Case Title: Hindustan Unilever Ltd. … Appellant
Versus
The Deputy Director. Sub Regional Employees’ State Insurance Corporation … Respondent
Date of Decision: Reserved On 27.04.2023
Pronounced On 26.06.2023
Coram: THE HON’BLE MR.JUSTICE S.VAIDYANATHAN
AND
THE HON’BLE MRS.JUSTICE R.KALAIMATHI
Citation: W.A. No.2836 of 2022 and C.M.P. No. 23210 of 2022
Introduction:
This Writ Appeal has been filed against the order dated 10.08.2022 of the learned Single Judge, in and by which, the Writ Petition filed by the Appellant herenin, questioning the order issued by the respondent herein, under Section 45-A of the Employees’ State Insurance Act, 1948 (in short the ‘ESI Act, 1948) was dismissed. On 06.12.2010, the Social Security Officer of the Respondent had visited the unit of the Appellant in respect of coverage of ESI Scheme and by communication dated 10.02.2011, it was informed that the Appellant Factory was liable to be covered with effect from 01.01.2010. After producing the legal history of tea and coffee factories of Brooke Bond India Limited and Lipton India Limited, an personal hearing was afforded on 30.08.2013, in which, it was resolved to ask the Social Security Officer to revisit the factory to ascertain whether the activity being carried on in the Factory falls within the definition of seasonal factory in terms of Section 2(19A) of the ESI Act, 1948. Section 2(19A) of the ESI Act, 1948.
Facts:
The Appellant Factory, having one of the factories at Coimbatore, is into the business of manufacturing pure coffee, coffee and chicory mixture in the name and style of M/s.Brooke Bond India Limited and the Appellant Factory does not deal with the process of chicory as a separate item. The Appellant Factory had registered itself as a Principal Employer and is holding a Certificate of Registration and there were four Contractors supplying manpower to the Appellant Factory at Hosur, who are also holding a valid license under the said Act. Since the business of the Contractors will not come within the definition of seasonal factory, the provisions of the ESI Act will apply to their employees. In 2010, the Respondent informed that the Contractors, calling upon them to cover their Establishments under the ESI Act, by treating them to be independent establishments and the Respondent also allotted a Code number to the establishments of the Contractors, thereby they have been remitting ESI
contributions in respect of their employees from April, 2010.
Issues:
- Whether the activity being carried on in the Appellant Factory falls within the definition of seasonal factory in terms of Section 2(19A) of the ESI Act, 1948.
- Whether the respondents’ factories in view of the amendment to the definition of ‘seasonal factory’ have lost the benefit of exclusion from the Act.
Legal Analysis:
The core issue to be decided in this case is whether the Appellant Factory can be construed as a seasonal factory or not? The Social Security Officer, after inspection, submitted a report, recommending that the Appellant Factory is liable to be covered under the ESI Act, 1948 and also for allotment of Code Number. Let us first analyze what are all the criteria for bringing a Factory under the purview of Seasonal Factory. According to the Respondent, the word ‘seasonal’ denotes that the activities of a Factory should take place in a particular period of time and the process of manufacturing coffee beans from the coffee berries is seasonal in nature. The reason stated by the respondent for coverage of the Appellant Factory under
the ESI Act, 1948, was that they procure coffee beans from 22 different vendors in Southern States, including Tamil Nadu and such procured beans are processed into coffee power in the factory situated at Hosur. Therefore, it cannot be said that they undertake works only during a particular period and without production of relevant materials to substantiate their stand, they
cannot be simply branded as a seasonal factory.
The order of the learned Single Judge in extending the coverage to the Appellant Factory on the ground that the contract employees are covered, may not be correct, as it is the duty of the Principal Employer, namely, Appellant Factory to pay the amount to the Respondent and there aftercollect the amount from the Contractors.
Judgements:
In the case on hand, the Appellant Factory, having advanced arguments on merits before the learned Single Judge and obtained an adverse order, cannot now raise a plea of alternative remedy. Moreover, a careful reading of the judgment of the Apex Court (supra), alternative remedy is not a bar to entertain a Writ Petition and therefore, the decision quoted by the Appellant Factory is against them. It is needless to mention that the objective of the ESI Act, 1948, which is otherwise called as a beneficial legislation, is to offer financial benefits to enrolled workers during sickness, pregnancy and any disability (permanent or temporary) due to employment injury. It is a duty cast upon the employer to pay ESI Contributions of the employer and employees, in view of the fact that
medical expenses are sky-rocketing and in the event of any untoward
incident, the employee or his family members should not be abjured in
streets.
For the foregoing discussions and observations, we are of the view that there is no need for interference in the order of the learned Single Judge and the Appellant Factory cannot be treated as a seasonal establishment, consequent to their engagement in other process of blending or packing or repacking of coffee for more than seven months in a year in contravention to Section 2(19A) of the ESI Act, 1948.
Conclusion:
The order of the learned Single Judge in extending the coverage to the Appellant Factory on the ground that the contract employees are covered, may not be correct, as it is the duty of the Principal Employer, namely, Appellant Factory to pay the amount to the Respondent and thereafter collect the amount from the Contractors and the full bench did not interfere in the single bench judgement and says the petitioner to pay the ESI Contribution to Empolyees.
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JUDGEMENT REVIEWED BY JANGAM SHASHIDHAR.
