{"id":3048,"date":"2010-12-13T00:00:00","date_gmt":"2010-12-12T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/the-regional-director-vs-ms-tata-tea-limited-on-13-december-2010"},"modified":"2018-03-05T01:35:12","modified_gmt":"2018-03-04T20:05:12","slug":"the-regional-director-vs-ms-tata-tea-limited-on-13-december-2010","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/the-regional-director-vs-ms-tata-tea-limited-on-13-december-2010","title":{"rendered":"The Regional Director vs M\/S.Tata Tea Limited on 13 December, 2010"},"content":{"rendered":"
Kerala High Court<\/div>\n
The Regional Director vs M\/S.Tata Tea Limited on 13 December, 2010<\/div>\n
       \n\n  \n\n  \n\n \n \n  IN THE HIGH COURT OF KERALA AT ERNAKULAM\n\nIns.APP.No. 12 of 2009()\n\n\n1. THE REGIONAL DIRECTOR,\n                      ...  Petitioner\n2. THE RECOVERY OFFICER, E.S.I.CORPORATION,\n\n                        Vs\n\n\n\n1. M\/S.TATA TEA LIMITED,\n                       ...       Respondent\n\n                For Petitioner  :SRI.T.P.M.IBRAHIM KHAN, SC, ESI CORPN.\n\n                For Respondent  :SRI.E.K.NANDAKUMAR\n\nThe Hon'ble MR. Justice M.N.KRISHNAN\n\n Dated :13\/12\/2010\n\n O R D E R\n                M.N. KRISHNAN, J.\n          = = = = = = = = = = = = = =\n            INS.APPEAL NO. 12 OF 2009\n         = = = = = = = = = = = = = = =\n    Dated this the 13th day of December, 2010.\n\n                 J U D G M E N T\n<\/pre>\n
    This appeal is preferred against the order<\/p>\n
of the Employees Insurance Court, Alappuzha in<\/p>\n
I.C.79\/04.  The applicant’s establishment moved<\/p>\n
an application u\/s 75 of the E.S.I.Act for<\/p>\n
setting  aside  the   direction   to   pay  E.S.I.<\/p>\n
contribution on the amount reimbursed to M\/s<\/p>\n
P.G. Parameswara Iyer and sons, their stockists<\/p>\n
in  connection   with    their    sale   promotion<\/p>\n
activities.   The applicant’s establishment is<\/p>\n
engaged in the manufacturing and marketing of<\/p>\n
tea.  They are having dealers and stockists at<\/p>\n
different centres and they purchase packets of<\/p>\n
tea from the establishment and they are being<\/p>\n
sold. The applicant also introduced a promotion<\/p>\n
scheme whereby the dealers\/stockists are free to<\/p>\n
INS.APPEAL NO. 12 OF 2009
\n                         -:2:-<\/span><\/p>\n
accept any mode prescribed in the sale promotion<\/p>\n
scheme. Those persons receive remuneration from<\/p>\n
the  stockists   which   was  reimbursed by  the<\/p>\n
applicant by way of sale promotion expenses. It<\/p>\n
has nothing to do with the persons so involved<\/p>\n
and therefore the prayer is to set aside the<\/p>\n
order of the E.S.I. Corporation.<\/p>\n
    2.   On   the    other    hand  the   E.S.I.\n<\/p>\n
Corporation would contend that the records of<\/p>\n
the establishment reveal reimbursement of those<\/p>\n
charges to the stockists and therefore it can be<\/p>\n
considered as the principal employer liable to<\/p>\n
pay contribution.   This was based on the report<\/p>\n
of an insurance inspector.\n<\/p>\n
    3.   In the trial court PW1 and DW1 were<\/p>\n
examined. Exts.P1 to P3 and D1 were marked. On<\/p>\n
an analysis of the materials the trial court<\/p>\n
INS.APPEAL NO. 12 OF 2009
\n                         -:3:-<\/span><\/p>\n
found in favour of the establishment and held<\/p>\n
that interim salesmen are not employees under<\/p>\n
the E.S.I.Act therefore set aside the order. It<\/p>\n
is against that decision the E.S.I. Corporation<\/p>\n
has come up in appeal.        The points of law<\/p>\n
formulated are,<\/p>\n
    (1) Whether    the   interim  salesmen   are<\/p>\n
employees within the meaning of    Section 2 (9)<\/p>\n
of the E.S.I.Act and the salary paid to them<\/p>\n
will   be    wages    to   attract  the   E.S.I.<\/p>\n
Contribution.\n<\/p>\n
    (2) Whether the interim salesmen are coming<\/p>\n
