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 Labour Law Update 


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ESI   2003

 

 

REFERENCE

ISSUE RAISED/FACTS

HELD

1

R.D. ESI CORPORATION 

VS 

THE ALUMINIUM IND. LTD.2003(96) FLR 512 [HC-KER-S.B]

 

1

 

   

2  

 

 

 

 

 

  

ESI CORPORATION INSISTED ON CONTRIBUTIONS FOR OVERTIME ALLOWANCE,CANTEEN SUBSIDY PAYMENTS AND PAYMENTS MADE TO CASUAL LOADING AND UNLOADING WORKERS

ARE CONTRIBUTIONS PAYABL ON THE ABOVE TWO ITEMS ?

 

 

 

1

2

 

   

3

   


 4

OVERTIME ALLOWANCE ORPAYMENT WILL FALL UNDER THE DEFINITION OF WAGES UNDER SECTION 2(22)

THE SUBSIDEY GIVEN FOR FOOD [MANAGEMENT REQUIRED TO OPERATE CANTEEN, BUT NOT RUNNING A CANTEEN BUT GIVING A CASH SUBSIDY] WILL NOT FALL UNDER THE DEFINITION OF WAGES AND NO CONTRIBUTION IS PAYABLE.

SINCE LOADING AND UNLOADING IS TO BYWORKERS REGISTERED UNDER ATTIMARI SCHEME AND ARE BY CASUAL WORKERS PAYMENTS MADE TO THEM WILL BE WAGES AND CONTRIBUTION IS PAYABLE

IN AN EARLIER JUDGEMENT IN ESI VS PREMIER TIMBERS LTD 1991 (63) FLR 861 KERALA HIGH COURT HAD HELD ATTIMARI PAYMENTS WILL NOT ATTRACT ESI

2

BALMER LAWRIE & CO. 

VS 

ESI CORPORATION 2003 (96) FLR 702 [HC-CAL-SB]

 

  1







2

IN INDIAN DRUGS & PHARMACEUTICALS  CASE [1997 (75) FLR 584] THE SUPREME COURT HAS FINALLY SETTLED THAT O.T PAYMENTS WILL FALL UNDER THE DEFINITION OF WAGES UNDER 2(22) OF THE ESI ACT

IS THIS JUDGEMENT ONLYPROSPECTIVE, THAT IS CAN ITBE ARGUED THAT ESIAUTHORITIES CANNOT CLAIMCONTRIBUTIONS FOR PERIODS PRIOR TO THE APEX COURT JUDGEMENT.

1  

  a

b

 

2  



3




4

SUPREME COURT JUDGEMENTS CAN BE OF TWO TYPES

REMEDIAL DECISION

DECLARATORY DECISIONS

 

IF THE DECISION IS BY WAY OF REMEDIAL DECISION, IT WILL ALWAYS  BE PROSPECTIVE

IF THE DECISION IS BY WAY OF CLARIFYING A TERM IN LAW IT IS A DECLARATORY DECISION AND IT IS TO BE RETROSPECTIVE IN EFFECT

IN THIS CASE THE SC DECISION  WAS DECLARATORY AND HENCE APPLICABLE TO O.T. PAYMENTS PRIOR TO THE 1997 RULING.

3

THE BANGALORE TURF CLUB LTD

vs

ESI CORPORATION 2002(95) FLR 1149 [HC-KAR-DB]

1  

2

 

BANGALORE RACE CLUB EMPLOYED ABOUT 300

WILL THE SERVICE  RENDERED TO THE MEMBERS OF THE CLUB AMOUNT TO SALE AND BRING IT UNDER THE DEFINITION OF ‘SHOP’ AND IN TURN BRING IT UNDER THE PURVIEW OF THE ESI COVERAGE

1

 

 

 

THOUGH THE CLUB MAY NOT BE ‘SHOP’ IN THE TRADITIONAL SENSE IT WOULD CERTAINLY COME WITHIN THE MEANING OF SHOP FOR THE PURPOSES OF THE ESI ACT

 

