CORAMTHE HONOURABLE MR v. E.S.I.Corporation

IN THE HIGH COURT OF JUDICATURE AT MADRASDated: 10-1-2007CORAMTHE HONOURABLE MR.JUSTICE K. VENKATARAMANC.M.A.No.477 of 2001M/s.Southern Roadways Ltd,95, Peters Road,Madras-14. .. Appellant/Petitionervs.E.S.I.Corporation,rep. by its Regional Director,143, Sterling Road,Madras-34. .. Respondent/ RespondentCivil Miscellaneous Appeal filed under Section 82 of theEmployees' State Insurance Act, 1948 against the order dated 8.12.2000made in E.S.I.O.P.No.15 of 1994 on the file of the I Additional Judge,City Civil Court, Chennai. For Appellant : Mr.S.Ramasubramanian, S.C., For Mr.D.Meenakshi Sundaram For Respondent : Mr.B.R.Ramesh Babu ...JUDGMENTThe above Civil Miscellaneous Appeal has been directedagainst the order of the learned I Additional Judge, City Civil Court,Chennai in ESIOP No.15 of 1994 dated 8.12.2000. 2. The appellant herein has filed ESIOP No.15/94 on the fileof I Additional Judge, City Civil Court, Chennai under Section 75 ofthe Employees' State Insurance Act Act, 1948 (hereinafter referred toas "the said Act"). The said ESIOP has been filed by the appellantpraying for a decree and judgment:-- (a) that the subsistence allowance paid to suspended employeesare not wages as defined under Section 2(22) of the E.S.I. Act andfurther the trainees/apprentices are not employees within the meaningof the Act and claim for contribution as per letter dated 15.7.1993 istotally against law. https://hcservices.ecourts.gov.in/hcservices/ (b) that the trainees would not come under the purview of theE.S.I. Act and therefore, the appellant is not liable to pay theamount as claimed in the notice.(c) to declare that the claim is totally untenable.(d) declaring that the appellant is not liable to pay any amount.(e) directing the respondent to pay the cost of the petition.3. The case put forth by the appellant is as follows. Theappellant has its Branch office at No.95, Peters Road, Madras-14. Theappellant is a big lorry transport operator and some of the employees,who have been suspended pending enquiry, are paid subsistenceallowance. The respondent by their letter dated 3.12.1990 directedthe appellant to pay contribution of Rs.33,780-30 from 1.12.1989 to31.12.1990 for the subsistence allowance paid to the suspendedemployees and also Rs.20,047-40 for the wages paid to trainees for theabove period, totalling Rs.67,897-64 covering interest at the rate of6% upto 19.10.1989 and at 12% from 20.10.1989. The further case ofthe appellant is that the appellant has sent reply on 5.1.1991 statingthat the claim of contribution with regard to subsistence allowancepaid to the suspended employees and stipend paid to the personsdesignated as apprentices/trainees is not sustainable in law and onfacts. While so, without giving any opportunity to the appellant, therespondent all of a sudden sent a letter dated 15.7.1993 asking theappellant to pay a sum of Rs.67,897-64. Hence, challenging the same,the said ESIOP has been filed by the appellant. The respondentresisted the said ESIOP on various grounds. The learned I AdditionalJudge, City Civil Court, Chennai by his order dated 8.12.2000dismissed the said ESIOP and the present appeal has been filed againstthe said order.4. At the time of admission, this Court has formulated thefollowing substantial questions of law for consideration:-(1) Whether the court below is right in refusing togrant relief to the appellant against the unlawful claimof the respondent-corporation for contribution under theunder the Act in respect of apprentices after havingfound in favour of the appellant on the question of law?(2) Whether the subsistence allowance paid as perthe Standing Order for employees under suspension didnot constitute wages under Section 2(22) of the E.S.I.Act?(3) Whether the E.S.I. Court under Section 75 ofthe Act has got original jurisdiction to decide thequestion of law? https://hcservices.ecourts.gov.in/hcservices/

5. I have heard Mr.S.Ramasubramanian, the learned senior counselappearing for the appellant and Mr.B.R.Ramesh Babu, the learnedcounsel appearing for the respondent. 6. Mr.S.Ramasubramanian, the learned senior counselappearing for the appellant, fairly conceded that as far as the claimof contribution in respect of substance allowance is concerned, he isnot pressing the appeal, since subsistence allowance has beenconsidered as wages by the Honourable Supreme Court. He has drawn myattention to the judgment reported in REGIONAL DIRECTOR, EMPLOYEES'STATE INSURANCE CORPORATION v. M/S.POPULAR AUTOMOBILES (AIR 1997 S.C.3956) wherein the Apex Court has held as follows:-"The High Court in the impugned judgments erred in takingthe view that subsistence allowance was not a part ofwages as defined by Section 2 Sub-section (22) of theAct. It must be held that such allowance forms part ofwages as per sub-section (22) of Section 2 of the Act andconsequently, on the said amount the employee will beliable to contribute under Section 39 by way ofemployee's contribution and equally the employer would beliable to contribute his share by way of employer'scontribution on the amount of subsistence allowance paidto the suspended employee."7. In view of the said fact, the appeal in respect ofcontribution towards subsistence allowance is rejected and the appealis dismissed in so far as the contribution towards subsistenceallowance.8. The learned senior counsel appearing for the appellantfurther submitted that regarding the claim of contribution with regardto the trainees, the trainees/apprentices are not employees within themeaning of the