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Hardev Singh Vs. Employees State Insurance Corporation, the Collector of Delhi - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtDelhi High Court
Decided On
Case NumberFirst Appeal No. 12 of 1971
Judge
Reported in19(1981)DLT35; 1981RLR117
ActsEmployees State Insurance Act, 1948 - Sections 2(12)
AppellantHardev Singh
RespondentEmployees State Insurance Corporation, the Collector of Delhi
Advocates: B.I. Singh and; A.P. Gupta, Advs
Cases ReferredChanan Singh v. Regional Director Employee
Excerpt:
labour and industrial - recovery - sections 2 (12) and 82 (2) of employees state insurance act, 1948 - appellant claims that recovery on account of employer's contribution cannot be made as appellant's working unit does not fall under definition of 'factory' - whether contractor can be included within definition of person working in a factory - evidence produced shows contractors in separate category which leads to inference that contractors not under control of manager of appellant - five out of 21 employees employed were contractors - in case contractors excluded premises of appellant it does not constitute 'factory' - appeals succeeds. - - hardev singh though failed to produce the record before the corporation but did so before the court......in the premises for purposes of coverage under the act. ours is not a case of a proprietor of the factory working as an employer in the factory. the learned court refused to look into the documents produced by the appellant before it on the ground that production of these documents at that stage could be of no value because the same were not produced by the petitioner before the inspector and were not produced even before the corporation in pursuance of notice ex. r. 3. i do not think that if the documents were not produced before the corporation, the appellant was precluded from producing and proving these documents, before the court. the court has not said that they were not or could not be considered to be, genuine documents. (5) it was next urged that the finding whether the number.....
Judgment:

M.L. Jain, J.

(1) The inspector of the Employees State Insurance Corporation Shri D. K. Sethi visited the premises of the Durga Metal Works on January 27, 1967 found 5 contractors and 16 other regular workers working in the factory. One Shri K. K. Pathak the supervisor was present in the premises of the factory. The inspector demanded inspection of the attendance register, wages register, cash book and ledger from December 1963 to July 1964. It appears that the record was not produced then nor later and the Corporation raised a demand of contributions as follows : 1. Rs. 1252.64 on account of employees' contribution for the period October 1, 1966 to August 21, 1968; 2. Rs. 1479.76 on account of employer's contribution w.e.f. October 1, 1966 to January 27, 1968.

(2) Since this amount was not paid, the Corporation requested the Collector of Delhi to effect recoveries by an application of November 20, 1968. Apprehending coercive process to issue for the recovery, Hardev Singh proprietor of the Durga Metal Works filed an application in the Employees Insurance Court on November 1 1, 1969 praying for an injunction against the Corporation and the Collector restraining them from recovering the aforesaid amounts. The court by its order dated November 26, 1970, refused to grant injunction for recovery of the principal amount but directed the respondents not to recover any interest thereon.

(3) The petitioner Hardev Singh has filed this appeal under Section 82(2) of the Employees State Insurance Act, 1948, (herein the Act), on the ground that a substantial question of law arises in the appeal.

(4) The very first contention is whether the Durga Metal Work is a factory covered by the definition given in the Act. Clause (12) of Section 2 of the Act as it stood at the relevant time defines 'factory' as follows :

'SEC. 2(12). 'Factory' means any premises including the precincts thereof whereon twenty or more persons are working, or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on with the aid of power, or is ordinarily so carried on, but does not include a mine subject to the operation of the Indian Mines Act, 1923 or a railway running shed.'

