{"id":196100,"date":"1974-01-21T00:00:00","date_gmt":"1974-01-20T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/b-m-lakshmanamurthy-vs-the-employees-state-insurance-on-21-january-1974"},"modified":"2018-02-14T05:38:09","modified_gmt":"2018-02-14T00:08:09","slug":"b-m-lakshmanamurthy-vs-the-employees-state-insurance-on-21-january-1974","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/b-m-lakshmanamurthy-vs-the-employees-state-insurance-on-21-january-1974","title":{"rendered":"B. M. Lakshmanamurthy vs The Employees&#8217; State Insurance &#8230; on 21 January, 1974"},"content":{"rendered":"<div class=\"docsource_main\">Supreme Court of India<\/div>\n<div class=\"doc_title\">B. M. Lakshmanamurthy vs The Employees&#8217; State Insurance &#8230; on 21 January, 1974<\/div>\n<div class=\"doc_citations\">Equivalent citations: 1974 AIR  759, \t\t  1974 SCC  (4) 218<\/div>\n<div class=\"doc_author\">Author: P Goswami<\/div>\n<div class=\"doc_bench\">Bench: Goswami, P.K.<\/div>\n<pre>           PETITIONER:\nB. M. LAKSHMANAMURTHY\n\n\tVs.\n\nRESPONDENT:\nTHE EMPLOYEES' STATE INSURANCE CORPORATION, BANGALORE\n\nDATE OF JUDGMENT21\/01\/1974\n\nBENCH:\nGOSWAMI, P.K.\nBENCH:\nGOSWAMI, P.K.\nREDDY, P. JAGANMOHAN\nDWIVEDI, S.N.\n\nCITATION:\n 1974 AIR  759\t\t  1974 SCC  (4) 218\n\n\nACT:\nEmployees'    State    Insurance    Act--S.    2(9)(ii)\t   &amp;\n2(13)--'Employee'  &amp; 'immediate employers' meaning  &amp;  scope\nof.\n\n\n\nHEADNOTE:\nThe  appellants\t firm  was  carrying  on  the  business\t  of\nmanufacturing\tand  exporting\tpolished  granite   memorial\nstones.\t The firm was a factory both under the Factories Act\nas  well  as  under  the  Employees'  State  Insurance\tAct.\nAdjacent to this factory was another factory situated on the\nappellant's land leased out to two contractors who  employed\n50 workers in their factory for the purposes of cutting\t and\ndressing  the granite stones.  The granite  stones  unloaded\noutside\t the  factory  by the lorries were  brought  on\t the\nportion of the leased land and after cutting them they\twere\nsent  back  to\tthe  appellant's  factory  where  they\twere\ndesigned  and  polished.   The\tEmployees'  State  Insurance\nCorporation claimed from the appellant a certain sum as\t the\nfirms contribution on account of the workers employed by the\ntwo contractors described as 'immediate employers' under the\nAct.   The  Employees' State Insurance Court held  that\t the\ncontractors  were  not\t'immediate  employers'\twithin\t the\nmeaning\t of s. 2(13) of the Employees' State  Insurance\t Act\nand  that they were independent contractors.  On appeal\t the\nHigh Court held that the appellant was a principal  employer\nand  the contractors were the immediate employers under\t the\nAct.   The High Court also held that the workers tinder\t the\ncontractors were employees within the meaning of s. 2(9)(ii)\nof the Act.\nDismissing the appeal, to this Court,\nHELD  : (1) The underlying aim of the Act is to\t insure\t the\nemployees  against ,various risks to their life, health\t and\nwell  being  and the charge is upon the\t principal  employer\neven  though  he  may get his usual  work  done\t through  an\nintermediary  who  is  described in the\t Act  as  'immediate\nemployer'.   Any dispute between the principal employer\t and\nthe immediate employer has to be settled between  themselves\nde  hors,  the employees and the Act charges  the  principal\nemployer with the liability to pay the contribution not only\nof  its\t own but also that of the employees subject  to\t his\nright to deduct the employees' contribution from their wages\nunder s. 40(2) Of the\t Act. [147A]\n(2)  On\t the  findings of fact the work\t undertaken  by\t the\ncontractor's  in  the adjoining vicinity is  preliminary  or\nincidental  to\tthe work in the\t principal  employer-factory\nturning\t out the finished product for export.  The  work  in\nthe two places has intimate correlation and is a niece of an\nintegrated  whole  and\tthe said  work\tby  the\t contractors\nthrough\t their labour is ordinarily part of the work of\t the\nprincipal  factory  undertaken by  the\tcontractors.   Their\nfactory\t is  situated  in the premises\tof  the\t appellant's\nfactory which, according to the definition clause,  includes\nthe   precincts\t thereof.   In\tthe  instant  case   on\t  an\nexamination of the site plan and the evidence it is  evident\nthat there is a definite environmental as well as functional\nunity between the two portions, namely, the main factory and\nthe  contractors'  factory with the  precincts\teven  though\nseparated  by  a  wall\tin which  there\t was  a\t door  which\nsometimes   was\t  closed.   