Ayoor Ksheera Vyavasaya Co-operative Society Ltd. No.15(D) v. Insurance Inspector, E.S.I. Office Kollam and Others

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR. JUSTICE B.KEMAL PASHA THURSDAY, THE 7TH DAY OF AUGUST 2014/16TH SRAVANA, 1936 Ins.APP.No. 58 of 2011 ( ) --------------------------IC 21/1999 of INDUSTRIAL TRIBUNAL, KOLLAM ## APPELLANTS/PETITIONERS: --------------------------------------------- 1. AYOOR KSHEERA VYAVASAYA CO-OPERATIVE SOCIETY LTD.NO.15(D), P.O.AYOOR, KOLLAM REPRESENTED BY ITS SECRETARY. 2. MANAGING COMMITTEE OF AYOOR KSHEERA VYAVASAYA CO-OPERATIVE SOCIETY LTD.NO.15(D) P.O.AYOOR, KOLLAM REPRESENTED BY ITS PRESIDENT. BY ADVS.SRI.R.KISHORE SRI.G.HARIPRASAD SRI.ARUN BABU ## RESPONDENTS/RESPONDENTS: ---------------------------------------------- 1. THE INSURANCE INSPECTOR, - E.S.I.OFFICE, KOTTARAKKARA - 691506. 2. REGIONAL DIRECTOR, E.S.I. CORPORATION, PANCHADEEP BHAVAN NORTH SWARAJ ROUND, TRICHUR - 680 820. 3. DEPUTY DIRECTOR, - REGIONAL OFFICE, (KERALA E.S.I. CORPORATION PANCHADEEP BHAVAN, N.S.ROUND, TRICHUR - 680 020. 4. BENSAMMA JOHN, D/O.JOHN, CLERK, AYOOR KSHEERA VYAVASAYA CO-OPERATIVE SOCIETY, LTD.NO.15(D) P.O.AYOOR, KOLLAM - 691 533 5. N.SOMAN, S/O.NANU, SALESMAN, AYOOR KSHEERA VYAVASAYA CO-OPERATIVE SOCIETY LTD.NO.15(D), P.O.AYOOR, KOLLAM - 691 533 6. N.GOPINATHA KURUP, S/O.NARAYANA KURUP, ATTENDER CUM SALESMAN AYOOR KSHEERA VYAVASAYA CO-OPERATIVE SOCIETY LTD.NO.15(D), P.O.AYOOR, KOLLAM - 691 533 ## 7. M.ACHAN KUNJU, S/O.MATHEW, ATTENDER CUM SALESMAN AYOOR KSHEERA VYAVASAYA CO-OPERATIVE SOCIETY LTD.NO.15(D), P.O.AYOOR, KOLLAM - 691 533 ## 8. M.THOMAS, S/O.MATHAI, ATTENDER CUM SALESMAN AYOOR KSHEERA VYAVASAYA CO-OPERATIVE SOCIETY LTD.NO.15(D), P.O.AYOOR, KOLLAM - 691 533 R,R1 TO 3 BY ADV. SRI.T.P.M.IBRAHIM KHAN, SC, ESI CORPN. R,R1 TO 3 BY ADV. SRI.K.M.ABDUL MAJEED R,R4,5,7,8 BY ADV. SRI.V.E.ABDUL GAFOOR R,R4,5,7,8 BY ADV. SRI.A.MOHAMMED SAVAD BY ADV.SANDESH K.RAJA R,R1 TO3 BY ADV. SRI.P.SANKARANKUTTY NAIR, SC, ESI CORPN THIS INSURANCE APPEAL HAVING BEEN FINALLY HEARD ON 07-08-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ## **B.KEMAL PASHA J.** - - - - - - - - - - - - - - - - - - - -- - - - Insurance Appeal No.58 of 2011 - - - - - - - - - - - - - - - - - - - -- - - - Dated this the 7[th] day of August, 2014 ## JUDGMENT A Co-operative Society registered under the Kerala Cooperative Societies' Act, has been running a factory, which according to the Employees State Insurance Corporation (for short 'E.S.I. Corporation') is covered under the Employees State Insurance Act (for short 'E.S.I. Act'). The said Co-operative Society challenged the coverage through I.C. No.21 of 1999 before the Employees Insurance Court, Kollam. The I.C. was dismissed and consequently the establishment filed Insurance Appeal No.51 of 2006 before this court, contending that the said establishment is one under the control of the Government of Kerala and therefore, it cannot be covered within the meaning of Section 1(4) of E.S.I. Act. Ins.Ap.58/11 2 It was also contended that the Secretary of the said Co-operative Society was drawing a higher salary than the prescribed limit for coverage, and therefore, he could not be considered as an employee within the meaning of the E.S.I. Act. The Insurance Appeal No.51 of 2006 was allowed in part and the matter was remitted to the E.I. Court, Kollam for deciding the aforesaid question afresh. Again, the E.I. Court, vide judgment dated 10.2.2011 dismissed the I.C. by finding that the Co-operative Society in question is not an establishment under the control of the Government of Kerala and further that the Secretary of the said Co-operative Society is an employee within the meaning of the E.S.I. Act. The applicant has come up in appeal. 2. Heard the learned counsel, Shri.R.Kishore, for the appellant and the learned standing counsel, Shri.R. Sandesh K. Raja, for the the E.S. I. Corporation. 3. The learned counsel for the appellant has pointed out that Ins.Ap.58/11 3 there is another welfare scheme as Kerala State Co-operative Employees Welfare Fund under which, the said Co-operative Society as such is covered, which provides similar benefits being provided by the the E.S. I. Corporation and therefore, Section 61 of the E.S.I. Act bars the employee from receiving any benefits from the said Welfare Fund. It is also argued that the Co-operative Society is one under the control of the Government of Kerala and therefore, the bar under Section 1(4) of the E.S.I. Act also will come into play. Regarding the secretary of the Co-operative Society, no further argument was forwarded as no other evidence to substantiate the contention that he was drawing a higher salary, which takes him out of the coverage, was adduced by the applicant before the court below. _Per contra,_ the learned standing counsel for the the E.S. I. Corporation has argued that the Co-operative Society is not one under the control of the Government of Kerala and therefore, the bar under Section 1(4) of the E.S.I. Act will not Ins.Ap.58/11 4 come into play. Regarding Section 61 of the E.S.I. Act, the learned standing counsel for the the E.S. I. Corporation has pointed out that the welfare fund scheme which provides some minor benefits to the employees after accepting a meagre contribution of `5/- or `10/-, are not providing benefits similar to the benefits being provided by the E.S.I. Act and therefore, the bar under section 61 will not come into play. 4. There is absolutely nothing to show that the Co-operative Society which is a separate entity is under the control of the Government of Kerala. Of course, it is true that there is supervision by the Registrar of