ESI contribution assessment excludes directors' emoluments, while unpaid arrears findings stand absent proof of payment.

A factual finding that Employees' State Insurance contributions remained unpaid was sustained where the company produced no payment vouchers or account books and did not effectively press limitation, so no second-appeal interference was warranted on a pure question of fact. The analysis also treated directors of a limited company as outside the category of employees for contribution purposes, since they answered the description of principal employer rather than wage-earning staff. On that basis, emoluments paid to directors could not be included in the wage base for ESI contribution assessment.

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Issues: (i) Whether the company had proved payment of the alleged arrears of Employees' State Insurance contributions and whether the High Court could interfere with the factual finding on that issue. (ii) Whether amounts paid to directors of a limited company could be treated as wages forming the basis for contribution under the Employees' State Insurance Act.

Issue (i): Whether the company had proved payment of the alleged arrears of Employees' State Insurance contributions and whether the High Court could interfere with the factual finding on that issue.

Analysis: The company failed to produce payment vouchers or account books to support its plea that the contributions had already been paid. The finding that arrears were due was based on the absence of evidence of payment. The plea of limitation was not effectively pressed. The issue was treated as one of fact, not fit for interference in second appeal, the jurisdiction being confined to substantial questions of law.

Conclusion: The company failed to establish payment of the arrears, and no interference was warranted on the factual finding.

Issue (ii): Whether amounts paid to directors of a limited company could be treated as wages forming the basis for contribution under the Employees' State Insurance Act.

Analysis: The definition of "principal employer" was read to include the owner or occupier of the factory and persons responsible for supervision and control of the establishment. Directors of a limited company were treated as falling within that description and not as employees within the meaning of the Act. On that basis, emoluments paid to directors could not be included for assessing contribution.

Conclusion: Payments made to directors could not form the basis for assessing contribution.

Final Conclusion: The challenge to the recovery of arrears failed, but the exclusion of directors' emoluments from the contribution base was upheld.

Ratio Decidendi: In proceedings under the Employees' State Insurance Act, a factual finding that arrears were unpaid will not be interfered with in the absence of evidence, and directors of a limited company are not employees for contribution purposes where they answer the description of principal employer.

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