The\t work  undertaken   by\t the\ncontractors  and carried on in their portion of the area  is\nsurely\tcomponental to make it a part of the complex  whole.\nThe principal requirement of the definition namely, that the\nwork  or the ,construction is undertaken on the premises  of\nthe factory is satisfied in the present ,case.\tIt therefore\nfollows\t that the two contractors are  'immediate  employers\nwithin the meaning of s. 2(13) and the workers employed\t for\ncutting\t and  dressing the granite stones by  the  immediate\nemployers  are\temployees  within s. 2(9)(ii)  of  the\tAct.\n[148B]\nEmployees'  State  Insurance Corporation.  Bombay  v.  Raman\n(Chittur  Harihar Iyer),[1957] 1  <a href=\"\/doc\/316117\/\">L.L.J.267,Nagpur  Electric\nLight and Power Co.Ltd. v. Regional Director Employees State\nInsurancea Corporation, Etc.<\/a> [1967] 3 S.C.R. 92, Employees'.\n143\n<a href=\"\/doc\/189443\/\">State  Insurance  Corporation, v. Peter Sewing\tMachine\t Co.<\/a>\netc.  A.I.R. 1970 Delhi 182, and M\/s Hindustan\tConstruction\nCo.  Ltd. v. Employees' State Insurance Corporation,  (1966)\nI.L.R. 18 Assam &amp; Nagaland 87, referred to.\n\n\n\nJUDGMENT:\n<\/pre>\n<p>CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1626 of 1967.<br \/>\nAppeal\tby Special Leave from the Judgment and Decree  dated<br \/>\nthe  14th  October,  1966 of the High  Court  of  Mysore  at<br \/>\nBangalore in Misc.  First Appeal No. 124 of 1966.<br \/>\nM. Natesan and Saroja Gopalkrishnan, for the appellant<br \/>\nGobind Das and S. P. Nayar, for the respondent.<br \/>\nThe Judgment of the Court was delivered by<br \/>\nGOSAMI,\t J.-The appellant and his  brother,  Srinivasamurthy<br \/>\nare  partners  of  a  firm  carrying  on  the  business\t  of<br \/>\nmanufacturing  and  exporting of polished  granite  memorial<br \/>\nstones in the name and style of Messrs Narayanaswami &amp; Sons.<br \/>\nThe  firm is admittedly a factory both under  the  Factories<br \/>\nAct  as\t well as under the Employees&#8217;  State  Insurance\t Act<br \/>\n(briefly the Act).  The appellant claims to directly  employ<br \/>\nabout 35 persons in his factory and has been paying  contri-<br \/>\nbution\tunder the Act on their account.\t It is\tstated\tthat<br \/>\nadjacent  to  his  own\tfactory\t there\tis  another  factory<br \/>\nsituated  on the appellant&#8217;s land leased out by him  to\t two<br \/>\npersons,  Chidambarchari and Shankarsubbachari\t(hereinafter<br \/>\nreferred  to  as the contractors).  The\t contractors  employ<br \/>\nabout  50 workers in their factory for purposes\t of  cutting<br \/>\nand  dressing the granite stones.  The lorry  drivers  bring<br \/>\ngranite\t from the surrounding areas and unload them  outside<br \/>\nthe  factory&#8217; The contractors get these to their portion  of<br \/>\nthe  leased land for cutting them.  After cutting these\t are<br \/>\nsent  back  to\tthe  appellant&#8217;s  factory  where  these\t are<br \/>\ndesigned and polished and thereafter exported.<br \/>\nThe  Employees\tState  Insurance  Corporation  (briefly\t the<br \/>\nCorporation) applied to the Employees&#8217; State Insurance Court<br \/>\nat  Bangalore (briefly the Court) for recovery of an  amount<br \/>\nof  Rs. 8893\/- being the employees&#8217; contribution payable  by<br \/>\nthe  appellant for the period commencing from  27-7-1958  to<br \/>\n31-1-1964  on  account of the workers employed\tby  the\t two<br \/>\ncontractors  described as &#8216;immediate employers&#8217;\t tinder\t the<br \/>\nAct.\tThe   court   decided\tagainst\t  the\t Corporation<br \/>\nholding .that the contractors were not &#8216;immediate employers&#8217;<br \/>\nwithin\tthe  meaning of section 2 (13) of the Act  and\tthey<br \/>\nwere  independent con tractors and hence the  appellant\t was<br \/>\nnot  the  principal  employer in respect  of  the  employees<br \/>\nworking under the contractors.\tThe Corporation appealed  to<br \/>\nthe  High Court of Mysore against the aforesaid order  under<br \/>\nsection\t 82(2)\tof the Act.  The High Court  held  that\t the<br \/>\nappellant was the principal employer an the contractors were<br \/>\nthe  immediate\temployers  under the Act.   The\t High  Court<br \/>\nfurther\t held  that the workers under the  contractors\twere<br \/>\nemployees  within the meaning of section 2 (9) (ii)  of\t the<br \/>\nAct.   The  High  Court\t thus accepted\tthe  appeal  of\t the<br \/>\nCorporation.  Hence this appeal by special leave.