{"id":95867,"date":"2006-01-25T00:00:00","date_gmt":"2006-01-24T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/the-assistant-regional-director-vs-sri-ganapathy-mills-company-on-25-january-2006"},"modified":"2017-11-01T09:34:45","modified_gmt":"2017-11-01T04:04:45","slug":"the-assistant-regional-director-vs-sri-ganapathy-mills-company-on-25-january-2006","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/the-assistant-regional-director-vs-sri-ganapathy-mills-company-on-25-january-2006","title":{"rendered":"The Assistant Regional Director vs Sri Ganapathy Mills Company … on 25 January, 2006"},"content":{"rendered":"
Madras High Court<\/div>\n
The Assistant Regional Director vs Sri Ganapathy Mills Company … on 25 January, 2006<\/div>\n
       \n\n  \n\n  \n\n \n \n BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT\n\n\nDATED : 25\/01\/2006\n\n\nCORAM:\nTHE HONOURABLE MR.JUSTICE A.C.ARUMUGA PERUMAL ADITYAN\n\n\nC.M.A.No.63 of 1998\n\n\nThe Assistant Regional Director,\nE.S.I.Corporation,\n143, Sterling Road,\nMadras-34.\t\t\t...\tAppellant\n\nVs\n\nSri Ganapathy Mills Company Limited,\nSankar Nagar,\nTirunelveli, represented by its\nManaging Director.\t\t...\tRespondent\n\n\nPrayer\n\n\nAppeal filed under Section 82 of the E.S.I.Act, 1948, Central Act XXXIV\nof 48, against the order of the learned Principal District Judge \/ The\nEmployees' State Insurance Judge, Tirunelveli, dated the 12.05.1994 and made in\nE.S.I.O.P.No.7 of 1988.\n\n\n!For Appellant   \t...\tMr.J.S.Murali\n\n^For Respondents \t...\tMr.K.Srinivasan,\n\t\t\t\tMr.G.Prabhu Rajadurai.\n\n\n:JUDGMENT\n<\/pre>\n
\tThis appeal has been preferred against the award  E.S.I.O.P.No.7 of 1988
\non the file of the Principal District Judge, Tirunelveli, dated 12.05.1994.
\nThe short facts of the case, in brief, are as follows:\n<\/p>\n
\t2. The petitioner, Sri Ganapathy Mills Company Limited, Sankar Nagar,
\nTirunelveli, is a cotton Mill governed under the provisions of the Factories
\nAct, and the said factory was paying the E.S.I. Contribution under the
\nE.S.I.Act.  The respondent, E.S.I.Corporation, Madras had sent a notice dated
\n02.07.1987 to the complainant \/ respondent to pay E.S.I Contribution for (i) a
\nsum of Rs.27,880.90 for the interim relief given to the employees, (ii) a sum of
\nRs.137.75 for the salary given to the supervisors for the month of February ‘
\n1986 and March ‘ 1986, (iii) a sum of Rs.1,957.50 for the salary given to two
\ndirectos for the period between 01.11.1985 and 31.10.1986, (iv) a sum of
\nRs.42.70 for the salary for the month of November ‘ 1985 to December ‘ 1985 and
\nMay ‘ 1986 to August ‘ 1986 to the directors, (v) a sum of Rs.2,039 for the
\nholidays salary to the directors and (vi) a sum of Rs.20,601.95 for the stipend
\ngiven to apprentices for the period from 01.10.1985 to 30.09.1986.\n<\/p>\n
\t3. The petitioner agreed to pay the E.S.I Contribution  for the salary
\ngiven to supervisors, for the salaries of two directors and also the salaries
\npaid to the two directors at the time of strike period.  But, the petitioner
\nwould deny to pay any E.S.I. Contribution to the holidays salary, on the ground
\nthat the interim relief is not a holidays salary.  The respondent has further
\nstated that apprentices are not employees and hence any salary given to
\napprentices, the Mill is not liable to pay E.S.I Contribution.  The petitioner
\nhas paid a sum of Rs.2,138 being the admitted E.S.I Contribution to the admitted
\namounts.  The respondent has arbitrarily issued the notice under Section 45 (A)
\nof E.S.I.Act along with the notice, dated 02.07.1987.  The Inspector of the
\nrespondent’s Corporation had not sent the report of the Inspector of the
\nrespondent, along with the show cause notice.  The respondent has not given any
\nreason for claiming the E.S.I Contribution for the stipend given to the
\napprentices and also for the interim relief given to the petitioners.  Hence,
\nthe petitioner had filed the petition to set aside the order passed by the
\nrespondent in T.N.I\/N.S.IV\/51-5466.11, dated 09.12.1987 and also to issue an
\norder of permanent injunction against the respondent from realising the sum of
\nRs.50,521.80.  The second respondent has filed a counter contending that since
\nthe apprentices were working in the petitioner’s Spinning Mill itself, the
\npetitioner is liable to pay the E.S.I contribution for the stipend paid to the
\napprentices and paid for the dismissal of the petition.  Before the learned
\nPrincipal District Judge, had accepted Ex.A.1 to A.13 and Ex.R.1 and Ex.R.2.  No
\noral evidence was let in before the Principal District Judge \/ Labour court.
