IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 02.04.2008 CORAM : THE HON’BLE MR. JUSTICE S.TAMILVANAN C.M.A. No.1631 of 1999 The Pondicherry Co-operative Handloom Export Development Project Ltd., rep. by its Managing Director, G.Narashiman Muthiah Mudaliar Street, Muthialpet, Pondicherry ..... Appellant Vs. The Regional Director Employees State Insurance Corporation, Madras. ..... Respondent Appeal against the Order, dated 10.06.1999 in E.S.I.O.P No.2/1994 on the file of the Presiding Officer, ESI Court, Pondicherry. For Appellant : Mr.C.K.Chandrasekaran for M/s. Row and Reddy For Respondent : Mrs.S.Jayakumari J U D G M E N T This Civil Miscellaneous Appeal has been preferred against the Order, dated 10.06.1999 passed by the ESI Court, Pondicherry in E.S.I.O.P No.2/94. 2. It is not in dispute that the appellant, Co-operative Handloom Export Development Project has been formed by the Government of Pondicherry, now renamed as Puducherry. According to the learned counsel appearing for the appellant, the said project has been formed by the Government with an intention of promoting export of the Handloom goods from Union Territory of Puducherry to foreign countries, as there were number of weavers, who were unemployed and do not have financial assistance to engage themselves in the weaving activity. As per the project, the appellant used to supply raw materials to the members of the society and the members use to weave it in their house at their convenience and deliver the finished goods to the society and therefore, there is no employer and employee relationship between the appellant and https://hcservices.ecourts.gov.in/hcservices/ the members of the project and as such, the members are not employees, within the meaning of Section 2 (9) of the E.S.I Act and what was being paid to them is only "conversion charges" and not wages. 3. The appellant has further stated that there is no attendance register maintained by the appellant and no leave Rules framed to regulate their attendance. Similarly, payment of overtime wages to the members and disciplinary action against them are not applicable to the members of the project, since there is no employer and employee relationship. 4. Mr.C.K.Chandrasekaran, learned counsel appearing for the appellant contended that the project itself is to provide self- employment to the weavers in the Union Territory of Puduchery and that there is no bar against the members in doing some other work also, since the weaving or conversion of finished goods is only a home work to the members of the project. 5. It is not in dispute in this Civil Miscellaneous Appeal that as per the project, the appellant would purchase yarns and other raw materials required and advance the same to the weavers / members and they shall convert the same into finished goods and deliver them to the society and for which, they will be entitled to only for conversion charges. As per the notice, dated 12.01.1994 issued to the appellant, a sum of Rs.32,19,265/- has claimed as arrears of E.S.I contribution from 01.01.1981 to till the date of filing of E.S.I.O.P. 6. According to the appellant, the claim made by the respondent is not maintainable on the aforesaid facts and circumstances. Learned counsel for the appellant further contended that originally there was Regional Director, Employees State Insurance Corporation, Madras for Tamil Nadu and Pondicherry and now there is a separate Regional Director for the union territory of puducherry, which has not been disputed by the learned counsel appearing for the respondent. 7. Mrs.S.Jayakumari, learned counsel appearing for the respondent submitted that even the Co-operative Societies, as per E.S.I Act should pay contribution, as per the Act. Learned counsel for the respondent further contended that the members of the society are employees within the meaning of Section 2 (9) of the E.S.I Act. 8. It is not in dispute that the appellant need not pay any contribution under the E.S.I Act, if the members of the project are employed for converting the yarns purchased and given by the appellant and pay only conversion charges. According to the appellant, as per the project, in order to promote export of Handloom goods from Union Territory of Puducherry to foreign countries, the scheme was introduced, whereby yarns and other raw materials required are purchased and advanced to the weavers, being the members of the project. For https://hcservices.ecourts.gov.in/hcservices/ converting the same into finished goods by doing home work, they are paid conversion charges and that no attendance register is being maintained and there is no leave Rules applicable to the members of the project and no disciplinary action can be taken against such members. In such circumstances, the authority should consider whether there is existence of employer and employee relationship between the appellant and the members of the project. 9. It is not disputed by both the learned counsel that to decide the aforesaid factum of employer and employee relationship, further evidence is required in this matter. Under the aforesaid circumstances, this Court is of the view to remit back the matter to the respondent, Regional Director, Employees State Insurance Corporation, Puducherry and accordingly, the impugned order, dated 10.06.1999 made in E.S.I.O.P No.2/94 is liable to be set aside. 10. In the result, this Civil Miscellaneous Appeal is allowed and the order, dated 10.06.199 made in E.S.I.O.P No.2/94 passed by the Employees Insurance Court, Puducherry is set aside. Considering the arguments advanced by both the learned counsel, I am of the view, to meet the ends of justice, to remit back the matter to the Regional Director, Employees State Insurance Corporation, Puducherry for fresh disposal according to law. The said authority is directed to provide reasonable opportunity to the appellant / petitioner to adduce further oral and documentary evidence, if any needed and also further directed to dispose the same, within a period of three months from the date of receipt of the copy of this order. No costs. Sd/ Asst. Registrar /true copy/ Sub Asst.Registrar tsvn To The Presiding Officer ESI Court, Pondicherry. +1 cc to M/s.Row & Reddy, Advocate, SR.No.18665. +1 cc to Mr.S/Jayakumari, Advocate, SR.No.19177. Skd (Co) krd / 15.4.08 C.M.A .No.1631 of 1999 https://hcservices.ecourts.gov.in/hcservices/