ROYAL TALKIES, HYDERABAD & ORS. versus EMPLOYEES STATE INSURANCE CORP.

Citation: [1979] 1 S.C.R. 80 · Decided: 09-08-1978 · Supreme Court of India · Bench: V.R. KRISHNA IYER · Disposal: Dismissed

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

Judgment (excerpt)

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SUPREME COURT REPORTS 
[1979] l S.C.R. 
ROYAL TALKIES, HYDERABAD & ORS. 
v. 
EMPLOYEES STATE INSURANCE CORP. 
August 9, 1978 
[V. R. KRISHNA IYER AND D. A. DESAI, JJ.[ 
F:111ployees State Insurance Act, 1948, s. 2(9), definitional a1nplitude of 
eniployee and consequential fall-out of statutory obligations-Whether a cinema 
theatre Afanager lvho has no statutory obligation to run a canteen or pri"vate 
cycle~stand, but for the better amenities of his customers and improvement of his 
business enters into an arrangement with another to maintain a canteen and a 
cycle-stand and that other employs, on his own, workers in connection . .,t:ith the 
canteen and the cycle stand, can be held liable for contribution as the "principal 
etnployer" of the workmen although they are engaged independently by the 
owner of the canteen or the cycle-stand. 
The appellants are owners of theatres in the twin cities of Hyderabad and 
Secunderaba<l, where films are exhibited. Within the same premises 
as the 
theatre, in every case, there is a cant.een and a cycle stand, leased out to con-
tractors under instruments of lease. The contractors employ their own servfu!s 
to run the canteen and the cycle stand. In regard to persons so employed by 
the contractors the owners of the theatres were treated as 'principal employers' 
and 1,1otices. of demands were issued to them calling upon them to pay contri-
bution under the Employees State Insurance Act. Thereupon the appellant filed 
an application under s. 7 5 of the Act before the Employees Insurance Court 
for a declaration that the provisions of the Act were not ap:i)licaible to their 
theatres and that they were not liable to any contribution in respect of the 
persons employed in the canteen and the cycle stands attached to their theatres. 
The Insurance Court found "that the canteens are meant primarily for the 
convenience· and comfort for those visiting the cinema theatres· though in a few 
cases the persons in-charge of the canteens seem to be allowing the general public 
also to have access to the canteens" and that the cycle stands "are meant 
exclusively for the convenience of the persons visiting the theatres". 
The 
Insurance Court held that the owners of the theatres were, therefore, 'principal 
employers' with reference to the persons e.mployed' by the contractors in the 
canteens and the cycle stands attached to the theatres and rejected the application \c 
filed by the owners under s. 75 of the Act. 
Jn appeal the High Court oonfirmcd 
the said findings and hence the appeal by special leave. 
-0 
Dismissing the appeal, the Court 
H 
JIELD : ( 1) Law is essentially the formal expression of the regula-tion of 
economic relations in society. In view of the complexities of modem. business 
organisations, 'the principal employer' is made primarily liable foi payment ot 
contribution "in respect of every employee, whether directly employed by him 
or by or through an immediate employer," under the Insurance Act, the main 
purpose of v:hich is to insure all employees in factories or establishments agaiinst 
sickness and allied disabilities, but the funding, to implement the policy of 
insurance is by contribution from the employers and the employees. The bene--
fits belong to the employees and are intended to embrace as extensive a cii'clc 
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ROYAL TALKIES V. E.S.I.C. 
81 
as is feasible. 
In short the social orientation, protective purpose and human 
coverage of the Act are important considerations in the statutory constructfoil; 
more weighty than mere logomaclly or grammatical nicety. 
[83A, 85G-H, 
86A-B] 
(2) In the field of labour jurisprudence, welfare legislation and sll>tutory 
construction which must have due regard to Pan IV of the CoriStitutioii, a 
teleological approach and social perspective must play upon the interpretative 
process. The reach and range of the definition of 'employee' in s. 2(9) of the 
F.S.I. Act is appa.rently wide and deliberately transcends pure contractual rela-
tionships. 
[88CJ 
(3) Clause (9) of s. 2 contains two substantive parts. Unless the person 
employed qualifies under both he is not an employee. 
Firstly he must be 
employed "in or in connection with" the work of an establishment. The expres~ 
sion "in connection with the work of an establishment .. ropes in a wide variety 
of workmen who may not be employed in the establishment. Some nexus must 
exist between the establishment and the work of the e

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