# B. M. LAKSHMANAMURTHY v. THE EMPLOYEES' STATE INSURANCE CORPORATION, BAN GALORE

- **Citation:** [1974] 3 S.C.R. 142
- **Court:** Supreme Court of India
- **Decided:** 1974-01-21
- **Bench:** P. Jaganmohan Reddy, ·N. DwiVEDI, K. Goswami
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/b-m-lakshmanamurthy-v-the-employees-state-insurance-corporation-ban-galore-6234
- **Pages:** 10

## Headnote

B
Employees' S!alt · lii~UI'allce Act-S, 2(9Xii) & 2(13)-' EmploY"' & 'il•unUime
.employers' mean1111 & sco~ of.
·
The appellaut's firm was carrying on the businesS of manufacturing and exporting polished granite memorial stones. The finn was a factOrY both. under the Factories Act as ·well as under the Employees• State Insurance Act.· Adjacent to tbis
factory . was
another factory
situated on the appellant's .!aDd leased out
C
to two contractors who employed SO workers it\ their factory for the pllrJ)Q1es of
cutting and .dressing .the granite stones,. The gi'anite stones unloaded outside .·the
factory by the lorries were brought on the portion or the leased land and after cuttins
them they were sent back to the appellant's factory whu'e they were ~
and
polished. The Employees' State Insurance Corporation claimed from the appelJaot
a certain sum as the firms contribution on account of the workers employed by the
two contractors described as 'immediate employers' under the Act. The Employees'
'State I.osurance Court held that the contractors were not 'im~te employers'
within the meaning of s. 2(13) of the Employees' State Insurance Act and that they
· D
were independent contractors. On appeal the High Court held· that the apcl.lant
was a principal . employer and the contractors were the immediate employers
·under the Act. The High Court also held that the workers under the contractors
were employees within the meaning of s. 2(9)(ii) of the Act.
Dismissin·g the appeal, to this Court,
HELD : (1) The underlying aim of the Act is to insure the employees against
·various risks to their life, health and well being and the charge is upon the principal
E
-employer even though be may get his usual work done through an intermc:diary who
is described in the Act as 'immediate employer'. Any- dispute between the priDcipal
.employer and the immediate employer has to be settled between themselves
J~ l1ors, the employees and the Act charges the principal employer with the liability
to pay the contribution not only of its own but also that of trle employees subject
to his right to deduct the employees' contribution from their wages under s. 40(2)
·of the Act. [147A]
(2) On the findings of fact the work undertaken by the contractor's in the adjoin-
'ing vicinity is preliminary or incidental to the work in the principal employer·
F
factory turning out the finished product for export. The work in the_ two places bas
intimate correlation and is a piece of an inte(:tated whole and the saJd work ~y .tbe
.contractors through their labOur is ordinarily part of the work of the pnnctpal
1"actory undertaken by the contractors. Their factory is situated in the premises of
the appellant's factory which, according to the definition clause, includes tile p~-
cincts thereof. In the instant case on an examination of the site plan and the eVIdence it is evid~nt that there is a definite environmental as well as fu!lCtional unitY
between the two portions, namely, tbe main factory and the contractors' factory with
G
the precincts even though separated by a wall in which there was a df:?Or whi<:h
·tiOnletimcs was closed. The work tmdertaken by the contractors and catr1ed on tn
their portion of the area is surely componental to make it a part of the complelt
whole. The principal requirement of the definition namely, that .the work or the
.construction is undertaken on the premises of the factory is satisfied in the present
.case. It therefore follows that the two contractors arc 'if'\llllediate em~loyers' with.in
the meaning of s. 2(13) and the workers employed for c_ut~mg and ~~g
the gran1te
stones by the immediate employers are· employees w1thm s. 2(9Xu) of the Act.
[t48BJ
H
Employees' Stme lrlsiWWlCC Corporation, &mbay v. Ra11um (Chiltur Harilltlr
Jycr),ll957)1 L.L.).~67, Nagpur Electric Iigllt and Power Co. Ltd. v. Rqional Direc:
.lOr D~I]Jlorees State [I!Silrai!Ce CrJrporatirm, Etc., [1967] 3 s.c.R. 92, Employees.
A
c
D
E
F
G
H
B. M. LAKSHMANA~lUli.THY v. E.S.J

## Text

B. M. LAKSHMANAMURTHY
v.
