IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE M.N.KRISHNAN THURSDAY, THE 19TH NOVEMBER 2009 / 28TH KARTHIKA 1931 Ins.APP.No. 83 of 2007() ---------------------------------- IC.48/2004 of ESI COURT, PALAKKAD .................... APPELLANTS/OPPOSITE PARTIES ----------------------------------------------- 1. EMPLOYEES STATE INSURANCE CORPORATION, REP. BY ITS REGIONAL DIRECTOR, ROUND NORTH, THRISSUR. 2. ASSISTANT DIRECTOR (INSPECTIONS) EMPLOYEES STATE INSURANCE CORPORATION ROUND NORTH, THRISSUR. BY ADV. MR.T.V.AJAYAKUMAR RESPONDENT/APPLICANT -------------------------------------- M/S.BALARAM & COMPANY ROUND WEST, THRISSUR REP. BY MANAGING PARTNER T.A. BALA RAMAN. BY ADV. MR.M.B.PRAJITH. THIS INSURANCE APPEALS HAVING BEEN FINALLY HEARD ON 19/11/2009,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: rs. M.N. KRISHNAN, J. ........................................... Ins.A.No.83 OF 2007 ............................................. Dated this the 19th day of November, 2009 J U D G M E N T This is an appeal preferred against the order of the Employees Insurance Court, Palakkad in I.C.No.48/2004. The applicant/establishment is a petrol pump. The E.S.I Corporation authorities inspected the premises and found that 10 persons and power is used and therefore, initiated action for coverage under the ESI Act. 2. It was stoutly opposed by the establishment and they moved the E.I. Court for setting aside the said order contending that petrol pump is not covered as there is no power used or in other words there is no manufacturing process. It is also contended that the number of employees per day never exceeded 10 or more in number and therefore, the Act cannot be extended to the establishment. 3. The Employees Insurance Court found that power is used and therefore, there is manufacturing process. But at the same time it held that there were never 10 or more employees working in the establishment on any day and : 2 : Ins.A.No.83 OF 2007 therefore set aside the order of the ESI Corporation regarding initiation for the coverage. It is against that decision, the appeal is preferred. 4. The following substantial questions of law had been raised in the Memorandum of Appeal: (i) whether the findings of the learned E.I. Court that there is no evidence to show that the applicant had employed more than nine persons on any day and hence it cannot be held that the applicant petrol pump cannot be covered by Section 2(12)(a) of theESI Act are not erroneous, perverse and unsustainable in law? (ii) whether the learned EI Court has not erred in placing the burden of proof on the appellant/opposite party (by holding that opposite parties had not taken any steps for the production of document of the agreement and vouchers for payments made to the agencies in respect of contract employees) and the same is not against the ruling reported in (1998 (1) KLT 786, of this Hon'ble High Court? 5. Points 1 and 2: The learned counsel for the ESI Corporation would contend that finding of the E.I. Court regarding the number of employees and the explanation that since some of the employees could be on leave on some days there would have been never 10 persons in the establishment is : 3 : Ins.A.No.83 OF 2007 wrong. 6. On the contra, the learned counsel for the respondent establishment would contend that in order to attract the provisions under the Employees State Insurance Act, it is to be established that 10 or more workers had worked on any day in a year to attract the coverage. So far as the manufacturing process is concerned, it is a fairly settled law that pumping out diesel or petrol from the bunk using power amounts to manufacturing process and therefore, it cannot be said to be absent. Now the most crucial question is regarding the number of employees. It is profitable to refer to the provisions of the employees State Insurance Act to understand the impact of the same. Under Section 2(9) an employee is defined and under Section 2(12) a factory is defined. Under Section 2(12) where 10 or more persons are employed or were employed for wages on any day of the preceding 12 months and in any period in which the manufacturing process is being carried on with the aid of the power or is ordinarily so carried on. I underline the importance of the word that 10 or more persons are : 4 : Ins.A.No.83 OF 2007 employed or were employed in a day preceding 12 months. So, if the ESI Corporation is able to substantiate that 10 or more employees were employed in a day since there is power as well there is satisfaction of the conditions enumerated under the Act to attract the ESI coverage. The first document and the reliable documents which, according to the ESI Corporation, are Exts.B1 and B2. Ext.B2 is the preliminary inspection report submitted by the insurance inspectors on 7.11.2003. A reference to para 8 would reveal that 10 persons are employed as on the date of visit and that list of employees obtained from the employer is attached. Ext.B1 is the list of employees furnished by the Manager of the establishment namely Sri. Krishnakumar on the very same day. It gives the particulars regarding salary and names of 4 permanent employees and salaries or wages as the case may be of six employees who are on contractual employment. So, if Ext.B1 is acceptable then it ends the matter and it has to be stated that the Employees Insurance Corporation is right in covering the establishment. Now I may also refer to the : 5 : Ins.A.No.83 OF 2007 evidence of Sri.Krishnakumar who had given Ext.B1 before the Employees Insurance Inspector on 7.11.2003. A perusal of the cross examination would reveal that he has candidly admitted that on 7.11.2003 he was there in the establishment. Then he adds “ which is marked as Ext.B1. Subsequently he would try to get out of the situation by deposing that in the place of persons who are absent, other persons present were also shown. What ever it may be, even by the explanation tendered by the witnesses, it is very clear that on the date of inspection by the Inspectors, there were 10 employees available in the petrol bunk. Now from perusal, I find that the learned Employees Insurance Court entertained an argument that if there are more employees and as they are availing leave and if that comes under 10,` then the establishment will not be covered. The learned counsel for the respondent also wants to lay emphasis in a decision : 6 : Ins.A.No.83 OF 2007 rendered by me in Ins.A.No.61/2007. I was only considering the question of strength and not the employment. I feel the said argument is not proper for the following reasons. The employees strength almost in establishments remain constant and only instead of X, Y may work. That is why the witness in cross examination stated that “ So there were persons available on that day. So what is the crux of a benevolent legislation like the Employees State Insurance Act also has to be remembered while interpreting these provisions. The legislature in its wisdom said that even on a day in an year if ten or more employees are employed, it will comes under the definition of factory under Section 2(12) of the Act. Whatever it may be, from the total reading of the evidence of PW1, it is explicitly clear that on : 7 : Ins.A.No.83 OF 2007 the date of inspection namely on 7.11.2003 there were 10 employees working in the establishment. When it is so, it cannot be said that it is not covered by the Act. In the absence of some of the employees for example in the case of contractual employees, A may be substituted for B or B may be substituted for C. That does not mean that the number changes but only the individuals. So, the approach of the Employees Insurance Court cannot be accepted. He had approached the whole subject by mis appreciation of the materials which resulted in manifest injustice and also contrary to the legal provisions which are certainly substantial questions of law and therefore the appeal is quite entertainable and since from the materials available it is seen that 10 employees with power were available at least on 7.11.2003 it has to be held that the establishment is liable to be covered under the ESI Act. 7. Therefore, the finding of the Employees Insurance Court is set aside and it is held that the applicant/establishment is covered under the provisions of the ESI Act. So far as it relates to the fixation of the : 8 : Ins.A.No.83 OF 2007 quantum is concerned, nobody has properly applied their mind and therefore a notice may be issued to the establishment fixing the quantum and permitting them to raise objections if any, hear them and fix the correct amount and thereafter direct them to pay the amount or initiate steps for realisation of the amount. Disposed of accordingly. M.N. KRISHNAN, JUDGE cl : 9 : Ins.A.No.83 OF 2007