1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD. FIRST APPEAL NO.407 OF 1995 WITH CIVIL APPLICATION NO.6445 OF 1995 Hotel Shangrilla, Neheru Place, Opp. S.T. Stand, Aurangabad Through Mr. Akbarali Gulam Hussai Kudchiwala. .... APPELLANT. VERSUS 1) Deputy Regional Director, Employees State Insurance Corporation, Punchdeep Bhavan, Ganesh Peth, Nagpur- 44 00 18 Through Standing Counsel for UOI Mr. R.G. Deo-Advocate. 2) The Tahasildar, Revenue Recovery (Head Quarters), Aurangabad (Through Govt. Pleader High Court, Bench at Aurangabad. .... RESPONDENTS. ... Mr.V.N. UPadhye Advocate for the Appellant. Mr.V.D. Sonwane Advocate for Respondent No.1. Mr.M.L. Dharashive, A.G.P. for Respondent No.2 ... CORAM: K.K. TATED, J. DATE: 10TH JULY, 2009 ORAL JUDGMENT: 1. Heard learned counsel for the parties. Present 2 First Appeal preferred by original applicant against the Judgment dated 5th September, 1995 passed by Member, Industrial Court, Aurangabad in Application (E.S.I.) No.2 of 1993 against the orders issued by Respondent No.1 dated 1st June, 1992 and two orders dated 9th February, 1993, one for the interest and another for damages. 2. The present First Appeal filed by original applicant under Section 82 of the Employees' State Insurance Act, 1948. As per Section 82 (2) of the Employees' State Insurance Act, 1948, the Appeal lies to the High Court from an order of an Employees' Insurance Court if it involves a substantial question of law. At the time of admission of the present Appeal, the order passed by this Court on 19th December, 1995 as under: "Heard. Admit. Expedite." 3. No substantial question of law involved, was framed at the time of admission of the Appeal. The Respondent No.1 is original opponent No.1 and 3 Respondent No.2 is original opponent No.2. It is the case of the Appellant that they received letter dated 4th February, 1991 from Respondent No.1 wherein it was informed that Appellant is covered under Section 1 (5) of the Employees' State Insurance Act, 1948. The Respondent No.1 informed to the Appellant that its Inspector had visited the Appellant's concern on 22nd December, 1990 and on the basis of the information received from the Inspector of the Respondent, the Appellant concerned was brought within the purview of Section 1 (5) of the said Act of 1948 with effect from 1st January, 1990. For the sake of convenience, the Respondent No.1 allotted Code No.25-0979-111 to the Appellant concerned. After receipt of the said notice/ letter dated 4th February, 1991 from Respondent No.1, the Appellant disputed the said coverage vide letter dated 9th July, 1991. The Appellant submitted that on receipt of the Appellant's letter dated 9th July, 1991 the Respondent No.1 called the Appellant at Nagpur on 19th August, 1991 for hearing. Accordingly, the Appellant appeared before Respondent No.1 on 19th August, 1991 at Nagpur through their authorized representative. Thereafter Respondent No.1 issued 4 notice dated 20th March, 1992 directing the Appellant to pay the amount of Rs.47,850/- for the period January, 1990 to January, 1992 on the assumed calculation of wages of 30 employees for a period of 25 months on the assumed salary of Rs.800/- per month per employee. Thereafter Appellant received another letter dated 6th May, 1992 wherein it was alleged that the employer was called for personal hearing on 31st March, 1992 against the assessment. Thereafter the concerned authority passed the order calling upon the Appellant to pay a sum of Rs.47,850/- for the period from January, 1990 to January, 1992. It is the case of the Appellant that they are employing less than 10 workers and it is not amenable to the provisions of the Act of 1948 and the Scheme framed under the Act of 1948. It is the case of the Appellant that they never employed 30 or more workers at any time and therefore they are not liable to pay the said amount as claimed by the Respondent No.1. 4. On the other hand, learned counsel appearing on behalf of Respondent No.1 stated that when their Inspector visited the premises of the Appellant, he 5 found that Appellant engaged more than 20 employees with power. 5. With the assistance of learned counsel appearing on behalf of the parties, I have gone through the Record and Proceedings. Copy of muster roll cum wages register is on record, which shows that more than 18 persons were in the employment of the Appellant in the year 1990. Even the evidence on behalf of the Appellant of the witness Abdul Wahab at Exhibit 22 shows that on 20th December, 1990 there were more than 20 employees in the Hotel. Even the report of the Inspector of Respondent No.1 shows that at relevant time the Appellant had engaged more than 20 workers. Learned counsel for the Appellant submitted that some of the workers were engaged through sub contractor and some of them were employed directly by the Appellant and therefore the Appellant is not covered by the Act of 1948. 