THE EMPLOYEES' STATE INSURANCE CORPORATION,
BAN GALORE
January 21, 1974
A
(P. JAGANMOHAN REDDY, S, ·N. DwiVEDI AND .p, K. GOSWAMI, JJ.)
B
Employees' S!alt · lii~UI'allce Act-S, 2(9Xii) & 2(13)-' EmploY"' & 'il•unUime
.employers' mean1111 & sco~ of.
·
The appellaut's firm was carrying on the businesS of manufacturing and exporting polished granite memorial stones. The finn was a factOrY both. under the Factories Act as ·well as under the Employees• State Insurance Act.· Adjacent to tbis
factory . was
another factory
situated on the appellant's .!aDd leased out
C
to two contractors who employed SO workers it\ their factory for the pllrJ)Q1es of
cutting and .dressing .the granite stones,. The gi'anite stones unloaded outside .·the
factory by the lorries were brought on the portion or the leased land and after cuttins
them they were sent back to the appellant's factory whu'e they were ~
and
polished. The Employees' State Insurance Corporation claimed from the appelJaot
a certain sum as the firms contribution on account of the workers employed by the
two contractors described as 'immediate employers' under the Act. The Employees'
'State I.osurance Court held that the contractors were not 'im~te employers'
within the meaning of s. 2(13) of the Employees' State Insurance Act and that they
· D
were independent contractors. On appeal the High Court held· that the apcl.lant
was a principal . employer and the contractors were the immediate employers
·under the Act. The High Court also held that the workers under the contractors
were employees within the meaning of s. 2(9)(ii) of the Act.
Dismissin·g the appeal, to this Court,
HELD : (1) The underlying aim of the Act is to insure the employees against
·various risks to their life, health and well being and the charge is upon the principal
E
-employer even though be may get his usual work done through an intermc:diary who
is described in the Act as 'immediate employer'. Any- dispute between the priDcipal
.employer and the immediate employer has to be settled between themselves
J~ l1ors, the employees and the Act charges the principal employer with the liability
to pay the contribution not only of its own but also that of trle employees subject
to his right to deduct the employees' contribution from their wages under s. 40(2)
·of the Act. [147A]
(2) On the findings of fact the work undertaken by the contractor's in the adjoin-
'ing vicinity is preliminary or incidental to the work in the principal employer·
F
factory turning out the finished product for export. The work in the_ two places bas
intimate correlation and is a piece of an inte(:tated whole and the saJd work ~y .tbe
.contractors through their labOur is ordinarily part of the work of the pnnctpal
1"actory undertaken by the contractors. Their factory is situated in the premises of
the appellant's factory which, according to the definition clause, includes tile p~-
cincts thereof. In the instant case on an examination of the site plan and the eVIdence it is evid~nt that there is a definite environmental as well as fu!lCtional unitY
between the two portions, namely, tbe main factory and the contractors' factory with
G
the precincts even though separated by a wall in which there was a df:?Or whi<:h
·tiOnletimcs was closed. The work tmdertaken by the contractors and catr1ed on tn
their portion of the area is surely componental to make it a part of the complelt
whole. The principal requirement of the definition namely, that .the work or the
.construction is undertaken on the premises of the factory is satisfied in the present
.case. It therefore follows that the two contractors arc 'if'\llllediate em~loyers' with.in
the meaning of s. 2(13) and the workers employed for c_ut~mg and ~~g
the gran1te
stones by the immediate employers are· employees w1thm s. 2(9Xu) of the Act.
[t48BJ
H
Employees' Stme lrlsiWWlCC Corporation, &mbay v. Ra11um (Chiltur Harilltlr
Jycr),ll957)1 L.L.).~67, Nagpur Electric Iigllt and Power Co. Ltd. v. Rqional Direc:
.lOr D~I]Jlorees State [I!Silrai!Ce CrJrporatirm, Etc., [1967] 3 s.c.R. 92, Employees.
A
c
D
E
F
G
H
B. M. LAKSHMANA~lUli.THY v. E.S.J.C.
(GOSl~·ami, /.)
t 4 3
State lnsuNmce Corpor·ation, v. Peter Sewi11g Macllilz~ Co. etc. A.I.R. 1970 Delhi
182, and M/s Hind11sta11 Construction Co. Ltd. v. l)np/o;~es' State l11surance
Corporatiorr, (1966) I.L.R. 18 Assam & Na;aland 87, rd'mcd to.