4 RD ESI CORPORATION

 VS 

IT SOLUTIONS LTD

2002(95) FLR 465[HC-KAR-SB]
OR
2002(3) LLJ 757
1







2






3

WILL CONVEYANCE ALLOWANCE PAID UNDER THE TERMS OF EMPLOYMENT COME UNDER THE DEFINITION OF ‘WAGES’ UNDER SECTION 2(22) NECESSITATINGPAYMENT OF CONTRIBUTIONS

EMPLOYMENT ARGUED THAT THE DEFINITION OF ‘WAGES’ ALSO HAS INDICATED SOME EXCLUSIONS AND ACCORDINGLY AS PERSECTION 2(22) (B) ‘ANYTRAVELLING ALLOWANCE OR VALUE OF TRAVELLING CONCESSIONS’ WILL NOT COME WITHIN THE SCOPE OF THE TERM ‘WAGES’

CAN CONVEYANCEALLOWANCE BE BROUGHTUNDER THIS EXCLUSIONCLAUSE ?
1





2





CONVEYANCE ALLOWANCE 
IS FOR REPORTING TO WORK SPOT WHERE AS TRAVELLING ALLOWANCE IS FOR UNDERTAKING OUT STATION TRIPS

THE TWO ARE DISTINCT AND DIFFERENT AND HENCE CONVEYANCE ALLOWANCE WILL BE PART OF ‘WAGES’ ATTRACTING PAYMENT OF ESI CONTRIBUTIONS

5 ESI CORPORATION

VS

DEPOT MANAGER

 MPSRTC 2003 (96)   FLR 1020[HC-MP-SB]

1



2





3


ESI AUTHORITIES ISSUED SHOW-CAUSE NOTICE FOR NOT PAYING CONTRIBUTIONS

ESI AUTHORITIES THEN INITIATED REVENUERECOVERY PROCEEDINGS UNDER 45 B WITHOUT PASSING AN ASSESSMENT ORDER UNDERSECTION 45 B

CAN RECOVERY PROCEDURE UNDER 45 B, BE INITIATED, WITHOUT PASSING A DETERMINATION ORDER UNDER 45 A ?
1 IN THE ABSENCE OF PASSING AN ORDER DETERMINING THE CONTRIBUTIONS DUE, ANY DIRECT RESPORT TO RECOVERY UNDER SECTION 45 B, WOULD BE IMPROPER.
6 QAZI NOORUL PETRO LPUMP

VS

ESI CORPORATION 

2003 (96) FLR 1090
[HC-ALL-SB]

1






2
AS PER SECTION 2 (14) OF THE ESI ACT, THE ACT IS APPLICABLE TO FACTORIES WHERE ‘MANUFACTURING PROCESS’ IS CARRIED ON AS DEFINED IN SECTION 2 (k) OF THE FACTORIES ACT 1948

WILL PUMPING OF PETROL IN A PETROL PUMP COME UNDER THE DEFINITION OF ‘MANUFACTURING PROCESS’ AND BRING IT UNDER ESI ACT, IF THE PUMP IS EMPLOYING MORE THAN 10 PERSONS
1






2
THE TERM ‘MANUFACTURING PROCESS’ IN SECTION 2 (K) UNDER FACTORIES ACT HAS A VERY EXTENDED MEANING AND WILL INCLUDED PUMPING OF PETROLEUM OR OTHER PRODUCTS.

HENCE PETROL PUMPS EMPLOYING MORE THAN 10 EMPLOYEES WILL COME UNDER ESI COVERAGE
7 JODHPUR VIDYUT NIGAM

VS

KARMACHARI  RAJA BEEMA NIGAM 

2003 (I) 
LLJ 104[HC-RAJ-DB]

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2





3
EMPLOYER CONTENDED THAT EMPLOYEES WORKING IN ELECTRICAL DISTRIBUTION CENTRES OF THE GOVERNMENT ARE NOT WORKING IN FACTORIES AND HENCE SHOULD NOT BE BROUGHT UNDER ESI ACT.


