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Andhra Pradesh State Electricity Board v. Employees' State Insurance Corporation, Hyderabad
Structured Summary of the Opinion
Factual and Procedural Background
This appeal challenges an order of the Judge, Employees' Insurance Court, Hyderabad in E.I. Case No. 9 of 1972. The appellant is the Andhra Pradesh State Electricity Board (the Board); the respondent is the Employees' State Insurance Corporation, Hyderabad (the Corporation).
The Corporation demanded that the Board deposit Rs. 646.80 as employer's special contribution and Rs. 3,452.84 as employees' contribution for the period 1.10.1968 to 31.3.1971. The Board failed to deposit the amounts. The Corporation therefore moved the District Collector, Karimnagar to recover the sums as arrears of land revenue under the Revenue Recovery Act. The Collector issued a show-cause notice dated 26-4-1972 calling on the Board to explain why its property should not be attached to realize the amounts.
The Board responded by contending that the workers for whom the demand was made were casual workers and could not avail the benefits under the Employees' State Insurance Act, 1948; therefore the demand was claimed to be illegal. The Corporation countered that casual labourers come within the definition of "employee" under Section 2(9) of the Employees' State Insurance Act, and that the demand was lawful. The learned Judge in the Employees' Insurance Court accepted the Corporation's contention and held casual workers entitled to benefits under the Act. The Board appealed to the Tribunal; the matter was referred for consideration by a Division Bench.
Legal Issues Presented
- Whether casual labourers employed by the appellant fall within the definition of "employee" in Section 2(9) of the Employees' State Insurance Act, 1948.
- Whether, in respect of such casual labourers, the employer is liable to pay employer's and employees' contributions under the Act (including when employment is for part of a week), thereby validating the Corporation's demand for the specified sums.
Arguments of the Parties
Appellant's Arguments (Andhra Pradesh State Electricity Board)
- The casual labourers employed by the Board do not come within the definition of "employee" under Section 2(9) of the Employees' State Insurance Act because continuity of service is an essential prerequisite to be an "employee" entitled to benefits; casual workers lack such continuity.
- The scope, scheme and purpose of the Employees' State Insurance Act exclude casual employees from entitlement to benefits.
- Relied upon authority: Supreme Court decision in Regional Provident Fund Commissioner, A.P. v. T.S. Hari Nat (1972) F.L.R. (22) S.C. 260 and decisions of the Andhra Pradesh and Madras High Courts involving the Employees' Provident Funds Act and related labour law contexts to support the contention that casual labourers are excluded (examples cited in the opinion: Mazeena Traders Ltd. v. Regional Provident Fund Commissioner and E.S.I. Corporation v. Gnanambika Mills).
Respondent's Arguments (Employees' State Insurance Corporation)
- The benefits under the Employees' State Insurance Act enure to casual labourers as they are covered by the wide definition of "employee" in Section 2(9) of the Act; accordingly the demand for contributions was lawful and valid.
- The Corporation relied on the statutory language (including provisions of Sections 39(4) and 42(3)) and prior judicial treatment (including a single Judge's decision in C.M.A. No. 359 of 1967) that interpreted Section 2(9) broadly to include short-term and part-week employment.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| C.M.A. No. 359, 1967 (Single Judge of this Court) — decision dated 18.3.1969 | Held that Section 2(9) of the Employees' State Insurance Act is comprehensive and that persons employed even for a short period are entitled to benefits of Chapter V based on contributions made; Section 39(4) permits employment for less than a week. | The Division Bench treated this decision as entirely in conformity with the statutory provisions and relied upon it in supporting the conclusion that casual workers fall within Section 2(9). |
| Regional Provident Fund Commissioner, A.P. v. T.S. Hari Nat — (1972) F.L.R. (22) S.C. 260 (Supreme Court) | Interpreted "employment" under Section 1(3)(a) & (b) of the Employees' Provident Funds Act, 1952 to require continuity; held casual labourers do not come within Section 1(3)(b) of the EPF Act because employment must be in the regular course of business and not for short temporary needs. | The Court observed this decision relates to the Employees' Provident Funds Act and limited its application: it does not control interpretation of the Employees' State Insurance Act, whose scheme and definition are materially different. |
| Mazeena (Mazeenal) Traders Ltd. v. Regional Provident Fund Commissioner (Andhra Pradesh High Court) | Decision dealing with the Employees' Provident Funds Act and the treatment of casual labourers under that Act. | The Court noted that the views in that decision are restricted to the EPF Act and therefore do not determine interpretation of the Employees' State Insurance Act. |
| E.S.I. Corporation v. Gnanambika Mills (Madras High Court) — 1974 Lab. I.C. 798 | Madras High Court Division Bench held that a casual labourer is not covered by the definition under Section 2(9) of the Employees' State Insurance Act, relying on provisions including Sections 39(1), 47(2)(2) and 2(5) (as cited in the opinion) to conclude casual employees cannot be compelled to insure and pay contributions. | The present Court expressly disagreed with the Madras High Court's conclusion, explaining why the statutory provisions (notably Sections 39(4) and 42(3), and disablement benefit provisions) support inclusion of casual workers under Section 2(9). |
Court's Reasoning and Analysis
The Court's analysis proceeds in the following steps, grounded in the statutory language of the Employees' State Insurance Act and the specific provisions invoked in the opinion.