CIVIL APPELLATE JuRISDICTfON: Civil Appeal No. 1626 of 1967.
Appeal by Special Leave from the Judgment and Decree dated the
J4th October, 1966 of the High O>urt of Mysore at Bangalore in
Misc. First Appeal No. 124 of 1966.
M. Natesan and Saroja Gopalkrislma11, for the appellant
Gobi11d Das and S. P. Nayar, for the respondent.
The Judgment of the Court was delivered by
GoSWA.W, J.-The appellant and his brother, Srinivas:unurthy
are partners of a firm carrying on the business of manufacturing and
exporting of polished granite memorial stones in the name and style
of Messrs Narayauaswami & Sons. The firm is admittedly a factory
both under the Factories Act as weU as under the Employees· State
1 nsurance Act (briefly the Act). The appellant claims to directly
employ about 35 persons in his factory and has been payil'lg contribution under the Act on their account. It is stated that adjacent to
his own factory there is another factory situated on the appellant's
land leased out by him to two person:;, Chidambarchari and Shankarsubbacbari (hereinafter referred to as the <.'Ontractors). The ·
contractors employ about 50 workers in their factory for purposl!s of
cutting aud dressing the granite stones. The lorry drivers bring
granite from the surrounding areas and unload them outside the factory. The contractors get these to their portion of the leased land
for cutting them. After cutting these are sent back to tl1e appe1lant's
factory where these are designed and polished and thereafter exported.
The Employees' State Insurance Corporation (briefly the COiporation)
applied to the Employees' State Imurance Court at Bangalore (briefly
the Court) for recovery of an amount of Rs. 8893/- bt-ing the
employees' contribution payable by the appellant for the period com·
mencing from 27-7-1958 to 31-1·1964 on account of the workers
employed by the two contractors described as 'immediate employers.'
under the Act. The court decided against the Corporation holding
that the contractors were not 'immediate employers' within
the
meaning of section 2 (13) of the Act and they were independent (.'0 ntractors and hence the appellant was not the principal employer in
respect of the employees working under the contractors. The Corporation appealed to the High Court of Mysore against the aforl!said
order under section 82(2) of the Act. The High Court held that
the appellant was the principal employer and the ~ontractors were
the immediate employers under the Act. The High Court further
held that. the workers under the contractors were employees \\ ithin
1 he mcanmg of section 2 (9) (ii) of the Act. The High C'ourt thus
accepted the appeal of the Corporation. Hence thi5 appeal by ~p.:-rial
leave.
~fore the court evid~nce was given by both sides and the fo llo ll'ing
find1ngs of the court arc adverted to by the High Court :
('
lH
SUPREME COURT REPORTS
[ 1974 ] 3 S.C.R.
"All that can be said to have been proved by the applicant corporation in this case is that RWs 2 and 3 (the contractors) work at a place belonging to the respondent and
execute part of the work which is necessary to manufacture
the final finished product for sale. All that can be said to have
been proved in this case is that the contractors are doing some
work which would be the foundation for the work that is
finally done by the respondent"
After examining the evidence the High Court also found as
follows :-
"There is evidence to shew that these employees (under
the contractors) aie employed in connection with the work of
the respondent-fac!ory".
The respondent in the High· Court's judgmeilt refers to the appellant
herein. As stated earlier, the High Court answered both the questions in favour of the Corporation.
The same points are raised for cons'ideration in this appeal and
Mr. Nates an on behalf of the appellant submits that the contractors
owned a separate factory and are independent contractors· and cannot
be held to be 'immediate employers' within the meaning of section
2(13) of the Act and hence the appellant is not liable as principal employer to pay the contribution on account of the persons working
under the contractors.
Before we deal with 1he \jUestions of Jaw raised in this appeal,
it will be appropriate to refer to the material provisions of the Act.
The Act, as it appears from the preamble, is passed "to provide
for certain benefits to employees in case of sickne~s. maternity and
employment injury and to make provision for certain other matters
in relation thereto". Section2 contains the definitions. By section
2 (4) "contribution"· means the sum of money payable to the Corporation by the principal employer in respect of an employee and in·
eludes any am(}unt payable by or on behalf of the employee in accord·
ance with the pro'lisions of this Act." By secti(}n 2 (9) "employee"
means any person employed for wages in or in connection with the
wor~ of a factory or establishment to which this Act applies and-
(i) who is. directly employed by the principal emp\(}yer on any
work of, or incidental or preliminary to or connected
with the work of, the factory or establishment, whether
such work is done by the employee in the factory orestablishment or elsewhere; or
(ii) who is employed by or through an immediate employer
on the premises of the factory or establishment or under
the supervision of the principal employer or his agent on
work which is ordinarily part ·or the work of the factory
or~sta~ti~hn,tent or which is preliminary to the work carried
on m or met dental to the purpose of lhe factory or establishment;
*
•
•
•
A
B
c
D
E
F
G
H
I
I
. .
