IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. F.A.O No.663 of 1986 Date of Decision: 4th.8.2009 Employees State Insurance Corporation. ....Appellant Versus M/s Ashoka Theatre, G.T. Road, Karnal through Shri P.N.Khanna, its partner. ...Respondent CORAM : Hon'ble Ms. Justice Nirmaljit Kaur Present:- Mr. Vikas Suri, Sr. Standing Counsel with Mr.Rajiv Kumar Saini, Advocate for the appellant. Mr. Rajiv Trikha, Advocate for the respondent. ***** 1. Whether Reporters of Local Newspapers may be allowed to see the judgment ? 2. To be referred to the Reporters or not ? 3. Whether the judgment should be reported in the Digest ? NIRMALJIT KAUR, J. The respondent-firm challenged the order dated 11-08-1983 and the notice dated 19-09-1983, issued by the appellant-Employees State Insurance Corporation by way of petition under Section 75 of the Employees State Insurance Act. Three issues were framed. These issues were decided together. Before the Employees State Insurance Court, Karnal, the respondent took a stand that never on any occasion, the respondent-firm employed more than 12 or 13 person at one time. The respondent-firm had voluntarily adopted the scheme of Employees State Insurance, Chandigarh for the benefit of their 12 to 15 employees F.A.O No.663 of 1986 -2- though the cinema of the respondent-firm is not amenable to the provisions of the Employees State Insurance Act. Further, the strength of the employees never reached 20, including the employees of the contractor at any time. Moreover, the persons working in canteen/cycle stand are independently working under the supervision of the independent contractor. Learned counsel for the appellant, on the other hand, submitted that as per survey report dated 05-05-1976, the respondent was found employing 21 persons for wages, which included workers working on the canteen, cycle stand, in the repair work of furniture and publicity. Even if the persons working in the canteen and the cycle stand are proved to be employees by the contractor, the firm comes within the definition of “employees” as defined in the Employees State Insurance Act. However, the petition was decided in favour of the respondent-firm and it was held as under :- (a) The number never reached 20 excluding the Contractor, Sub-Contractor and the Sundry repairer. (b) The Contractor, Sub-Contractor and a Casual Mason for doing repairs work cannot be included in the number of employees who are under the regular and direct employment of the respondent-firm. (c) It was also held that since the respondent had voluntarily adopted for being covered by the Act w.e.f. December 1980, he was held not liable to pay the interest. Accordingly, it was held that the provisions of the Act did not apply to the firm prior to December 1980 and he was only covered w.e.f. the year 1980 that too voluntarily. Dissatisfied with the orders dated 29-05-1986, passed by F.A.O No.663 of 1986 -3- Judge, Employees State Insurance Court, Karnal, the appellant-Employees State Insurance Corporation have filed the present appeal and raised three fold arguments. Firstly, the Employees Insurance Court has erred in holding that casual labour engaged for repair of the building, is not covered by the definition of “employee” as given in the Act. In order to substantiate his argument, learned counsel for the appellant has placed reliance on the judgment of Hon'ble the Apex Court, titled as Regional Director, Empoyees' State Insurance Corporation, Madras v. South India Flour Mills (P) Ltd. AIR 1986 Supreme Court 1686, wherein, it is held that the casual employees come within the purview of the Act. After having perused the judgment, I find that the said question as to whether a casual labour is an employee or not, is covered by the said judgment. Section 39 Sub Section 4 of the Employees State Insurance Act, 1948 reads as follows :- “ The contributions payable in respect of each [wage period] shall ordinarily fall due on the last day of the [wage period], and where an employee is employed for part of the [wage period], or is employed under two or more employers during the same [wage period], the contributions shall fall due on such days as may be specified in the regulations.” The said section has been duly interpreted in paras 9 and 10 of the judgment as follows :- “9.Sub-section (4) clearly indicates employment of a casual employee when it provides “and where an F.A.O No.663 of 1986 -4- employee is employed for part of the week.” When an employee is employed for part of a week, he cannot but be a casual employee. We may also refer to sub- section (3) of S.42 relating to general provisions as to payment of contributions. Sub-section (3) reads as follows :- “Where wages are payable to an employee for a portion of the week, the employer shall be liable to pay both the employer's contribution and the employee's contribution for the week in full but shall be entitled to recover from the employee the employee's contribution.” 