Civil Appeal Nos
122 1244 of 1978
Appeal by special leave from the Judgment and order dated 23 11 77 of the Andhra Pradesh High Court in appeals against orders Nos 236 237 241 to 243 246 253 to 260 287 288 293 and 294 of 1977
Y section Chitale A A Khan J B Dadachanji and D N Mishra for the appellants
SV Gupte Attorney General of India and Girish Chandra for the Respondent
83 The order of the Court was delivered by KRISHNA IYER J Law is essentially the formal expression of the regulation of economic relations in society
That is the key note thought in this case where the core question is who is an employee  Secondly to decide the meaning of a welfare measure a feeling for the soul of the measure is a surer guide than meticulous dissection with lexical tools alone
The definitional amplitude of employee  in section 29 of the  hereinafter referred to as the Act is the sole contentious issue canvassed by counsel at the bar
We have heard Sri Chitale for the appellant and the learned Attorney General for the respondent Corporation at some length because a decision by this Court as to the width of the definition and consequential fall out of statutory obligations may cover a considerable number of establishments
We have granted leave to appeal on that basis and now proceed to study the anatomy of employee  as defined in section 29 of the Act
A brief factual narration may help get a hang of the case
The High Court before which the present appellants had filed fruitless appeals has summarised the facts succinctly thus The appellants are owners of theatres in the twin cities of Hyderabad and Secunderabad where films are exhibited
Within the same premises as the theatre in every case there in a canteen and a cycle stand
The canteen and the cycle stand are leased out to contractors under instruments of lease
The contractors employ their own servants to run the can teen and the cycle stand
In regard to persons so employed by the contractors the owners of the theatres were treated Principal Employers  and notices of demand were issued to them calling upon them to pay contribution under the employees  State Insurance Act
Thereupon the owners of theaters filed application under Section 75 of the Employees State Insurance Act before the Employees Insurance Court for a declaration that the provisions of the Act were not applicable to their theaters and that they were not liable to any contribution in respect of the persons employed in the can teens and cycle stands attached to the theaters
The Insurance Court on a consideration of the relevant lease deeds and other evidence noticed the following features in regard to the running of the canteens 1 All these canteens are within the premisses of the cinema theatres 2 A few of these canteens have access 84 directly from the abutting roads whereas the other canteens can be reached only through the open space inside the cinema theatres
3 The persons running the canteens are them selves responsible for equipping the canteens with the necessary furniture and for providing the required utensils
4 The Managements of all these Cinema theaters pay the electricity charges due in respect of these canteens
5 The persons working in these canteens are employed only by the contractors or tenants who run the canteens and they alone are responsible for the salaries payable to the persons
6 The managements of the cinema theatres have absolutely no supervisory control over the persons employed in these canteens
7 These canteens have to be run only during the show hours
This is made abundantly clear by Exhibits P 7 to P 10 and in the face of the recitals contained in these agreements I am not prepared to accept PW 1 s evidence that the tenants of these canteens are at liberty to run them at other times also
In particular Exhibit P 10 provides that the lessee shall run the business only during the show hours and that it shall be closed as soon as the cinema shows are closed
8 A few of the persons working in the can teens are allowed inside the auditorium during the interval for vending eatables and beverages
They can enter the auditorium a few minutes before the interval and can remain inside the auditorium for a few minutes after the interval
9 It is seen Freon Ex P 10 that the management of the cinema theatre had reserved to itself the right to specify what types of things should be sold in the canteen
The canteens are expected to maintain a high degree of cleanliness and sanitation
10 In some cases the managements of the theatres reserve the right to enter the canteen premises at all reasonable time for purposes of check and inspection
exhibit P 9 contains a specific clause in that regard
 These features led the Insurance Court to arrive at the following findings of fact From the several circumstance mentioned above it is clear that these canteens are meant primarily for the convenience and comfort of those visiting the cinema theatres though in a few cases the persons in charge of canteens seem to be allowing the general public also to have access to the canteens taking advantage of the fact that the canteens can be recalls directly from the abutting road
But this Circum 85 stance does not by itself indicate that these canteens are A thrown open to the general public as other hotels restaurants or eating houses
 In regard to cycle stands the Insurance Court held Hence it may safely be concluded that these cycle stands are meant exclusively for the convenience of persons visiting B the theaters The Insurance Court found that the owners of theaters where principal employers with reference to the persons employed by contractors in the canteens and the cycle stands attached to the theaters and rejected the applications filed by the owners of theaters under Sec 75 of the Act
The disappointed theatre owners appealed under Sec 82 without avail but undaunted
