Employees’ State Insurance Act, 1948 – ss.2(9), 75 and 82 – Respondent-Company, covered under the ESI Act had been depositing the amount of contribution with reference to the wages paid to some of its employees, however, did not make the contribution in respect of the remuneration paid to the Directors – By order dated 06.04.2005, the Deputy Director of the appellant-Corporation called upon the respondent to make payment of contribution in relation to the remuneration paid to the Directors – Challenged by the respondent u/s.75 – ESI Court declared the said order as void – In appeal by the appellant, the High Court concluded that the Directors of the respondent establishment do not come within the purview of the “employees”, as defined u/sub-sec. (9) of s.2 of the ESI Act and dismissed the appeal – Held: Appellant in order dated 06.04.2005 asserted that the Directors of the Company were paid remuneration @ Rs. 3,000/- p.m. and they were falling within the definition of “employee” under the ESI Act and hence, contribution was payable in regard to the amount paid to them – However, while challenging the said order, the respondent chose not to lead any evidence before the Court – Hence, there was nothing on record to displace the facts asserted on behalf of the appellant in its order dated 06.04.2005, rather the factual assertions in the said order remained uncontroverted – High Court in the present case has been in error in assuming that the Director of a Company, who had been receiving remuneration for discharge of duties assigned to him, may not fall within the definition of an employee for the purpose of the ESI Act – No reason to interfere with the order dated 06.04.2005 issued by the appellant – Impugned order set-aside and the application filed by the respondent-Company u/s.75 of the ESI Act is dismissed. Allowing the appeal, the Court
Held: 1.1 In the present case, the appellant-Corporation in its impugned order dated 06.04.2005 specifically asserted that the Directors of the Company were paid remuneration at the rate of Rs. 3,000/- p.m. and they were falling within the definition of “employee” under the Employees’ State Insurance Act, 1948 and hence, contribution was payable in regard to the amount paid to them. Interestingly, even while seeking to challenge the aforesaid order dated 06.04.2005 by way of proceedings under Section 75 of the ESI Act, the respondent-Company chose not to lead any evidence before the Court. Hence, there was nothing on record to displace the facts asserted on behalf of the appellantCorporation in its order dated 06.04.2005; rather the factual assertions in the said order remained uncontroverted. The order dated 06.04.2005 had been questioned by the respondent only on the contention that the Directors do not fall within the category of “employee” but no attempt was made to show as to how and why the remuneration paid to its Directors would not fall within the purview of “wages” as per the meaning assigned by sub-section (22) of Section 2 of the ESI Act? [Para 13][682-C-E]
1.2 The High Court in the present case has been in error in assuming that the Director of a Company, who had been receiving remuneration for discharge of duties assigned to him, may not fall within the definition of an employee for the purpose of the ESI Act. There had been no reason to interfere with the order dated 06.04.2005 as issued by the appellant. The application filed by the respondent under Section 75 of the ESI Act is dismissed. [Paras 14, 15][682-H; 683-A-B]
Employees’ State Insurance Corporation v. Apex Engineering Pvt. Ltd. (1998) 1 SCC 86 : [1997] 5 Suppl. SCR 57 – held applicable.
Sakal Papers Private Limited v. Employees’ State Insurance Corporation MHLJ 1995 Vol. 2 Page 69; Employees’ State Insurance Corporation v. Apex Engineering Pvt. Ltd. MHLR 1990 Vol. 2 Page 850; Saraswath Films v. Regional Director, Employees’ State Insurance Corporation, Trichur (2010) 11 SCC 553 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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