10. Sub-section (3), inter alia, deals with employer's liability to pay both employer's contribution and the employee's contribution where wages are payable to an employee for a portion of the week. One of the circumstances when wages may be payable to an employee for a portion of the weekis that an employee is employed for less than a week, that is to say, a casual employee. Thus Section 39(4) and S. 42(3) clearly envisage the case of casual employees. In other words, it is the intention of the Legislature that the casual employees should also be brought within the purview of the Act. It is true that a casual employee may not be entitled to sickness benefit as pointed out in the case of Gnanambikai Mills (1974 Lab IC 198) (Mad) (supra). But, in our opinion, that cannot be a ground for the view that the intention of the Act is that casual employees should not be brought within the purview of the Act. Apart from sickness benefit there are other benefits under the Act including disablement benefit to which a casual employee will be entitled under S. 51 of the Act. Section 51 does not lay down any benefit period F.A.O No.663 of 1986 -5- or contribution period. There may again be cases when casual employees are employed over the contribution period and, in such cases, they will be entitled, to even the sickness benefit. In the circumstances, we hold that casual employees come within the purview of the Act.” Challenging the order on the second ground, learned counsel for the appellant submitted that the Contractor, Sub-Contractor and Casual Labour were deemed to be an employee of the respondent and the Court had erred in holding otherwise. Reliance was placed yet again on another judgment of Hon'ble the Apex Court, reported in Royal Talkies,Hyderabad and others v.Employees' State Insurance Corporation through its Regional Director, Hill Fort Road, Hyderabad AIR 1978 Supreme Court 1478, wherein, it was held that “employee” of cycle stand and canteen run in a cinema theater by Contractors is covered by the definition of “employee” and recorded their findings as follows :- “14. Now here is a break-up of Sec.2(9). 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 F.A.O No.663 of 1986 -6- 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 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, 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 theater is not bound to run a canteen or keep a cycle stand (in Andhra Pradesh) but no one will deny that a canteen service, a toilet service, a car park or cycle stand, a booth for sale of catchy film literature on actors, song hits and the like, surely have connection with the cinema theatre and even further the venture.” 18. Therefore, we move down to Sec.2(9) (ii). Here again, the language used 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 some one 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 F.A.O No.663 of 1986 -7- 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.2(9)(ii).” A reading of the said judgment shows that this issue, too, is covered by the said judgment. Raising his third argument, learned counsel for the appellant stated that the statute makes it mandatory to allow interest @ 6% p.a. for each day of delay and thus, any consent to waive off the interest was not permissible. Hence, the Court should not have waived off the interest, even if it was consented. Accordingly, reliance has been placed on the judgment of Hon'ble the Apex Court in the case of Goetze (India) Limited vs. Employees' State Insurance Corporation 2008(8) Supreme Court Cases 705. Learned counsel for the respondent, however, did not dispute the legal position of law on all the three issues, but, however, vehemently opposed the factual position and argued that as regards the applicability of the Act and its provisions from December 1980 onwards, there remains no dispute as the letter Ex.R.4 written by the respondent voluntarily opting to be covered by the respondent of the Act has not been disowned. However, he objected to the applicability of the same for the period prior to December 1980. He submitted that at least 20 employees must be on the roll so as to attract the applicability of the provisions of the Act, whereas, at no time more than 20 persons were found in the employment of the respondent prior to December, 1980 except on a few occasions where the number was either F.A.O No.663 of 1986 -8- 20 or 21. In order to substantiate the argument, attention was invited to the evidence and the cross-examination of R.W-1. R.W-1, in his cross- examination and stated that there were 18 employees, including contractors, sub contractors and their workers, and in the year 1975 also, there were 18 employees. The report was made on the basis of attendance register and wages report. Learned counsel for the appellant, while rebutting the arguments, submitted that the statement of RW-1 is incorrect as the employees were more than 20 after including the contractors, sub contractors and casual workers and pointed out to Exhibit R-7, which is hand-written survey report, showing the employment position for the years November 1979 to February 1981, where the total number of employees is more than 20 after including contractors, sub contractors and casual workers and the said report is on the basis of the wages register, whereas, the document pointed out by the learned counsel for the respondent on page 167 of the record Annexure `A' is after March 1981 and does not include the contractors, sub contractors and casual workers. From the arguments raised by learned counsel for the parties and perusal of Survey Report Exhibit R-7 on the question of number of employees, in the firm, following facts are evident :- (a) In his oral evidence, R.W-1 stated that there were 18 employees i.e. less than 20 after including the contractors, sub contractors and other casual labours. (b) The survey report for the years November 1979 to February 1981 shows that the employees were more than 20 after including the contractors, sub contractors and casual labours. F.A.O No.663 of 1986 -9- (c) Thus, the oral evidence given by the survey report, was contrary to the hand-written survey report at page 179 of the record, pertaining to the year November 1979 