# C.E.S.C. LTD. ETC v. SUBHASH CHANDRA BOSE AND OR:i - **Citation:** [1991] Supp. 2 S.C.R. 267 - **Court:** Supreme Court of India - **Decided:** 1991 - **Case number:** Civil Appeal No. 3197-98 of 1988 - **Bench:** Ranganath Misra, Madan Mohan B Punchhi, K. Ramaswamy - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/c-e-s-c-ltd-etc-v-subhash-chandra-bose-and-or-i-11394 - **Pages:** 38 ## Headnote Employees' State Insurance Act, 1948-Section 2 (9)-"Employee" -Definition--Employees of contractor JJnder works contract-Whether covered under-Right of principal employer to reject or accept work done by contractor through his employees whether includes "supervision". C Employees' State .Insurance Act, 1948-0bject and purpose of Interpretation of Statutes-Constitution of India, 1950 (Preamble, Chapter JV) and Employees' State Insurance Act, 1948 [Section 2(9)]-Constrnction of-Strict interpretation when leads to unjust situation, duty of D Judges, indicated. Constitution of India, 1950-Artic/es 39,21-Health and strength of workers--Medical care and health.facilities-Purpose of-Right to social justice-Whether fundamental-Right to health-Nature of Words and Phrases-"Health ", "Supervision", "To supervise "-Construction. E Indian Contract Act, 1872-Sections 182, 184, 23-"Agent", "Principal "-Meaning-'Agent' u/s. 2(9) (ii) of the Employees' State Insurance Act, 1948-Constrnction-Method indicated-Contractor under F a works contract whether agent of Corporation. The appellant-Corporation engaged the respondents-contractors to carry out work of excavation, conversion of over-head electric lines and laying of underground cables under public roads and for repair and maintenance. G On 26.8.1975, the Regional Director of the Employees' State Insurance Corporation noticed the appellant that the employees, whose wages were being paid through the respondents-contractors, would come under the provisions of Section 2(9) of the Employees' St\\te Insurance Act, 1948. H 267 268 SUPREME COURT REPORTS [1991] SUPP. 2 S.C.R. A The appellant directed the representative body of •he contractorir--respondents' Association--to comply with the provisions of the Act immediately, failing which a lumpsum of 7% woulrt be deducted from their bills. When the respondents' Association refused to carry out such obligation, the appellant started to deduct the E.S.I. contribution amount at the rate of 10% from their bills B from 1984 and continued deducting till 1985. The respondents-contractors challenged the deductions from bills by filing a writ petition before the High Court, contending that for carrying out their contracts, the respondents were not supervised by the appellant, the principal employer and they were carryC ing out the allotted work under the contracts of sites outside the factory establishment of the appellant and that the employees of the respondents did not come within the definition of the term, 'employee' under section 2(9) of the Act. On 23.3.1984, the Single Ju~ge of the High Court passed an D interim order permitting the appellant to r:_espond to the notice issued by the E.S.I.C. and staying the realisation of the E.S.I. contribution from the respondent-contradors. On 30.3.1985, under section 45-A of the Act, the Regional Director, E.S.I.C. held that the appellant was liable to pay the E.S.I. E contribution in respect of the employees of its contractors and directed to pay the same. F G H The appellant challenged that order under Article 226 of the Constitution of India by filing another writ petition. The Single Judge hearing both the writ petitions together, dismissed them, holding that the ultimate supervision was that of the appellant and hence the Act was applicable. Following the decision of this Court in M. G. Beedi Works case (AIR 1974 SC 1952), the Single Judge further held that the respondents-contractors were agents of the appellant-the principal employer, and that the appellant - the principal employer could not escape the liability for the works of its agents - the respondents - contractors. The Division Bench, in appeal, reversed the judgment of the Single Judge, against which the present appeals by specia• Jeave were made to this Court posing the question--whether on the facts, the right of the principal employer to reject or accept ~ork on C.E.S.C. v. SUBHASH BOSE 269 completio~, on scrutinizing. compliance with job requirem ## Text _Characters 0–39,875 of 100,439. This is a partial read: ask again with offset=39875 for what follows._ C.E.S.C. LTD. ETC. v. SUBHASH CHANDRA BOSE AND OR:i. NOVEMBER 15,1991 A [RANGANATH MISRA, CJ., MADAN MOHAN B PUNCHHI AND K. RAMASWAMY, JJ.] Employees' State Insurance Act, 1948-Section 2 (9)-"Employee" -Definition--Employees of contractor JJnder works contract-Whether covered under-Right of principal employer to reject or accept work done by contractor through his employees whether includes "supervision". C Employees' State .Insurance Act, 1948-0bject and purpose of Interpretation of Statutes-Constitution of India, 1950 (Preamble, Chapter JV) and Employees' State Insurance Act, 1948 [Section 2(9)]-Constrnction of-Strict interpretation when leads to unjust situation, duty of D Judges, indicated. Constitution of India, 1950-Artic/es 39,21-Health and strength of workers--Medical care and health.facilities-Purpose of-Right to social justice-Whether fundamental-Right to health-Nature of Words and Phrases-"Health ", "Supervision", "To supervise "-Construction. E Indian Contract Act, 1872-Sections 182, 184, 23-"Agent", "Principal "-Meaning-'Agent' u/s. 2(9) (ii) of the Employees' State Insurance Act, 1948-Constrnction-Method indicated-Contractor under F a works contract whether agent of Corporation. The appellant-Corporation engaged the respondents-contractors to carry out work of excavation, conversion of over-head electric lines and laying of underground cables under public roads and for repair and maintenance. G On 26.8.1975, the Regional Director of the Employees' State Insurance Corporation noticed the appellant that the employees, whose wages were being paid through the respondents-contractors, would come under the provisions of Section 2(9) of the Employees' St\\te Insurance Act, 1948. H 267 268 SUPREME COURT REPORTS [1991] SUPP. 2 S.C.R. A The appellant directed the representative body of •he contractorir--respondents' Association--to comply with the provisions of the Act immediately, failing which a lumpsum of 7% woulrt be deducted from their bills. When the respondents' Association refused to carry out such obligation, the appellant started to deduct the E.S.I. contribution amount at the rate of 10% from their bills B from 1984 and continued deducting till 1985. The respondents-contractors challenged the deductions from bills by filing a writ petition before the High Court, contending that for carrying out their contracts, the respondents were not supervised by the appellant, the principal employer and they were carryC ing out the allotted work under the contracts of sites outside the factory establishment of the appellant and that the employees of the respondents did not come within the definition of the term, 'employee' under section 2(9) of the Act. On 23.3.1984, the Single Ju~ge of the High Court passed an D interim order permitting the appellant to r:_espond to the notice issued by the E.S.I.C. and staying the realisation of the E.S.I. contribution from the respondent-contradors. On 30.3.1985, under section 45-A of the Act, the Regional Director, E.S.I.C. held that the appellant was liable to pay the E.S.I. E contribution in respect of the employees of its contractors and directed to pay the same. F G H The appellant challenged that order under Article 226 of the Constitution of India by filing another writ petition. The Single Judge hearing both the writ petitions together, dismissed them, holding that the ultimate supervision was that of the appellant and hence the Act was applicable. Following the decision of this Court in M. G. Beedi Works case (AIR 1974 SC 1952), the Single Judge further held that the respondents-contractors were agents of the appellant-the principal employer, and that the appellant - the principal employer could not escape the liability for the works of its agents - the respondents - contractors. The Division Bench, in appeal, reversed the judgment of the Single Judge, against which the present appeals by specia• Jeave were made to this Court posing the question--whether on the facts, the right of the principal employer to reject or accept ~ork on C.E.S.C. v. SUBHASH BOSE 269 completio~, on scrutinizing. compliance with job requirements,· as A accomplished by a contractor, the immediate employer, through his employees, is in itself an effective and meaningful 'supervision' as envisaged under section 2(9) of the E.S.I. Act, 1948?" The appellants contended that the High Court fell in error in giving a restricted meaning to the word, 'supervision', occurring in B section 2(9) of the Act and in taking out the final act of rejection or acceptance of work from the purview of that word. Dismissing the appeals, this Court, HELD: Per Ranganath Misra, CJ. C 