\nAfter going through the documentary evidence produced before it, the learned
\nPrincipal District Judge, Tirunelveli, had come to the conclusion that the order
\npassed by the respondent \/ E.S.I.Corporation, dated 09.12.1987, cannot be set
\naside in respect of E.S.I  Contribution for the holidays salary and set aside
\nthe order of the E.S.I.Corporation in respect of the interim relief awarded to
\nthe employees and also for the stipend paid to the apprentices.\n<\/p>\n
\t4. Aggrieved by the orders of the learned Principal District Judge,
\nTirunelveli, in E.S.I.O.P.No.7 of 1988, dated 12.05.1994, the E.S.I.Corporation
\nhas preferred this appeal.\n<\/p>\n
\t5. Now, the point for determination in this appeal is whether the award
\npassed by the Principal District Judge, Tirunelveli in E.S.I.O.P.No.7 of 1988,
\ndated 12.05.1994, is liable to be set aside for the reasons stated in the
\nMemorandum of appeal?\n<\/p>\n
The Point:\n<\/p>\n
\t6. The appellant had issued Ex.A.3, order, under Section 45(A) E.S.I.Act,
\ndemanding the respondent \/ the petitioner, Sri Ganapathy Mills Company Limited,
\nSankar Nagar, to pay E.S.I Contribution under six heads totalling a sum of
\nRs.52,659.80.  The details of demand are as follows:\n<\/p>\n
\t1. towards interim relief sanctioned to the employees for the period from
\n8\/85 to 9\/86 is                   \t\t\t\t  = Rs.27,880.90\n<\/p>\n
\t2. the salary of supervisors for February 86 and March 86 , E.S.I share
\ncontribution is        \t\t\t\t   = Rs.137.75\n<\/p>\n
\t3. for the salary of two directors (Mr.K.V.Rajendran and Mr.V.Subburaj)
\nfrom 01.11.1985 to 31.10.1986 is  \t   = Rs.1,957.50\n<\/p>\n
\t4. the salary sanctioned during strike period from May 86 to July 86 is  =
\nRs.42.70\n<\/p>\n
\t5. for holiday salary is                       \t\t\t\t   =
\nRs.2,039\n<\/p>\n
\t6. the stipend of the apprentices for the period between 01.10.1985 and
\n30.09.1986 is              \t\t\t\t  = Rs.20,601.95<\/p>\n
\t7. The appellant challenges the orders of the Principal District Judge,
\nTirunelveli in the above E.S.I.O.P.No.7 of 1988 only in respect of two grounds.
\nThe first ground is in respect of the interim relief given to the workers for a
\nperiod of 8\/85 to 9\/86 amounting to Rs.27,880.90 and the next one is the stipend
\npaid to the apprentices for the period of 01.10.1985 to 30.09.1986 amounting to
\nRs.20,601.95.\n<\/p>\n
\t8. The learned Counsel appearing for the appellant relying on the decision
\nin Premier Polytronics Limited, Vs. Assistant Regional Director, Employees’
\nState Insurance Corporation reported in 2001-I-LLJ (page 187) and contended that
\nthe apprentices, as defined under Section 2(a) of the Apprentices Act, 1961, are
\nnot employees, against whom the employer, the E.S.I.Act will not be applicable.
\nIn the said case, a notice under Section 45(A) of E.S.I.Act, 1948 dated 6th May
\n1986, was directed against the appellant in the said case and the Inspector of
\nthe E.S.I.Corporation  visited the factory and found that employees who were
\ndesignated as apprentices were not trainees or apprentices.  Hence, the order
\nunder Section 45(A) of the Act, was issued.  In the reply to the notice, the
\nemployer had contended that there was a full-fledged scheme of apprenticeship in
\ntheir factory with duly certified standing orders and regular classes were also
\nconducted for one day in a week to the apprentices and for the rest of the week,
\nthey were being given job training.  After ascertaining the actual state of
\naffairs and based on the facts, it was concluded that the employees were
\nactually given production work and they were not merely trainees.  The E.S.I.
