EMPLOYEES’ STATE INSURANCE CORPORATION versus VENUS ALLOY PVT. LTD.

Citation: [2019] 3 S.C.R. 673 · Decided: 05-02-2019 · Supreme Court of India · Bench: ABHAY MANOHAR SAPRE · Disposal: Appeal(s) allowed

Judgment (excerpt)

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EMPLOYEES’ STATE INSURANCE CORPORATION
v.
VENUS ALLOY PVT. LTD.
(Civil Appeal No. 1464  of 2019)
FEBRUARY 05, 2019
[ABHAY MANOHAR SAPRE AND
DINESH MAHESHWARI, JJ.]
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.
[2019] 3 S.C.R. 673
673
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SUPREME COURT REPORTS
[2019] 3 S.C.R.
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 appellant-
Corporation 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.
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Case Law Reference
[1997] 5 Suppl. SCR 57
held applicable
Para 6
(2010) 11 SCC 553
referred to
Para 6
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1464
of 2019.
From the Judgment and Order dated 17.02.2014 of the High Court
of  M

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