1. The legislative intention should have been brought out more clearly by undertaking appropriatelegislation once this Court took a different view. The legislation is beneficial and if by interpretation put by the Court the intention is not properly brought out it b_ecomes a matter for the legislature to attend to. [278 E) D Per M.M. Punchhi. J. 1. In whatever manner the word 'employee' under Section 2(9) be construed, liberally or restrictidly, the construction cannot go to the extent of ruling out the function and role of the immediate E employer or obliterating the distance between the principal em• · ployer and the immediate employer. In some situations he is the cut-off. He is the one who stumbles in the way of direct nexus being . established, unless statutorily fictioned, between the employee and the principal employer. He is the one who in a given situation is the princi~I employer to the employee, directly employed under him. F If the work by the employee is conducted under the immediate gaze or overseeing of the priincipal employer, or his agent, subject to other conditions as envisaged being fulfilled, he would be an employee for the purpose of section 2(9). [284 B~DJ 2. In the ordinary dictional sense "to supervise" means to G direct or over-see the performance or operation of an activity and to over-see it, watch over and direct. It is work under eye and gaze of someone, who can immediately direct a corrective and tender advice. In the textual sense 'supervision' of the principal employer or his agent is on 'work' at the places envisaged and the word 'work' can neither be -t'.onstrued so broadly to be the final act of H A B c D E F G. H 270 SUPREME COURT REPORTS (1991) SUPP.2 S.C.R. acceptance or rejection of work, nor so narrowly so as to be supervision at all times and at each and every step of the work. A harmonious construction alone would help carry out the purpose of the Act, which would mean moderating the two extremes. [284 G-H) 3. When the employee is put to work under the eye and gaze of the principal employer, or his agent, where he can be watched secretly, accidently, or occasionally, while the work is in progress, so Ifs to scrutinise the quality thereof and to detect faults therein, as also put to timely remedial measures by directions given, finally leading to the satisfactory·completion and acceptance of the work, that would be supervision for the purposes of Section 2(9) of the Act. It is the consistency of vigil, the proverbial 'a stich in time saves nine'. The standards of vigil would of course depend on the facts of each case. (284 H-285 B] 4. Section 182 of the Indian Contract Act, 1872 defines "agent" as a-person employed to do any act or to represent another in d~aling with third persons, the person for whom such act is done, or is. so represe~ted is called the "principal". Section 184 of the said Act further provides that as between Principal and the third person any person may become an agent so as to be responsible to his principal. [288 E] 5. The agent has an identity distinct from his Principal in one sense and a fictional identity with his Principal in the other. The agreement nowhere amalgamates the identity of the electrical contractor with that of the principal (C.E.S.C.) by undertaking to provide adequate supervision for the purposes of the Act, on behalf of the C.E.S.C. The agreement no doubt provides that the electrical contractor would provide adequate supervision while carrying on with the work, th·e purpose dominant is to safeguard obtaining quality work and safety safeguards and fo conform to the provisions of the Electricity Supply Act. [288 E-G] 6. The creation or deduction of principal-agent. relationship throws one ·towards the statutory scheme of keeping distinct the concept of the principal and immediate employer, because of diverse and distinct roles. [285 DJ 1; The electrical contractor is obliged to provide competent supervision while carrying out the work. The electrical contractor C.E.S.C. v. SUBHASH BOSE 271 is othtirwise a licensee under the Indian Electricity Act and the A Rules made thereunder. [286 CJ 8. The principal employer can not delegate the function of supervision to his agent who in the eye of law is his second self, i.e., a substitute of the principal employer. The immediate employer can by statutory compulsion never be the agent of the principal emB ployer. If such a relationship is permitted to be established, it would, not only .obliterate the distinction between the two, but would violate the provisions of the Act as well