REGIONAL DIRECTOR EMPLOYEES STATE INSURANCE CORPORATION TRICHUR versus RAMANUJA MATCH INDUSTRIES

Citation: [1985] 2 S.C.R. 119 · Decided: 27-11-1984 · Supreme Court of India · Bench: AMARENDRA NATH SEN · Disposal: Dismissed

Cited by 3 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

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REGIONAL DIRECTOR EMPLOYEES 
STATE INSURANCE CORPORATION 
TRICHUR 
v. 
RAMANUJA MATCH INDUSTRIES 
November 27, 1984 
(AMARENDRA NATH SEN AND RANGANATH MISRA, JJ.) 
119 
Employees ~ate Insurance Act 1948 section 2(9) 'employee'-Mean1'ng of 
partners of a firm receiving salary or other remuneration - Whetlitr employee. 
Indian Pa!"tnership Act 1931 sections 4 and 30(1) 'partner' .. •partMrs in a 
firm' - Not employees. 
Interpretation of statutes : Beneficient legislation to receive liberal inter-
pretation - However Court not to travel ~yonti scheme of statute and extend 
scope of statute on pretext of extending statutory benefit to these not covered by 
the scheme of the statute. 
The Respondent-firm was engaged in the manufacturing of matches. 
The Inspector of the Employees 
State Insurance Corporation who 
inspected the firm found that there were 18 regular employees and three 
of the partners worked regularly for wages. 
As the number of emplo· 
yees were over 20 he held that the Respondcnt~firm incurred liability for 
contribution under the Employees State Insurance Act 1948. 
The Respondent challenged its liability before the Employees 
Insu ranee Court by contending that partners were not employees and 
that when the three partners were excluded, the total number of emplo-
yees did not exceed the statutory minimum. 
The Insurance Court found 
in favour of the respondent. 
The Employees State Insurance Corpora .. 
tion appealed to. 
The High Court, which held following its earlier 
decision in Regional Director of E.S.I. Corporation v. M/s. Oosman}a Tiite 
Works, Alwaye. I.L.R. 1975(2) Kerala 207 that partners were not emp-
ployees. In the appeal to this Court on the question whether a partner 
of a firm is an "employee" within the meaning of section 2(9) of the 
Employees State Insurance Act 1948, 
A 
B 
c 
D 
E 
F 
G 
H 
120 
SUPREME COURT REPORTS 
iI985] 1 S.C.R 
A 
Dismissinhe Appeal, 
B 
c 
D 
E 
F 
HELD: 1. 
The three partners were not employees. 
On this ad-
n1itted fact the total number of en1ployees would be less than 20. 
The 
Employees State Insurance Act 1948 would not therefore oe applicable 
to the respondent-establishment. [128C] 
2. 
The term 'employee' has been defined in section 2(9) of the 
Employees State Insurance Act 1948 to mean "any person employed for 
wages in or in connection with the work of a factory or establishment to 
which the Act applies ... ". 
"WagesJ' has been defined in sub-section 
(22) of that section to mean "all remuneration paid or payable, in cash 
to an employee, if the terms of the contract of employment, express or 
implied, were fulfilled ... n. 
In order that some one may be an employee 
within the meaning of the Act, he has to be employed for wages. 
The 
concept of wages would bring in the contract of ·employment, and the 
concept of employee would take with it the correlation of the employer. 
The term •employer' has not been defined in the Act. 
In the absence of 
an employer who would provide the employment, there would be no 
employee. [122D-F] 
3. 
A partnership firm is not a legal entity. 
In a partnership each 
partner acts ·as an agent of the other. 
The position of a partner qua 
the firm is thus not that a master and a servant or Cmployer and employee 
which concept involves an element of subordination but that of equality. 
The partnership business belongs to the partners and each one of them is 
an owner thereof. 
In common parlance the status of a partner qua the 
firm is thus different from en1ployees working under the firm, it. may be 
that a partner is being paid some remuneration for any special attention 
which he devotes but that would not involve any change of status and bring 
him within the definition of employee. 
Seth Hira Lal & Anr-v. Sheikh Jammaluddin and anr. (1946] 224 Indian Cases 
106 & Regional Directer of E.S. I. C0rporation v. Mjs. Osmanja Tile Works, 
Alwaye, I.L.R. 1975 (2) Kerala 207 approved. 
Regional Director of E.S.I. Corporation, Jaipur v. P.C. Kasliwal and Anr. 
(1931) Labour & Industrial Cases 671 reversed. 
4. 
In the United States, Great Britain and Australia, a partner is 
not treated as an employee of his firm merely because he receives a wage 
or remuneration for work done for the firm, which is in complete accord 
G 
with the jurisprudential approach. [127D-E] 
H 
Dube v. Robinson 92 NIL 312. United States Fidelity & Guarantee Com-
pany v. Neal, 188 Ga. 105 Le Cltar v. Smith 202 N.Y.S. 514 & Be

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