Employing around 55 employees, there are only five employees who are getting less than Rs 15000 per month, My question is we coverable under Esi Act ?
From India, Coimbatore
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46From India, Coimbatore
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If the total number of employees is 10 or more, the establishment will be covered irrespective of how many employees are covered. In your case, your establishment will be covered under ESI, and you have to pay contributions for those whose salary is not more than Rs 15,000.
Madhu.T.K
From India, Kannur
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Madhu.T.K
From India, Kannur
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Dear sir, Please find attachment Judgment , Kindly give your input which one is correct ?
From India, Coimbatore
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From India, Coimbatore
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Dear sir,
Please find the attached Judgment. Kindly give your input.
Which one is correct?
JUDGMENT
Case Note:
Employees' State Insurance (Amendment) Act, 1975 Section 2(12) r/w 75--Factory--Meaning of--Defined--Respondent (ESIC) asked appellant company to submit Form No. 01--Company pleaded it is not a "shop" and not covered under notification and the number of employees is less than 20--Respondent unmoved--Petition Under Section 75 of the Act--Trial court held petitioner/appellant is a "shop"--Appealed against and pleaded the company cannot be treated as a "factory"--Impugned order set aside.
Words and Phrases - Defined- "Shop", "Factory", "Employee(s)", "Persons employed" and "wages"--Meaning of--Explained.
1. The question for consideration in this appeal is whether the appellant M/s. M. M. Suri & Associates Pvt. Ltd. is a "factory" within the meaning of Section 2(12) of the Employees' State Insurance (Amendment) Act, 1975 (hereinafter called the Act).
2. The facts fall into a short compass. Having been asked by the Employees' State Insurance Corporation by its letter of July 26, 1990, to submit Form No.O.1, the appellant-Company took the stand that it was not a "shop" and as such not covered by the above-referred Notification and that, in any case, the number of its employees being less than 20, the provisions of the Act could not be extended to it. However, since the Corporation remained unmoved, the appellant-Company filed a petition under Section 75 of the Act.
3. The learned Senior Civil Judge, before whom the petition came up for disposal, held that as the Company was dealing in retail sale Of services, it was a "shop" and that as admittedly 24 persons were employed, Section 2(12) was attracted notwithstanding the fact that out of the said employees, 13 were drawing more wages than the prescribed limit and thus were not "employees" within the meaning of Section 2(9) of the Act.
4. The order of the learned Senior Civil Judge has left the company dissatisfied. Hence this appeal.
5. The case of the appellant-Company is that as out of the 24 persons working with it, 13 were getting more wages than the prescribed limit, therefore, they were not "employees" within the meaning of Section 2(9) of the Act and that as such the appellant could not be treated to be a "Factory" within the meaning of Section 2(12) of the Act.
6. In order to appreciate the point in issue, it is necessary to set out the relevant provisions of the Act.
7. Section 2(12) defines "factory" in the following terms:
"2(12) "factory" means any premises including the precincts thereof -
(a) Whereon ten or more persons are employed or were employed for wages 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, or
(b) Whereon twenty or more persons are employed or were employed for wages on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on without the aid of power or is ordinarily so carried on, but does not include a mine subject to the operation of the Mines Act, 1952 (35 of 1952) or a railway running shed;"
The term "Employee" is defined in Section 2(9) of the Act as under:
"2(9) "employee" means any person employed for wages in or in connection with the work of a factory or establishment to which this Act applies and -
(i) who is directly employed by the principal employer on any work of, or incidental or preliminary to or connected with the work of, the factory or establishment, whether such work is done by the employee in the factory or establishment or elsewhere; or
(ii) who is employed by or through an immediate employer on the premises of the factory or establishment or under the supervision of the principal employer or his agent on work, which is ordinarily part of the work of the factory or establishment or which is preliminary to the work carried on in or incidental to the purpose of the factory or establishment; or
(iii) whose services are temporarily lent or let on hire to the principal employer by the person with whom the person whose services are so lent or let on hire has entered into a contract of service:
and includes any persons employed for wages on any work connected with the administration of the factory or establishment or any part, department, or branch thereof or with the purchase of raw materials for or the distribution or sale of the products of the factory or establishment or any person engaged as an apprentice, not being an apprentice engaged under the Apprentices Act, 1961 (52 of 1961), or under the standing orders of the establishment; but does not include -
(a) any member of the Indian naval, military, or air force; or
(b) any person so employed whose wages (excluding remuneration for overtime work) exceed such wages as may be prescribed by the Central Government a month:
Provided that an employee whose wages excluding remuneration for overtime work exceed such wages as may be prescribed by the Central Government a month at any time after and not before the beginning of the contribution period shall continue to be an employee until the end of that period".
As would be seen from the definition of "factory" under Section 2(12) of the Act what is required is that twenty or more persons are employed or were employed for wages on any day of the preceding twelve months. It was strenuously argued by the learned Counsel for the appellant that as according to Section 2(9) of the Act a person whose wages exceed the prescribed limit does not become an "employee" and as, admittedly, thirteen of the twenty-four persons working with the appellant were drawing more wages than the prescribed limit, they could not be included amongst the persons employed for wages so as to make up the number of such persons to 20. Of course, the argument so advanced is based on the premise that the 20 or more persons mentioned in Section 2(12) have necessarily to be "employees" as defined in Section 2(9) of the Act.