as the contractual principle that a contractor and a contractee cannot be the same person. (285 . B-CJ 9. Checking of work after the same is completed and supervision of work while in progress is not the same. These have different perceptions. Checking of work on its completion is an activity, the purpose of which is to finally accept or reject the work, on the touchstone of job specifications. Thereafter if accepted, it has to be paid on the acceptance of the work. This step by no means is supervision exercised. It cannot be the terminating point of an agency when the interests of the so called principal and the so called agent become business-like. (288 H-289 B] 10. Supervision rested with persons holding valid certificates of competency for which a register of supervision was required under the licence to be maintained. (289 CJ 11. Under the contracts, the electrical contractors cannot in one breath be termed as agents of the C.E.S.C. undertaking supervision of the work of their employees and innately under the licence to have beforehand delegated that function to the holder of the certificate of competency. (289 C-D] 12. Even if, the terms of the contract and the terms and conditions of the licence, the first being at the behest of the C.E.S.C. and the second being at the behest of the Government, be suggested to be complementing.each other, still these cannot be so interplayed to mean that an agency, express or implied, has been created by the C.E.S.C. in favour of the electrical contractor appointing him to supervise work as envisaged under Section 2(9) of the Act, and thus to have established a direct link between the employee and the C.E.S.C. to the exclusion of the electrical contractor. [288 C-D] 13. On the terms of the contract read with or without the terms of the licence, no such agency, factually or legally, stood erec D E F G H 272 SUPREME COURT REPORTS (1991] SUPP. 2 S.C.R. A ated on behalf of the C.E.S.C. in favour of the electrical contractors; and none could be, as that would violate the statutory scheme of distinction well marked under Section 2(9) of the Act. The supervision taken was to fulfil a contractual obligation simplicitor. [289 D) B 14. The employees of the electrical contractors, on the facts and circumstances do not come in the grip of the Act and thus all demands made towards ESI contribution made against the C.E.S.C. and the electrical contractors were invalid. (289 E-F) MG. Beedi Works v. Union of India, AIR 1974 SC 1952; Royal C Talkies v. E.S.lC., [1979) 1SCR80; Regional Director, E.S.lC., Trichur v. Ramanuja Match Industries, (1985) 2 SCR 119; Mis. P.M. Patel & Sons & Others v .. Union of India & Ors. [1986) 1 SCC 32; The Superintendent of Post Offices etc.etc., v. P.K. Rajamma etc.etc., AIR 1977 SC 1677, referred to. D Halsbury's Laws of England (Hailsham Edition) Vol-I at page E F G H 193, referred to. Per K. Ramaswamy, J. (Dissenting) 1. The Employees' State Insurance Act, 1948 seeks to serve the twin objects namely, social security, i.e., medical benefits in case of sickness, maternity and employment injury and other matters r-elating thereto and to augment the efficient performance of the duty. [289 H-290 A) 2. Section 2(9) of the Act eacompasses employees employed for wages in or in connection with the work of a factory or establishment to which the Act applies (i) who are directly employed by the principal employer or (ii) employed by or through "an immediate employer"; and whose services are 'temporarily lent or let on hire to the principal employer by the person with whom the person is entered into a contract of service. [293 B-C] 3. Clause 2(9)(ii) (applicable to the facts on hand) attracts a person employed by or through an iR1mediate employer as an employee of the principal employer provided the following conditions are satisfied, namely, (1) the immediate employer employs an employee on the premises of the factory or establishment of the principal employer; (2) or "under the supervision of the principal employer", (3) "his agent" on work which is ordinarily part of the f l C.E.S.C. v. SUBHASH BOSE 273 work of the factory or establishment or which is preliminary to the A work carried out in or incidental to the purpose of the factory or establishment. [293 C-D] 4. Article 39(2) of the Constitution enjoins the State to direct its policies to secure the health and strength of workers. The right to socia .. justice is a· fundamental right. Right to livelihood springs B from the right to life guaranteed under Art. 21. The health and ' strength of a worker