Act. According to the learned senior counsel, they aregetting only stipend or allowance and not wages. Further, the learnedsenior counsel has submitted that the appointment letter of apprenticewould clearly indicate that they cannot be treated as employees duringthe period in issue. The learned senior counsel further submittedthat even though a clear finding has been given by the learned IAdditional Judge, City Civil Court, Chennai that the claim made by therespondent in respect of trainees is totally against law, the learnedTrial Judge has dismissed the ESIOP on the sole ground that theappellant did not produce the letter dated 15.7.1993. In thisconnection, the learned senior counsel has drawn my attention to theimpugned order wherein the following findings have been given by thelearned Trial Judge:-"It is contended on the side of the petitioner thatthe respondent has also claimed contribution for theamounts given to trainees. In the light of thediscussion made earlier, it is very clear that the claimmade by the respondent in respect of trainees is totallyagainst law. https://hcservices.ecourts.gov.in/hcservices/ .. .. ..From the close reading, the decision referred toabove it is further made clear to the Court that anapprentice is not an employee within the meaning ofSection 2(9) of the Employees State Insurance Act.Therefore, it is very clear that there is a considerableforce in the argument advanced by the learned counsel forthe petitioner."9. Thus, according to the learned senior counsel for theappellant, when such findings have been given, the learned Trial Judgeshould not have rejected the claim of the appellant on the ground thatthe appellant has not produced the letter dated 15.7.1993 sent by therespondent. Further, the learned senior counsel appearing for theappellant has submitted that since the respondent did not disputeabout the said letter, the rejection of the claim of the appellant onsuch ground is totally unjust. I am able to see force in the saidcontention. The learned Trial Judge, after finding that the claimmade by the respondent in respect of trainees is totally against law,should not have rejected the claim of the appellant on the ground thatthe appellant herein failed to produce the letter sent by therespondent dated 15.7.1993, especially when the respondent did notdispute the letter dated 15.7.1993. 10. The learned senior counsel further relied on thejudgment reported in 2001 (II) L.L.J. 793 (MADRAS) (MANAGEMENT OFJAWAHAR MILLS LTD v. REGIONAL DIRECTOR, EMPLOYEES' STATE INSURANCECOPRORATION LTD) wherein this Court has held as follows:-"If the above said evidence on record is taken intoconsideration, in the light of the decision of the ApexCourt cited above, the apprentice, who have undergonetraining in the petitioner-mill cannot be treated asemployees under the meaning of Section 2(9) of the Act.If the apprentices cannot be treated as employees underthe Act referred to above, the respondent-corporation isnot justified in asking for payment of contributiontowards the amount spent as stipend for the apprentices.In view of the said position, the impugned order passed bythe Court below cannot be sustained."11. Further, the learned senior counsel has cited thedecision of the Apex Court reported in AIR 1976 S.C. 66 (THEEMPLOYEES' STATE INSURANCE CORPORATION v. THE TATA ENGINEERING &LOCOMOTIVE CO LTD) wherein it has been held as follows:-"From the terms of the agreement it is clear thatapprentices are mere trainees for a particular period fora distinct purpose and the employer is not bound to employthem in their works after the period of training is over.During the apprenticeship they cannot be said to beemployed in the work of the company or in connection withthe work of the company. That would have been so if they https://hcservices.ecourts.gov.in/hcservices/ were employed in a regular way by the company. On theother hand the purpose of the engagement under theparticular scheme is only to offer training under certainterms and conditions. Besides, the apprentices are notgiven wages within the meaning of that term under the Act.If they were regular employees under the Act, they wouldhave been entitled to additional remuneration such asdaily allowance and other allowances which are availableto the regular employees. We are, therefore, unable tohold that the apprentices is an employee within themeaning of Section 2(9) of the Act."12. Thus, taking into consideration of the entire aspects ofthe matter, the fair and final order of the learned I AdditionalJudge, City Civil Court, Chennai dated 8.12.2000 made in ESIOP No.15of 1994 is liable to be set aside in so far as the rejection of theappellant's claim regarding trainees/apprentices and the appeal isallowed in respect of the said claim. In view of the said finding,the appellant is entitled to get back the amount with proportionateinterest from the respondent in so far as the contribution made by theappellant under the said head. The said amount has to be refunded bythe respondent to the appellant within 12 weeks from this date. Asheld earlier, the appeal in respect of other claim, namely,contribution towards subsistence allowance is dismissed.13. In the result, the Civil Miscellaneous Appeal is allowedin part as indicated above. There is no order as to costs. dppSd/- Asst. Registrar./true copy/ Sub Asst. Registrar.To 1 The I Additional Judge, City Civil Court, Chennai.2. THE RECORD KEEPER, VR SECTION, HIGH CORT MADRAS + ONE C.C to MR. D. MEENAKSHISUNDARAM ASSOCIATES SR.NO. 1888 GM(CO) KSJ(25/01/2007) Judgment inC.M.A.No.477 of 2001