EMPLOYER FURTHER CONTENDED THAT SINCE THEIR EMPLOYEES WERE GETTING BETTER MEDICAL BENEFITS THAN ESI, THEY SHOULD NOT COME UNDER ESI

SINCE ESI HOSPITAL WAS NOT FUNCTIONING FOR THE ENTIRE PAST PERIOD OF ESI CLAIM, NO CONTRIBUTION SHOULD BE INSISTED FOR PERIOD OF NOT PROVIDING HOSPITAL FACILITY


1






2







3

AS FAR AS THE SECOND & THIRD CONTENTION ARE CONVERNED, SINCE NO FACTUAL FOUNDATIONS WERE PUT UP BEFORE LABOUR COURTS THEY WERE NOT ALLOWED AT THE WRIT STAGE


AS REGARDS ISSUE ONE IS CONCERNED HELD THAT THE DEFINITION OF ‘EMPLOYEE [IN SECTON 2(9) IS WIDE ENOUGH TO COVER NOT ONLY EMPLOYEES WITHIN THE PREMISES OF THE ESTABLISHMENT, IT WILL ALSO COVER WORKERS ON WORKS INCIDENTAL OR PRELIMINARY TO THE WORK OF THE FACTORY EVEN IF SUCH WORKERS ARE WORKING OUTSIDE THE FACTORY PREMISES.

THE ACT DOES NOT EXCLUDE GOVERNMENT FACTORIES AS COULD BE SEEN FROM SECTION 1(4). 
8 R.D. ESI CORPORATION 

VS 

ALUMINIUM INDUSTRIES LTD

 2003(1) LLJ 84 [HC-KER-SB]
1



2




3



4
THE FACTORY WAS REQUIRED TO RUN A CANTEEN UNDER FACTORIES ACT

IT WAS NOT RUNNING A CANTEEN AND AS PER AN AGREEMENT WAS GIVING A CANTEEN ALLOWANCE IN LIEU OF CANTEEN

ESI CORPORATION DEMANDED CONTRIBUTION ON THE CANTEEN ALLOWANCE

IS DEMAND JUSTIFIED ?
1




2


3






4
THE ALLOWANCE WILL NOT QUALIFY AS  WAGES EVEN THOUGH PAID UNDER AN AGREEMENT BECAUSE:

THERE IS NO UNDERSTANDING THAT EMPLOYEES WILL GET FREE FOOD

UNDERSTANDING IS ONLY TO GIVE SUBSIDISED FOOD

ALLOWANCE IS TO DEFRAY THE HARDSHIP OF NOT RUNNING A CANTEEN


HENCE WILL NOT ATTRACT EWI CONTRIBUTION AS PER THE EXCLUSION CLAUSE IN DEFINITION OF WAGES IN SECTION 2(22).

9 EID PARRY (I) LTD

VS

ESI CORPORATION

2002(3) LLJ 145 [HC-AP-SB]
1





ARE HAMALS [LOADING & UNLOADING WORKERS] ENGAGED, TO BE COVERED UNDER THE ESI ACT BY THE ENGAGER 


1





2




3


INSISTENCE OF COVERAGE BY ESI CORPORATION BASED ON THE RAJ KAMAL TRANSPORT CASE [1996(2) LLJ 435] IS NOT APPLICABLE IN THIS CASE SINCE.

HAMALS IN THIS CASE ARE NOT EXCLUSIVELY EMPLOYED AND ARE WORKING FOR MORE THAN ONE AGENCY AND

HAMALS ARE NOT APPOINTED BY OR UNDER THE SUPERVISION OF THE EMPLOYER
10 UNITED BREWARIES LTD

VS

ESI CORPORATION

2003(I) LLJ 900[HC-KER-DB]
1




2





3





4
AS PER SUB SECTION ONE OF SECTION 2(22) ANY PAYMENT UNDER TERMS OF EMPLOYMENT WOULD BE ‘WAGES’

AS PER SUBSECTION THREE OF 2(22) ANY REMUNERATION PAID AT INTERVALS OF MORE  THAN 2 MONTHS CANNOT BE TREATED AS WAGES

CAN ESI AUTHORITIES INSIST  ON ESI CONTRIBUTION ON  INCENTIVE BONUS PAID AT INTERVALS OF THREE MONTHS ?


