Case Name : Royal Western India Turf Club Ltd. Vs E.S.I. Corporation & Ors. (Supreme Court of India)
Appeal Number : Civil Appeal No. 49 of 2006
Date of Judgement/Order : 29/02/2016
Brief of the Case
The Supreme Court held In the case of Royal Western India Turf Club Ltd. vs. E.S.I. Corporation & Ors. that the definition of employee is very wide. A person who is employed for wages in the factory or establishment, on any work of, or incidental or preliminary to or connected with the work is covered. The definition brings various types of employees within its purview. The ESI Act is a welfare legislation and is required to be interpreted so as to ensure extension of benefits to the employees and not to deprive them of the same which are available under the Act. Further it is apparent from section 39 that an employee who is employed for a part of the wage period is also covered for the purposes of contribution. The definition of the term “employee” in section 2(9) is also wide enough to cover casual employees who are employed for part of wage period. Hence casual workers are entitled all benefits available under ESI Act.
Facts of the Case
The main question involved in the present appeals whether the ESI Act is applicable to Royal Western India Turf Club Ltd. has been concluded by a 3 Judge Bench decision of this Court vide judgment dated 31.7.2014. It has been held that the Turf Club would fall within the meaning of the word ‘shop’ as mentioned in the notification issued under the ESI Act. Therefore, the provisions of ESI Act would extend to the appellant also. Thereafter the matters have been placed before a Division Bench to consider other questions on merit. The question raised is as below-
– whether casual workers are covered under definition of employee as defined in Section 2(9) of the Employees State Insurance Act, 1948 and pertaining to period for which Turf Club is liable to pay from 1978-79 or from 1987.
Contention of the Appellant
The ld counsel of the Appellant submitted that in view of the specific notification dated 18.9.1978 so far as Royal Western India Turf Club Ltd. is concerned in Maharashtra, position was clear as to applicability of ESI Act. The consent terms which have been relied upon related to the earlier period in which other establishments of the Turf Club were covered. In the notification issued on 18.9.1978, the departments in question of the Turf Club were also covered. Even the consent term reflects that there was no doubt that the Turf Club was covered under provisions of the ESI Act w.e.f. 1968.
Contention of the Respondent
The ld counsel of the respondent submitted that temporary staff engaged on race days for issue of tickets, would not be covered by the definition of the “employee” under Section 2(9) of the Employees State Insurance Act, 1948. It was also submitted that in view of the consent terms filed in Application No.16/1976 by the Turf Club before the ESI Court, Bombay, the casual labour engaged on race track were not to be covered under the ESI Act. It was further submitted that in view of Rule 2A of the Employees’ State Insurance (Central) Rules, 1950, contribution is required to be made for a period as may be prescribed in the Regulations and in view of Regulations 29 and 31 of the Employees’ State Insurance (General) Regulations, 1950, it would be difficult to calculate the contribution for the employees who work casually on the racing days.
It was also submitted that the direction issued by the High Court not to recover the amount before 1987 does not call for any interference in the appeal filed by ESI Corporation, for which reliance has been placed on a decision of this Court in Employees State Insurance Corporation v. Hyderabad Race Club (2004) 6 SCC 191.
Whether casual employees are covered within the purview of ESI Act
The Supreme Court held that the definition of “employee” is very wide. A person who is employed for wages in the factory or establishment on any work of, or incidental or preliminary to or connected with the work is covered. The definition brings various types of employees within its ken. The Act is a welfare legislation and is required to be interpreted so as to ensure extension of benefits to the employees and not to deprive them of the same which are available under the Act. Further It is apparent from section 39 that an employee who is employed for a part of the wage period is also covered for the purposes of contribution. The definition of the term “employee” in section 2(9) is also wide enough to cover casual employees who are employed for part of wage period. It is also provided in section 39(5) that in case contribution is not paid, it shall carry 12% interest per annum or such higher rate as may be specified in the Regulations till the date of actual payment and the amount is recoverable as arrears of land revenue.
This Court in Regional Director, Employees’ State Insurance Corporation, Madras v. South India Flour Mills (P) Ltd. [AIR 1986 SC 1686] has overruled the decision of the Madras High Court in Employees’ State Insurance Corporation v. Gnanambikai Mills Ltd. (1974) 2 Lab. Law Journal 530 (Mad.) in which the High Court laid down that though casual employee may come within the definition of the term “employee” under section 2(9) of the Act, yet they may not be entitled to sickness benefits in case their employment is less than the benefit period or contribution period and that it does not appear from the Act that casual employee should be brought within its purview. It was held that casual employees come within the purview of the Act. In view of the aforesaid decision it is apparent that the submission raised by Royal Turf Club that casual workers are not covered under the ambit of ESI Act is too tenuous for its acceptance.
Further the notification of 1978 is clear and has to be given full effect, for earlier period also the consent terms indicated that various other departments of Turf Club were covered under the notification of 1968. Reliance on the decision of this Court in Hyderabad Race Club case (2004) 6 SCC 191 so as to waive the contribution from 1975 to 1986, is not available as in the instant case there was no doubt as to applicability of ESI Act in view of the specific notification issued in 1978. The provisions of ESI Act were applied to various departments of Turf Club w.e.f. 1968. The decision in Hyderabad Race Club case (2004) 6 SCC 191 turned on its own different factual matrix. In this case, it was clear from 1968 itself that Turf Club was covered under ESI Act as is apparent from consent terms. The notification dated 18.9.1978 included other left out departments of race club. The provisions of ESI Act were complied with by Turf Club w.e.f. 1968. The High Court on the facts of the case has erred in quashing the demand for the contribution with effect from 1978 till 1987. In our opinion, the Turf Club is liable to make the contribution as per notification dated 18.9.1978 along with interest at such rate as provided in the Act and the Rules till the date of actual payment.
Accordingly, appeal of the appellant dismissed.