{"id":236935,"date":"2010-10-05T00:00:00","date_gmt":"2010-10-04T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/roofs-engineers-contractors-vs-the-mathrubhumi-printing-on-5-october-2010"},"modified":"2017-11-20T07:54:00","modified_gmt":"2017-11-20T02:24:00","slug":"roofs-engineers-contractors-vs-the-mathrubhumi-printing-on-5-october-2010","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/roofs-engineers-contractors-vs-the-mathrubhumi-printing-on-5-october-2010","title":{"rendered":"Roofs Engineers & Contractors vs The Mathrubhumi Printing & … on 5 October, 2010"},"content":{"rendered":"
Kerala High Court<\/div>\n
Roofs Engineers & Contractors vs The Mathrubhumi Printing & … on 5 October, 2010<\/div>\n
       \n\n  \n\n  \n\n \n \n  IN THE HIGH COURT OF KERALA AT ERNAKULAM\n\nIns.APP.No. 38 of 2006(A)\n\n\n1. ROOFS ENGINEERS & CONTRACTORS,\n                      ...  Petitioner\n\n                        Vs\n\n\n\n1. THE MATHRUBHUMI PRINTING & PUBLISHING\n                       ...       Respondent\n\n2. THE EMPLOYEES STATE INSURANCE CORPN.,\n\n3. ASSOCIATED BUILDERS,\n\n4. KAP CONSTRUCTIONS,\n\n                For Petitioner  :SRI.A.M.SHAFFIQUE (SR.)\n\n                For Respondent  :SRI.U.K.RAMAKRISHNAN (SR.)\n\nThe Hon'ble MR. Justice K.M.JOSEPH\nThe Hon'ble MRS. Justice M.C.HARI RANI\n\n Dated :05\/10\/2010\n\n O R D E R\n                           K.M. JOSEPH &\n                         M. C. HARI RANI, JJ.\n                  -----------------------------------------\n                INS. APPEAL NOS. 38 & 45 OF 2006\n                  ------------------------------------------\n                   Dated this the 5th October, 2010.\n\n                                JUDGMENT\n<\/pre>\n
K.M. Joseph, J.\n<\/p>\n<\/p>\n
     Both these Appeals raise the following substantial questions<\/p>\n
of law:\n<\/p>\n
           “i)   Whether the Court below is correct in<\/p>\n
     directing the appellant to pay the ESI contribution<\/p>\n
     directly to the Corporation instead of directing the 1st<\/p>\n
     respondent who was the primary liability in terms of<\/p>\n
     Section 40 of the Act.\n<\/p><\/blockquote>\n
           ii)  Whether the Court below is correct in<\/p>\n
     directing the appellant to pay ESI contribution when<\/p>\n
     such claims for adjudication was raised against the<\/p>\n
     app.<\/p><\/blockquote>\n
           iii) Whether the Court below is legally correct in<\/p>\n
     directing   the   immediate       employer       to    pay ESI<\/p>\n
     contribution at the first instance only on the ground<\/p>\n
INS.APPEALS 38 & 45\/2006        2<\/p>\n
      that the immediate employer is wrongly made as a<\/p>\n
      party to the case.\n<\/p>\n
            iv)    Whether the immediate employer is a<\/p>\n
      necessary party in an Insurance Case filed by the<\/p>\n
      principal employer challenging the demand for<\/p>\n
      contribution made by the ESI contribution.<\/p>\n
            v)    Whether the Court below is correct in<\/p>\n
      deciding a claim under Section 75(2)(b) in a claim<\/p>\n
      under Section 75(2)(a) when each claim in the<\/p>\n
      aforesaid sections are independent claim for which<\/p>\n
      independent proceedings are required.\n<\/p>\n
            vi)   Since the Act is not applicable to the<\/p>\n
      appellant and no such code has been allotted whether<\/p>\n
      the court below is correct in directing the appellant to<\/p>\n
      pay the contribution.”\n<\/p>\n<\/p>\n
      2.  The first respondent in both these Appeals entrusted<\/p>\n
certain construction works to the appellant in both these cases in its<\/p>\n
in its premises. The first respondent is a covered establishment<\/p>\n
under the Employees’ State Insurance Act, 1948 (hereinafter<\/p>\n
referred to as the Act). Proceedings were taken under Section 45A<\/p>\n
INS.APPEALS 38 & 45\/2006         3<\/p>\n
in respect of the liability of the first respondent towards the<\/p>\n