moved this Court for Special Leave to Appeal which we have granted as stated earlier so that we may discuss the facets of the definitional dispute in some detail and lay down the law on the main question
A conspectus of the statute to the extent relevant is necessary to appreciate the controversy at the Bar
The statutory personality and the social mission of the Act once projected the resolution of the conflict of interpretation raised in this case is simple
Although technically the Act is a pre Constitution one it is a post Independence measure and shares the passion of the Constitution for social justice
Articles 38 39 41 4243 and 43 A of the Constitution show concern for workers and their welfare
Since Independence this legislative motivation has found expression in many enactments
We are concerned with one such law designed to confer benefits on this weaker segment in situations of distress as is apparent from the Preamble
The machinery for state insurance is set up in the shape of a Corporation and subsidiary agencies
All employees in Factories or establishments are sought to be insured against sickness and allied disabilities but the funding to implement the policy of insurance is by contributions from the employer and the employee
In view of the complexities of modern business organisation the principal employer is made primarily liable for payment of contribution in respect of every employee whether directly employed by him or by or through an immediate employer
Of course where the employee is not directly employed by him but through another immediate employer  the principal employer is empowered to recoup the contribution paid by him on behalf of the immediate employer section 41
There is an Inspectorate to supervise the determination and levy of the contributions
86 There is a chapter prescribing penalties there is an adjudicating machinery and there are other policing processes for the smooth working of the benign project envisaged by the Act
The benefits belong to the employees and are intended to embrace is extensive a circle as is feasible
In short the social orientation protective purpose and human coverage of the Act are important considerations in the statutory construction more weighty than mere logomachy or grammatical nicety
With this prefatory statement we may go straight to the crucial definition
The essential question is whether a cinema theatre manager who has no statutory obligation to run a canteen or provide a cycle stand but for the better amenities of his customers and improvement of his business enters into an arrangement with another to maintain a canteen and a cycle stand and that other employs on his own workers in connection with the canteen and the cycle stand can be held liable for contribution as the principal employer of the workmen although they are engaged independently by the owner of the canteen or the cycle stand
It is common ground that there is no statutory obligation on me part of the appellants to run canteens or keep cycle stands
It is common ground again
that the workers with whom we are concerned are not directly employed by the appellants and if we go by the master and servant relationship under the law of contracts there is no employer employee nexus
Even so it has been held cone currently by the Insurance Court and the High Court that canteens are meant primarily for the convenience and comfort of persons visiting the theatres and the cycle stands are meant exclusively for the convenience of the persons visiting theatres and that the persons employed in the canteens and cycle stands are persons employed on work which is ordinarily part of the work of the theatre or incidental to the purpose of the theatres
In relation to the person so employed therefore the owners of the theatres are principal employers   The High Court proceeded further to affirm By undertaking to run the canteen or the cycle stand the contractor has undertaken the execution of the whole or part of the work which is ordinarily part of the work of the theatre of the principal employer or is incidental for the purpose of the theatre
We have already held that the running of canteen or cycle stand is work carried on in connection with the work of the theatre work which may be considered to be either ordinarily part of the work of the theatre or incidental to the purpose of the theatre
If so there is no reason why the contractor should not come within the definition of immediate employer  
87 Before us counsel have mainly focussed on the definition of employee since the short proposition which creates or absolves liability of the appellants depends on the canteen workers and the cycle stand attendants being employees  vis a vis the theatre owners
There is no doubt that a cinema theatre is an establishment  and that the appellants as theatre owners are principal employers being persons responsible for the supervision and control of the establishment
Admittedly the canteens and cycle stands are within the theatre premises
Within this factual metrix let us see if the definition in section 29 will fit
We may read the definition of employee once again before analysing the components thereof 29 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 or 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 of 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 iiiwhose 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 person 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 but does not include a any member of the Indian naval military or air forces or 88 b any person so employed whose wages excluding remuneration for overtimes work exceed five hundred rupees a month Provided that an employee whose wages excluding remuneration for overtime work exceed five hundred rupees 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