A
B
c
D
B, M. L~SHMANAMUUHY v. E.S.LC. (Goswami, /.)
145
By section 2(12) "factory .. means any premises including the precincts
thereof whereon twenty or more persons are employed or were employed for wages on any day of the preceding twelve months, and in
any part of which a manufacturing process is being oarried on with
the aid of power or is ordinarily so carried on.
But does not in.
elude a mine subject to the operation of the Mines Act, 1952 or a
railway running shed".
•
•
•
•
By section 2(13) ••immediate employer", in relation to employees.
employed by or through aim, means a person who bas undertaken
the execution, on the premises of a factory or an establishment to
which this Act, applies or under the supervision of the principal employer or his agent, of the whole or any part of any work which is
ordinarily part of the work of the factory or establishment of the
principal employer or is preliminary to the work carried on in, or
incidental to the purpose of, any such factory or establishment, and
includes a person by whom the services of an employee who has
entered into a contract of service with him are temporarily lent or
let on hire to the principal employer".
By section 2(14) "insured person" mean~t a person who is or wa&
an employee in respect of whom contributions are or were payable
under this Act and who is, by reason thereof, entitled to any of the
benefits provided by this Act".
By section 2(17) "principal employer .. means-
(I} in a factory, the owner or occupier of the factory and in·
E
eludes the manaiing agent of such owner or occupier, the
legal representative of a deceased owner or occupier, and
where a person bas been named as the manager of the
factory undor the factories Ac.t. 1948, the penon so
named" .
F
G
H
•
•
Chapter IV deals with eontributions.
The opening section 38 provides that-
•
•
• 'subject to the provisions of this Act, all employee' in
factories, or establishments to which this Act applies shall be
insured in the manner provided by this Act."
•
•
•
•
:By Section 39(1) "the contribution payable under this Act in respect of an employee shall comprise contribution payable by the employer (hereinafter referred to as the employer's contribution) and
contribution payable bY. the employee (hereinafter referred to as the
employee'& contribution) and 6hall be paid to the Corporation''
By section 40 (l) "the principa} employer shall pay in respect of
every employee, whether directly employed by him or by or through
an immediate employer, both the employer's contribution and the
employee's contribution".
ll--M852S,uPCI/74
us
SUPREME COURT RBPOilTS
[ 1974] 3 S.C.R •.
By· section ·42(2) "Con.tribution (both .the -employer-'s-contribution
A.
and the employee's contribution) ~baH be payable by .the principal
employer for each week in respect of the whole or part· of · whic.h
wages are p:tyable to the employee and not otherwise".
_Section 43 and section 97 empower the Corporation . to make
regulations. Under section 44 every
principal and immediate em~
ployer has,to submit returns ~o the Corporation.and maintain legisn
ters and records.
Section 68 provides for Corporation'srights where a.principal.em~
ployer fails or neglects to pay any contribution. By .section .;72 an
employer is barred from reducin~ wages by reason only of his. liability
tp pay contribution;
Chapter VA provides for.
certain transitory provisions. The
opening section 73A provides for em~loyer's special contribution. ·
Chapter VI deals with a.djudication of disputes and claims~ UndJr
section 74 (l) Employee's Insurance Court is. constituted.
Inter-alia
under section 75 (!)'"If any question. or dispute arises as to-
·
(a)
w~ether aQy person is 3:n ~rriployee within the m~aning_ of
th1s Act or whether he IS hable to j)llY the employe~s.· contribution, or
•
•
•
*
(d) the person who is or was the principal employer in respect
of any employee;
*
•
•
"'
such question or dispute ...... shall be deCided by the.E~ployees•
Insurance Court in ~tccord~tnce with the provisions of this Act."
