IN THE HIGH COURT OF JUzsDICATURE, ANDHRA PRADESH AT HYDERABAD TUESDAY, THE SIXTH DAY OF APRIL TWO THOUSAND AND TEN PRESENT THE HON'BLE SRI JUSTICE K.C.BHANU CIVIL MISCELLANEOUS APPEAL NO. 2709 OF 2004 Between : Employees State Insurance Corporation Rep.by its Regional Manager. .... Appellant. A N D M/s Nitco Tiles & Marbles Industries (Andhra ) Pvt. Ltd., …Respondent THE HON'BLE SRI JUSTICE K.C. BHANU CIVIL MISCELLANEOUS APPEAL NO. 2709 OF 2004 J U D G M E N T: This Civil Miscellaneous Appeal, under Section 82(2) of Employees State Insurance Act, 1948, (for short, “the Act”), is directed against the order dated 12.07.2001 in E.I. Case No.57 of 1992, on the file of Employees Insurance Court, Hyderabad, whereunder and whereby the application filed under Section 75 of the Act, for declaration that the employees engaged by the independent agencies for laying work at customers construction site outside premises of the first respondent company do not fall within the meaning ‘employee’ as defined under Section 2(9) of the Act and to set aside Ex.P2-impugned notice, was allowed. 2. The brief facts that are necessary for disposal of the appeal may be stated as follows: The respondent company manufactures and sells Mosaic tiles. Some customers requested the company to suggest their specialized agencies to carry out the laying of the tiles at their premises, and such agencies are routed through the respondent corporation for the benefit of its customers. Laying of tiles is neither preliminary nor incidental work in the manufacture of tiles made by the company. There is no obligation for the customer to engage the independent agencies for laying tiles at their premises. On 05.12.1989, the Inspector made inspection of the records of the respondent company for the period from July, 1988 to October, 1989, and basing on the report, the appellant Corporation sent a letter dated 11.07.1990 to the respondent company demanding to pay Employees State Insurance contribution of Rs.1,11,606.00 in respect of payment made to the independent agencies for laying and polishing the tiles at customer’s premises. In response to the same, the respondent company made a representation to the appellant corporation. However, a show-cause notice dated 22.10.1991 was sent by the appellant corporation and thereafter Ex.P2 order was passed. Challenging the same, the respondent company filed the case before the Employees Insurance Court. 3. The appellant corporation filed its written statement stating that the work has been entrusted to some contractors who are having specialization in the work of laying tiles. The said contractor in turn executes the work and that the respondent company was having full control over the work of laying and polishing the tiles and therefore, those persons come within the meaning of ‘Employee’ and hence, the corporation prays to dismiss the petition as not maintainable. 4. Basing on the above pleadings the following issues have been framed by the trial court: 1. Whether the employees engaged by the independent agencies can be treated as employees of the petitioner ? 2. Whether the respondent -corporation is entitled to claim contribution on the amounts spent towards laying and polishing? 3. To what relief ? 5. To substantiate their evidence PW-1 was examined and Exs.P1 to P3 were marked. On behalf of respondent RWs.1 and 2 were examined and got marked Exs.R1 to R11. 6. The trial court after consideration of evidence on record, held that the workers who are engaged by the contractor did not come within the meaning of ‘Employee’ of the respondent company, and accordingly set aside the impugned order Ex.P2, demand notice. Challenging the same the present appeal is filed. 7. The substantial question is, whether the employees working under the contractor come within the meaning of ‘employee’ as defined under Section 2(9) of the Employees State Insurance Act, 1948 ? 8. The learned counsel for the appellant corporation contended that since laying of stones is a specialized skill, the employees are engaged by the manufacturer for laying and polishing the tiles and therefore, whether the work was done within the factory premises or outside the factory premises, it is ancillary work, therefore, he prays to set aside the impugned order. 9. On the other hand, the learned counsel for the respondent company contended that the workers engaged by the contractor are not the employees of the manufacturer, and therefore, they cannot be termed as employees of the manufacturer; that the records maintained by the employer do not indicate that the wages have been paid to the workers; similarly there is no evidence to show that the workers were engaged or appointed by the employer so as to lay and polish the tiles; that, after consideration of evidence on record, the trial Court rightly passed the impugned order and there are no grounds to interfere with the same. Section 2(9) (i) of the Act reads thus: “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….” 10. The factual aspects are not in dispute. The respondent company is the manufacturer of the tiles. The Inspector made the inspection on 05.12.1989 and found about the payment made to the independent agencies who are doing laying and polishing work of tiles (Mosaic/marble) at the customers’ premises. There is absolutely no evidence to show that the workers who are doing the contract work outside the manufacturing premises are directly appointed by manufacturer or that they were under the direct control and supervision of the manufacturer. The learned counsel for the appellant corporation placed reliance on the inspection report. That report is self serving document. Except the inspection report, there is no independent evidence placed before the trial court by the appellant to show that the workers were duly appointed by the manufacturer. 11. Therefore, absolutely there is no evidence to show that the workers who are laying tiles and polishing at the customers’ place were directly appointed by the employer. The issuance of notice by the corporation so as to bring those workers under the purview of the Employees State Insurance Act is found to be illegal, in view of the fact that they are not directly appointed by the manufacturer, and as a matter of fact they were appointed by the contractor. Even as seen from the report it is clear that the wages are not being paid directly by the manufacturer to the workers who are laying the stones and polishing them, but certain amounts are being paid to the contractor. Therefore, in these circumstances, the trial court rightly held that the impugned notice is bad under law and that order does not call for any interference inasmuch as there is no substantial question of law involved in this appeal. None of the finding is shown to be perverse. The trial court after appreciation of evidence available on record came to the right conclusion. There are no grounds to interference with the same. 12. Accordingly, the Civil Miscellaneous Appeal is dismissed. No costs. _______________ K.C.BHANU. J APRIL 6, 2010. YVL