High Court of KeralaDivision Bench2012-06-26Appeal dismissed

Employees State Insurance Corporation v. V.K. Subran and others; MIL Controls Limited

Case / Petition Number:Ins.Appeal No. 31 of 2006

Neutral Citation:/

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: Pius C.Kuriakose
A.V.Ramakrishna Pillai
Judgment Date: 2012-06-26
Court Decision / Holding: Appeal dismissed. No costs.
Final Disposition: Appeal dismissed

Parties to the Case

Appellants / Petitioners

Employees State Insurance Corporation

Respondents

V.K.Subran
P.A.Chacko
N.T.Sasidharan
K.V.Mohanan
C.A.Shaju
A.Saiprasad
P.Pampavasan
P.V.Narayanan
P.R.Rajeev
V.G.Johny
Joseph Martin
Jaison Paul
K.A.Jerome
U.Ramachandran
K.Murali
M.L.Thomson
C.G.Joy
K.Praveed Paul
V.T.Dilip Kumar
Sabu George
C.O.Francis
R.Natesan Achary
V.V.Johny
M.K.Anil Kumar
M.Iyyappan
V.Selvaraj
R.T.Mahesh Kumar
G.Ramesh Kumar
T.B.Babu
A.R.John
N.A.Sagheer
K.V.Harikrishna Sharma
P.K.Suresh
V.V.Lalu
K.R.Sajeevan
MIL Controls Limited

Legal Representation & Advocates

Counsels for Petitioners

• Sri. T.V. Ajayakumar

Counsels for Respondents

• Sri. P. Ramakrishnan
• Sri. P.V. Lohithakshan
• Smt. P. Vijayamma
• Sri. V. Krishna Menon (for R36)
• Sri. Devidas U.K (for R? )

Case Synopsis & Summary

This is an appeal under Section 82(2) of the Employees State Insurance Act filed by the Employees’ State Insurance Corporation challenging a Palakkad Employees Insurance Court order which held that MIL Controls Ltd. employees were not liable to be covered under the ESI Act and that there was no liability to pay ESI contributions. The core issue is whether the monthly salary of the workers exceeded the wage ceiling of Rs. 7,500 as of April 1, 2004, in light of Ext. B4 which purportedly raised the ceiling to Rs. 7,500 from that date. On 1-4-2004 the salaries due were paid at Rs. 6,500, but Ext. B4 increased the ceiling to Rs. 7,500 from that date. The ESI Court rejected the appellant’s reliance on the proviso to section 2(9)(b) and on the wage-definition under section 2(22), holding that wages payable as on 1-4-2004 exceed Rs. 7,500 per month and thus the employees were not liable for coverage. It based its reasoning on a Supreme Court decision in Prantiya Vidhyut Mandal Mazdoor Federation v. Rajasthan State Electricity Board (1993) (1) LLJ 222. The Kerala High Court unanimously held that the ESI Court’s reasoning did not raise serious questions of law warranting reversal and dismissed the appeal with no costs. The case underscores the tension between wage ceilings and coverage under the ESI Act and affirms the lower court’s interpretation in light of the cited Supreme Court authority.

Provisions of Law Cited

Section 82(2) of the Employees State Insurance ActProviso to Section 2(9)(b) of the Employees State Insurance ActSection 2(22) of the Employees State Insurance Act

Submissions & Arguments

Contentions of Appellants / Petitioners

The appellant contends that the ESI Court erred in applying the proviso to Section 2(9)(b) and the wage-definition under Section 2(22). It submits that Ext. B4 raised the wage ceiling to Rs. 7,500 from 1-4-2004 and that the salary due for April 2004, though paid at Rs. 6,500 on that date, must be considered under Section 2(22) as wages payable, thus making the employees liable to contribute. The proviso to 2(9)(b) is argued to be triggered where wages due for April 2004 are already paid below the ceiling, and that the lower court’s reliance on the 1993 Supreme Court decision was misplaced. The ESIC urges that the wage-ceiling interpretation should lead to liability for contributions for the relevant period and that the cited decision ought not control this matter in the manner adopted by the ESI Court.

Contentions of Respondents

The respondents (employees) contend that Ext. B4’s effect from 1-4-2004 elevates the wage ceiling to Rs. 7,500, thereby excluding them from coverage under the ESI Act for the period in question. They rely on the ESI Act’s wage definition and the proviso to 2(9)(b) to argue that once the ceiling is raised, the salary payable on 1-4-2004 cannot attract coverage, even if some amounts were previously paid at a lower rate. They urge that the ESI Court’s approach, which culminated in not imposing coverage due to the higher wage ceiling, is consistent with the statutory framework and supported by the cited Supreme Court authority, and that there is no ground to overturn it on appeal.