Under section 75(1) (g), inter-alia; any dispute between a principal
employer and an immediat~ employer shall also be dedded by the
court. Under section 75 (2) (b) any claim by principal employe~: to
recover contributions from any· immediate employer shall also b!!
decided by the Employees' . Insurance Court. By
section 75 (3)
jurisdiction of a civil court i~ . barred regardfng, amongst
others,
any question or dispute as specified· in· the section.
Section 82 provides for appeals and under aub,section..(2) .. thereof
an appeal shall lie to the H)gh Court from an erder of the Employees'
Insurance Court if it involves a substantial question of law.·
Chapter VII provides for different penalties.
Under Chapter VIII (Miscellaneous). 11ection 9-4 provides, inter·
alia, that contributions due to the Corporation shall ·have priority
over all other debts.
The Act is thus a beneficial piece of soci1tl ~curity legislation in the
interest of labour in factories at the first instance and with power to
extend to other establishments. Provisions of the Act will have to be
construed with that end in view to promote the schemes and avoid
c
D
E
F
G
H
'· I
"'!, .,
'·· I
,I, . :
· \· ..
,~:~
A
·~
'· .,
~.
~;
B
t
1:
'
~
'! c
L
L
f F
I
1c
I{
~· M. LAKSHMANAMURTHY v. E.S.t.C. (Goswami, J.)
147
the mischief. F!om some o~ the material provisions set o~t
the underly!ng.aim of the Act IS to insure the employees against ab?ve,
risks to their hfe, l1ealth and .welt being and the cllarge .
vanohus
· · 1
I
h
1 h
JS upon t e
pnnc1pa emp oyer eyen t oug.t
e ~ay g~t his usual work done
through ~n mtermed.Jary, who JS dcscnbed m the Act as 'immediate
~mplo~er .
Any
d1 ~pute between tl1e
principal employer and the
Immtd1ate e~p~fyerAJ~ to ?e settled bc_t~cel!- themselves, de !Jors, the
~m~ ?yees an
1e
c . C1~arges the pnnc1pa! employer
with the
l1abihty to pay. the con~nb~t10n not only of its own but also that of the
employe:s subject to h1s ngh! to deduct the employees' contribution
from their wages under sect10n 40 (2) of the Act. There is a quicker
mode of recovery as ar:ears of land revenue under section 45B and
73D. Chapte~ V_A provides for transitory provisions and by ~ect!on
73A every pnnc1pal employer shall have to pay a special contribution
i~ Iie!-1 of the employer's con~ributio_n payable under Chapter IV. Adjudication of all kinds of specified drsputes are also intended to be expeditiously disposed, of by the court constituted under section 74.
Such disputes include a dispute between a principal employer and an
~mmediat~ employer as noticed
.earli~r. Civil courts' jurisdiction
JS barred m respect of matters specified m the Act. There is onlv one
sp:cia! type of appeal to the High Court and that also in a restricted
form. -The Act insists on compliance with its provisions on pain of
penalties and the contributions due to the corporation have priority
over other debts.
Keeping in view the scheme and the principal object of the Act,
we 'will now examine the questions of law raised in this appeal. The
definition of the 'immediate employer' under section 2 (13), omitting
what is not necessary for our purpose, is as follows:-
" 'immediate employer', in relation to employees employed by or through him, means a person who has under~
taken the execution, on the premises of a factory ..•..... to
which this Act applies ...... of the whole or any part of
. any work which is ordinarily part of the wo~k of the. fa~tory or
establishment of the princ.;ipal employer or JS
prel!mmary to
the work carried on in, or incidental to the purpose of, any
such factory •.•....•... . . .. ••..••. "
That the app:Uant, who is the principal employer, has ~ factory
where granite memorial stones are manufactured for expo~t Js beyo~d
question. The ftnished articles are the dressed and polished gramte
stones. The raw material is the stone from the quarry-brou~ht
therefrom, cut to sizes, dressed, po!i:>hed and then exported:
~he
other factory of the contractors on the leased land of the pnncJp:tl
employer, adjoining the latter's f.'lctory, is reg.istcred under tl:e Facton~:s Act in the year J 963.
Although admtttcdly a factor), the~c
is no evidence on the record that the contractors pay nny
con~n~
bulion under the Act or have been even ch.argetl sepnrately as pnncipal employers so far as their so called dm:ct
~mploy':es are c~n~
ceroed. The principal employer, the appellant, 1s. m~long a cla1m
which, if correct, will make the contractors also pnnc1pal employers
liable under the Act. But it is easy for the appellant to make such
:'" ~ -.~ I
.,. , .•. ·. "" ..