However, the learned Counsel for the respondent-Corporation found the contention of the appellant totally unacceptable. His argument was that all the 20 or more persons or any of them who are employed for wages need not necessarily be employees within the meaning of Section 2(9) of the Act. And, in support, he drew my attention to M. P. & W Proof Ltd. v. E. S. I. Corporation, 1974 Lab. I.C. 85 and to a judgment of the Punjab High Court in Chanan Singh & Sons v. Employees S. I. Corporation, (1964-I-LLJ-314).
In Chanan Singh's case (supra), the Punjab High Court while dealing with the definition of "factory", observed: at p 318
"If it was intended that the twenty were only to include employees, the wording could quite easily have been "whereon twenty or more employees are working" or "whereon twenty or more persons are employed", and it must be assumed that the choice of words has been deliberate".
And that: at p 319
"The obvious intention appears to be that at any rate the twenty persons necessary to constitute a factory under Section 2(12) may include persons who are employees in the ordinary sense, but are excluded from the scope of the Act and the benefits thereunder by reason of the fact that their monthly pay is more than Rs. 400/-".
The Division Bench of the Mysore High Court in the case of M. P. & W. Proof Ltd. v. E. S. I. Corporation (supra), after reproducing Section 2(12) of the Act, observed:
"A plain reading of this Section makes it manifest that it is necessary to satisfy two ingredients before an establishment is characterized as a 'factory'. Those ingredients are: (1) that 20 or more persons work in an establishment for wages; (2) a manufacturing process is being carried on in any part of it 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. We do not see any reason to incorporate 'employees' properly so-called in the Act within the definition mentioned above. All the 20 or more persons or any of them who are employed for wages may or may not be employees within the meaning of the definition found in Section 2(12) of the Act. If any of them happens to be employees within the meaning of Section 2(12) of the Act they would be entitled to certain benefits provided by the other provisions of the Act. Those workers who are employed for wages by the establishment and do not fall within the definition of an 'employee' as provided in Section 2(9) of the Act do not get any such benefits provided by the Act for an employee. Therefore, in order to compute the 20 persons mentioned in Section 2(12) of the Act, it is not necessary that all those 20 persons should be employees properly so-called by the Act."
It may be noticed that the Mysore High Court, in turn, had relied upon a judgment of the Bombay High Court in M/s. Bank Silver Co., Bombay v. Employees State Insurance Corporation, Bombay, (1964-II-LLJ-591) wherein it was held at p 594:
"If twenty or more persons work in an establishment and if a manufacturing process is being carried
From India, Coimbatore
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Please find the attached Judgment. Kindly give your input.
Which one is correct?
JUDGMENT
Case Note:
Employees' State Insurance (Amendment) Act, 1975 Section 2(12) r/w 75--Factory--Meaning of--Defined--Respondent (ESIC) asked appellant company to submit Form No. 01--Company pleaded it is not a "shop" and not covered under notification and the number of employees is less than 20--Respondent unmoved--Petition Under Section 75 of the Act--Trial court held petitioner/appellant is a "shop"--Appealed against and pleaded the company cannot be treated as a "factory"--Impugned order set aside.
Words and Phrases - Defined- "Shop", "Factory", "Employee(s)", "Persons employed" and "wages"--Meaning of--Explained.
1. The question for consideration in this appeal is whether the appellant M/s. M. M. Suri & Associates Pvt. Ltd. is a "factory" within the meaning of Section 2(12) of the Employees' State Insurance (Amendment) Act, 1975 (hereinafter called the Act).
2. The facts fall into a short compass. Having been asked by the Employees' State Insurance Corporation by its letter of July 26, 1990, to submit Form No.O.1, the appellant-Company took the stand that it was not a "shop" and as such not covered by the above-referred Notification and that, in any case, the number of its employees being less than 20, the provisions of the Act could not be extended to it. However, since the Corporation remained unmoved, the appellant-Company filed a petition under Section 75 of the Act.
3. The learned Senior Civil Judge, before whom the petition came up for disposal, held that as the Company was dealing in retail sale Of services, it was a "shop" and that as admittedly 24 persons were employed, Section 2(12) was attracted notwithstanding the fact that out of the said employees, 13 were drawing more wages than the prescribed limit and thus were not "employees" within the meaning of Section 2(9) of the Act.
4. The order of the learned Senior Civil Judge has left the company dissatisfied. Hence this appeal.
5. The case of the appellant-Company is that as out of the 24 persons working with it, 13 were getting more wages than the prescribed limit, therefore, they were not "employees" within the meaning of Section 2(9) of the Act and that as such the appellant could not be treated to be a "Factory" within the meaning of Section 2(12) of the Act.