- Distinguishing EPF authority: The Court first observed that decisions which exclude casual labourers (for example, the Supreme Court decision on the Employees' Provident Funds Act and the Andhra Pradesh High Court decision) are necessarily constrained to the EPF Act because that Act's purpose and scheme require continuity of employment. The Court therefore held such authorities do not dictate interpretation of the Employees' State Insurance Act.
- Focus on the ESI Act's text and scheme: The Court emphasised that the definition of "employee" in Section 2(9) of the Employees' State Insurance Act is wide and that the Act's purpose and scheme do not inhibit inclusion of casual workers among those entitled to benefits.
- Reliance on Section 39(4): Clause 4 of Section 39 provides that contributions payable in respect of each week ordinarily fall due on the last day of the week, and where an employee is employed for part of the week, the contribution shall fall due on such days as may be specified in the regulations. The Court read this as a statutory recognition that an employee may be employed for part of a week (i.e., casual employment) and that contributions are payable accordingly.
- Reliance on Section 42(3): Clause (3) of Section 42 envisages that an employer shall be liable to pay both the employer's and the employee's contribution even in respect of an employee employed for a portion of the week, although the employer may have the right to recover the employee's share. The Court treated this as explicit statutory direction that employers must pay contributions even for short-term employment.
- Synthesis from Sections 39(4) and 42(3): The Court concluded that these provisions together make clear that casual workers are within the scope of "employee" under Section 2(9) because the statute contemplates contribution payment and benefit entitlement even for part-week employment.
- Response to contrary Madras decision: The Court considered the Madras High Court's contrary view (that casual workers were excluded) but concluded that the Madras Bench did not adequately account for provisions such as Section 51 (disablement benefit) and Section 46(1)(c) which provide disablement benefit without reference to contribution or benefit periods. The Court used this as further indication that the Act applies to casual labourers.
- Treatment of benefit-qualification provisions: The Court acknowledged that certain benefits (e.g., sickness benefit under Section 47 and maternity benefit under Section 50) require qualifying contribution/benefit periods (for example, 13 weeks of payable contributions in the corresponding contribution period for sickness benefit). However, the Court stated that the existence of these qualifications for particular benefits does not mean casual labourers are excluded entirely from the Act's protections—rather, some benefits may be unavailable unless qualifying conditions are met.
- Constructional approach: The Court emphasized that the Employees' State Insurance Act is a beneficial social security statute to be construed so as to promote the scheme and benefit labourers. This principle supported an inclusive interpretation of "employee."
- Conclusion of reasoning: On the basis of the statutory language (notably Sections 2(9), 39(4) and 42(3)), the remedial purpose of the Act, and the applicability of certain benefits (including disablement benefit) to employees irrespective of contribution/benefit periods, the Court concluded that casual workers are included within Section 2(9).
Holding and Implications
Holding: The appeal is dismissed with costs.
The Court held that Section 2(9) of the Employees' State Insurance Act includes casual workers and that such workers are entitled to the benefits provided by the Act. The Court affirmed the view taken by the single Judge in C.M.A. No. 359 of 1967 that persons employed even for short periods fall within the Act's scope.
Implications:
- Direct effect on the parties: The Board's appeal failed; the lower court's order upholding the Corporation's demand for contributions in respect of casual workers stands, and the Board remains liable as determined by the courts below (subject to payment and recovery processes already initiated).
- Scope of ruling: The opinion reasons that, although certain benefits under the Act require qualifying contribution/benefit periods (so that some benefits may not be available to very short-term casual labourers), the Act nonetheless covers casual workers generally (including in respect of contribution liability and certain benefits such as disablement benefit which do not depend on contribution/benefit periods).
- The opinion does not purport to catalogue broader policy consequences beyond these direct legal effects; it primarily resolves the statutory interpretation question between the parties and notes conformity with a prior single-judge decision of this Court.