QYOTING SUPREME COURT JUDGEMENT IN  WHIRL POOL CASE [2000 (1) LLJ 1190]   THE EMPLOYER HAD CONTENDED THAT INCENTIVE PAYMENTS MADE AT INTERVALS EXCEEDING 2 MONTHS CANNOT BE TREATED AS WAGES FOR DEMANDING ESI CONTRTIBUTION
1





2


3

THE SUPREME COURT JUDGEMENT IN WHIRLPOOL CASE IS APPLICABLE ONLY IN CASES WHERE INCENTIVE IS PAID BY EMPLOYER UNDER A VOLUNTARY SCHEME

IN THIS CASE THE INCENTIVE PAYMENT IS UNDER THE TERMS OF EMPLOYMENT AND HENCE WHIRLPOOL CASE IS NOT APPLICABLE

ANY PAYMENT MADE UNDER TERMS OF EMPLOYEMENT WOULD ATTRACT ESI CONTRIBUTION, EVEN IF PAYMENTS ARE MADE AT INTERVALS  EXCEEDING 2 MONTHS
11 R.D. ESI CORPORATION

VS

CIGIFL LTD

2002 (2) LLJ 635[HC-KAR-SB]
1



a




b



2



3
ESI CORPORATION HAS TWO OPTIONS FOR RECOVERING CONTRIBUTIONS

TO RECOVER AS ARREARS OF LAND REVENUE UNDER SECTION 45 B, AFTER PASSING A SPEACKING / ORDER UNDER SECTION 45A OR

TO RAISE A DISPUTE BEFORE E.S.I. COURT UNDER SECTION 75


SECTIONS 77 PRESECRIBES A 5 YEAR LIMITATION FOR RAISING ARREAR CLAIMS

DOES THIS 5 YEAR LIMITATION APPLY TO BOTH MODES OF RECOVERY

1




2
THE 5 YEAR LIMITATION IF APPLICABLE ONLY WHEN THE ESI CORPORATION INVOKES SECTION 75


THE 5 YEAR LIMITATION IS NOT APPLICABLE TO THE RECOVERY PROCEEDINGS UNDER SECTION 45 A/45 B
12 BHARAGATH ENGINEERING

VS

R RANGANAYAKI

2003(97) FLR 577 [SC]OR2003 (1) LLJ 558
1







2



3

AS PER CONTRACT ACT AN INSURER’S   LIABILITY FOR COMPENSATION  WOULD ARISE ONLY AFTER THE POLICY IS REGISTERED WITH THE INSURANCE COMPANY, THAT IS AFTER RECEIPT OF FIRST PREMIUM PAYMENT

AN EMPLOYEE WHO WAS REQUIRED TO BE COVERED UNDER ESI ACT 1948 DIED IN EMPLOYMENT ACCIDENT BEFORE HE COULD BE REGISTERED UNDER ESI OR ACTUAL PAYMENT 0F HIS CONTRIBUTIONS.

IS HE DISENTITLED TO ESI ACCIDENT BENEFIT OR SHOULD THE CLAIMANTS DEMAND COMPENSATION UNDER WORKMENS COMPENSATION ACT 1923 ?
1





2





3





4
SECTION 53 OF THE ESI ACT STIPULATES THAT AN EMPLOYEE REUIRED TO BE COVERED UNDER ESI ACT CANNOT GET ANY BENEFIT UNDER W.C. ACT 1923

REGISTRATION OR ACCEPTANCE OF ENROLLMENT APPLICATION AFTER THE DEATH OF THE EMPLOYEE WILL NOT DISENTITLE THE DEATH BENEFIT UNDER ESI ACT 1948

AS PER SECTION 2(14) DEFINING AN “INSURED PERSON” AN EMPLOYEE BECOMES COVERED UNDER THE ESI ACT IF CONTRIBUTIONS ARE PAID OR PAYABLE UNDER THE ACT

HENCE NON-PAYMENT OF CONTRIBUTION BEFORE DEATH W2ILL NOT DISENTITLE THE EMPLOYEE’S BENEFIT UNDER ESI ACT.
13 THE DIRECTOR ESI

