Case: M/S. The Abu Marble Mining Private Limited Vs. The Regional Directors

1. This Appeal is against the judgment of the learned Single Judge dated 14th August 1992 in First Appeal No.807 of 1997 under the provisions of the Employees State Insurance Act, 1948 (hereinafter referred as "the said Act"). By his judgment dated 14th August 1992, the learned Single Judge was pleased to allow the Appeal preferred by the respondents herein against the order of the Employees Insurance Court at Mumbai dated 30th July 1977. The learned Insurance Court had framed the following issue for consideration. "Is the work of fixing and polishing of a marble, done outside the factory premises, a part of the extension of the work of the applicants factory" After considering the evidence led on behalf of the appellants herein, the learned Insurance Court held that the job of marble fixing outside the factory by employees engaged by the contractor had no connection whatsoever with the work of the factory. The learned Court further held that they were mainly carrying out marble fixing work and only incidentally, were utilizing the products of the factory belonging to theand, based on these conclusions held that the employees engaged by the contractor would not fall within the extended definition of the word "employee" under Section 2(9) of the Act. It is this order which was the subject matter of Appeal under the Act before the learned Single Judge. The learned Single Judge, after consideration of the material and the various authorities cited arrived at the conclusion that the work done by the marble fixing contractor must be held to be done under the supervision of the principal employer viz.,The learned Single Judge further proceeded to hold as under."In my view, this leaves no means of doubt whatsoever that the marble fixer in the present case was employed under the supervision of the principal employer and, indeed, in the facts of this case, he was his agent on the work which was ordinarily the part of the work of the factory establishment or which is preliminary to the work carried on."It is based on this finding that the learned Judge held that the employees employed by the marble fixer i.e. the immediate employer would be the employees of the principal employer within the meaning of Section 2(9)(i)(ii) of the Act and consequently, reversed the judgment of the Employees Insurance Court. It is this order which is the subject matter of the present Appeal.

Court's reasoning:
9. Considering all these judgments, we now come back to the facts of this case. We have earlier noted the evidence on record. From the evidence on record, what is clear is that the contractor was only doing the work of laying tiles/marble. Even the polishing work at the site, from the evidence of Sharma, was not done by the contractor. It was done either by the company or given on contract. The work of the factory, as has come in the evidence, was processing marble stones which was cutting, polishing and finishing, according to size. As pointed out earlier, the employees to be covered have either to be working under the supervision of the principal employer or his agent and doing work, which is ordinarily part of the work of the factory or establishment. From the evidence nothing has been placed on record to show that the appellant principal employer was supervising the work of the immediate employer i.e. the contractor. The only evidence that has come on record is that it is the person who had given the contract to the appellant who was supervising the work. This cannot be said to be supervision by the employer. The test of supervision must be the test as laid down by the Apex Court in the case of CESC Ltd.Ors. (supra). Those tests are, therefore, not satisfied. We have also earlier noted that the immediate employer or the contractor cannot also be said to be the agent of the appellant as the immediate contractor was engaged by the principal employer to carry out the work of laying of the marble and paying to him consideration on the piece rate basis. The test of the agent again, as contained in the provisions of Section 182 of the Indian Contract Act and as laid down in CESC Ltd.Ors. (supra) are not satisfied. The contractor is not working under the supervision of the "principal employer or his agent. The immediate employer will not fall within head (b) as split up and seen in paragraph 3.10. The other test to be applied is whether the work of laying, even in a case of a complete contract can be said to be incidental to the work of the factory or establishment. The work of the factory, as has come in evidence, is cutting, polishing and finishing. It is only when a complete contract is taken, the principal employer is required to carry out also the work of laying or fixing the marble. Merely because the establishment is a "factory" it does not mean that even contractors employees engaged by an employee would necessarily fall within the definition of "employee" under Section 2(9). They must do work incidental to the purpose of the factory. The work of the factory has been spelt out earlier. Merely because the material is supplied at the site and that is laid by the contractor i.e. Immediate employer it cannot be said that, that would be work which is incidental to the work of the factory or for the purpose of the factory. Incidental for the purpose of the factory would mean that it has some connection with the ordinary work of the factory. That is not the evidence in the instant case. The work of the factory is cutting and polishing marble. Head "c" of the definition of employee in paragraph 3 will also not be attracted.11. We are clearly, therefore, of the opinion that on the material on record there was nothing to show that the employees engaged by the immediate employer fell within the extended definition of "employee" within the meaning of Section 2(9) of the ESIC Act. We are, therefore clearly of the opinion that the learned Single Judge erred in law in holding that the test of supervision and agency had been satisfied.