<br \/>\nBefore\tthe court evidence was given by both sides  and\t the<br \/>\nfollowing  findings of the court are adverted to by the High<br \/>\nCourt<br \/>\n<span class=\"hidden_text\">144<\/span><br \/>\n.lm15<br \/>\n&#8220;All  that can be said to have been proved by the  applicant<br \/>\ncorporation  in\t this  case is that RWs 2 and  3  (the\tcon-<br \/>\ntractors)  work at a place belonging to the  respondent\t and<br \/>\nexecute\t part of the work which is necessary to\t manufacture<br \/>\nthe  final finished product for sale.  All that can be\tsaid<br \/>\nto have been proved in this case is that the contractors are<br \/>\ndoing  some work which would be the foundation for the\twork<br \/>\nthat is finally done by the respondent&#8221;.\n<\/p>\n<p>After examining the evidence the High.\tCourt also found  as<br \/>\nfollows<br \/>\n\t      &#8220;There   is  evidence  to\t show\tthat   these<br \/>\n\t      employees\t  (under   ,the\t  contractors)\t are<br \/>\n\t      employed\tin connection with the work  of\t the<br \/>\n\t      respondent-facory&#8221;.\n<\/p>\n<p>The  respondent in the High Court&#8217;s judgment refers  to\t the<br \/>\nappellant  herein.   As\t stated\t earlier,  the\tHigh   Court<br \/>\nanswered both the questions in favour of the Corporation.<br \/>\nThe same points are raised for consideration in this  appeal<br \/>\nand Mr. Natesan on behalf of the appellant submits that\t the<br \/>\ncontractors  owned  a separate factory and  are\t independent<br \/>\ncontractors  and cannot be held to be &#8216;immediate  employers&#8217;<br \/>\nwithin the meaning of section 2(13) of the Act and hence the<br \/>\nappellant  is  not liable as principal employer to  pay\t the<br \/>\ncontribution  on  account of the persons working  under\t the<br \/>\ncontractors.\n<\/p>\n<p>Before\twe  deal with the questions of law  raised  in\tthis<br \/>\nappeal,\t it  will be appropriate to refer  to  the  material<br \/>\nprovisions of the Act.\n<\/p>\n<p>The  Act,  as it appears from the preamble,  is\t passed\t &#8220;to<br \/>\nprovide\t for  certain  benefits\t to  employees\tin  case  of<br \/>\nsickness,  maternity  and  employment  injury  and  to\tmake<br \/>\nprovision  for certain other matters in\t relation  thereto&#8221;.<br \/>\nSection\t 2  contains  the definitions.\t By  section  2\t (4)<br \/>\n&#8220;contribution&#8221;\tmeans the sum of money payable to  the\tCor-<br \/>\nporation by the principal employer in respect of an employee<br \/>\nand  includes  any  amount payable by or on  behalf  of\t the<br \/>\nemployee in accordance with the provisions of this Act.&#8221;  By<br \/>\nsection 2 (9) &#8220;employee&#8221; means any person employed for wages<br \/>\nin  or\tin  connection\twith  the  work\t of  a\tfactory\t  or<br \/>\nestablishment to which this Act applies and-\n<\/p>\n<blockquote><p>\t      (i) who is directly employed by the  principal<br \/>\n\t      employer\ton  any work of,  or  incidental  or<br \/>\n\t      preliminary to or connected with the work of ,<br \/>\n\t      the  factory  or establishment,  whether\tsuch<br \/>\n\t      work is done by the employee in the factory or<br \/>\n\t      establishment or elsewhere; or\n<\/p><\/blockquote>\n<blockquote><p>\t      (ii)   who  is  employed\tby  or\tthrough\t  an<br \/>\n\t      immediate\t employer  on the  premises  of\t the<br \/>\n\t      factory\tor   establishment  or\t under\t the<br \/>\n\t\t\t    supervision\t of the principal employer<br \/>\n  or  his<br \/>\n\t      agent on work which is ordinarily part of\t the<br \/>\n\t      work of the factory or establishment or  which<br \/>\n\t      is  preliminary to the work carried on  in  or<br \/>\n\t      incidental  to the purpose of the\t factory  or<br \/>\n\t      establishment;\n<\/p><\/blockquote>\n<blockquote><p>\t      *\t      *\t       *       *<br \/>\n<span class=\"hidden_text\">145<\/span><br \/>\nBy  section 2(12)&#8221;factory &#8220;means any premises including\t the<br \/>\nprecincts  thereof  whereon  twenty  or\t more  persons\t are<br \/>\nemployed  or  were  employed for wages on  any\tday  of\t the<br \/>\npreceding  twelve  months,  and\t in  any  part\tof  which  a<br \/>\nmanufacturing  process is being carried on with the  aid  of<br \/>\npower or is ordinarily so carried on.  But does not  include<br \/>\na mine subject to the operation of the Mines Act, 1952 or  a<br \/>\nrailway running shed&#8221;.