The reach and range of the definition is apparently wide and deliberately transcends pure contractual relationships
We are in the field of labour jurisprudence welfare legislation and statutory construction which must have due regard to Part IV of the Constitution
A teleological approach and social perspective must play upon the interpretative process
Now here is a break up of Sec
The clause contains two substantive parts
Unless the person employed qualifies under both he is not an employee 
Firstly he must be employed in or in connection with the work of an establishment
The expression in connection with the work of an establishment ropes in a wide variety of workmen who may not be employed in the establishment but may be engaged only in connection with the work of the establishment
Some nexus must exist between the establishment and the work of the employee but it may be a loose connection in connection with the work of an establishment  only postulates some connection between what the employee does and the work of the establishment
He may not do anything directly for the establishment he may not do anything statutorily obligatory in the establishment he may not even do any thing which is primary or necessary for the survival or smooth running of the establishment or integral to the adventure
It is enough if the employee does some work which is ancillary incidental or has relevance to or link with the object of the establishment
Surely an amenity or facility for the customers who frequent the establishment has connection with the work of the establishment
The question is not whether without that amenity or facility the establishment cannot be carried on but whether such amenity or facility even peripheral may be has not a link with the establishment
Illustrations may not be exhaustive but may be informative
Taking the present case an establishment like a cinema theatre is not bound to run a canteen or keep a cycle stand in Andhra Pradesh but no one will deny that a can teen service a toilet service a car park or cycle stand a booth foresail of catchy film literature on actors song hits and the like surely have connection with the cinema theatre and even further the venture
89 On the other hand a book stall where scientific works or tools are A sold or stall where religious propaganda is done may not have anything to do with the cinema establishment and may therefore be excluded on the score that the employees do not do any work in connection with the establishment that is the theatre
In the case of a five star hotel for instance a barber shop or an arcade massage parlour foreign exchange counter or tourist assistance counter may be run by some one other than the owner of the establishment but the employees so engaged do work in connection With the establishment or the hotel even though there is no obligation for a hotel to maintain such an ancillary attraction
By contrast not a lawyer s chamber or architect s consultancy
Nor indeed is it a legal ingredient that such adjunct should be exclusively for the establishment if it is mainly its ancillary
The primary test in the substantive clause being thus wide the employees of the canteen and the cycle stand may be correctly described as employed in connection with the work of the establishment
A narrower construction may be possible but a larger ambit is clearly imported by a purpose oriented interpretation
The whole goal of the statute is to make the principal employer primarily liable for the insurance of kindred kinds of employees on the premises whether they are there in the work or are merely in connection with the work of the establishment
Merely being employed in connection with the work of an establishment in itself does not entitle a person to be employee 
He must not only be employed in connection with the work of the establishment but also be shown to be employed in one or other of the three categories mentioned in Sec
29 i covers only employees who are directly employed by the principal employer
Even here there are expressions which take in a wider group of employees than traditionally so regarded but it is imperative that any employee who is not directly employed by the principal employer cannot be eligible under Sec 2 9 i 
In the present case the employees concerned are admittedly not directly employed by the cinema proprietors
Therefore we move down to Sec
29 ii
Here again the language used is extensive and diffusive imaginatively embracing all Possible alternatives of employment by or through all independent employer
In such cases the principal employer  has no direct employment relationship since the immediate employer  of the employee concerned is some one else
Even so such an employee if 7 520SCI78 90 he works a on the premises of the establishment or b under the supervision of the Principal employer or his agent on work which is ordinarily part of the work of the establishment or which is preliminary to the work carried on in or incidental to the purpose of the establishment qualifies under Sec
29 ii
The plurality of persons engaged in various activities who are brought into the definitional net is wide and considerable and all that is necessary is that the employee be on the premises or be under the supervision of the principal employer or his agent
Assuming that the last part of Sec
29 ii qualifies both these categories all that is needed to satisfy that requirement is that the work done by the employee must be a such as is ordinarily not necessarily nor statutorily part of the work of the establishment or b which is merely preliminary to the work carried on in the establishment or c is just incidental to the purpose of the establishment
No one can seriously say that a canteen or cycle stand or cinema magazine booth is not even incidental to the purpose of the theatre
The cinema goers ordinarily find such work an advantage a facility an amenity and some times a necessity