is an integral facet of right to life. The aim of fundamental rights is to create an egalitarian society to free all citizens from coercion or restrictions by society and to make liberty available for all. Right to human dignity, development of personality, social protection, right to rest and leisure as fundamental C human rights to common man mean nothing more than the status without means. To the tillers of the soil, wage earners, labourers, wood cutters, rickshaw pullers, scavengers and hut dwellers, the civil and political rights are 'mere cosmetic" rights. Socio-economic and cultural rights are their means and relevant to them to realise the basic aspirations of meaningful right to life. [293 F-H] D S. The Universal Declaration of Human Rights, International Conventions of Economic, Social and Cultural Rights recognise their needs which include right to food, clothing, housing, education, right to work, leizure, fair wages, decent working conditions, social security, right to physical or mental health, protettion of their families E as integral part of the right to life. Our Constitution in the Preamble and Part IV reinforce them _compendiously as social economic justice, a bed-rock to an egalitarian social order. The right to social and economic justice is thus fundamental right. [293 H-294 BJ 6. The term 'health' implies more than an absence of sickF ness. Medical care and health facilities not only project against sickness but also ensures stable man power for economic development. Facilities of health and mcdic,?I care generate devotion and dedication to give the workers' best, physically as well as mentally in productivity. lt enables the worker to enjoy the fruit of his lahour, to keep him physically fit and mentally alert for leading a successful, ecoG nomic, social and cultural life. The medical facilities, arc therefore, part of social security and like gilt edged security, it would yield immediate return in the increased production or at any rate reduce absenteeism on grounds of sickness, etc. health is thus a state of complete physical, mental and social well being. and not merely the absence of disease or infirmity. (294 E-GI H 274 SUPREME COURT REPORTS (1991] SUPP. 2 S.C.R. A 7. Right to health is a fundamental human right to workmen. The maintenance of health is a most imperative constitutional goal whose realisation requires interaction by many social and economh factors. Just and favourable condition of work implies to ensure safe and healthy working conditions to the workmen. The periodical medical treatment invigorates the healtfl: of the workmen and harB 'esses their buma.n resources. Prevention of occupational disabilities generates devotion and dedication to duty and enthuse the workmen to render efficient service which is a valuable asset for greater productivity to the employer and national production to the State. (294 H - 295 B] C 8.The Employees' State Insurance Act aims at relieving the employees from· health and occupational hazards. The interpretation calls for in this case is of the meaning of the meanings 'supervision' and 'agent' in s.2(9)(ii) of the Act. The legal interpretation is not an activity sui generis. The purpose of the enactment is the touch-stone of interpretation and every effort would be to give efD feet to it. The judge acts as a vehicle of communication between the authors and the recipients. The end result is to promote rule .-(law and to enliven social order and humane relations. (295 C-D] E F 9. In an attempt to construe the provisions of the statute, construction, as a balancing wheel, should be meaningful so as to make the statute workable and not to render it futile or sterile. Whenever strict interpretation of the statute gives rise to unjust situation or results, the Judges can ensure their good sense to remedy it by reading words in, if necessary, so as to do what Parliament would. have done had they had the situation in mind. The meaning of thE: same words in a statute may be mended in the laborynth of interpretation and may be enlarged or restr!cted in order to harmonise them with the legislative intention of the entire statute. The spirit of the statute would prevail over the literal meaning. The jurisprudence and principle, therefore, in such a situation, would be the contextual interpretation to subserve the consti.tutional scheme and to alongate the legislative purpose, harmonising the individual G interest with the community good so as to effectuate social transformation envisioned in the preamble of the Constitution. (297 D-F] H 10. The