co-operative societies in the case of a Co-operative Society. It is true that the Registrar of Co-operative Societies can control the functioning of a Co-operative Society. The Registrar of Co-operative Society is not the Government of Kerala. Therefore, it cannot be said that a Co-operative Society on which the Registrar of Co-operative Society has supervisory Ins.Ap.58/11 5 control, is an establishment under the control of the Government of Kerala. As far as the employees are concerned, the Government of Kerala has no say in the appointment to the Co-operative Society. The appointments are at the will and pleasure of the Management of the concerned Co-operative Society; of course, under the minimal control of the Registrar of the co-operative societies. Merely because of the fact that certain guidelines are there for the functioning of the Co-operative Society, or some welfare measures are prescribed for the employees of the Co-operative Society, it cannot be said that the Government has control over the Cooperative Society. The co-operative societies are not under the control of the Government within the meaning of Section 1(4) of the E.S.I. Act. 5. Regarding the application of Section 61 of the E.S.I. Act, the learned counsel for the appellant has invited the attention of this court to the so called welfare measures being enjoyed by the Ins.Ap.58/11 6 employees from the Kerala State Co-operative Employees Welfare Fund. Apart from some minor payments on certain specified occasions, it cannot be said that those benefits being enjoyed by the employees of the Co-operative Society under the Kerala State Co-operative Employees Welfare Fund, are benefits similar to those being provided by the the E.S. I. Corporation. The only inhibition under Section 61 of the E.S.I. Act is from availing similar benefits that are being given by the the E.S. I. Corporation. If any other welfare measures are formulated by the co-operative department or the Government, it cannot be said that it will create a bar under Section 61 of the E.S.I. Act. 6. Lastly, the learned counsel for the appellant has requested this court to pass an order limiting the recovery of contribution from the appellant Co-operative Society to the amount of contribution payable prospectively from this judgment. It seems that unnecessarily the matter has been prolonged and dragged on Ins.Ap.58/11 7 by the appellant Co-operative Society right from 1999 onwards. They should have stopped challenging the coverage even by the judgment of the court below, which was passed on 25.2.2006. They did not stop there. They came up with an appeal and the matter was remitted to the court below for deciding the aforesaid questions afresh. Again the court below has decided the said questions as against the appellant. This appeal is devoid of merits and there is absolutely nothing to interfere with the impugned judgment passed by the court below. 7. At the same time, it is a matter of serious heartburn that in case the appellant Co-operative Society is asked to pay contributions for the period up to 26.2.2006 also, there is every possibility of the Co-operative Society to crumble down. The establishment has to go on for the beneficial enjoyment of its employees to the fruits of the E.S.I. Act. The learned counsel for the appellant has invited the attention of this court to the decision Ins.Ap.58/11 8 in _**Employees' State Insurance Corporation and others v. Jardine**_ _**Henderson Staff Association and others** [2006(6) SCC 581]_ , wherein it was held: “The High Court was fully justified in passing the judicious impugned order after considering the equities by directing the employer and the employees to make ESIC contribution for the future and that they should not bear the liability for the past inasmuch as the employees of the respondents have not availed any medical facilities from ESIC and at the same time the employer was providing the medical facilities due to interim orders of the High Court. The order passed by the High Court meets the ends of justice and does not require interference by the Supreme Court under Article 136 of the Constitution.” 8. The learned standing counsel for the the E.S.I. Corporation has pointed out that it was a case wherein the association of the employees of the establishment concerned had challenged the coverage of contribution and in that case, the High Court took the view when they had not obtained any benefits from 9 Ins.Ap.58/11 the E.S. I. Corporation, the coverage could be prospective and contribution need be paid only prospectively from the date of judgment. It is true that this is not a case wherein the employees of the Co-operative Society have come forward with any such requests. At the same time, it is a fact that the establishment being a Co-operative Society may not be able to withstand on making the payment of contributions for the period at least up to 26.2.2006. Therefore, this court is of the view that the appellant Co-operative Society can be permitted to pay the contribution for the period from 26.2.2006 only, in order to safeguard the interests of the appellant Co-operative Society and its employees. The arrears of contribution shall be paid in installments within a period of 9 months from today. 9. It is made clear that the said benefit extended by this court to the present establishment, being a Co-operative Society, is only by considering the peculiar facts and circumstances of the Ins.Ap.58/11 10 present case, and this decision shall not be a precedent to any other case. This appeal is dismissed. No order as to costs. Sd/- **B.KEMAL PASHA** , JUDGE _dl_ _// TRUE COPY //_ _PA to Judge_