It is not clear from which date the preceding twelve months shall reckon back. The learned counsel for the Corporation pointed to Reg. 5 and I Ob, and Form 01 of the Employees State Insurance (General) Regulations 1950 and urged that the twelve months mentioned in the definition of 'factory' will be reckoned from the appointed day i.e. the date on which Chapters Iv & V of the Act come into force or from the date of which the employer makes a declaration in Form 01 or from. the date on which the premises are inspected. I am unable to uphold this contention firstly, because there is nothing in the Regulations to support it and secondly, because the omission in the Act cannot be supplied by subordinate legislation and that too in such an alternative manner. This is a substantial difficulty in construction of the Act but I will leave it to be decided in some other case. In this case the Corporation's case is that it is the date of the inspection of the premises which is the material relevant date. It is not disputed that on January 2 7, 1967 power was being used for the manufacturing processes carried on in the premises of the Durga Metal Works but the contention is that 20 or more persons were not working on that date or any day of the twelve months preceding January 27, 1967. The controversy centres round the four contractors mentioned in the inspection report of Shri Sethi. The appellants contend that contractors cannot be included for purposes of conversing the precincts in the definition of a factory. If the contractors are excluded, then the premises are not a factory. The learned counsel for the Corporation cited The Ustia Prints v. The Employees State Insurance Corporation and another : (1963)IILLJ544Bom . The High Court of Bombay observed as follows :

'INa large number of factories for grant many reasons contractors are employed to do certain portion of the work but they are directly under the supervision of the managers of the factory. Unless clear proof were afforded which showed that this contractor had nothing to do with the Usha Prints, that he was never under the control of the managers of the Usha Prints and he was so completely an independent contractor that he must be regarded separate entity) inference must necessarily be that the ironing department is a part and parcel of the Usha Prints.'

(4) It is urged on the basis of this ruling that it was the duty of the appellant to prove that the contractors shown in the report had nothing to do with the factory, that they were never under the control of the manager and that they were completely independent contractors working as separate entities. To my mind, this contention cannot be upheld because the inspector has shown them as a separate category in his report. When the Corporation itself admitted that 5 of the 21 employees were contractors, then it was for them to show that they were not independent and were rather under the supervision of the management. Shri D. K. Sethi who appeared as the Corporation's witness in his zeal even increased the total number to 26 persons which obviously against his own report. He should have explained the position of the contractors. When he inspected the factory, appellant Hardev Singh was not present and only the supervisor Shri Pathak was there. Hardev Singh though failed to produce the record before the Corporation but did so before the Court. On the basis of that record he deposed that the total number of his employees never exceeded 14. No question was put to him with regard to the status of the contractors. The very fact that they have been shown in a separate category leads to an inference that these contractors were not under the control of the manager of the appellant Durga Metal Works and were independent contractors regarded as independent entities. Chanan Singh v. Regional Director Employee's Corporation, Amritsar also cannot retrieve the position either. In that ruling, it was held that even if an employer was working in the factory, he too is to be taken as a person working in the premises for purposes of coverage under the Act. Ours is not a case of a proprietor of the factory working as an employer in the factory. The learned court refused to look into the documents produced by the appellant before it on the ground that production of these documents at that stage could be of no value because the same were not produced by the petitioner before the inspector and were not produced even before the Corporation in pursuance of notice Ex. R. 3. I do not think that if the documents were not produced before the Corporation, the appellant was precluded from producing and proving these documents, before the court. The court has not said that they were not or could not be considered to be, genuine documents.

(5) It was next urged that the finding whether the number of persons working were 20 or not, or whether a particular man was employed on a particular date or not is a finding of fact and such finding cannot be attacked by way of an appeal. This contention is rejected because the interpretation of the definition of 'factory' is involved and further more what is involved is whether the contractors can be included within the definition of a person working in a factory, which are substantial questions of law. The first contention of the appellant is upheld.

(6) The second contention of the appellant is that whereas the maximum period for purposes of contribution is 12 months from the date the factory is supposed to be employing 20 or more persons, but the court upheld the recovery for the period from July 1, 1966 to January 27, 1968 that is for 20 months, which is said to be erroneous. Upon consideration I find that this argument is not correct because there is nothing in the Act that the contribution cannot exceed more than twelve months. This argument is based upon a misreading of the definition of a factory and is rejected.

(7) The result of the above discussion is that this appeal succeeds as the first contention is accepted. The impugned order of the Insurance Court is set aside and the Corporation and the Collector are restrained from making the recoveries in dispute. No costs.


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