word "supervision" is not one of precise import and is broad enough to require either supervisor's constant presence during work supervised or his devotion thereto if only time necessary to see that it complies. with contract specifications, advise as to details, prepare necessary sketches and drawings," etc. (298 C] . ' jl C.E.S.C. v. SUBHASH BOSE 275 11. Th~ Employees' State Insurance Act does no~ give its own A definition of the word "supervision". Therefore, it must be construed in the ,,con text the ultimate purpose the Act aims to serve and the object behind the Act, i.e. to extend sickr;ess benefits and to relieve the employee from occupational hazards consistent with the constitutional and human rights scheme. Under the Electricity Act and the Rules, the Corporation, licencee, is enjoined to perform the B acts and duties contemplated thereunder to lay overhead lines, un., derground cables, their repairs and maintenance there of, etc. lt authorised, under the contract, the immediate employer to perform, on its behalf, those acts and duties. The immediate employer would get the work done through their employees employed for that pur• pose. It is not a sporadic work but a constant and an ongoing procC ess, so long as the licencee generates, transmits and supplies electrical energy to the consumers of their supply area. Had the principal employer performed those acts an·d duties through its employees, indisputably, their employees would be covered under the Act, though the work was got done at highways or at places other than the factory or the establishment. When the principal employer authorD ises the respondents as its contractors under contracts the need for constant supervision is obviated relegating that function to its immediate employers. Otherwise the need for contracts would be redundant. The Corporation retained, under the contract, the power of acceptance or rejection of the work done or supervision effected in maintenance of the work got done by the immediate employer, E subject to overall supervision by the Electrical Inspector, on behalf of the State Government. The supervision in the fact situation is not the day to day supervision but legal control, i.e. right to accept or reject the work done or maintenance effected. The.exercise of right of acceptance or rejection is the supervision as envisaged in the contract between the principal employer and the immediate emF ployer. It would supply the needed unifying or connecting thread between the constitutional creed of social justice i.e., social security under the Act and supervision of the acts or duties by the principal employer vis-a-vis the employees of the immediate employer under the contract who ultimately perform them on behalf of the principal employer. Undoubtedly in a bilateral contract between the corporaG tion and the respondents qua their rights and liabilities under the contracts, strict interpretation of the words engrafted therein, be of paramount relevance and call for attention as per Contract Act. (301 C-302 BJ ·. 12. In the context of the statutory interpretation of "superviH sion" under the Act of the works undertaken under the contract, the A B c ·o E F G H 276 SUPREME COURT REPORTS (1991) SUPP.2 S.C.R. interest of the workmen or the welfare schemes for the employees under the Act interposed and call attention to and need primacy. In its construction the courts must adopt contextual approach to effectuate the statutory animation, namely, social security. The literal interpretation would feed injustice in perpetuity denying to the employees of sickness benefit etc. under the Act, which would be avoided, lest the purpose of the Act would be frustrated. (302 B-C) 13. The application of the golden rule to the word "agency" under the Indian Contract Act between the respondents and the corporation, perhaps, does not encompass agency in strict sense under the Act. But public policy of the Act, the constitutional and human right's philosophy to provide social security to protect the health and strength of the workers must be kept at the back of the mind to construe the word "agent" under s. 2 (9) (ii) of the Act, in contradistinction with the bilateral stipulations under the contract. In this regard public policy interposes and plays a vital role to read hit.o the contracts the extended meaning of agency to bring about connecting links between the respondents and the licencee corporation. Lest the contract, if intended to deny welfare benefits to workmen, would be opposed to public' policy and would become void under s. 