under provisions of Section 2 (9) of the Act and<\/p>\n
the contributions are payable in the facts and<\/p>\n
circumstances of this case.\n<\/p>\n
INS.APPEAL NO. 12 OF 2009
\n                         -:4:-<\/span><\/p>\n
    Points 1 and 2:\n<\/p>\n
    4.   Heard  the   learned  counsel for  the<\/p>\n
appellant as well as the respondent. It is<\/p>\n
desirable to understand the work done by these<\/p>\n
persons in order to decide the question.   Tata<\/p>\n
Tea Ltd. is a manufacturer and seller of tea<\/p>\n
products.    M\/s P.G. Parameswara Iyer and sons<\/p>\n
is the stockists\/dealer under them.    They are<\/p>\n
non-exclusive   in   the  sense that  they  are<\/p>\n
entitled to store and sale the products of other<\/p>\n
companies   as  well.     The  persons who  are<\/p>\n
attempted to be roped in for the purposes are<\/p>\n
persons who had purchased packets of tea from<\/p>\n
the stockists and had sold it during different<\/p>\n
festivals or exhibitions. It is contended that<\/p>\n
since Tata Tea Ltd. has reimbursed the amount<\/p>\n
incurred for the sale promotion which amounts to<\/p>\n
INS.APPEAL NO. 12 OF 2009
\n                         -:5:-<\/span><\/p>\n
wages and therefore the company is bound to pay<\/p>\n
contribution for these persons. So the question<\/p>\n
to be decided is whether a person who sells tea<\/p>\n
for promotion activities independently whose<\/p>\n
expenses are reimbursed by the Tata Tea Ltd. to<\/p>\n
its stockists can be considered as wages for an<\/p>\n
employee that is either under the principal<\/p>\n
employer or the immediate employer.   This fact<\/p>\n
has been considered by the learned Insurance<\/p>\n
Court Judge in paragraph 9 of the award. He had<\/p>\n
considered the evidence of DW1 and found that<\/p>\n
payments were reimbursed by the Tata Tea Ltd. to<\/p>\n
M\/s P.G. Parameswara Iyer and Company. In cross-<\/p>\n
examination DW1 deposed that he did not see any<\/p>\n
agreement executed between Tata Tea Company and<\/p>\n
M\/s P.G. Parameswara Iyer and sons and his<\/p>\n
report was based only on the ledger payments.<\/p>\n
INS.APPEAL NO. 12 OF 2009
\n                         -:6:-<\/span><\/p>\n
He had not enquired about the nature of works of<\/p>\n
interim salesmen and nothing is stated in the<\/p>\n
report.    It is also not stated that those<\/p>\n
interim salesman were attached to the stockist’s<\/p>\n
office.     He  does   not   know whether E.S.I.<\/p>\n
Corporation has claimed contribution from   M\/s<\/p>\n
P.G. Parameswara Iyer and sons. He would submit<\/p>\n
further it had not entered into any agreement<\/p>\n
with M\/s P.G. Parameswara Iyer and sons as<\/p>\n
stockists. It is further interesting to note<\/p>\n
that the so called activities of salesmen are<\/p>\n
not carried out in the establishment of     M\/s<\/p>\n
P.G. Parameswara Iyer and sons and again it is<\/p>\n
deposed that the said Company did not maintain<\/p>\n
any records relating to interim salesmen.    So<\/p>\n
the basis on which the E.S.I. Corporation wanted<\/p>\n
to rope in the establishment is that since the<\/p>\n
INS.APPEAL NO. 12 OF 2009
\n                         -:7:-<\/span><\/p>\n
amounts spent by the stockists for promotion of<\/p>\n
sale had been reimbursed to the stockists, the<\/p>\n
principal   company   will    become liable   for<\/p>\n
contribution. I am afraid such an interpretation<\/p>\n
may lead to dare consequences.    As extracted by<\/p>\n
the trial court neither the stockists nor the so<\/p>\n
called principal employer has any control or<\/p>\n
right over these salesmen. In fact what they do<\/p>\n
is they purchase these stocks but sell it for<\/p>\n
the purpose of the improvement of the business<\/p>\n
for which the stockists paid some remuneration<\/p>\n
and as a part of the sale improvement scheme the<\/p>\n
Company reimburses that amount to the stockists.<\/p>\n
In order to be an employee it is fundamental<\/p>\n