This summary was prepared strictly from the content of the provided opinion. No information not present in the opinion has been added.
1. This appeal is directed against the order passed by the Judge, Employees' Insurance Court, Hyderabad in E.I. case No. 9 of 1972. Andhra Pradesh State Electricity Board who is the petitioner in the lower Court is the appellant herein.
2. The Employees' State Insurance Corporation. Hyderabad respondent, demanded the appellant to deposit a sum of Rs. 646.80 towards employer's special contribution and a sum of Rs. 3,452.84 towards employees' contribution for the period from I. 10.1968 to 31-3-1971. But the appellant failed to deposit the same and hence the respondent-Corporation moved the District Collector, Karimnagar to recover these amounts under the Revenue Recovery Act as arrears of land revenue.
3. The District Collector, therefore, issued a show-cause notice on 26-4-1972 to the appellant calling upon them to explain as to why the property of the appellant should be attached for the realisation of the said amounts. The appellant submitted an explanation stating that the workers for whose sake the demand was made towards the aforesaid contributions are casual workers and hence they cannot avail of any of these benefits and the demand is, therefore, illegal.
4. As against this contention, the respondent-Corporation contended in its counter that the benefits envisaged under the Act enured to the casual labourers also since they would come within the purview of Section 2(9) of the Employees' State Insurance Act, 1948 and the demand is, therefore, lawful and valid.
5. The learned Judge took into consideration the provisions of Section 2(9) and also a decision of a single Judge of this Court in C.M.A. No. 359, 1967 dated 18.3.1969 in which it was held that Section 2(9) of the Act is comprehensive and does not warrant the inference that a person cannot be deemed to be an employee unless his services are engaged for not less than a particular period and Section 39(4) of the Act visualises the possibility of employment even for less than a week when it lays down among other things that where an employee is employed for part of a week the contributions shall fall due on such day as may be specified in the regulations and finally held that the persons employed even for a short period would be entitled to the benefits of the Chapter V of the Act based on the contribution made or in respect of such employees. In the light of this decision rejected the contention held that the casual the learned Judge of the appellant and workers were also entitled to the benefits provided by the Act.
6. Aggrieved with the said order, the Electricity Board which is the petitioner before the Tribunal preferred this appeal.
7. Our learned brother A.V. Krishna Rao, J., after hearing the arguments addressed by Shri Anantha Babu, learned Counsel for the appellant, felt that the question raised are 'of sufficient importance and deserve consideration of Division Bench. He, therefore, wanted the matter to be referred to a Bench for authoritative pronouncement on these questions. Thus the matter came before us.
8. Shri Anantha Babu, the learned Counsel for the appellant, contends that the casual labourers employed by the appellant-board do not come under the definition of "employee" under Section 2(91 of the Employees' State Insurance Act. According to him, for the employee who seeks to avail the benefits given by the Act should be a regular/labourer but not casual labourer, since the continuity of service is an essential prerequisite which is absent in the case of a casual labourer. He also contends that the scope, Scheme and purpose of the Act make it abundantly clear that casual employees are excluded from the definition of the employee. In support of his contention be'' relied upon the decision of the Supreme Court in Regional Provident Fund Commissioner, A.P. v. T.S. Hari Nat and (1972) F.L.R. (22) S.C. 260, and a decision of this Court in Mazeenal Traders Ltd. v. Regional Provident Fund Commissioner, Hyderabad and Ors. and also a decision of the Madras High Court in E.S.J Corporation v. Gnanambika Mills, 1974 Lab. I.C. 798.
9. The Supreme Court's decision cited \ above deals with casual labourers with ' reference to Section 1(3)(a) and (b) of the Employees' Provident Funds Act, 1952. Their Lordships held that casual labourers do not, come within the definition of Section 1(3)(b) of the Employees' Provident Funds Act. According to them, the word "employment" should be construed as employment in the regular course of business of the establishment and such employment obviously, would not include employment of a persons for a short period on account some passing necessity or some temporary] emergency beyond the control of the company. The purpose and scheme of the Act demanded a continuity of employment and hence excluded casual labourers.
10. The decision of the Andhra Pradesh High Court in Mazeena Traders Limited v. Regional Provident Fund Commissioner (supra) also deals with Employees' Provident Funds Act.
11. The views expressed in these decisions about casual labourers are necessarily restricted to the Employees' Provident Funds Act. In view of the purpose and scheme of the Act and the nature and benefits conferred by it, it is clear that the casual workers cannot come within the purview of that Act. But under the Employees' State Insurance Act, the definition of I the expression "employee" in Section 2(9) of the Act is not only very wide but the purpose and scheme of the Act 'do not appear to inhibit the inclusion of casual workers among those entitled to the benefits of the Act.
