Case Note & Summary
The appellant, M/s. Natraj Cinema, a partnership firm running a cinema theatre in Nagpur, challenged an order dated 21.09.2005 passed by the Industrial Court at Nagpur in Insurance Case No. 7 of 1994 under Section 75 of the Employees State Insurance Act, 1948. The Industrial Court had rejected the appellant's application challenging an order dated 11.07.1994 passed under Section 45A of the Act, which made the ESI Act applicable to the appellant's establishment. The dispute pertained to the period from 01.04.1991 to 29.09.1993. It was undisputed that if the appellant had more than 20 employees during that period, the Act would apply. The respondent authority claimed that 21 employees were found working on 29.09.2003 (though the relevant period ended in 1993), comprising 10 regular employees, 5 temporary employees (including 2 handbill boys), 2 employees of a canteen contractor, and 4 employees on a cycle stand. The appellant admitted to having 10 permanent and 3 temporary employees, totaling 13, and disputed the inclusion of the handbill boys, canteen contractor employees, and cycle stand employees. The canteen and cycle stand were within the premises of the establishment. The court framed the issue of whether these persons could be counted as employees of the appellant. The court held that employees of the canteen contractor and cycle stand contractor are not employees of the principal employer under Section 2(9) of the ESI Act, as they are under the control and supervision of the contractor. The handbill boys were also held not to be employees because pasting handbills is not incidental to or connected with the work of the cinema establishment. Excluding these, the appellant had only 13 employees, below the threshold of 20, making the Act inapplicable. The court allowed the appeal, set aside the order dated 21.09.2005 of the Industrial Court and the order dated 11.07.1994 under Section 45A, and directed that the ESI Act is not applicable to the appellant for the relevant period.
Headnote
A) Employees State Insurance Act - Definition of Employee - Section 2(9) - Employees of independent contractor not employees of principal employer - The court held that persons employed by canteen contractor and cycle stand contractor are not employees of the cinema owner as they are under the control and supervision of the contractor, not the principal employer. (Paras 4-5) B) Employees State Insurance Act - Handbill Boys - Not Employees - Section 2(9) - Handbill boys engaged for pasting posters are not employees as the work is not incidental to or connected with the work of the establishment. The court held that such work is not part of the cinema business and thus they are not employees under the Act. (Para 5) C) Employees State Insurance Act - Applicability - Threshold of 20 Employees - Section 1(4) - Excluding contractor employees and handbill boys, the appellant had only 13 employees, below the threshold of 20, hence the Act is not applicable. The court set aside the order under Section 45A and the Industrial Court's order. (Paras 5-6)
Issue of Consideration
Whether employees of canteen contractor, cycle stand employees, and handbill boys are to be counted as employees of the appellant-establishment for determining applicability of the Employees State Insurance Act, 1948.
Final Decision
Appeal allowed. Order dated 21.09.2005 of Industrial Court and order dated 11.07.1994 under Section 45A ESI Act set aside. It is declared that the ESI Act is not applicable to the appellant for the period 01.04.1991 to 29.09.1993.
Law Points
- Employees of independent contractor not employees of principal employer
- Handbill boys not employees under ESI Act
- Cycle stand employees not employees of cinema owner
- Section 2(9) ESI Act interpretation
- Section 45A ESI Act order set aside