that he is to be employed by the person. Though<\/p>\n
employment need not be direct S.2(a)(i) gives a<\/p>\n
picture about the same.    So far as this case is<\/p>\n
INS.APPEAL NO. 12 OF 2009
\n                          -:8:-<\/span><\/p>\n
concerned 2(a)(i) of the E.S.I.Act cannot have<\/p>\n
any application at all and if at all we have to<\/p>\n
see   whether   S.2    (9)(ii)   will  have  any<\/p>\n
application. In S.2(9)(ii) also employee means,<\/p>\n
“………..who is employed by or through an<\/p>\n
immediate employer, on the premises of the<\/p>\n
factory   or    establishment     or  under  the<\/p>\n
supervision of the principal employer or is an<\/p>\n
agent of work which is ordinarily part of the<\/p>\n
work of the factory or establishment or which is<\/p>\n
preliminary   to  the   work   carried on  in or<\/p>\n
incidental to the purpose of the factory or<\/p>\n
establishment.” Just because the stockists or<\/p>\n
somebody else makes genuine attempts to improve<\/p>\n
their business and in the process since the<\/p>\n
products of the manufacture is being sold out if<\/p>\n
one comes to the conclusion that these people<\/p>\n
INS.APPEAL NO. 12 OF 2009
\n                         -:9:-<\/span><\/p>\n
have to be tacked with the principal employer,<\/p>\n
as stated by me earlier will lead to dangerous<\/p>\n
consequences.    Sale promotion activity is a<\/p>\n
factor which is concerning all, right from the<\/p>\n
manufacturer to the wholesaler or the retailer<\/p>\n
as the case may be and in all those cases just<\/p>\n
because   the  reimbursement   is made  by  the<\/p>\n
manufacturer   as  an   incentive for the  sale<\/p>\n
promotion activity one cannot classify it as<\/p>\n
wages so as to attract the provisions of the<\/p>\n
E.S.I.Act or broadly speaking neither they can<\/p>\n
be treated as an employee of the principal<\/p>\n
employer nor the amount received as taken as<\/p>\n
wages   for    the    purpose   of  the  E.S.I.<\/p>\n
Contribution.   The learned judge had considered<\/p>\n
the matter elaborately on factual basis and the<\/p>\n
finding on the said fact does not appear to be<\/p>\n
INS.APPEAL NO. 12 OF 2009
\n                         -:10:-<\/span><\/p>\n
perverse or mis guided by law.        So the facts<\/p>\n
emanating make it very clear that they are not<\/p>\n
attracted and therefore considering the nature<\/p>\n
of the work done in this case I hold that they<\/p>\n
will not be covered under the provisions of the<\/p>\n
Act and so the respondent Tata Tea Ltd. cannot<\/p>\n
be directed to pay any contribution.      Both the<\/p>\n
questions   of   law  are  answered    against the<\/p>\n
Corporation and the appeal fails and the same is<\/p>\n
dismissed but without costs.\n<\/p>\n
                           Sd\/-\n<\/p>\n
                      M.N. KRISHNAN, JUDGE.\n<\/p>\n
ul\/-\n<\/p>\n
         [true copy]<\/p>\n
                            P.A. To Judge.<\/p>\n<\/blockquote>\n","protected":false},"excerpt":{"rendered":"
Kerala High Court The Regional Director vs M\/S.Tata Tea Limited on 13 December, 2010 IN THE HIGH COURT OF KERALA AT ERNAKULAM Ins.APP.No. 12 of 2009() 1. THE REGIONAL DIRECTOR, … Petitioner 2. THE RECOVERY OFFICER, E.S.I.CORPORATION, Vs 1. M\/S.TATA TEA LIMITED, … Respondent For Petitioner :SRI.T.P.M.IBRAHIM KHAN, SC, ESI CORPN. For Respondent :SRI.E.K.NANDAKUMAR 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-3048","post","type-post","status-publish","format-standard","hentry","category-high-court","category-kerala-high-court"],"yoast_head":"\nThe Regional Director vs M\/S.Tata Tea Limited on 13 December, 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\/the-regional-director-vs-ms-tata-tea-limited-on-13-december-2010\" \/>\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 M\/S.Tata Tea Limited on 13 December, 2010 - 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