23 of the Indian Contract Act. Such an intention would be avoided by reading into the contract the extended meaning of agency but not fiduciary. (302 E-G] 14. The contractors, respondents, knew t~t the date of the agreements that the Corporation, as principal employer, is under statutory obligation to execute or keep executed the works and keep them repaired and maintained as an integral activity of generation, transmission and distribution of the electrical energy to. the. consumers within their area of supply. On authorisation, the respondents execute and keep executed the works and. repairs or kept them repaired and the maintenance thereof effected through their employees, which in law is on behalf of the Corporation, principal employer. The genesis and aim of the transaction was to act on behalf of the Corporation. The agency of the respondent with the Corporation, thus, springs into being. The prohibition of the qualified supervisors, while in service of the respondents, to disengage themselves with t~ird parties in terms of the contract was only to extract unstinted and exclusive devotion to duty and no further. It stands no impediment to construe that the respondents are agen_ts to the Corporation as immediate employers. (303 F-H] C.E.S.C. v. SUBHASH BOSE 277 15. The employees working under the respondents perform their duties in 'execution of the works, repairs and maintenance thereof in connection with the generation, transmission and distribution of the electrical energy by the Corporation licensee. The Corporation is the principal employer. The respondents' immediate employers execute the work etc. under the supervision of the Corporation as its agents. Their employees, in law, work un~er the supervision of the principal employer, corporation. They are covered under s.2(9) (ii) of the Act entitling to the sickness benefits, etc. envisaged therein and the respondents are liable to make their contribution to the Employees' Insurance Fund. (304 A".'B] Senior Electric Inspector & Ors. v. Laxmi Narayan Chopra & Ors., (1962) 3 SCR 146 at p. 156; M Pentiah & Ors. v. Muddala Veeramallapa & Ors .. (1961) 2 SCR 295 at p. 313; Massachusetts Bonding & Insurance Co. v. United States of America, 352 US 128, 1 Led 2d 189; Atma Ram Mittal v. Ishwar Singh Punia, [1988] 4 SCC 284; Owen v. Evans & Owen (Builders) Ltd., 1962(1) Weekly Law Reports 933; Regional Director, E.S.I.C. v. South India Flour Mills (P) Ltd., 1986 (69) F.J.R. 77; A.P.State ·Electricity Board v. E.S.I.C., Hyderabad, (1977) 51 FJR 171(A.P.); Regional Director, E.S.I.C., Bangalore v. Davangere Cotton Mills, (1977) 2 LLJ 404; E.S.I.C. Chandigarh v. Oswal Woollen Mills Ltd., (1980] 57 FJR 171 (P&H) (F.B.); Birohichand Sharma v. First Civil Judge, Nagpur & Ors., (1961) '3 SCR 161; D. C. Dewan Mohideen Sahib & Sons v. The Industrial Tribunal, Madras, (1964) 7 SCR 646; Nagpur Electric Light & Power Co. Ltd. v. Regional Director E.S.l.C., [1967) 3 SCR Reprint 92; Kir/oskar, Pneumatic Co. Ltd. v. E.S.I.C., (1987) 70 FJR 199 (Bom.); Royal Talkies, Hyderabad & Ors. v. E.S.I.C.. (1979] 1 SCR 80; MIS. P.M Patel & Sons & Ors. v. Union of India & Ors .. (1986) 1 SCC 32, Superintendent of Post Office v. P.K. Rajamma. (1977) 3 SCR 678; Prenn v. Simmonds. 1971 (1) Weekly Law Reports 1381 (H.L.), referred to. World Labour Report - 2, at Chapter 9 (Safety and Health); Lawyer Oct. 1987 Page 5; Report of the Committee on Labour Welfare, 1969 in paragra.ph 5.77 of Chapter S; Webster Comprehensive Dictionary {International Edition) at page 1260, in Vol, II; Corpus Juris Secundum, Vol. 83 at page 900; The Words and Phrases. Permanent Edition, Vol. 40A; Halsbury 's Laws of England (Hailsham Edition); Chitty on Contracts. 26th Edition, paragraph 2502 at page 4, A.G.Guest: Alison::; Law of Contract, 26th Edition, at page 308 - referred to. A B c D E F G 278 SUPREME COURT REPORTS (1991) SUPP.2 S.C.R. A CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3197-98 of 1988. From the Judgment and Order dated 4.4.1988 of the Calcutta High Court in Appeal Nos. 16 and 438 of 1986. B P.P. Rao, M.K. Ramamurthy, S.S. Ray, Raj Kumar Gupta, V.J. Francis, N.M. Popli, S.K. Nandy, P.K. Dutta and A.D. Sikri for the appearing parties. The Judgment of the Court was delivered by C RANGANATH MISRA, CJ. I have had the :\dvantage of perusing the draft judgments prepared by my learned brethren Purichhi and Ramaswamy, JJ. While Justice Punchhi has gone by the literal construction of the statute, brother Ramaswamy has tried to find out the spirit of the legislation and with a view to conferring