\n<\/p><\/blockquote>\n<blockquote><p>\t  *\t  *\t   *\t    *\t      *<br \/>\nBy  section  2(13)  &#8220;immediate\temployer&#8221;,  in\trelation  to<br \/>\nemployees employed by or through aim, means a person who has<br \/>\nundertaken the execution, on the premises of a factory or an<br \/>\nestablishment  to  which  this Act,  applies  or  under\t the<br \/>\nsupervision  of the principal employer or his agent, of\t the<br \/>\nwhole  or any part of any work which is ordinarily  part  of<br \/>\nthe  work of the factory or establishment of  the  principal<br \/>\nemployer  or  is preliminary to the work carried on  in,  or<br \/>\nincidental   to\t the  purpose  of,  any\t such\tfactory\t  or<br \/>\nestablishment.,\t and includes a person by whom the  services<br \/>\nof  an employee who has entered into a contract\t of  service<br \/>\nwith  him  are\ttemporarily  tent or  let  on  hire  to\t the<br \/>\nprincipal employer&#8221;.\n<\/p><\/blockquote>\n<p>By  section 2(14) &#8220;insured person&#8221; means a person who is  or<br \/>\nwas an employee in respect of whom contributions are or were<br \/>\npayable\t under\tthis  Act and who  is,\tby  reason  thereof,<br \/>\nentitled to any of the benefits provided by this Act&#8221;.<br \/>\nBy section 2(17) &#8220;principal employer&#8221; means-<br \/>\n(1)  in a factory, the owner or occupier of the factory\t and<br \/>\nincludes  the managing agent of such owner or occupier,\t the<br \/>\nlegal  representative of a deceased owner or  occupier,\t and<br \/>\nwhere a person has been named as the manager of the  factory<br \/>\nunder the factories Act, 1948, the person so named&#8221;.<br \/>\n\t *\t*\t*\t *\t *\t*<br \/>\nChapter IV deals with contributions.\n<\/p>\n<p>The opening section 38 provides that&#8211;\n<\/p>\n<p>&#8220;subject  to. the provisions of this Act, all  employees  in<br \/>\nfactories, or establishments to which this Act applies shall<br \/>\nbe insured in the manner provided by this Act.&#8221;<br \/>\n\t *\t*\t*\t *\t *\t *<br \/>\nBy Section 39(1) &#8220;the contribution payable under this Act in<br \/>\nrespect\t of an employee shall comprise contribution  payable<br \/>\nby  the employer (hereinafter referred to as the  employer&#8217;s<br \/>\ncontribution)  and  contribution  payable  by  the  employee<br \/>\n(hereinafter referred to as the employee&#8217;s contribution) and<br \/>\nshall be paid to the Corporation&#8221;.\n<\/p>\n<p>By  section  40\t (1) &#8220;the principal employer  shall  pay  in<br \/>\nrespect of every employee, whether directly employed by\t him<br \/>\nor by or through an immediate employer, both the  employer&#8217;s<br \/>\ncontribution and the employee&#8217;s contribution&#8221;.\n<\/p>\n<p><span class=\"hidden_text\">146<\/span><\/p>\n<p>By   section  42(2)  &#8220;Contribution  (both   the\t  employer&#8217;s<br \/>\ncontribution  and  the employee&#8217;s  contribution),  shall  be<br \/>\npayable\t by the principal employer for each week in  respect<br \/>\nof  the\t whole\tor part of which wages are  payable  to\t the<br \/>\nemployee and not otherwise&#8221;.\n<\/p>\n<p>Section\t 43 and section 97 empower the Corporation  to\tmake<br \/>\nregulations.  Under section 44 every principal and immediate<br \/>\nemployer  has  to  submit returns, to  the  Corporation\t and<br \/>\nmaintain registers and records.\n<\/p>\n<p>Section\t 68  provides  for  Corporation&#8217;s  rights  where   a<br \/>\nprincipal   employer   fails   or  neglects   to   pay\t any<br \/>\ncontribution.\tBy  section 72 an employer  is\tbarred\tfrom<br \/>\nreducing  wages\t by  reason only of  his  liability  to\t pay<br \/>\ncontribution.\n<\/p>\n<p>Chapter VA provides for certain transitory provisions.\t The<br \/>\nopening\t  section  73A\tprovides  for\temployer&#8217;s   special<br \/>\ncontribution.\n<\/p>\n<p>Chapter\t VI deals with adjudication of disputes and  claims.<br \/>\nUnder\tsection\t 74  (1)  Employee&#8217;s  Insurance\t  Court\t  is<br \/>\nconstituted.  Inter-alia  under\t section  75  (1)  &#8220;If\t any<br \/>\nquestion or dispute arises as to-\n<\/p>\n<blockquote><p>\t      (a)  whether any person is an employee  within<br \/>\n\t      the  meaning  of\tthis Act or  whether  he  is<br \/>\n\t      liable to pay the employees&#8217; contribution, or<br \/>\n\t\t\t*\t *\t *\t  *\t   *<br \/>\n\t      *\n<\/p><\/blockquote>\n<blockquote><p>\t      (d)  the\tperson who is or was  the  principal<br \/>\n\t      employer in respect of any employee;\n<\/p><\/blockquote>\n<pre>\t\t\t*\t*\t *\t *\t   *\n\t      *\n<\/pre>\n<blockquote><p>such  question\tor  dispute&#8230;&#8230; shall be  decided  by\t the<br \/>\nEmployees&#8217; Insurance Court in accordance with the provisions<br \/>\nof this Act.&#8221;\n<\/p><\/blockquote>\n<p>Under  section 75(1) (g), inter-alia, any dispute between  a<br \/>\nprincipal  employer and an immediate employer shall also  be<br \/>\ndecided by the court.  Under section 75 (2) (b) any claim by<br \/>\nprincipal   employer  to  recover  contributions  from\t any<br \/>\nimmediate  employer shall also be decided by the  Employees&#8217;<br \/>\nInsurance Court.  