•" ..,.~
. • • , •
.
...... , .. ........ ...
.' I ' •
~ " ..
. .. .
t .
.. · .. ..
!. . -· . . -
I
l
{ I I
! !
l
I
l . '
148
SUPREME OOURT REPORTS .
{ 1974) 3 S.C.Il.
a claim to avoid his personal liability which, in aU fairness to labour,
should have been settled by impleading the contractors
as
parties in order to make the entire position clear. It is not necessary
for u11 to examine whether this is a mere device of the principal
employer to a void his liability under the Act.
We agree with the High Court that on the findings of fact the work
undertaken by the contractors in the adjoining vicinity, even thouah
their factory may have been subsequently registered under the factories
Act, is preliminary or incidental to the work in thC' principal emplo·
yer-factory turning out the finished product for export. The
work in the two places has an intimate correlation and is a piece of
an integrated whole and the said work by the contractors through
their labour is ordinarily part of the work of the principal-factory
undertaken by the contractors. Their factory is situated in the premises of the appellant's factory which according to the definition
clause includes the precincts thereof. It, therefore, follows that the
two contractors are 'immediate employers• within the meaning of
section 2 (13) and the workers employed for cutting and dressing the
granite stones. by the immediate
employers are employees within
sectioq 2 (9) (ii) of the Act, being employed through the immediate employers on the premises of the factory including the precincts thereof.
The fact that in 1963 the contractors' factory Was separately refistered under the Factories Act or that, after meeting the prior reqwrements of the principal employer, work of some other parties was also
permissible, does not, in our opinion, militate against the predominant purposes of the work of the contractors being part and parcel
of the main work of the principal employer-factory for which the contractors mainly work.
A &Ood deal of argument is advanced with regard to the expression
"oa the premises of a factory" in the definition clause of "immediate
employer" under section 2 (13). The word "premises" according
to the dictionary means house or building with its ground or other
apurtenances. The premises include under section 2 (13) the pre·
cints
thereof. The word "precincts" means the environs. This
Court in A.rdeshir H. Bhiwandiwala v. The State ofBombay(l) dealt
with the term "premises" in the definition of factory under section
2(m) of the Factories Act and after noticing its meanin& in various
Law Lexicons and dictionaries observed:-
"The word "premises" bas•now come to refer to either
land or buildings or to both, depending on the context ..•... "
It is therefore clear that tl',e word "premises" is a generic term
meaning open land or land with buildings or buildings alone."
The contention in that ease that the word ''premises" must be
r~stricted to mean buildings and not taken to cover open lands as
well was repelled.
In the instant case, on an examination of the site plan (Ext. P-1)
and the evidence, it is evident there is a definite environmental as
well as functional unity between the two portions, namely, the main
(1) tl9ilJ 3 S.C.R. ~92.
\
A
B
c
D
E
F
G
II
A
B
c
D
E
F
G
H
B. M. LAKSHMANAMURTHY v; E.S.I.C. (Goswami, J.)
149
factory (Portion A) and the contractors' factory with the precincts
(Portion B) even though separated by a wall in which there was a
door which sometimes was closed. The work undertaken by the
contractors and carried on in their portion of the area is surely componental to make it a part of the complex whole. The principal
requirement of the definition, namely, that the work or the construction is undertaken on the premises of the factory and about which both
sides join issue, is satisfied in the present case on·the evidence on records and we hold accordingly. We are also satisfied that the workers
under the contractors are employees employed by the principalemployer through the 'immediate employers' on the premises of the
factory in work which is ordinarily the normal work of the factory
or is, at any rate, preliminary to the work or which is certainly incidental to the purpose of the main factory of the appellant.
Mr. Natesan laid great stress upon the requirement of a unity of
control of the principal employer over the manufacturing process of
the work: undertaken by the contractors, but it will be obvious from
the facts found ana the evidence noted below that the work is done on
the premises of the factory. We need not examine this aspect in detail
in view of the uncontradicted evidence of PW-1 as follows:-
"Thc work: done in the Factory consisted of manufacture
of granite stone9 for export. I found raw stones lying all over
the surrounding area. I found that raw stones were moved
to the premises marked Bin Ex. P. 1. I found that about
50 penons working at the spot. I learnt from the partners
those 50 persons had been employed by two or three contractors. Cutting and dressing of the stones were done by those
fifty men. There were (1) sand blasting machine belonging to
the partners and (2) Electric blower. Power was used in these
machines. After the stones are cut and dressed, they are removed to premises A for designing and polishing. Final touches
are then given to them in the premises B. They are again
brought back to premises A for packing and despatching. The
premises A and B belong to the partners. Only a wall separated the two premises. There was a connecting -door which
appeared to have been closed".
