK.T.SANKARAN@@
\n             AAAAAAAAAAAA
\n        \t\t\t\t\t    Judge@@
\n             AAAAAAAAA
\n        ahz\/
\n.PA
\n((HDR 0<\/p>\n
))
\n.HE 2
\n.JN
\n.SP 2
\n                                     P.R.RAMAN & K.T.SANKARAN, JJ.@@
\n                                     AAAAAAAAAAAAAAAAAAAAAAAAAAAAA\n<\/p>\n
                                   ————————————-\n<\/p>\n
                                   ————————————-\n<\/p>\n
                                       R.C.R.No. 337 of 2000 C  @@
\n                                     AAAAAAAAAAAAAAAAAAAAAAAAAAA<\/p>\n
                                              JUDGMENT@@
\n                                              EEEEEEEE<\/p>\n
                                           5th  July, 2005\n<\/p>\n
                                  —————————————
\n.JY<\/p>\n","protected":false},"excerpt":{"rendered":"
Kerala High Court The Regional Director vs Hindustan Lever Ltd on 4 July, 2005 IN THE HIGH COURT OF KERALA AT ERNAKULAM MFA No. 337 of 2000 1. THE REGIONAL DIRECTOR, ESI CORPN … Petitioner Vs 1. HINDUSTAN LEVER LTD … Respondent For Petitioner :SMT.RAJALAKSHMI For Respondent :SRI.ANTONY DOMINIC The Hon’ble MR. Justice P.R.RAMAN The […]<\/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-195711","post","type-post","status-publish","format-standard","hentry","category-high-court","category-kerala-high-court"],"yoast_head":"\nThe Regional Director vs Hindustan Lever Ltd on 4 July, 2005 - 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-hindustan-lever-ltd-on-4-july-2005\" \/>\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 Hindustan Lever Ltd on 4 July, 2005 - 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