1999 (11) TMI 901 - SC - Indian Laws

State Notification Automatically Covers Bombay Branch Under Employees' State Insurance Act

Transport Corporation of India Versus Employees' State Insurance Corpn. and Ors.

The Supreme Court affirmed that the notification issued by the State of Andhra Pradesh under Section 1(5) of the Employees' State Insurance Act, 1948 ... - Issues Involved:1. Applicability of the notification issued by the State of Andhra Pradesh under Section 1(5) of the Employees' State Insurance Act, 1948 to the appellant's branch located in Bombay.2. Requirement of a separate and independent notification by the State of Maharashtra for the applicability of the Act to the appellant's Bombay branch.Issue-Wise Detailed Analysis:1. Applicability of the Notification Issued by the State of Andhra Pradesh to the Appellant's Bombay Branch:The appellant, Transport Corporation of India, contended that its Bombay branch was not covered by the Employees' State Insurance Act, 1948, based on the notification issued by the State of Andhra Pradesh. The appellant argued that the notification by Andhra Pradesh could not extend to its Bombay branch as the State of Maharashtra had not issued a similar notification during the relevant period. The Bombay branch was only covered by the Act after Maharashtra issued its notification on 10.3.1989.The Deputy Regional Director of the Employees' State Insurance Corporation (ESIC) had assessed contributions for the Bombay branch from May 1981 to July 1985, arguing that once the head office in Andhra Pradesh was covered, all branches, including those outside Andhra Pradesh, were automatically covered. The Single Judge of the Bombay High Court initially quashed this order, but the Division Bench reversed this decision, holding that the branches of the establishment were covered by the notification issued by Andhra Pradesh.The Supreme Court upheld the Division Bench's decision, stating that the term 'employee' under Section 2(9) of the Act includes any person employed for wages in or in connection with the work of an establishment, whether the work is done within the establishment or elsewhere. Consequently, once the head office is covered by the Act, all branches, including those outside the state, are automatically covered due to their functional integrality with the head office.2. Requirement of a Separate and Independent Notification by the State of Maharashtra:The appellant argued that a separate notification by the State of Maharashtra was necessary to cover its Bombay branch under the Act. The Supreme Court rejected this argument, stating that the Act is a Central Act intended to operate throughout India. The 'appropriate Government' under Section 1(5) of the Act can extend the Act to any establishment or class of establishments within its jurisdiction. Once the Andhra Pradesh Government issued the notification, it automatically covered all branches of the appellant, including those in other states, due to the integrated nature of the appellant's business operations.The Court emphasized that the Act is a beneficial piece of legislation aimed at providing social security to employees. It should be interpreted broadly to cover all employees working for an establishment, regardless of their location. The Court also noted that treating branches as separate entities would create an anomalous situation where employees transferred between branches would lose their benefits under the Act.Conclusion:The Supreme Court affirmed the Division Bench's decision, holding that the notification issued by the State of Andhra Pradesh under Section 1(5) of the Employees' State Insurance Act, 1948, automatically covered the appellant's Bombay branch. The Court emphasized the integrated nature of the appellant's business and the broad, beneficial purpose of the Act, rejecting the need for a separate notification by the State of Maharashtra. The appeal was dismissed with costs.