Again RW-2 also deposed that "it is since last three years that,
I undertook: the work of the second party" i.e. the appellant. R W~l
(partner of the appellant) stated as follows in cross-examination:
"Ex. P. 4 is the copy of the letter dated 19-3-63 written
by P.W. 1 to me for copy of the agreement and plan. Ex. P. 5
is my interim reply ..............•. By Factory premises in
Ex. P. 5, I meant both the portions A and B in Ex. p. I".
Mr. Natesan has referred to a decision of the Bombay High Court
in Employees' State Insurance Corporation, Bombay v. Raman (Cizittur
Harihar Iyer)(') but the High Court dealt in that case with the definition
of "employee" prior to the amendment of the Act in 1966 and is of no
-~------
(1) [1957] I L .L.J. 267.
150
SUPREME COURT REPORTS
[ 19741 3 s.C.R.
aid to counsel. This case was also distinguished by this Court in
Nagpur Electric Light & Power Co. Ltd. v. Regional Directcr Employees
State Corporation, Etc.(l) Counsel also relied upon a decision of
the Delhi High Court in Employees' State Insurance Corporation
v. Peter Sewing Machine Co. etc.(2), dealing with the definition
of 'factory' under section 2 (12) of the Act. The High Court, inter
alia, was posing a question in that case as to whether the whole or
any part of the work of the contractors there consisted of any work
which was ordinarily a part of the work of the factory or establishment of the principal employer and answered it in the negative on
·the finding of facts in that case "that the contractors, manufacture
their goods independently and not as a part ofthe goods manufactured
by the Peter Sewing Machine Company". On the facts of this case
that question does not arise and we express no opinion
thereon.
The decision is therefore, of no aid to the appellant in this case.
The learned counsel further draws our attention to M/s Hindustan
Construction Co. Ltd. v .. Employees' State Insurance Corporation(l)
in which case the High Court remanded the matter to find out "whether
the work done at t~e site can be regarded. . as a manufacturing ,process .......... " We,
~owever; do not fail to notice that
the judgment did not take ·note of the corri.plete definition of "employee''·under section 2 (9), the first P.art of which is joined by a conjunctive 'and' with· two claus,es. ·Further the High Court is not correct
in thinking that the. definition of the ·word "factory" under the Factories Act "is. same" as that of "factory'' under the Employees' State
Insurance Act wtich is of ·wider amplitude with an expanding horizon of objectives in the latter Act. It is riot necessary, however, to
consider in this case if these factors may have affected the decision
in the above case.. At any rate, the appellant does not derive any aid
from this decision. .
The next decision in Nagpur Electric Light & Power Co., Ltd.
(supra), relied upon by .the appellant for the construction of the definition of "employee" ~nder section 2 (9) {i) of the Act is not of assis'·
tance to him since we are dealing with a case under section 2(9) (ii).
We, of course, notice that the High Court in this case held as follows
at page 20 of the judgment :-
A
B
c
D
E
F
"From the foregoing, it is clear that the contractors have
been executing the work .which is ordinarily part of the work of
the factory and that within the premises of the respondentG
factory".
The definition clauses of "immediate
employer" [section 2 (13)J
and "employee" [section 2 (9) (11)], contain the expression "on the
premises of a factory" and not within it. Even so as detailed above
after examining the evidence ourselves, we are
~!early of opinion
(1) [19~71 (3) S.C.R. "92.
(2) AIR 1970 Delhi 182,
(3) [1966J LL.R., 18 Assam & Nagaland 87.
H
A
B
B, M. LAUHMANAMURTHY V. E,S.LC. (Goswami, /,)
151
that the work of the contractors was undertaken by them on the premises of the factory which may not be the same thing as in
or within the factory. We are further of the view that the entire site
of the factory is a composite one containing portions A as well as B
and there is no doubt· that the contrar.tors are the. 'immediate
empll?yers' within th~ meaning of section 2 (13) of the Act and the
workers employed- by them are "employees" under the Act.
In the result, the appeal fails and is dismissed with costs.
P.B.R.
Appeal dismissed.