B. M. LAKSHMANAMURTHY versus THE EMPLOYEES' STATE INSURANCE CORPORATION, BANGALORE

Citation: [1974] 3 S.C.R. 142 · Decided: 21-01-1974 · Supreme Court of India · Bench: P. JAGANMOHAN REDDY · Disposal: Dismissed

Judgment (excerpt)

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 export-
ing polished granite memorial stones. The finn was a factOrY both. under the Fac-
tories 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 eVI-
dence 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 
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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

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