1983 (9) TMI 334

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....oyer submitted an application under Section 75 of the Employees' State Insurance Act, (hereinafter referred to as 'the Act'), to set aside certain demands made by the Employees' State Insurance Corporation by its letter dated 19-6-1975, demanding a sum of Rupees 1,158.20 p. as contribution due to the Corporation from 1-4-1973 to 31-12-1973 from the applicant employer. The applicant is a Manufacturer and dealer of Margarin & Refined Oil carrying on business from a long time and the Company is covered under the provisions of the Act. But, the applicant contended that the Corporation demanded a sum of Rs. 822.78 p., in respect of all the employees for the period from 1-7-1973 to 31-12-1973 with interest thereon at Rs. 85-14 p. ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

..... Aggrieved by the said order, as stated above the Employees' State Insurance Corporation has instituted the above appeal before this Court. 6. Shri M. Papanna, learned Counsel appearing for the appellant, strenuously urged before us that the Employees' Insurance Court was not justified in holding that the Managing Director of the Company could not be considered as its employee. According to him, the Managing Director of the Company becomes an employee and, as such, the employer was liable to pay contribution with regard to the remuneration paid to the Managing Director also at Rupees 500/- per month. 7. As against that, the learned Counsel appearing for the applicant Company argued supporting the order of the Employees' I....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....atuity payable on discharge;" 11. Thus, it becomes clear that any remuneration paid or payable in cash to, an employee would amount to wages. In the instant case, the Board of Directors have appointed one of the Directors as the Managing Director to discharge certain functions and he is paid remuneration of Rs. 500/- per month. Therefore, it is obvious that the said amount should be construed as wages as defined under Section 2(22) of the Act. 12. The learned Counsel appearing for the respondent further supported the reasoning of the learned Judge stating that under the Act a Managing Director becomes the Principal Employer and he cannot, at the same time be construed as an employee of the Company. 13. The learned Counsel appearing....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... in paras 117 and 18 of the judgment make it clear that a Company is a legal person. It is a corporate entity and, as such, it can employ one of the Directors as Managing Director and he becomes an employee of the Company. The Supreme Court of India has made the position clear in Ramprasad v. Commr. of Income-tax (86 ITR 122 : AIR 1973 SC 637), by ruling thus (Para 7):-- "A managing director may have a dual capacity. He may both be a director as well as an employee. In the capacity of a managing director he may be regarded as having not only the capacity or persona of a director but also has the persona of an employee or an agent depending upon the nature of his work and the terms of his employment. Where he is so employed, the rel....