1986 (4) TMI 368 - SC - Indian Laws

Expansion construction workers classified as employees under ESI Act | Social security ruling |

Regional Director, Employees' State Insurance Corpn., Madras Versus South India Flour Mills (P) Ltd.

Workers employed for constructing additional factory buildings for expansion were deemed employees under Section 2(9) of the Employees' State Insurance ... - Issues Involved:1. Whether workers employed for the construction of additional buildings for factory expansion are employees within the meaning of Section 2(9) of the Employees' State Insurance Act, 1948.2. Whether casual workers come within the purview of the Employees' State Insurance Act, 1948.Issue-wise Detailed Analysis:1. Definition of 'Employee' under Section 2(9) of the Act:The primary issue in these appeals and Special Leave Petitions is whether workers employed for the construction of additional buildings for factory expansion are considered employees under Section 2(9) of the Employees' State Insurance Act, 1948. Section 2(9) defines an employee as any person employed for wages in or in connection with the work of a factory or establishment to which the Act applies. This includes those directly employed by the principal employer on any work incidental or preliminary to or connected with the work of the factory or establishment, whether done in the factory or elsewhere.The Court emphasized that the definition is broad and includes various types of employees. It is sufficient if the conditions under the definition are met for one to be considered an employee.2. Inclusion of Casual Workers under the Act:The Court also addressed whether casual workers fall within the Act's purview. Referring to the case of Gnanambikai Hills Ltd., the Madras High Court had previously held that casual workers do not come within the Act's purview, despite being covered by the definition of 'employee' under Section 2(9). This was based on the reasoning that casual workers, due to their short employment duration, may not be entitled to sickness benefits, suggesting it was not the Act's intention to include them.However, the Supreme Court noted that this view overlooked other provisions of the Act, specifically Sections 39(4) and 42(3), which indicate the inclusion of casual employees. Section 39(4) mentions contributions payable for employees employed for part of the week, implicitly including casual workers. Section 42(3) further supports this by addressing employer liability for contributions even when wages are payable for only part of the week.The Court concluded that the Act indeed intends to include casual employees, as they are entitled to other benefits, such as disablement benefits under Section 51, which do not require a benefit period or contribution period.3. Connection of Construction Work with Factory Work:The investigation into whether construction work for factory expansion is incidental or preliminary to or connected with the factory's work involved interpreting the term 'work of the factory' broadly. The Court noted that the definition of 'employee' under Section 2(9) is wide and includes any work conducive to or necessary for the factory's augmentation.The Court held that constructing additional buildings for factory expansion is linked to the factory's work, as it facilitates increased production and work. Thus, such construction work is incidental or preliminary to or connected with the factory's work.4. Interpretation of Social Security Legislation:The Court emphasized that the Act is a piece of social security legislation aimed at providing benefits to employees in cases of sickness, maternity, and employment injury. Interpreting the Act to exclude workers employed for constructing factory buildings would contradict its purpose. The Court stressed the need for a liberal interpretation of such legislation in favor of the beneficiaries.5. Supporting Precedents:The Court referred to the decision in Royal Talkies, Hyderabad v. Employees' State Insurance Corporation, where it was held that workers employed in ancillary services like canteens and cycle stands within a cinema theatre's compound were employees under Section 2(9). This precedent supported the view that work ancillary, incidental, or connected to the establishment's object falls within the definition of 'employee.'Conclusion:The Supreme Court concluded that workers employed for constructing additional factory buildings for expansion are employees under Section 2(9) of the Act. The Court set aside the judgments of the Madras High Court, which had held otherwise, and allowed the appeals and Special Leave Petitions filed by the ESI Corporation. The parties were directed to bear their own costs.Judgment:Civil Appeals Nos. 801 of 1976 and 819 (NL) of 1976 were allowed, and the judgments of the Madras High Court were set aside. Special Leave Petitions Nos. 1143-1145 (NL) of 1978 were granted, the judgment of the Madras High Court was set aside, and the connected appeals were allowed.