\nCourt had also taken into account other facts as well as the fact that as
\nagainst the strength of the permanent employees of 25, the employer had
\nrepresented that there were 87 apprentices and in that case, there was no
\nreasonable materials placed to show that the employees were not apprentices.
\nSo, on that ground the findings of the learned E.S.I.Court was set aside.\n<\/p>\n
\t9. But, here in this case, before the learned Principal District Judge,
\nTirunelveli \/ E.S.I Court, as per Ex.A.5 to A.7, the agreements, stipends were
\ngiven to the apprentices and it is seen from the above documents that apprentice
\nwere doing apprentice work in the petitioner \/ respondent’s Mill.  In Ex.A.1
\nitself, the appellant \/ respondent had claimed Rs.20,601.95 being the E.S.I
\nContribution for the stipend paid to the apprentice for the period between
\n01.10.1985 and 30.09.1986.  So, the appellant cannot now turn around and say
\nthat they are not the apprentices, but they are employees.  There is absolutely
\nno document produced before the Principal District Judge, Tirunelveli, at the
\ntime of trial of E.S.I.O.P.NO.7 of 1988 that there were no apprentices under
\ntraining in the said respondent’s Mill.  For the stipend given to the
\napprentices, the E.S.I.Corporation cannot claim E.S.I Contribution, as decided
\nin Employees’ State Insurance Corporation Vs. Tata Engineering & Locomotive Co.,
\nLtd., and another reported in Volume XXX (1966 – 67) F.J.R. 304,  wherein the
\nquestion arose for consideration before the Patna High Court was whether the
\napprentice falls within the definition of ’employee’ under Section 2(9) of the
\nE.S.I.Act, 1948.  While deciding that question, it has been held by the said
\nCourt as follows:\n<\/p>\n
\t“The Crucial question for consideration is whether on a true construction
\nof the agreement between the apprentices and respondent No.1 (annexure A) it can
\nbe held  that these apprentices are employees of respondent No.1 as defined in
\nSection 2(9) of the Act.  On behalf of the petitioners, it was urged that, in
\nessence, these apprentices were employees and not mere students undergoing
\ntraining notwithstanding the use of such words as ‘students’, ‘for practical
\ntraining’, ‘course of study’, and ‘holding of periodical examinations’.  Some
\nreliance was placed on the use of the words “serve the Company” occurring in
\nsub-clause (1) of clause 12 of the agreement which may be quoted as follows:\n<\/p>\n
\t“That the Apprentice will during the whole of the said term of three years
\nof training diligently and faithfully serve the Company and to the utmost power
\nand skill attend to the Company’s business at such places and times as the
\nCompany or its representatives shall direct”\n<\/p>\n
\t10. Ex.A.5 to Ex.A.7 are the agreements entered into by the apprentices
\nwith the Management \/ Respondent herein.  So, the contentions of the learned
\nCounsel appearing for the appellant that there were no apprentices in the said
\nMill and that they are employees, cannot be sustainable, as rightly held by the
\nPrincipal District Judge, Tirunelveli in E.S.I.O.P.NO.7 of 1988.\n<\/p>\n
\t11. The next contention raised by the learned Counsel for the appellant,
\nwas that interim relief paid to workers for the period from August 1986 to
\nSeptember 1986 amounting to Rs.3,84,564.15 for which the E.S.I Contribution of
\nRs.27,880.90 was demanded under Ex.A.1.  It was contended by the learned Counsel
\nfor the appellant that interim relief given to the employees, is also salary and
\nhence, the Mill \/ respondent herein, is liable to pay the E.S.I Contribution.
\nIt is seen from Ex.A.1 that the E.S.I Contribution of Rs.27,880.90 was demanded
\nonly for the interim relief paid to the workers for 8\/85 to 9\/86  and it was
\ndefinitely not for an ex-gratia payment.  In Annexure 1 to A.13 shows that only
\na basic wages and dearness allowance, house rent allowance and increments were
\ngiven to the workers as per the settlement.  Further, there is no document
\nproduced by the respondent herein \/ Mill to show that Rs.3,84,564.15 paid to the
\nworkers for the period from 8\/85 to 9\/86 are only ex-gratia payments and not
\ninterim wages.\n<\/p>\n
\t12.  The learned Counsel for the respondent relying on the decision in
\nEmployees State Insurance Corporation, etc. Vs. The Narasimha Mills Limited,
\netc., reported in 2003-1-L.W.210 and contended that as per Section 10-B,22 of
\nthe Industrial Disputes Act, wages include ex-gratia payments also that the
\nE.S.I Contribution demanded under Section 2(22) of E.S.I.Act for the interim
\nrelief paid to the workers of the respondent for the period from 8\/85 to 9\/86,
\nwill be construed only as ex-gratia and that the Mill \/ respondent is not liable
\nto pay any E.S.I contribution.\n<\/p>\n
\t13. But, the learned Counsel appearing for the appellant brought to the
\nnotice of this court that the above said judgment has been over-ruled by the
\njudgment of the Apex Court in Employees’ State Insurance Corporation Vs.