6. In order to appreciate the point in issue, it is necessary to set out the relevant provisions of the Act.
7. Section 2(12) defines "factory" in the following terms:
"2(12) "factory" means any premises including the precincts thereof -
(a) Whereon ten or more persons are employed or were employed for wages 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, or
(b) Whereon twenty or more persons are employed or were employed for wages on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on without the aid of power or is ordinarily so carried on, but does not include a mine subject to the operation of the Mines Act, 1952 (35 of 1952) or a railway running shed;"
The term "Employee" is defined in Section 2(9) of the Act as under:
"2(9) "employee" means any person employed for wages in or in connection with the work of a factory or establishment to which this Act applies and -
(i) who is directly employed by the principal employer on any work of, or incidental or preliminary to or connected with the work of, the factory or establishment, whether such work is done by the employee in the factory or establishment or elsewhere; or
(ii) who is employed by or through an immediate employer on the premises of the factory or establishment or under the supervision of the principal employer or his agent on work, which is ordinarily part of the work of the factory or establishment or which is preliminary to the work carried on in or incidental to the purpose of the factory or establishment; or
(iii) whose services are temporarily lent or let on hire to the principal employer by the person with whom the person whose services are so lent or let on hire has entered into a contract of service:
and includes any persons employed for wages on any work connected with the administration of the factory or establishment or any part, department, or branch thereof or with the purchase of raw materials for or the distribution or sale of the products of the factory or establishment or any person engaged as an apprentice, not being an apprentice engaged under the Apprentices Act, 1961 (52 of 1961), or under the standing orders of the establishment; but does not include -
(a) any member of the Indian naval, military, or air force; or
(b) any person so employed whose wages (excluding remuneration for overtime work) exceed such wages as may be prescribed by the Central Government a month:
Provided that an employee whose wages excluding remuneration for overtime work exceed such wages as may be prescribed by the Central Government a month at any time after and not before the beginning of the contribution period shall continue to be an employee until the end of that period".
As would be seen from the definition of "factory" under Section 2(12) of the Act what is required is that twenty or more persons are employed or were employed for wages on any day of the preceding twelve months. It was strenuously argued by the learned Counsel for the appellant that as according to Section 2(9) of the Act a person whose wages exceed the prescribed limit does not become an "employee" and as, admittedly, thirteen of the twenty-four persons working with the appellant were drawing more wages than the prescribed limit, they could not be included amongst the persons employed for wages so as to make up the number of such persons to 20. Of course, the argument so advanced is based on the premise that the 20 or more persons mentioned in Section 2(12) have necessarily to be "employees" as defined in Section 2(9) of the Act.
However, the learned Counsel for the respondent-Corporation found the contention of the appellant totally unacceptable. His argument was that all the 20 or more persons or any of them who are employed for wages need not necessarily be employees within the meaning of Section 2(9) of the Act. And, in support, he drew my attention to M. P. & W Proof Ltd. v. E. S. I. Corporation, 1974 Lab. I.C. 85 and to a judgment of the Punjab High Court in Chanan Singh & Sons v. Employees S. I. Corporation, (1964-I-LLJ-314).
In Chanan Singh's case (supra), the Punjab High Court while dealing with the definition of "factory", observed: at p 318
"If it was intended that the twenty were only to include employees, the wording could quite easily have been "whereon twenty or more employees are working" or "whereon twenty or more persons are employed", and it must be assumed that the choice of words has been deliberate".
And that: at p 319
"The obvious intention appears to be that at any rate the twenty persons necessary to constitute a factory under Section 2(12) may include persons who are employees in the ordinary sense, but are excluded from the scope of the Act and the benefits thereunder by reason of the fact that their monthly pay is more than Rs. 400/-".
The Division Bench of the Mysore High Court in the case of M. P. & W. Proof Ltd. v. E. S. I. Corporation (supra), after reproducing Section 2(12) of the Act, observed:
"A plain reading of this Section makes it manifest that it is necessary to satisfy two ingredients before an establishment is characterized as a 'factory'. Those ingredients are: (1) that 20 or more persons work in an establishment for wages; (2) a manufacturing process is being carried on in any part of it 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. We do not see any reason to incorporate 'employees' properly so-called in the Act within the definition mentioned above. All the 20 or more persons or any of them who are employed for wages may or may not be employees within the meaning of the definition found in Section 2(12) of the Act. If any of them happens to be employees within the meaning of Section 2(12) of the Act they would be entitled to certain benefits provided by the other provisions of the Act. Those workers who are employed for wages by the establishment and do not fall within the definition of an 'employee' as provided in Section 2(9) of the Act do not get any such benefits provided by the Act for an employee. Therefore, in order to compute the 20 persons mentioned in Section 2(12) of the Act, it is not necessary that all those 20 persons should be employees properly so-called by the Act."
It may be noticed that the Mysore High Court, in turn, had relied upon a judgment of the Bombay High Court in M/s. Bank Silver Co., Bombay v. Employees State Insurance Corporation, Bombay, (1964-II-LLJ-591) wherein it was held at p 594:
"If twenty or more persons work in an establishment and if a manufacturing process is being carried
From India, Coimbatore
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