6. On the other hand, learned counsel appearing on behalf of the Respondent No.1 pointed out that at the time of calculating the number of workers, they have 6 to consider total number of workers in the establishment. In support of his contention, learned counsel for Respondent No.1 relied on the Apex Court Judgment in the matter of Management of Pratap Press, New Delhi vs. Secretary, Delhi Press Workers' Union Delhi, reported in AIR 1960 S.C. Page 1213. It is held by the Apex Court that the most important test is that of functional integrality meaning thereby such as finance, employment and labour. The Court has to consider how far there is 'functional integrality' meaning thereby such functional interdependence that one unit cannot exist conveniently and reasonably without the other and on the further question whether in matters of finance and employment the employer has actually kept the two units distinct or integrated. Para 5 of the said Judgment reads as under: "(5) In Associated Cement Co., Ltd. v. Their Workmen, AIR 1960 SC 56, this Court had to consider the question whether the employer's defence to a claim for lay-off compensation by the workers of the Chaibasa Cement Works that the laying off was due to a strike in another part of the establishment, viz., limestone quarry at Rajanka was good. In other words the question was whether the limestone quarry of Rajanka formed part of the establishment known 7 as Chaibasa Cement Works within the meaning of Section 25E (iii) of the Industrial Disputes Act. While pointing out that it was impossible to lay down any one test as an absolute and invariable test for all cases it observed that the real purpose of these tests would be to find out the true relation between the parts, branches, units etc. This court however mentioned certain tests which might be useful in deciding whether two units form part of the same establishment. Unity of ownership, unity of management and control, unity of finance and unit of labour , unity of employment and unity of functional integrality were the tests which the Court applied in that case. It is obvious there is an essential difference betweens the question whether the two units form part of one establishment for the purposes of Section 25 E(iii) and the question whether they form part of one single industry for the purposes of calculation of the surplus profits for distribution of bonus to workmen in one of the units. Some assistance can still nevertheless be obtained from the enumeration of the tests in that case. Of all these tests the most important appears to us to be that of functional integrality and the question of unity of finance and employment and of labour. Unity of ownership exists ex hypothesi. Where two units belong to a proprietor there is almost always likelihood also of unity of management. In all such cases therefore the Court has to consider with care how far there is functional integrality meaning thereby such functional interdependence that one unit cannot exist conveniently and reasonably without the other and on the further question whether in matters of finance and employment the employer 8 has actually kept the two units distinct or integrated." 7. In the present case the Appellant's witness in his evidence stated that some of the workers were employed through sub contractor and some of them were directly employed by the Appellant. Therefore, in view of the Apex Court Judgment, at the time of calculating the persons for implementing the provisions of Employees' State Insurance Act, we have to consider the total number of employees employed in that establishment. 8. Learned counsel appearing on behalf of Respondent No.1 also relied on the Judgment in the matter of Assistant Regional Director vs. Kolhapur Motor Malak Sangh Limited, reported in 2007 (5) Bom. C.R. Page 493. Head Note of the said Judgment reads as under: "Employees Sate Insurance Act, 1948, Secs. 2 (12), 75 & 77 - Employer's contribution - On two petrol pumps functioning at different places demand raised from 1963 to 1977 - Employees State Insurance Court accept this in 9 respect of one unit from 1-1-1977 and not prior to it and also held that there was no functional unity between two and two cannot be clubbed together - Appeal by ESI against it - Held, in courts view there is a functional unity between two units in view of admissions of Managing Director of company and documentary evidence. In voe4w of fact of control by Head Quarter of both units, ration of Apex Court Judgment in 2001 (88) F.L.R. 347 squarely applies to this case. Two petrol pumps therefore, constitute one unit under control of one Head Quarter. Appeal allowed. Corporation to get contributed from 1-1-1977." 8. It is clear from the above mentioned authority that the total number of workmen working in the establishment is to be considered at the time of considering applicability of the Employees' State Insurance Act, 1948;. In the present case, it is clear from the evidence on record, as disclosed by both the parties, that at the relevant time the Appellant had engaged more than 20 persons in their establishment. Therefore, I do not find any substance in the present First Appeal. Even otherwise at the time of admitting the present Appeal, no substantial question of law was framed. In view of these facts, First Appeal is dismissed. No order as to the costs. 10 9. In view of the dismissal of First Appeal, nothing survives in Civil Application No.6445 of 1995 and the same is disposed of. [K.K. TATED, J.] asb/JULY09/fa407.95