REUNION ENGINEERING CO. PRIVATE LTD. Vs. REGIONAL DIRECTOR

JUDGEMENT

(1.) THIS is an Appeal filed under Section 82 of the Employees' State Insurance Act, 1948 (for short 'the Act'), by the Branch Office of Reunion Engineering Company Ltd., at Premises Nos. 106 and 107, Midford House No. 1, Midford Gardens, Bangalore, questioning the correctness of the order dated 28 -11 -1991 made in E.S.I. Application No. 77/87 by the Employees' Insurance Court at Bangalore (for short 'the Insurance Court') by which it (the Branch Office of Reunion Engineering Company Ltd.) is held to be a shop, that is, an establishment, to which the provisions of the Act are extended by Government of Karnataka, Notification No. SWL 371 LSI 87 dated 5 -1 -1985 issued under Sub -section (5) of Section 1 thereof (for short 'the Notification').

(2.) FACTS lie in a narrow compass - By its letter dated 31 -1 -1985, Karnataka Regional Office of the Employees' State Insurance Corporation at Bangalore (for short 'the Corporation') sought to obtain information from the Branch Office of the Reunion Engineering Company Limited (the appellant) as to its activities to find out whether it is a "shop", to which the provisions of the Act had been extended by the Notification. The information furnished thereto by the appellant was to the effect that its work was confined to carrying out the electrical contracts and its employees, in the months of January and February of 1985, were 32 in number. The information furnished thereto also indicated that the appellant's electrical contracts involving electrical installations and erection works, had to be done outside their Office and at job sites, buildings and factories and therefore the employees had to be sent out to such places for carrying out electrical contract works. However, in that letter, by which information had been furnished, it was contended by the appellant that its activities not being connected with any manufacturing process, it cannot be treated as an 'establishment' - 'shop' to which the provisions of the Act had been extended by the Notification. Thereafter, the Corporation, by the order dated 23 -9 -1987 made by its deputy Regional Director under Section 45 -A of the Act, treated the appellant as a 'shop' to which the provisions of the Act had been extended by the Notification and fixed the contribution payable at 7.25% on the assumed wage of Rs. 880 -00 per month for each of its employees said to be 36 in number for the period commencing from 27 -1 -1985 and ending with 31 -3 -1987 - the total contribution having been computed at a sum of Rs. 60,099.48. When the sum so fixed by the said order was sought to be recovered from the appellant as arrears of land revenue, it made an application in E.S.I. Application No. 77/1987 before the Insurance Court disputing its liability for contribution determined under Section 45 -A of the Act. That application was contested by the Corporation. Evidence adduced in support of the application by the appellant consisted of documentary and oral evidence of the appellant's Manager. The evidence contained in the documents clearly showed that the appellant (Branch Office) was entering into electrical contracts to carry out electrical works for others in their factories and buildings, through its employees. Its Manager, in the course of his oral evidence, though stated that his Branch Office undertook electrical contracts and carried out electrical works in factories and other places of the customers, what was being done by the Branch Office, was, according to him, sale of works contract service and not sale of goods, either wholesale or retail. It was also stated by him that in his Bangalore Branch Office, about 40 to 50 persons were employed, out of whom only 50% comprised of skilled technicians, while others comprised of administrative staff, like, Cashiers, Secretaries and Accountants. His explanation as to what he meant by services sold in electrical contract works, was the sale of services relating to the preparation of drawings and project details by the Branch Office done before undertaking such contract works. There was also evidence adduced by the Corporation which comprised of the inspection report of the Corporation's Inspector and his oral evidence.

(3.) SRI H.B. Datar, learned Senior Advocate, contended before us that the Decision of the Supreme Court in Hindu Jea Band, Jaipur Vs. Regional Director, Employees' State Insurance Corporation, Jaipur, AIR 1987 SC 1166 which has ruled that even a place where services are rendered or performed will be a shop, should be confined to a situation where the services are sold for any person who wants to avail of the same and were made available on payment of a stipulated price with no variation according to the volume, nature, quality and complexity of the work involved in the matter and if the application of the Ruling in M/s Hindu Jea Band case (supra) is so confined, the Branch Office of Reunion Engineering Company Ltd., (the appellant) cannot be a shop as envisaged in the Notification and in that event, the provisions of the Act cannot be extended to the appellant's Branch office. He sought to support his contention by placing reliance on the Decision of the Bombay High Court in Employees' State Insurance Corporation Vs. Dattaram Advertising (Private) Ltd., (1988) 1 LLJ 413 Bom and the Decision of the Kerala High Court in Waves Advertising and Marketing (P) Ltd. Vs. Jaison, (1992) 1 LLJ 309 Ker