All that the statute requires is that the work should not be irrelevant to the purpose of the establishment
It is sufficient if it is incidental to it
A thing is incidental to another if it merely appertains to something else as primary
Surely such work should not be extraneous or contrary to the purpose of the establishment but need not be integral to it either
Much depends on time and place habits and appetites ordinary expectations and social circumstances
In our view clearly the two operations in the present case namely keeping a cycle stand and running canteen are incidental or adjuncts to the primary purpose of the theatre
We are not concerned with Sec
29 iii nor with the rest of the definitional provision
Shri Chitale tried to convince us that on a minute dissection of the various clauses of the provision it was possible to exclude canteen employees and cycle stand attendants
May be punctilious sense of grammar and minute precision of language may sometimes lend unwitting support to narrow interpretation
But language is handmaid not mistress
Maxwell and Fowler move along different streets sometimes
When as in Sec
29 the definition has been cast deliberately in the widest terms and the draftsman has endeavoured to cover every possibility so as not to exclude even distant categories of men employed either in the primary work or cognate activities it will defeat the object of the statute to truncate its semantic sweep and throw out of its ambit those who obviously are within the benign 91 contemplation of the Act
Salvationary effort when the welfare of the weaker sections of society is the statutory object and is faced with stultifying effect is permissible judicial exercise
In this view we have no doubt that the findings assailed before us are correct and that the conclusion reached deserves to be affirmed
We do so
Learned counsel for the appellants finally submitted that in this event of our negativing his legal contention he should be given the benefit of natural justice
We agree
The assessment of the quantum of the employers  contribution has now been made on an ad hoc basis because they merely pleaded non viability and made no returns
on the strength of Sec
45A the contribution was determined without hearing
In the circumstances of the case and the learned Attorney General has no obiection we think it right to direct the relevant Corporation authorities to give a fresh hearing to the principal employers concerned if sought within 2 months from to day to prove any errors or infirmities in the physical determination of the contribution
Such a hearing in tune with the ruling of this Court in the Central Press case1 is fair and so we order that the assessment shall be reconsidered in the light of a de novo hearing to the appellants and the quantum of contribution affirmed or modified by fresh orders
Before we formally wind up we think it apt to make a critical remark on the cumbersome definition in Sec
29 of the Act when has promoted considerable argument
This reminds us of the well known dictum or Sir James Fitzjames Stephen that in drafting it is not enough to gain a degree of precision which a person reading in good faith can understand hut it is necessary to attain if possible to a degree of precision which a person reading in bad faith cannot misunderstand
2 Subject to this direction we dismiss the appeals with costs one set 
SR Appeals dismissed 11977 3 SCR 35
2Lux Gentium Lex Than and Now 1799 1974 p 7


Summary:
The appellants are owners of theaters in the twin cities of Hyderabad and Secunderabad where fulls are exhibited
Within the same premises as the theaters in every case there is a canteen and a cycle stand leased out to contractors under instruments of lease
The contractors employ their own servants to run the canteen and the cycle stand
In regard to persons so employed by the contractors the owners of the theaters were treated as principal employers  and notices of demands were issued to them calling upon them to pay contribution under the Employees State Insurance Act
Thereupon the appellant filed an application under section 75 of the Act before the Employees Insurance Court for a declaration that the provisions of the Act were not application to their theaters and that they were not liable to any contribution in respect of the persons employed in the canteen and the cycle stands attached to their theaters
The Insurance Court found that the canteens are meant primarily for the convenience and comfort for those visiting the cinema theaters though in a few cases the persons in charge of the canteens seem to be allowing the general public also to have access to the canteens and that the cycle stands are meant exclusively for the convenience of the persons visiting the theaters
The Insurance Court held that the owners of the theaters were therefore principal employers with reference to the persons employed by the contractors in the canteens and the cycle stands attached to the theaters and rejected the application filed by the contractors under section 75 of the Act
In appeal the High Court confirmed the said findings and hence the appeal by special leave
Dismissing the appeal the court  HELD 1 Law is essentially the formal expression of the regulation of
economic relations in society
In view of the complexities of modern business organisations the principal employer  is made primarily liable for payment of contribution in respect of every employee whether directly employed by him or by or through an immediate employer under the Insurance Act the main purpose of which is to insure all employees in factories or establishments against sickness and allied disabilities but the funding
to implement the policy of insurance is by contribution from the employers and the employees
The benefits belong to the employees and are intended to embrace as extensive a circle 81 as is feasible