the benefit on the workmen, has adopted a ~onstruction different from the reported decision of this D Court. E F G H I agree with Justice Punchhi that the appeals should be dismissed and the judgment of the Divi~joh)J!lnch'should be sustained. At the same time, I would like to add that the fegisiaiive intention should have been brought out more clearly by undertaking appropriate legislation once this Court took a different view in the decision referred to in brother Punchhi's judgment. The legislation is beneficial and if by interpretation put by the Court the intention is not properly brought out it becomes -a matter for the legislature to attend to. PUNCHHI, J. The sole question which falls for determination in these appeals is, whether on the facts found, the right of the Principal employer to reject or accept work on completion, on scrutinizing compliance with job requirements, as accomplished by a contractor, the immediate employer, through his employees, is in itself an effective and meaningful "supervision" as envisaged under Section 2(9) of the Employees' State Insurance Act, 19•!8 (for short the Act)? The said provision, as it stood at the relevant time, is set out below, as is relevant for our purpose:- "2(9) - 'employee' means any person employed for wages in or in connection with the work of a factory or establishment to which this Act applies and - (i) who is directly employed by the principal employer on any work of, or incidental or preliminary to or connected 1 I ) ! C.E.S.C. v. SUBHASH BOSE [PUNCHHI, J. J 279 with the work of, the factory or establishment, whether A such work is done by the employee in the factory or establishment or elsewhere; or (ii) who is employed by or through an immediate employer on the premises of the factory or establishment or under the superyision of the principal employer or his agent on work which is ordinarily part of the work of the factory or establishment or which is preliminary to the work crotection and benefit. of workers, required liberal interepretation, as was held by this Court in MG. Beedi Works v. Union of India. AIR 1974 SC H 1952, and then proceeded to hold that the contractors as supervj~ors were in the nature of agents of the C.E.S.C., the principal employer. The learned I ( , ! .. C.E.S.C. v. SUBHASH BOSE [PUNCHHI, J.] 281 Single Judge also took the view that since ultimate energising of the A transmission lines was invariably effected by the C.E.S.C. after proper checks were effected for laying of cables or other maintena1'ce work, that step by itself was "supervision' so as to attract the provisions of the Act. Such finding was based on the fact that even though the agreement specified that work was to be done under the supervision of the electrical contractor the C.E.S.C. retained the ultimate rower or supervision and in B fact did supervise the work executed by the contractors. It is then that the learned Single Judge abruptly come to the conclusion that the principal employer could not escape the liability for the works of his contractors, as the latter was acting as the agent of the principal, and in sense confinned the view of the Regional Director of the E.S.l.C. Two appeals were filed against the dismissal of the two writ petitions before the Division Bench of the High Court who, after re-considering the matter, reversed the learned Single Judge, which has given cause for these appeals by special leave and the poser of the question mentioned at the outset . Now it is noteworthy that the Regional Director of.the E.S.l.C. drew deductions of facts in his impugned order dated March 30, 1985 in this manner: "The job which is perfonned by these employees engaged through c D the contractors, was principally maintenance and distribution E of electricity generated by the C.E.S.C. and also consumers' service. It was conceded during the course of hearing that after the work entrusted to such contractors was completed, it was subject to checking by C.E.S.C. for compliance with their job specifications and the work related to main business of tlie C.E.S.C. It cannot therefore be argued that ~erely because F such job was performed outside the factory premises as stated, it did not concern the C.E.S.C. The definition of the term 'premises' includes such work site where the job of the factory is being done. 1 cannot agree therefore with the argwnent that such job was not done for the factory and/or that there was no supervision of the C.E.S.C. over such job. It could not but be a G fact that C.E.S. C. was executing its own job through tire agency