Cited Precedents (1)

Case Name	Citation	Treatment	Explanation
Prantiya Vidhyut Mandal Mazdoor Federation v. Rajasthan State Electricity Board	1993 (1) LLJ 222	Positive	The ESI Court relied on this Supreme Court decision as authority for non-liability under the proviso to 2(9)(b), which the Kerala High Court accepted as foundational for the lower court’s reasoning.

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Extracted Judgment Text

Exact text extracted from official judgment records.

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE PIUS C.KURIAKOSE & THE HON'BLE MR. JUSTICE A.V.RAMAKRISHNA PILLAI TUESDAY, THE 26TH DAY OF JUNE 2012/5TH ASHADHA 1934 Ins.APP.No. 31 of 2006 ( ) -------------------------IC.43/2005 of ESI COURT, PALAKKAD APPELLANT(S)/APPELLANT/1ST OPPOSITE PARTY: ----------------------------------------- EMPLOYEES STATE INSURANCE CORPORATION, REPRESENTED BY ITS REGIONAL DIRECTOR, N.S.ROUND THRISSUR. BY ADV. SRI.T.V.AJAYAKUMAR RESPONDENT(S)/APPELLANTS/2ND OPPOSITE PARTY: -------------------------------------------- 1. V.K.SUBRAN, ROLL NO.2-227, MIL CONTROLS LTD., MELADOOR THRISSUR. 2. P.A.CHACKO, ROLL NO.2-255, MIL CONTROLS LTD., MELADOOR THRISSUR. 3. N.T.SASIDHARAN, ROLL NO.2-258, MIL CONTROLS LTD., MELADOOR THRISSUR. 4. K.V.MOHANAN, ROLL NO.2-271, MIL CONTROLS LTD., MELADOOR THRISSUR. 5. C.A.SHAJU, ROLL NO.2-272, MIL CONTROLS LTD., MELADOOR THRISSUR. 6. A.SAIPRASAD, ROLL NO.2-276, MIL CONTROLS LTD., MELADOOR THRISSUR. 7. P.PAMPAVASAN, ROLL NO.2-227, MIL CONTROLS LTD., MELADOOR THRISSUR. 8. P.V.NARAYANAN, ROLL NO.2-279, MIL CONTROLS LTD., MELADOOR THRISSUR. 9. P.R.RAJEEV, ROLL NO.2-280, MIL CONTROLS LTD., MELADOOR THRISSUR. 10. V.G.JOHNY, ROLL NO.2-281, MIL CONTROLS LTD., MELADOOR THRISSUR. 11. JOSEPH MARTIN, ROLL NO.2-282, MIL CONTROLS LTD., MELADOOR THRISSUR. 12. JAISON PAUL, ROLL NO.2-294, MIL CONTROLS LTD., MELADOOR THRISSUR. 13. K.A.JEROME, ROLL NO.2-285, MIL CONTROLS LTD., MELADOOR THRISSUR. 14. U.RAMACHANDRAN, ROLL NO.2-287, MIL CONTROLS LTD., MELADOOR THRISSUR. 15. K.MURALI, ROLL NO.2-288, MIL CONTROLS LTD., MELADOOR THRISSUR. 16. M.L.THOMSON, ROLL NO.2-289, MIL CONTROLS LTD., MELADOOR THRISSUR. 17. C.G.JOY, ROLL NO.2-290, MIL CONTROLS LTD., MELADOOR THRISSUR. 18. K.PRAVEED PAUL, ROLL NO.2-292, MIL CONTROLS LTD., MELADOOR THRISSUR. 19. V.T.DILIP KUMAR, ROLL NO.2-293, MIL CONTROLS LTD., MELADOOR THRISSUR. 20. SABU GEORGE, ROLL NO.2-295, MIL CONTROLS LTD., MELADOOR THRISSUR. 21. C.O.FRANCIS, ROLL NO.2-296, MIL CONTROLS LTD., MELADOOR THRISSUR. 22. R.NATESAN ACHARY, ROLL NO.2-298, MIL CONTROLS LTD., MELADOOR THRISSUR. 23. V.V.JOHNY, ROLL NO.2-299, MIL CONTROLS LTD., MELADOOR THRISSUR. 24. M.K.ANIL KUMAR, ROLL NO.2-300, MIL CONTROLS LTD., MELADOOR THRISSUR. 25. M.IYYAPPAN, ROLL NO.2-302, MIL CONTROLS LTD., MELADOOR THRISSUR. 26. V.SELVARAJ, ROLL NO.2-303, MIL CONTROLS LTD., MELADOOR THRISSUR. 27. R.T.MAHESH KUMAR, ROLL NO.2-304, MIL CONTROLS LTD., MELADOOR THRISSUR. 28. G.RAMESH KUMAR, ROLL NO.2-306, MIL CONTROLS LTD., MELADOOR THRISSUR. 29. T.B.BABU, ROLL NO.2-308, MIL CONTROLS LTD., MELADOOR THRISSUR. 30. A.R.JOHN, ROLL NO.2-309, MIL CONTROLS LTD., MELADOOR THRISSUR. 31. N.A.SAGHEER, ROLL NO.2-310, MIL CONTROLS LTD., MELADOOR THRISSUR. 32. K.V.HARIKRISHNA SHARMA, ROLL NO.2-311, MIL CONTROLS LTD., MELADOOR THRISSUR. 33. P.K.SURESH, ROLL NO.2-312, MIL CONTROLS LTD., MELADOOR THRISSUR. 34. V.V.LALU, ROLL NO.2-313, MIL CONTROLS LTD., MELADOOR THRISSUR. 35. K.R.SAJEEVAN, ROLL NO.2-314, MIL CONTROLS LTD., MELADOOR THRISSUR. 