employees of the appellants.     Against the said proceedings, the<\/p>\n
first respondent filed E.I.C. No.5\/2000 before the Employees<\/p>\n
Insurance Court under Section 75 read with Section 77 of the Act.<\/p>\n
In the said proceedings, the appellants in these cases were also<\/p>\n
impleaded as respondents.      Allegations were raised against the<\/p>\n
appellants that they are liable on the ground that they are principal<\/p>\n
employers for the reason that they are employing more than twenty<\/p>\n
employees. Thereafter, an amendment was permitted by the court<\/p>\n
by which the first respondent claimed that the appellants be<\/p>\n
directed to remit the amount as they the are immediate employers.<\/p>\n
     3. The court did not accept the case of the first respondent<\/p>\n
that the appellants are liable as principal employers. However,<\/p>\n
acting on notions of justice, the court proceeded to, inter alia,<\/p>\n
dispose of the matter by directing the appellants in both these cases<\/p>\n
to remit the amounts due. It reasoned that the appellants are the<\/p>\n
immediate employers and under the Act, while the responsibility is<\/p>\n
INS.APPEALS 38 & 45\/2006            4<\/span><\/p>\n
to pay the amounts is cast on the principal employer, the principal<\/p>\n
employer has a legal right to recover the same from the immediate<\/p>\n
employer. In the circumstances of the case, the court took the view<\/p>\n
that it is justified in directing the appellants to remit the amount. In<\/p>\n
fixing the wage element, the court did not accept the version of the<\/p>\n
first respondent and instead, fixed the wage element as twentyfive<\/p>\n
per cent of the total contractual payment. It is feeling aggrieved by<\/p>\n
the same that the appellants are before us.\n<\/p>\n
      4. We heard the learned counsel for the appellants, learned<\/p>\n
senior counsel appearing on behalf of the first respondent and also<\/p>\n
the learned counsel appearing on behalf of the second respondent<\/p>\n
Corporation.\n<\/p>\n
      5. Learned counsel for the appellants in both these cases<\/p>\n
would submit that the order is in the teeth of the statutory scheme<\/p>\n
of the Act. He would draw our attention to Section 40 of the Act.<\/p>\n
He would contend that under the Act, it is the obligation of the<\/p>\n
principal employer to pay the contribution in respect of the<\/p>\n
INS.APPEALS 38 & 45\/2006         5<\/p>\n
employees of the immediate employer. Upon payment being made,<\/p>\n
the principal employer becomes entitled by virtue of the provisions<\/p>\n
of the Act to recover the same under Section 41 from the<\/p>\n
immediate employer. He would submit that actually the appellants<\/p>\n
would have been entitled to the benefit of the exemption granted<\/p>\n
under the Act, but for the fact that they are carrying on the work in<\/p>\n
the factory premises. Learned counsel for the appellants would<\/p>\n
also point out that the fixation of the wage element at twentyfive<\/p>\n
per cent in the case of a construction in question, which is a new<\/p>\n
building, is not sustainable, while twentyfive per cent could have<\/p>\n
been taken as the norm in respect of contract of repairs and<\/p>\n
maintenance, which is not the case in these matters. Per contra, the<\/p>\n
learned senior counsel for the first respondent would address the<\/p>\n
following contentions before us:\n<\/p>\n
     He would submit that this is a peculiar case where the<\/p>\n
appellants\/immediate    employers     did   not   furnish  the  first<\/p>\n
respondent with the necessary details about the wages being paid<\/p>\n
INS.APPEALS 38 & 45\/2006          6<\/span><\/p>\n
to its workers. He would further point out that under the Act, it is<\/p>\n
not open to the principal employer to make any deduction of the<\/p>\n
wages of the employees of the immediate employer, as deduction<\/p>\n
of wages is permissible only with respect to the employees of the<\/p>\n
principal employer. He would also contend that this is a case<\/p>\n