By section 75 (3) jurisdiction of a  civil<br \/>\ncourt  is barred regarding, amongst others, any question  or<br \/>\ndispute as specified in the section.\n<\/p>\n<p>Section\t 82 provides for appeals and under  sub-section\t (2)<br \/>\nthereof an appeal shall lie to the High Court from an  order<br \/>\nof   the  Employees&#8217;  Insurance\t Court\tif  it\tinvolves   a<br \/>\nsubstantial question of law.\n<\/p>\n<p>Chapter VII provides for different penalties.<br \/>\nUnder  Chapter\tVIII (Miscellaneous), section  94  provides,<br \/>\ninteralia,  that contributions due to the Corporation  shall<br \/>\nhave priority over all other debts.\n<\/p>\n<p>The  Act  is  thus a beneficial\t piece\tof  social  security<br \/>\nlegislation  in the interest of labour in factories  at\t the<br \/>\nfirst\tinstance   and\twith  power  to\t extend\t  to   other<br \/>\nestablishments.\t  Provisions  of  the Act will\thave  to  be<br \/>\nconstrued  with that end in view to promote the schemes\t and<br \/>\navoid<br \/>\n<span class=\"hidden_text\">147<\/span><br \/>\nthe mischief.  From some of the material provisions set\t out<br \/>\nabove,\tthe  underlying\t aim of the Act\t is  to\t insure\t the<br \/>\nemployees  against various risks to their life,\t health\t and<br \/>\nwell  being  and the charge is upon the\t principal  employer<br \/>\neven  though  he  may get his usual  work  done\t through  an<br \/>\nintermediary,  who  is described in the\t Act  as  &#8216;immediate<br \/>\nemployer.   Any dispute between the principal  employer\t and<br \/>\nthe immediate employer is to be settled between\t themselves,<br \/>\nde  hors,  the employees and the Act charges  the  principal<br \/>\nemployer with the liability to pay the contribution not only<br \/>\nof  its\t own but also that of the employees subject  to\t his<br \/>\nright\tto  deduct the employees&#8217; contribution.\t from  their<br \/>\nwages  under section 40 (2) of the Act.\t There is a  quicker<br \/>\nmode  of recovery as arrears of land revenue  under  section<br \/>\n45B and 73D.  Chapter VA provides for transitory  provisions<br \/>\nand  by section 73A every principal employer shall  have  to<br \/>\npay  a\tspecial\t contribution  in  lieu\t of  the  employer&#8217;s<br \/>\ncontribution payable under Chapter IV.\tAdjudication of\t all<br \/>\nkinds  of  specified disputes are also intended\t to  be\t ex-<br \/>\npeditiously  disposed  of  by the  court  constituted  under<br \/>\nsection\t 74.   Such  disputes include a\t dispute  between  a<br \/>\nprincipal  employer  and an immediate  employer\t as  noticed<br \/>\nearlier.  Civil courts&#8217; jurisdiction is barred in respect of<br \/>\nmatters\t specified  in the Act.\t There is only\tone  special<br \/>\ntype  of  appeal  to  the High Court  and  that\t also  in  a<br \/>\nrestricted  form.   The Act insists on compliance  with\t its<br \/>\nprovisions on pain of penalties and the contributions due to<br \/>\nthe corporation have priority over other debts.<br \/>\nKeeping\t in view the scheme and the principal object of\t the<br \/>\nAct, we will now examine the questions of law raised in this<br \/>\nappeal.\t  The definition of the &#8216;immediate  employer&#8217;  under<br \/>\nsection\t 2  (13),  omitting what is not\t necessary  for\t our<br \/>\npurpose, is as follows:-\n<\/p>\n<blockquote><p>\t      &#8221;\t  &#8216;immediate  employer&#8217;,  in   relation\t  to<br \/>\n\t      employees employed by or through him, means  a<br \/>\n\t      person  who his undertaken the  execution,  on<br \/>\n\t      the  premises of a factory to which  this\t Act<br \/>\n\t      applies  of the whole or any part of any\twork<br \/>\n\t      which  is ordinarily part of the work  of\t the<br \/>\n\t      factory  or  establishment  of  the  principal<br \/>\n\t      employer or is preliminary to the work carried<br \/>\n\t      on  in, or incidental to the purpose  of,\t any<br \/>\n\t      such factory&#8230;&#8230;&#8230;&#8230;&#8230;..&#8221;\n<\/p><\/blockquote>\n<p>That  the appellant,, who is the principal employer   has  a<br \/>\nfactory\t where granite memorial stones are manufactured\t for<br \/>\nexport\tis beyond question.  The finished articles  are\t the<br \/>\ndressed\t and polished granite stones.  The raw\tmaterial  is<br \/>\nthe  stone from the quarry-brought therefrom, cut to  sizes,<br \/>\ndressed, polished and then exported.The other factory of the<br \/>\ncontractors  on the leased land of the\tprincipal  employer,<br \/>\nadjoining the latter&#8217;s factory. is registered under the Fac-<br \/>\ntories Act in the year 1963.  