\nGnanambigai Mills Limited, reported in 2005(6) SC 67.  The relevant observation
\nof the Apex Court  is as follows:\n<\/p>\n
\t“In our view the High Court has gone completely wrong in concluding that
\nby virtue of the award it ceases to be wages.  As stated above, the Tribunal has
\nnot applied, its mind as to whether or not the payments were wages.  All that
\nthe Tribunal did was to give its imprimatur to a compromise between the parties.
\nMerely because the parties in their compromise chose to term the payments as ‘ex
\ngratia payments’ does not mean that those payments cease to be wages if they
\nwere otherwise wages.  As stated above, they were wages at the time that they
\nwere paid.  They did not cease to be wages after the award merely because the
\nterms of compromise termed them as ‘ex gratia payments’.  We are therefore
\nunable to accept the reasoning of the judgments of the High Court.  The judgment
\nof the Division Bench as well as that of the Single Judge accordingly stand set
\naside.  It is held that the amounts paid are wages and contribution will have to
\nbe made on those amounts also.”\n<\/p>\n
\t14. So, I am of the view that the interim relief paid to the workers for
\nthe period from 8\/85 to 9\/86 will not amount to ex-gratia payments as per
\nsettlement arrived at between the Management and the workers, as contended by
\nthe learned Counsel appearing for the respondent.\n<\/p>\n
\t15. Under such circumstances, the findings of the learned Principal
\nDistrict Judge, Tirunelveli that they are not interim relief, but they are ex-
\ngratia payments, cannot be accepted.  So, under Ex.A.1, the respondent \/ Sri
\nGanapathy Mill Company Limited is not liable to pay the E.S.I. Contribution of
\nRs.27,880.90 to the appellant.  Hence, I hold on the point that the award passed
\nby the learned Principal District Judge, Tirunelveli in E.S.I.O.P.No.7 of 1988,
\ndated 12.05.1994, is liable to be set aside in respect of the interim relief for
\nthe period from 8\/85 to 9\/86 for the E.S.I Contribution to the tune of
\nRs.27,880.90 and the finding in respect of E.S.I Contribution for apprentice
\nstipend for the period between 01.10.1985 to 30.09.1986 to the tune of
\nRs.20,601.95 is to be confirmed.  The point is answered accordingly.\n<\/p>\n
\t16. In the result, the appeal is partly allowed and the findings of the
\nlearned Principal District Judge, Tirunelveli, in E.S.I.O.P.No.7 of 1988, dated
\n12.05.1994 in respect of the E.S.I contribution for interim relief to the tune
\nof Rs.27,880.90 is hereby set aside.  With regard to the other findings, the
\naward passed in E.S.I.O.P.No.7 of 1988 is confirmed.  No costs.\n<\/p>\n
rsb   \t<\/p>\n
To<\/p>\n
The Principal District Judge –\n<\/p>\n
The Employees’ State Insurance Judge,
\nTirunelveli\t\t<\/p>\n","protected":false},"excerpt":{"rendered":"
Madras High Court The Assistant Regional Director vs Sri Ganapathy Mills Company … on 25 January, 2006 BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED : 25\/01\/2006 CORAM: THE HONOURABLE MR.JUSTICE A.C.ARUMUGA PERUMAL ADITYAN C.M.A.No.63 of 1998 The Assistant Regional Director, E.S.I.Corporation, 143, Sterling Road, Madras-34. … Appellant Vs Sri Ganapathy Mills Company Limited, […]<\/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":[8,13],"tags":[],"class_list":["post-95867","post","type-post","status-publish","format-standard","hentry","category-high-court","category-madras-high-court"],"yoast_head":"\nThe Assistant Regional Director vs Sri Ganapathy Mills Company ... on 25 January, 2006 - 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-assistant-regional-director-vs-sri-ganapathy-mills-company-on-25-january-2006\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Assistant Regional Director vs Sri Ganapathy Mills Company ... on 25 January, 2006 - 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