where, even though it may be true that the appellants were not<\/p>\n
parties to the proceedings under Section 45A, they were none-the-<\/p>\n
less made parties before the court and they ought to have utilised<\/p>\n
the opportunity so afforded to place any data they wished in<\/p>\n
support of their contentions. He would submit that, at any rate, the<\/p>\n
ultimate responsibility is fixed under the Act on the immediate<\/p>\n
employer in respect of employees of the immediate employer and<\/p>\n
in the peculiar circumstances of the case, the decision of the court<\/p>\n
in so far as it relates to the recovery of the amounts directly from<\/p>\n
the appellants may not be disturbed. Learned counsel appearing on<\/p>\n
behalf of the Corporation also would submit that the ultimate<\/p>\n
responsibility is cast on the immediate employer.<\/p>\n
INS.APPEALS 38 & 45\/2006        7<\/p>\n
     6. After having heard the learned counsel for the parties, we<\/p>\n
are of the view that the directions issued as against the appellants<\/p>\n
by the court may be difficult to sustain. Sub-section (1) of Section<\/p>\n
40 reads as follows:\n<\/p>\n
           “40. Principal employer to pay contribution in<\/p>\n
      the first instance.- (1) The principal employer shall<\/p>\n
      pay in respect of every employee, whether directly<\/p>\n
      employed by him or by or through an immediate<\/p>\n
      employer, both the employer’s contribution and the<\/p>\n
      employee’s contribution.”\n<\/p><\/blockquote>\n
Section 41, thereafter provides for recovery of the contribution<\/p>\n
from the immediate employer. It reads as follows:<\/p>\n
           “41. Recovery of contribution from immediate<\/p>\n
      employer.-<\/p><\/blockquote>\n
      (1) A principal employer, who has paid contribution<\/p>\n
      in respect of an employee employed by or through an<\/p>\n
      immediate employer, shall be entitled to recover the<\/p>\n
      amount of the contribution so paid (that is to say the<\/p>\n
INS.APPEALS 38 & 45\/2006       8<\/p>\n
      employer’s contribution, as well as the employee’s<\/p>\n
      contribution, if any from the immediate employer,<\/p>\n
      either by deduction from any amount payable to him<\/p>\n
      by the principal employer under any contract, or as a<\/p>\n
      debt payable by the immediate employer.”\n<\/p>\n
Sub-section (1A), no doubt, provides that the immediate employer<\/p>\n
shall maintain a Register of employees employed by or through<\/p>\n
him as provided in the Regulations and submit the same to the<\/p>\n
principal employer before settlement of any amount payable under<\/p>\n
Sub-section (1). It is open to the immediate employer to recover<\/p>\n
the employees’ contribution from the employees or by through<\/p>\n
deduction from wages. The conclusion is inevitable on a perusal<\/p>\n
of Sections 40 and 41 that the legislature intended that it is<\/p>\n
incumbent upon the principal employer to pay the contribution in<\/p>\n
respect of an employee of the immediate employer also. But for<\/p>\n
Section 41, there would have been no legal right with the principal<\/p>\n
employer to even recover it from the immediate employer. Thus,<\/p>\n
the Scheme is that the principal employer has to pay initially and<\/p>\n
INS.APPEALS 38 & 45\/2006         9<\/p>\n
then it is open to him to recover the same from the immediate<\/p>\n
employer.\n<\/p>\n
     7. In this case, as already noted, the first respondent was<\/p>\n
called upon to remit contributions in respect of the employees of<\/p>\n
the immediate employer. Proceedings were initiated under Section<\/p>\n
45A. The appellants were not parties in the said proceedings. In<\/p>\n
proceedings under Section 75 initiated by the principal employer,<\/p>\n
the appellants were made parties. The principal allegation against<\/p>\n
them was they would be liable to make contributions in their<\/p>\n
capacity as principal employer. It is not in the region of any<\/p>\n