Although admittedly a factory,<br \/>\nthere is no evidence on the record that the contractors\t pay<br \/>\nany  contribution  under the Act or have been  even  charged<br \/>\nseparately as principal employers so far as their so  called<br \/>\ndirect employees are concerned.\t The principal employer, the<br \/>\nappellant,  is making a claim which, if correct,  will\tmake<br \/>\nthe  contractors also, principal employers liable under\t the<br \/>\nAct.  But it is easy for the appellant to make such<br \/>\n<span class=\"hidden_text\">148<\/span><br \/>\na  claim  to  avoid his personal  liability  which,  in\t all<br \/>\nfairness  to labour, should have been settled by  impleading<br \/>\nthe  contractors  as  parties in order to  make\t the  entire<br \/>\nposition  clear.   It  is not necessary for  us\t to  examine<br \/>\nwhether\t this is a mere device of the principal employer  to<br \/>\navoid his liability under the Act.\n<\/p>\n<p>We  agree with the High Court that on the findings  of\tfact<br \/>\nthe  work  undertaken by the contractors  in  the  adjoining<br \/>\nvicinity,   even   though  their  factory  may\t have\tbeen<br \/>\nsubsequently   registered  under  the  factories   Act,\t  is<br \/>\npreliminary  or\t incidental  to the work  in  the  principal<br \/>\nemployer-factory  turning  out\tthe  finished  product\t for<br \/>\nexport.\t  The  work  in\t the  two  places  has\tan  intimate<br \/>\ncorrelation  and is a piece of an integrated whole  and\t the<br \/>\nsaid  work  by\tthe  contractors  through  their  labour  is<br \/>\nordinarily  part  of  the  work\t of  the   principal-factory<br \/>\nundertaken by the contractors.\tTheir factory is situated in<br \/>\nthe  premises of the appellant&#8217;s factory which according  to<br \/>\nthe  definition clause includes the precincts thereof.\t It,<br \/>\ntherefore,  follows that the two contractors are  &#8216;immediate<br \/>\nemployers&#8217;  within  the meaning of section 2  (13)  and\t the<br \/>\nworkers employed for cutting and dressing the granite stones<br \/>\nby  the immediate employers are employees within  section  2<br \/>\n(9)  (ii) of the Act, being employed through  the  immediate<br \/>\nemployers  on  the  premises of the  factory  including\t the<br \/>\nprecincts  thereof.  The fact that in 1963 the\tcontractors&#8217;<br \/>\nfactory was separately registered under the Factories Act or<br \/>\nthat, after meeting the prior requirements of the  principal<br \/>\nemployer,  work of some other parties was also\tpermissible,<br \/>\ndoes  not, in our opinion, militate against the\t predominant<br \/>\npurposes  of  the  work of the contractors  being  part\t and<br \/>\nparcel\tof the main work of the\t principal  employer-factory<br \/>\nfor which the contractors mainly work.\n<\/p>\n<p>A  good\t deal  of argument is advanced with  regard  to\t the<br \/>\nexpression  on the premises of a factory&#8221; in the  definition<br \/>\nclause\tof &#8220;immediate employer&#8221; under section 2\t (13).\t The<br \/>\nword  &#8220;premises&#8221; according to the dictionary means house  or<br \/>\nbuilding  with\tits  ground  or\t other\tapurtenances.\t The<br \/>\npremises  include under section 2 (13) the precints  thereof<br \/>\nThe  word  &#8220;precincts&#8221; means the environs.   This  Court  in<br \/>\n<a href=\"\/doc\/1530900\/\">Ardeshir  H.  Bhiwandiwala v. The State of  Bombay<\/a>(1)  dealt<br \/>\nwith the term &#8220;Premises&#8221; in the definition of factory  under<br \/>\nsection\t 2(m)  of the Factories Act and after  noticing\t its<br \/>\nmeaning in various Law Lexicons and dictionaries observed:-\n<\/p>\n<blockquote><p>\t      &#8220;The word &#8220;premises&#8221; has now come to refer  to<br \/>\n\t      either land or buildings or to both, depending<br \/>\n\t      on  the context&#8230;&#8230;.. It is therefore  clear<br \/>\n\t      that  the\t word &#8220;premises&#8221; is a  generic\tterm<br \/>\n\t      meaning  open land or land with  buildings  or<br \/>\n\t      buildings alone.&#8221;\n<\/p><\/blockquote>\n<p>The  contention in that &#8216;case that the word &#8220;premises&#8221;\tmust<br \/>\nbe  restricted\tto mean buildings and not taken to  cover  I<br \/>\nopen lands as well was repelled.\n<\/p>\n<p>In  the\t instant case, on an examination of  the  site\tplan<br \/>\n(Ext.\tP-1)  and  the evidence, it is evident\tthere  is  a<br \/>\ndefinite  environmental as well as functional unity  between<br \/>\nthe two portions, namely, the main<br \/>\n(1) [1961] 3 S.C.R. 592.