to February 1981. Thus, the question that requires to be adjudicated is as to whether in the presence of documentary evidence, oral evidence adduced by the respondent, can be given weightage. For this, reliance has been placed on the record by the appellant on the judgment of Hon'ble the Apex Court, reported in the case of Banarsi Dass vs. Brig. Maharaja Sukhjit Singh and another 1998(2) Supreme Court Cases 81. In the facts of this case before the Hon'ble Apex Court, no documentary evidence was produced by plaintiff showing that he was in possession of the property. Suit was dismissed by the trial Court but first Appellate Court decreed the suit. This Court set aside the order of the First Appellate Court which was upheld by Hon'ble the Supreme Court, holding that in the absence of the documentary evidence which could have been available, the plaintiff could not rest his case on oral evidence which was against the record produced by the defendants. In the case of Birvati Devi v. Court of Civil Judge, Delhi 1996(2) R.R.R. 431, wherein, it was observed that where proof of possession is available on documentary evidence, oral evidence contrary to the proof on documents has to be discarded and similar view was held by this Court, in the case of Chahi v. Rajinder Singh and others 2004(1) L.J.R. 134 as well as by the Karnataka High Court, in the case of G. Rangaiah v. Govindappa 2009 (1) ICC 745. In the present case, the oral evidence is contrary to the documentary evidence. The oral evidence may lie but the documentary F.A.O No.663 of 1986 -10- evidence which has gone un-challenged, cannot be over-looked. It is clear from the Survey Report R-7 that there were more than 20 employees for the year November 1979 to February 1981 and they were more than 20 after including contractors, sub contractors and casual workers. In view of the legal position, having been settled by Hon'ble the Apex Court as discussed above and not disputed by the counsel for the respondent, the casual labours, the contractors, sub contractors, the employees of the canteen, cycle stand are covered under the definition of an “employee” and the casual employees come within the purview of the act and the cinema owner is liable as principal employer for their contribution. As such, I have no hesitation in holding that for the year November 1979 to February 1981, the employees were more than 20. Besides, a presumption of truth is attached to the notice under Section 45-A of the Employees' State Insurance Act, 1948. This is evident from the reading of Sub-section (2) of Section 45-A, which is reproduced below :- “45A. Determination of contributions in certain cases.-(1) Where in respect of a factory or establishment no returns, particulars, registers or records are submitted, furnished or maintained in accordance with the provisions of Section 44 or any Inspector or other official of the Corporation referred to in sub-section (2) of section 45 is [prevented in any manner] by the principal or immediate employer or any other person, in exercising his functions or discharging his duties under section 45, the Corporation may, on the basis of information available to it, by order, F.A.O No.663 of 1986 -11- determine the amount of contributions payable in respect of the employees of that factory or establishment: [Provided that no such order shall be passed by the Corporation unless the principal or immediate employer or the person in charge of the factory or establishment has been given a reasonable opportunity of being heard.] (2) An order made by the Corporation under sub-section (1) shall be sufficient proof of the claim of the Corporation under section 75 or for recovery of the amount determined by such order as an arrear of land revenue under seciton 45B [or the recovery under sections 45C to 45-I].” It is evident from reading of Sub-section 2 of Section 45-A that the order made by the Corporation under Sub-section (1) shall be sufficient proof of the claim of the Corporation under Section 75 or for recovery of the amount. As such, the onus was on the respondent-firm, who had filed the petition under Section 75 to lead sufficient proof that the employees were less than 20. Thus, the survey report R-7 cannot be ignored. The said document has not been challenged. In view of Section 2 of Section 45-A, the order of recovery, being sufficient proof of the claim, the onus to prove survey report was incorrect was on the respondent-firm. In view of the settled proposition of law, as mentioned above and the evidence referred by the appellant, the present appeal is partly allowed to the extent that respondent-firm is liable for contribution for the period November 1979 to November 1980 to be determined with interest @6% till the date of payment excluding the period from the date of the decision i.e. 29-05-1986 of the Employees State Insurance Court, Karnal, uptil the date of the decision in the appeal before this Court F.A.O No.663 of 1986 -12- and the respondent shall also be liable for further interest at the same rate from the date of this decision till payment. However, the appellant-ESIC have not been able to prove their claim, either from the documents or from the oral evidence that the respondent-firm is liable to pay the amount prior to November 1979 as there is nothing to show that they had more than 20 employees prior to November 1979. However, for the period December 1980 onwards, the respondent-firm has itself accepted that they were covered under the Employees State Insurance Act, 1948. Disposed off in the above terms. (NIRMALJIT KAUR) 4.8.2009 JUDGE gurpreet