dispute that the court did not accept the case of the first<\/p>\n
respondent\/principal       employer       that    the     immediate<\/p>\n
employers\/appellants could be treated as principal employers.<\/p>\n
Once it was found by the court that the appellants were not liable<\/p>\n
in their capacity as principal employer, we fail to see how the court<\/p>\n
could have proceeded to direct the appellants to make the payment.<\/p>\n
The court is a creature of the statute. Its powers are circumscribed<\/p>\n
INS.APPEALS 38 & 45\/2006        10<\/p>\n
by the provisions under which it is created. We are not shown the<\/p>\n
source for the court to exercise any residuary powers or in other<\/p>\n
words, we cannot describe the court as a court of unlimited<\/p>\n
jurisdiction. Certainly, the court cannot give a direction which is<\/p>\n
opposite to the statutory scheme contained in Sections 40 and 41 of<\/p>\n
the Act to which we have already adverted to. Yet, this is precisely<\/p>\n
what the court on motions of justice proceeded to do. We must<\/p>\n
also notice that this is a case where we should emphasis the fact<\/p>\n
that the appellants were not even parties before the statutory<\/p>\n
authority in proceedings under Section 45A.<\/p>\n
     8. Learned counsel for the appellants in both these cases<\/p>\n
would submit that if proceedings are taken under Section 45A for<\/p>\n
which there is power indeed under the proviso to Section 45A<\/p>\n
against them and the amounts are quantified after giving an<\/p>\n
opportunity to them and with the first respondent also participating<\/p>\n
in the proceedings, the appellants will pay up.            In such<\/p>\n
circumstances, we are inclined to hold that the appellants could not<\/p>\n
INS.APPEALS 38 & 45\/2006         11<\/p>\n
have been called upon to pay the contributions by the court without<\/p>\n
calling upon the principal employer to pay the amount by the court<\/p>\n
and that too, when the appellants were not being made parties to<\/p>\n
the proceedings under Section 45A. The order dated 19.10.2005<\/p>\n
which is appealed before us, to the extent they are against the<\/p>\n
appellants in these cases, shall stand set aside. Proceedings will be<\/p>\n
taken by the second respondent against the appellants under<\/p>\n
Section 45A and concluded within a period of two months from the<\/p>\n
date of receipt of a copy of this Judgment. The first respondent<\/p>\n
can also be made a formal party in the proceedings.<\/p>\n
                                                      Sd\/=
\n                                                  K.M. JOSEPH,
\n                                                    JUDGE<\/p>\n
                                                       Sd\/=
\n                                                M.C. HARI RANI,
\n                                                    JUDGE<\/p>\n
kbk.<\/p>\n
\n               \/\/True copy\/\/\n                                                    PS to Judge\n\nINS.APPEALS 38 & 45\/2006    12\n<\/pre>\n","protected":false},"excerpt":{"rendered":"
Kerala High Court Roofs Engineers & Contractors vs The Mathrubhumi Printing & … on 5 October, 2010 IN THE HIGH COURT OF KERALA AT ERNAKULAM Ins.APP.No. 38 of 2006(A) 1. ROOFS ENGINEERS & CONTRACTORS, … Petitioner Vs 1. THE MATHRUBHUMI PRINTING & PUBLISHING … Respondent 2. THE EMPLOYEES STATE INSURANCE CORPN., 3. ASSOCIATED BUILDERS, 4. […]<\/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-236935","post","type-post","status-publish","format-standard","hentry","category-high-court","category-kerala-high-court"],"yoast_head":"\nRoofs Engineers & Contractors vs The Mathrubhumi Printing & ... on 5 October, 2010 - 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\/roofs-engineers-contractors-vs-the-mathrubhumi-printing-on-5-october-2010\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Roofs Engineers & Contractors vs The Mathrubhumi Printing & ... on 5 October, 2010 - 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