\n<\/p>\n<p><span class=\"hidden_text\">149<\/span><\/p>\n<p>factory\t (Portion A) and the contractors&#8217; factory  with\t the<br \/>\nprecincts  (Portion  B) even though separated by a  wall  in<br \/>\nwhich there was a door which sometimes was closed.  The work<br \/>\nundertaken  by\tthe  contractors and  carried  on  in  their<br \/>\nportion of the area is surely componental to make it a\tpart<br \/>\nof  the\t complex whole.\t The principal\trequirement  of\t the<br \/>\ndefinition,  namely,  that the work or the  construction  is<br \/>\nundertaken  on the premises of the factory and\tabout  which<br \/>\nboth  sides join issue, is satisfied in the present case  on<br \/>\nthe  evidence  on records and we hold accordingly.   We\t are<br \/>\nalso  satisfied that the workers under the  contractors\t are<br \/>\nemployees  employed  by the principal employer\tthrough\t the<br \/>\n&#8216;immediate employers&#8217; on the premises of the factory in work<br \/>\nwhich is ordinarily the normal work of the factory or is, at<br \/>\nany  rate,  preliminary to the work or\twhich  is  certainly<br \/>\nincidental  to\tthe  purpose  of the  main  factory  of\t the<br \/>\nappellant.\n<\/p>\n<p>Mr.  Natesan  laid great stress upon the  requirement  of  a<br \/>\nunity  of  control  of\tthe  principal\temployer  over\t the<br \/>\nmanufacturing\tprocess\t of  the  work\tundertaken  by\t the<br \/>\ncontractors, but it will be obvious from the facts found and<br \/>\nthe  evidence  noted  below that the work  is  done  on\t the<br \/>\npremises of the factory.  We need not examine this aspect in<br \/>\ndetail\tin  view of the uncontradicted evidence of  PW-1  as<br \/>\nfollows:-\n<\/p>\n<blockquote><p>\t      &#8220;The  work  done in the Factory  consisted  of<br \/>\n\t      manufacture  of granite stones for export.   I<br \/>\n\t      found   raw   stones  lying   all\t  over\t the<br \/>\n\t      surrounding  area.   I found that\t raw  stones<br \/>\n\t      were moved to the premises marked B in Ex.  P.\n<\/p><\/blockquote>\n<blockquote><p>\t      1.  I found that about 50 persons\t working  at<br \/>\n\t      the spot.\t I learnt from the partners those 50<br \/>\n\t      persons had been employed by two or three con-<\/p><\/blockquote>\n<p>\t      tractors.\t Cutting and dressing of the  stones<br \/>\n\t      were done by those fifty men.  There were\t (1)<br \/>\n\t      sand   blasting  machine\tbelonging   to\t the<br \/>\n\t      partners\tand (2) Electric blower.  Power\t was<br \/>\n\t      used in these machines.  After the stones\t are<br \/>\n\t\t\t    cut and dressed, they are removed to p<br \/>\nremises A<br \/>\n\t      for  designing and polishing.   Final  touches<br \/>\n\t      are then given to them in the premises B. They<br \/>\n\t      are  again  brought  back to  premises  A\t for<br \/>\n\t      packing and despatching.\tThe premises A and B<br \/>\n\t      belong to the partners.  Only a wall separated<br \/>\n\t      the two premises.\t There was a connecting door<br \/>\n\t      which appeared to have been closed&#8221;.\n<\/p>\n<p>Again  RW-2 also deposed that &#8220;it is since last three  years<br \/>\nthat,  I  undertook the work of the second party&#8221;  i.e.\t the<br \/>\nappellant.   R\tW-1  (partner of the  appellant)  stated  as<br \/>\nfollows in cross-examination:\n<\/p>\n<blockquote><p>\t      &#8220;Ex.  P. 4 is the copy of the letter dated 19-<br \/>\n\t      3-63  written by P.W. 1 to me for copy of\t the<br \/>\n\t      agreement\t and plan.  Ex.\t P. 5 is my  interim<br \/>\n\t      reply,&#8230;&#8230;&#8230;&#8230;&#8230;  By Factory premises  in<br \/>\n\t      Ex. P. 5, 1 meant both the portions A and B in<br \/>\n\t      Ex. p. 1&#8221;.\n<\/p><\/blockquote>\n<p>Mr.  Natesan has referred to a decision of the\tBombay\tHigh<br \/>\nCourt  in Employees&#8217; State Insurance Corporation, Bombay  v.<br \/>\nRaman (Chittur Harihar Iyer)(1) but the High Court dealt  in<br \/>\nthat  case  with the definition of &#8220;employee&#8221; prior  to\t the<br \/>\namendment of the Act in 1966 and is of no<br \/>\n(1) (1957) I L.L.J. 267.\n<\/p>\n<p><span class=\"hidden_text\">150<\/span><\/p>\n<p>aid  to counsel.  This case was also distinguished  by\tthis<br \/>\nCourt in <a href=\"\/doc\/316117\/\">Nagpur Electric Light &amp; Power Co. Ltd. v.  Regional<br \/>\nDirector  Employees State Corporation, Etc.<\/a>(1) Counsel\talso<br \/>\nrelied upon a decision of the Delhi High Court in <a href=\"\/doc\/189443\/\">Employees&#8217;<br \/>\nState  Insurance  Corporation v. Peter\tSewing\tMachine\t Co.<\/a><br \/>\netc.(2),  dealing  with the definition\tof  &#8216;factory&#8217;  under<br \/>\nsection 2 (12) of the Act.  