In short the social orientation protective purpose and human A coverage of the Act are important considerations in the statutory construction more weighty than mere logomachy or grammatical nicety
83A 85G H 86A B 2 In the field of labour jurisprudence welfare legislation and statutory construction which must have due regard to Part IV of the Constitution a teleological approach and social perspective must play upon the interpretative process The reach and range of the definition of employee  in section 29 of the ESI Act is apparently wide and deliberately transcends pure contractual relationships
88C 3 Clause 9 of section 2 contains two substantive parts
Unless the person employed qualifies under both he is not an employee
Firstly he must be employed in or in connection with the work of an establishment
The expres sion in connection with the work of an establishment   ropes in a wide variety of workmen who may not be employed in the establishment
Some nexus must exist between the establishment and the work of the employee but it may be a loose connection
In connection with the work of an establishment only postulates some connection between what the employee does and the work of the establishment
He may not do anything directly for the establishment concerned he may not clo anything statutorily obligatory in the establishment he may not do anything which is primary or necessary for the survival or smooth running of the establishment or integral to the adventure
It is enough if the employee does some work which is ancillary incidental or has relevance to or link with the object of the establishment
Surely the amenity or facility for the customers who frequent the establishment has connection with the work of the establishment
the question is not whether without theat amenity or facility the establishment cannot be carried on but whether such amenity or facility even peripheral may be has not a link with the establishment
Nor indeed is it legal ingredient that such adjunct should be exclusively for the establishment if it is mainly its ancillary
C The primary test in the substantive clause being thus wide the employees of the canteen and the cycle stand may be correctly described as employed in connection with the work of the establishment
A narrower constriction may be possible but a larger ambit is clearly imported by a purpose oriented interpretation
The whole goal of the statute is to make the principal employer primarily liable for the insurance of kindred kinds of employees on the premises whether they are there in the work or are merely in connection with the work of the establishment
Merely being employed in connection with the work of establishment in itself does not entitle a person to be an employee
He must not only be employed in connection with the work of the establishment but also be shown to be employed in one or other of the three categories mentioned in section 29 1
89D F 4 section 29 i covers only employees who are directly employed by the principal employer 
It is imperative that any employee who is not directly employed by the principal employer cannot be eligible under section 29 i
In the present case the employees concerned are admittedly not directly employed by the cinema proprietors
89F G 82 5 The language of section 29 ii is extensive and diffusive imaginatively embracing all possible alternatives of employment by or through an independent employer
In such cases the principal employer has no direct employment relationship since the immediate employer of the employee concerned is someone else
Even so such an employee if he works a on the premises of the establishment or b under the supervision of the principal employer or his agent on work which is ordinarily part of the work of the establishment or which is preliminary to the work carried on in or incidental to the purpose of the establishment qualifies under section 29 ii
The plurality of persons engaged in various activities who are brought into the definitional net is wide and considerable and all that is necessary is that the employee be on the premises or be under the supervision of the principal employer or his agent
89G H 90A B 6 A thing is incidental to another if it merely appertains to something else as primary
Surely such work should not be extraneous or contrary to the purpose of the establishment but need not be integral to it either
such depends upon time and place habits and appetites ordinary expectations and social circumstances
Keeping a cycle stand and running a canteen are incidental or adjuncts to the primary purpose of the theatre
90D E 7 May be punctilious sense of grammar and minute precision of language may sometimes lend unwitting support to narrow interpretation
But language is the handmaid not mistress
Maxwell and Fowler move along different streets sometimes
It will defeat the objects of the statute to truncate its semantic sweep and throw out of its ambit those who obviously are within the benign contemplation of the Act when as in section 29 the definition has been cast deliberately in the widest terms and the draftsman has endeavoured to cover every possibility so as not exclude even distant categories of men employed either in the primary work or cognate activities
Salvationary effort when the welfare of the weaker sections of society is the statutory object and is faced with stultifying effect is permissible judicial exercise
The findings in the instant case arc correct and the conclusion reached deserves to be affirmed
90G H 91A B In view of the fact that the contribution was determined without hearing under section 45 A of the ESI Act the Court directed the Corporation authorities to give a fresh hearing to the principal employers ie the employers in tune with the ruling of this Court in the Central Press case 19771 3 SCR 351