METTUR BEARDSELL LIMITED Vs. EMPLOYEES STATE INSURANCE CORPORATION OF INDIA, REPRESENTED BY REGIONAL DIRECTOR

JUDGEMENT

(1.) THESE writ petitions are connected; for the purpose of narrating the facts, it is enough to notice the facts in Writ Petition No. 3238 of 1971. The petitioner is a private limited company having its factory at Madhavaram within the limits of the City of Madras. But it has an independent administrative office at No. 52/53, Jehangir Street, Madras -1. The petitioner's case is that there are about 67 workers exclusively working in the factory of the petitioner -company and there are a few others numbering about 30 as on date working in the administrative office of the company in the address as above. The respondent as the statutory functionary under the Employees' State Insurance Act, 1948 was of the view that by reason of the amendment of the word 'employee' in Section 2(9) of the Act, the employees of the petitioner, even, though working in the administrative office as above, would squarely come within the meaning of the word "employee" as defined in Section 2(9) and therefore the respondent called upon the petitioner to bring in the personnel working in the administrative office also within the purview and mischief of the Act in the matter of the contribution payable by an employer in relation to the services of its employees. The petitioner's case is that by letter, dated 29th September, 1971, the respondent called upon the petitioner -company to register in the books of the respondent as a Regional Director of the Employees' State Insurance Corporation, the staff in the head office or administrative office also with effect from 28th January, 1968 and make contributions in accordance with law, failing which, the respondent threatened legal action. There were incessant reminders. The petitioner, however, was of the view that even though the definition of an employee has been modified by an amending Act of Parliament, Act XLIV of 1966, yet the respondent did not have the requisite jurisdiction in law to call upon the petitioner to register the members of the staff as demanded and claim contribution for the reason that no notification was issued by the appropriate Government under Section 1(5) of the Act. This position was explained by the petitioner to the authorities. But it appears that the respondent is threatening to take proceedings under the Revenue Recovery Act against the petitioner to recover contribution in respect of the employee's working in administrative offices, such as head office, branch office etc. Apprehending that the threat to invoke the provisions of the Revenue Recovery Act would be processed through in the usual course, the petitioner, without having recourse to the alternative remedy provided for in the Act to the Employees' State Insurance Court has come up to this Court for the issue of a writ in the nature of a writ of mandamus directing the respondent from further processing its action as threatened as, according to the petitioner, the respondent has no jurisdiction to call for contribution in the absence of a statutory notification under Section 1 (5) of the Act. As the applicability of the Act itself is in question, recourse to this Court under Article 226 of the Constitution is sought to be justified. In the counter -affidavit, the respondent no doubt admits that prior to the amendment of the definition of " employee " under Section 2 (9) of the Act, no such demand was raised as against the petitioner. Bat according to the respondent, the amended provision is only clarificatory of the subject -matter and cannot be understood as amendatory or a substitute for the quondam definition of an employee under the Act. It is also said that such head office or branch office or sales office being integrally connected with the factory, its work in one office cannot be dissociated from the other and such an integration by itself is sufficient to attract the provisions of the Act notwithstanding the absence of any notification under Section 1 (5). What is suggested is that even though a head office or a branch office can, for certain purposes, be considered to be an establishment other than a factory, as the employees therein are virtually the employees of the factory, the amended definition need not at all be invoked and on the basis of the unamended definition of ' employees ' the stand taken by the respondent is legal and therefore no writ under Article 226 of the Constitution can issue.

(2.) FOR a proper appreciation of the contentions of parties, it would be sufficient to refer to certain relevant provisions of the Employees' State Insurance Act, '1948. This Act, no doubt is one of those legislations which our Parliament undertook in the name of the welfare state and for the progression and welfare of certain sections of the community who deserve encouragement in the hands of Parliament and the Legislature. But whilst enacting the Act, Parliament bore in mind a specific dichotomy as between a factory and any other establishment or class of establishment, industrial, commercial, agricultural or otherwise. As it is not unusual for Parliament to do so, this Act, in the first instance, was made applicable to all factories including factories belonging to the Government other than seasonal factories (Vide : section (4) of the Act). But whilst preserving its prerogative to extend the provisions of the Act to other situations, Parliament contemporaneously provided for Section 1 (5) of the Act which reads as under:

(3.) IF there is an establishment in which there is personnel working administratively as its staff, the question, is, whether the Act could be applied to the said establishment without making the appropriate notification in the proper and prescribed form as contemplated in Section 1(5) of the Act. I have already referred to the purport of Section 1(5) and its force. In the instant case there has not been any such notification. It is therefore rightly contended by the learned Counsel for the! petitioner that there is total absence of jurisdiction in these cases when the respondent, without reference to the prescribed statutory pre -requisites under Section 1(5) has included employee in the establishment of their companies' head offices, branch offices, etc., as being personnel who ought to be covered under the Act.