36. MIL CONTROLS LIMITED, POST BOX NO.4, HOSPITAL JUNCTION, ALUVA. BY ADV. SRI.P.RAMAKRISHNAN BY ADV. SRI.P.RAMAKRISHNAN(R1,R2,R5 TO R14,R16 TO R19,R21-35) BY ADV. SRI.P.V.LOHITHAKSHAN BY ADV. SMT.P.VIJAYAMMA BY ADV. SRI.V.KRISHNA MENON (R36) BY ADV. SRI.DEVIDAS.U.K THIS INSURANCE APPEALS HAVING BEEN FINALLY HEARD ON 26-062012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ## **PIUS C.KURIAKOSE & A.V.RAMAKRISHNA PILLAI JJ. -----------------------Ins.Appeal. NO. 31 OF 2006 ------------------------** Dated this the 26[th] day of June, 2012 ## **JUDGMENT** ## Pius C.Kuriakose,J This appeal under Section 82(2) of the Employees State Insurance Act has been filed by the E.S.I. Corporation challenging the order passed by the Employees Insurance Court, Palakkad, allowing the application filed by the employees of the MIL Controls Limited, declaring that they are not liable to be covered under the provisions of the ESI Act and there is no liability for them to pay any contribution. 2. The bone of contention between the parties before the ESI Court was whether the salary of the employees exceeded Rs.7,500/-. The due date was 1-4-2004. The salary due to all these employees were actually paid on that day at the rate of Rs.6,500/-. However, the employees claimed exclusion from coverage on the basis of Ext.B4 under which the salary was Ins. Appeal No. 31 /2006 2 increased to Rs.7,500/- with effect from 1-4-2004. The ESI Court repelled the contentions raised by the appellant Corporation based on the proviso to section 2(9) (b) that if the salary due for the month of April 2004 is already paid at the rate below Rs.7500/- the employees will be liable for coverage, by resorting to section 2(22) of the Act which defines wages as wages actually paid or payable. The court took the view that due to the implementation of Ext.B4, the wages payable to the employees as on 1-4-2004 exceeds Rs.7500/- per month and hence they were not liable for coverage. For taking such a view, the learned court relied on the judgment of the Supreme Court in **Prantiya Vidhyut Mandal Mazdoor Federation v. Rajastan State Electricity Board (1993 (1) LLJ 222).** 3.Following are the substantial questions of law which arises for decision by us in this appeal according to the appellant. ; i). Whether the aforesaid findings and order of the learned E.I.Court are not perverse and illegal. ii). When the respondent employees were Ins. Appeal No. 31 /2006 3 liable to pay and have actually paid the E.S.I. contributions due for the month of April 2004. are they not liable to continue the payment of E.S.I. contributions till the end of that contribution period despite the exceeding of their wage ceiling limit in the meanwhile in view of the aforesaid proviso to Section 2 (9) of the E.S.I. Act ? (iii). Whether finding of the learned E.I. court that as far as the E.S.I. contribution is concerned, the point to be considered is what was their wages paid or payable for the month of April 2004 (only) in the instant case, is not violative of the provisions of the E.S.I Act, particularly of the proviso to section 2 (9) of the E.S.I.Act? 4. We are of the view that in view of the reasoning adopted by the ESI Court on the basis of the decision in Prantiya Vidhyut Mandal Mazdoor Federation (cited supra), the Ins. Appeal No. 31 /2006 4 above questions of law do not seriously arise in this appeal. If at all they arose, that can be answered only against the appellant Corporation. The appeal will stand dismissed. No costs. ## **Sd/PIUS C.KURIAKOSE, JUDGE** **Sd/A.V.RAMAKRISHNA PILLAI, JUDGE.** dpk /True copy/ P.A to Judge. Ins. Appeal No. 31 /2006 5