12. The word "employee" is defined in Section 2(9) as follows:
13. The entire argument that the Act excludes payment of contribution in respect of casual labourers collapses in view of Clause 4 of Section 39 and Clause 3 of Section 42. Clause 4 of Section 39 provides that the contribution payable" in respect of each week shall ordinarily fall due on the last day of the week and where an employee in employed for part of the week, the contribution shall fall due on such days, as may be specified in the regulations. This clause, therefore, makes it abundantly clear, that the first limb of the provision deals, with the payment of contribution in respect of a regular labourer while the second limb deals with the casual labourer who is employed even for part of the week. It makes it further clear that in the case of a regular labourer, the contribution payable in respect of each week shall ordinarily fall due on the last day of the week and in respect of the casual labourer, the contribution shall fall due on such day as may be specified in the regulations.
14. Clause (3) of Section 42 also envisages t the employer shall be liable to pay both the employer's contribution and the employees' contribution even in respect of the employee who is employed for a portion of the week. But the employer is given the| right to recover from such an employee, the employee's contribution. Section 42(3) reads as follows:
15. Clause (3) of Section 42 clearly shows that even if a worker is employed for a few days of a week, the employer shall be liable to pay both the employer's as well as the employee's contribution for the week in full. The employer cannot refuse to pay the contribution on the mere ground that he employed the worker for a few days, but not even for a week and that the employee is only a casual worker.
16. Both Clause (4) of Section 39 and Clause (3) of Section 42 establish beyond doubt that a casual worker is entitled to payment of contribution by the employer towards employer's contribution as well as employee contribution, though he is employed even for a day or two or a few days in a week. The effect of these two clauses is emphatic enough to declare that the word "employee" as defined under Section 2(9) of the Act includes casual worker also.
17. It is true that the Division Bench of the Madras High Court took a different view in E.S.I. Corporation v. Gnanambika Mills (supra). The learned Judges were of the view that casual labourer is not covered by the definition given under Section 2(9) of the Act in view of the provisions of Sections 39(1), 47 2(2) and 2(5) which, according to them, clearly show that casual employees cannot be compelled to insure and pay contributions and are excluded from the purview of the Act.
18. With great respect for the reasons that follow and given above, we are unable to persuade ourselves to conform to this view. Section 47, of course, prescribes conditions for claiming sickneas benefit. Under this Section, a person shall be qualified to claim sickness benefit for sickness occurring during any benefit period, if during the corresponding contribution period, weekly contributions in respect of him were payable for not less than 13 weeks. "Benefit period" as defined under Clause (2) of Section 2 (means, such period, being not less than 25 but not exceeding 27 consecutive weeks or six consecutive months corresponding to the contribution period, as may be specified under clause (5) of section 2 as such period, being not less than 25 weeks but not exceeding 27 consecutive weeks or six consecutive months, as may be specified in the regulations provided that in the case of the first contribution period a longer or shorter period may be specified by or under regulations. Similar qualifications are prescribed even for maternity benefit as could be seen from Section 50 of the Act.
19. "Thus it is clear that if a casual, labourer is employed for over a contribution period, he is entitled to sickness or maternity benefit, if the sickness or maternity occurs during the benefit period, though it" may not be available to him if he is employed for a shorter period.-Merely because some of the benefits of the Act are not available to some casual labourers, it cannot be said that the casual labourers are not entitled to have the benefits of the Act as expressed by the learned Judges of the Madras High Court in the above cited decision. We also notice here that the Madras High Court did not take into account the circumstance that under Section 51 the Act, employees are entitled to "disablement benefit" as provided in Section 46(I)(c) without reference to any benefit period or the contribution period. "Disablement Benefit" is given to employees suffering "employment injury" as defined in Section 2(8). "Employment injury" as defined includes a personal injury caused by accident in the accident to occur on the first day of employment either to casual or to regular employees causing him disablement. Then the disablement benefit can be extended to him without reference to the benefit period or to contribution period. This is again an indication that the Act applies to casual labourers as well.
20. The Act being a beneficial piece of I social security legislation in the interest of labourers employed in the factory, provisions of the Act will have to be construed with a view to promote the scheme for the benefit of all the labourers.
21. For the aforesaid reasons we hold that Section 2(9) includes a casual worker also' and he is entitled to the benefits provided course of employment. It is possible for an in the Act. It is in this view that we find that the decision of the single Judge of this Court in C.M.A. No. 359, 1967 is entirely in conformity with the provisions of the Act. We, therefore, find no merits in the appeal and it is accordingly dismissed with costs.
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