VS
BHUWALKA STEELS LTD

2003(97) FLR 458[HC-KAR-SB]
1 DOES SECTION 77(1A) OF THE 
ESI ACT PRESCRIBE A5 YEAR LIMITATION PREVENTING ESI AUTHORITIES FROM MAKING
CLAIMS FOR PERIOD MORE THAN 5 YEARS OLD ?
1






2




3




4






5
THE POSITION IS DIFFERENT FOR CLAIMS MADE BY ESI PRIOR TO 20.10.1989 AND POST 20.10.1989 WHEN THE NEW SECTION 77(1A) PRESCRIBING 5 YEAR LIMITATION WAS INTRODUCED

FOR ESI CLAIMS PERTAINING TO PERIODS PRIOR TO 20.10.1989 THE EMPLOYER CANNOT TAKE SHELTER UNDER NEW SECTION 77(1A)

FOR CLAIMS PERTAINING TO PERIOD AFTER 20.10.1989 THE 5 YEAR LIMITATION CAN BE CLAIMED BY EMPLOYER

HOWEVER IF AN EMPLOYER HAS FAILED TO SUBMIT ANY RETURNS OR PREVENTED THE ESI AUTHORITIES FROM INSPECTING THEIR RECORDSPROTECTION UNDER 77(1A) WILL NOT BE AVAILABLE

IN SUCH CASES ESI AUTHORITIES CAN INITIATE REVENU  RE RECOVERY PROCEEDINGS UNDER SECTION 45A/45B WITHOUT ANY LIMITATION PERIOD [THAT IS FOR PERIODS EVEN OLDER THAN 5 YEARS]
14 ESI CORPORATION

VS

COCHIN PORT TRUST

2003(2) LLJ 117 [HC-KER-SB]
1


2



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4


5


6

COCHIN   PORT TRUST IS AN EXEMPTED ESTABLISHMENT

IT’S STATUTORY CANTEEN  WAS RUN BY A CONTRACTOR


ESI CORPORATION INSISTED  ON PAYMENT OF   CONTRIBUTION ON  CONTRACT WORKMEN

CONTRACTOR CLAIMED HIS WORKMEN ALSO STAND EXEMPTED AS THE CANTEEN  IS RUN FOR THE PORT TRUST   ON PORT TRUST PREMIESES

ESI COURT FAVOURED THE CONTRACTORS STAND

CORPORATION CHALLENGED THE ESI COURT ORDER
1





2
SINCE THE PRINCIPAL EMPLOYER IS AN EXEMPTED ESTABLISHMENT THE CONTRACT WORKMEN IN THE STATUTORY CANTEEN ALSO WOULD STAND EXEMPTED

ESI CORPORATION CANNOT INSIST ON COVERAGE
15 ESI CORPORATION

VS

M GANESAN

2003(2) LLN 646[HC-MAD-DB]
1











2
A SINGLE BENCH DECISION OF MADRAS HIGH COURT IN TIRUPUR TEXTILES CASE [1998(1) LLN 688] HAD HELD THAT ESI CORPORATION IS LIABLE TO PAY ACCIDENT COMPENSATION TO AN INSURED PERSON MEETING WITH AN ACCIDENT IN HIS LAST BENEFIT PERIOD WHEN HE WAS NO MORE AN ‘EMPLOYEE’ AS DEFINED IN THE ACT.

ESI CORPORATION CHALLENGED THIS AND HELD THEY ARE NOT LIABLE UNDER THE PROVISIONS OF THE ACT
1


2

THE DIVISION BENCH OVER RULED THE SINGLE BENCH DECISION AND HELD THAT ESI CORPORATION IS NOT LIABLE


AS THE ACT SPECIFICALLY STIPULATES THAT ACCIDENT COMPENSATION IS AVAILABLE ONLY WHEN AN EMPLOYEE IS MAKING CONTRIBUTION AND NOT ELIGIBLE IF HE IS MERELY IN INSURED PERSON, THERE IS NO SCOPE FOR LIBERAL INTERPRETATION OF THE STATUTE.