The High Court, inter alia,\t was<br \/>\nposing\ta question in that case as to whether the  whole  or<br \/>\nany  part of the work of the contractors there consisted  of<br \/>\nany  work  which was ordinarily a part of the  work  of\t the<br \/>\nfactory\t or  establishment  of the  principal  employer\t and<br \/>\nanswered it in the negative on the finding of facts in\tthat<br \/>\ncase   &#8220;that  the  contractors,\t manufacture   their   goods<br \/>\nindependently and not as a part of the goods manufactured by<br \/>\nthe  Peter  Sewing Machine Company&#8221;.  On the facts  of\tthis<br \/>\ncase that question does not arise and we express no  opinion<br \/>\nthereon.   The\tdecision  is therefore, of  no\taid  to\t the<br \/>\nappellant in this case.\n<\/p>\n<p>The  learned  counsel  further draws our  attention  to\t M\/s<br \/>\nHindustan   Construction  Co.  Ltd.  v.\t  Employees&#8217;   State<br \/>\nInsurance  Corporation(3)  in  which  case  the\t High  Court<br \/>\nremanded  the matter to find out &#8220;whether the work  done  at<br \/>\nthe    site   can   be\t regarded   as\t  a    manufacturing<br \/>\nprocess&#8230;&#8230;&#8230;&#8230; We, however, do not fail to notice\tthat<br \/>\nthe judgment did not take note of the complete definition of<br \/>\n&#8221; employee&#8221; under section 2 (9), the first part of which  is<br \/>\njoined by a conjunctive &#8216;and&#8217; with two clauses.\t Further the<br \/>\nHigh Court is not correct in thinking that the definition of<br \/>\nthe word &#8220;factory&#8221; under the Factories Act &#8220;is same&#8221; as that<br \/>\nof &#8220;factory&#8221; under the Employees&#8217; State Insurance Act  which<br \/>\nis   of\t wider\tamplitude  with\t an  expanding\thorizon\t  of<br \/>\nobjectives in the latter Act.  It is not necessary, however,<br \/>\nto consider. in this case if these factors may have affected<br \/>\nthe decision in the above case.\t At any rate, the  appellant<br \/>\ndoes not derive any aid from this decision.<br \/>\nThe next decision in Nagpur Electric Light &amp; Power Co., Ltd.<br \/>\n(supra),  relied upon by the appellant for the\tconstruction<br \/>\nof  the definition of &#8220;employee&#8221; under section 2 (9) (i)  of<br \/>\nthe  Act  is not of assistance to him since we\tare  dealing<br \/>\nwith a case under section 2(9) (ii).\n<\/p>\n<p> We, of course, notice that the High Court in this case held<br \/>\nas follows at page 20 of the judgment :-\n<\/p>\n<blockquote><p>\t      &#8220;From  the  foregoing, it is  clear  that\t the<br \/>\n\t      contractors have been executing the work which<br \/>\n\t      is ordinarily part of the work of the  factory<br \/>\n\t      and   that   within  the\t premises   of\t the<br \/>\n\t      respondent-factory&#8221;.\n<\/p><\/blockquote>\n<p>The  definition clauses of &#8220;immediate employer&#8221;\t [section  2<br \/>\n(13)]  and  &#8220;employee&#8221;\t[section 2 (9)\t(11)],\tcontain\t the<br \/>\nexpression &#8220;on the premises of a factory&#8221; and not within it.<br \/>\nEven  so,  as detailed above after  examining  the  evidence<br \/>\nourselves, we are clearly of opinion<br \/>\n(1) [1967] (3) S.C.R. 92.      (2) AIR 1970 Delhi 182.<br \/>\n(3) [1966] I.L.R., 18 Assam &amp; Nagaland 87.\n<\/p>\n<p><span class=\"hidden_text\">151<\/span><\/p>\n<p>that  the work of the contractors was undertaken by them  on<br \/>\nthe premises of the factory which may not be the same  thing<br \/>\nas  in\tor within the factory.\tWe are further of  the\tview<br \/>\nthat  the  entire  site of the factory is  a  composite\t one<br \/>\ncontaining  portions  A as well as B and there is  no  doubt<br \/>\nthat  the contractors are the &#8216;immediate  employers&#8217;  within<br \/>\nthe  meaning  of section 2 (13) of the Act and\tthe  workers<br \/>\nemployed by them are &#8220;employees&#8221; under the Act.<br \/>\nIn the result, the appeal fails and is dismissed with costs.\n<\/p>\n<pre>P.B.R.\t\t\t\t      Appeal dismissed.\n<span class=\"hidden_text\">152<\/span>\n\n\n\n<\/pre>\n","protected":false},"excerpt":{"rendered":"<p>Supreme Court of India B. M. Lakshmanamurthy vs The Employees&#8217; State Insurance &#8230; on 21 January, 1974 Equivalent citations: 1974 AIR 759, 1974 SCC (4) 218 Author: P Goswami Bench: Goswami, P.K. PETITIONER: B. M. LAKSHMANAMURTHY Vs. RESPONDENT: THE EMPLOYEES&#8217; STATE INSURANCE CORPORATION, BANGALORE DATE OF JUDGMENT21\/01\/1974 BENCH: GOSWAMI, P.K. BENCH: GOSWAMI, P.K. REDDY, P. [&hellip;]<\/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":[30],"tags":[],"class_list":["post-196100","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>B. M. 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