## **IN THE HIGH COURT OF KERALA AT ERNAKULAM**
**PRESENT :**
**THE HONOURABLE MR. JUSTICE M.N.KRISHNAN**
**WEDNESDAY, THE 26TH NOVEMBER 2008 / 5TH AGRAHAYANA 1930**
**Ins.APP.No. 30 of 2005(A)**
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**IC.68/2002 of ESI COURT, PALAKKAD**
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**APPELLANT/OPPOSITE PARTY:**
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**REGIONAL DIRECTOR, EMPLOYEES STATE INSURANCE CORPORATION, THRISSUR.**
**BY ADV. SRI.T.V.AJAYAKUMAR**
**RESPONDENT(S): APPLICANT:**
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**K.K.UNNIKRISHNAN, JOB CONTRACTOR, COCO R.O, PETROL PUMP, KANJIKODE, PALAKKAD.**
**ADV. SRI.U.K.RAMAKRISHNAN (AMICUS CURIE)**
**THIS INSURANCE APPEALS HAVING BEEN FINALLY HEARD ON 26/11/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:**
_Kss_
## **M.N.KRISHNAN, J**
## **===================== INAP No.30 OF 2005**
## **=====================**
**Dated this the 26th day of November 2008**
## **JUDGMENT**
This appeal arises out of the order of the Employees' Insurance Court, Palakkad in I.C.No.68 of 2002. It was an application filed by the job contractor of the petrol pump contending that he cannot be considered as a principal employer for the purpose of E.S.I.Act and therefore he is not liable to comply with the provisions of the said Act. The ESI Corporation objected to the same on the ground that he will become the principal employer by virtue of the fact that he is either the owner, occupier or the managing agent of the owner or occupier by virtue of which he will acquire status of a principal employer. After considering the entire materials the E.I.Court came to the conclusion that he cannot be considered as a principal employer and therefore set aside the proceedings. It is against that decision, the Corporation has come up in appeal. The following substantial questions of law are raised in this appeal, which reads as follows:
“(i)Whether the finding of the learned E.I.Court that the Indian Oil Corporation the principal employer in relation to the retail outlet concerned in this case and the respondent cannot be treated as a principal employer
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under any of the categories mentioned in Sec.2(17) of the E.S.IAct are not unsustainable in law.
(ii) Whether the licencee who has been granted licencee to conduct the retail outlet would not come within the definition of principal employer under Section 2(17) of the E.S.I Act especially in view of the ruling of the Hon'ble Supreme Court reported in 2003 10 SCC 303”.
2. The points that arise for determination in the appeal are whether a job contractor, who is functioning or conducting a petrol pump under specific terms of the agreement can be classified as a principal employer for the purpose of the E.S.I.Act. It is profitable to refer to the definition of principal employer as defined in Section 2(17) of the Employees State Insurance Act. For our purpose, it is sufficient to understand that a principal employer means “in a factory, the owner or occupier of the factory and includes the managing agent of such owner or occupier, the legal representative of a deceased owner or occupier and where a person has been named as the manager of the factory under the Factories Act, the person so named”. If the applicant before the court below comes within the 4 corners of any of these certainly he can be called as a principal employer for the purpose of this Act. It is also to be stated that a reference is necessary to the document executed by the Indian Oil Corporation appointing this man as the job contractor. The caption itself would show that the operation of COCO
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Retail Outlet at Kanjikode, Palakkad District is on job contract basis. The terms of the said letter would reveal that the appointment as a job contractor is on a temporary basis and he shall operate the outlet of the Indian Oil Corporation only in the name of the Corporation and shall not operate the same under the name and style of him or under any other name. It is also specifically stated that the arrangement of the appointment is only as a job contractor on adhoc and temporary basis. It is also stipulated in paragraph 6 that only mere leave and permission to enter upon the site for the purpose of conducting retail outlet business is granted and it shall be deemed to be in the possession of the Corporation, one or more representatives of the Corporation shall always have the right to be in the outlet premises. It is further classified that the status of the person will be that of a licencee and he shall have no right or interest over the retail outlet premises. It is specifically reiterated in clause 9 that the term of appointment is only as a job contractor. In order to become a principal employer one must be either owner or occupier of the factory. There cannot be any dispute that he is not the owner of the premises. Then the question is whether he will become an occupier. Occupier in the widest connotation means a person who occupies. But the word 'occupier' has got relevance because his occupation must be on a legal right to occupy. An occupier means a person who has got control
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over the premises and possession over the premises. Here is a case where the permission, that is granted to the person is only to have entry into the premises for the limited purpose of conducting the petrol outlet business. It is also to be stated that a reading of the entire conditions imposed upon by the Indian Oil Corporation would indicate that they are in control of the entire area with possessory right and the mere right to use the premises for a particular purpose is seen granted to this person. Such a person in an ordinary parlance cannot be called as an occupier for the legal purpose of arriving at a finding on the question of principal employer. Similarly now the next question will be whether he is a managing agent. A managing agent must be a person who must be employed as an agent. Admittedly the applicant before the court below is not employed as an agent or a managing agent. His status is only that of a mere licencee.
3.It has to be stated that a licencee's right is a limited right and it is only permissive occupation without any legal right attached to the same. On the contrary, when one is a lessee, even as per the definition, there is a transfer of interest in the property which creates a right in the person to occupy on the basis of the right conferred on him as a lessee, but whereas a licencee is a person who is merely in permissive occupation or possession at the whims and fancies of the person granting the license. So there is an
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ocean of difference between the right attached to a lessee and a licencee. A Division Bench of this Court in the decision reported in Thomas K.C. v. Regional Director, ESI Corporation(1998(2) LLJ 166) had the opportunity to deal with the question of a principal employer and immediate employer.
It was held in that case that “it observed that the principal employer continued to be the occupier of the factory despite the fact that persons were employed through an immediate employer. A 'contractor' would come within the term “immediate employer”. But in the case of a lease, as in the present case the position was different. The right to run the factory was transferred to the lessee who therefore got a proprietory right in the property, viz., factory, and he would be the occupier of the factory”. According to the Division Bench, a contractor would not come within the ambit of a principal employer but would be only an immediate employer as contemplated under the Act.
4.Learned counsel for the Corporation had invited my attention to a decision of the Apex Court reported in Anitha v. ESI Corporation(2003(3) KLT 813(SC). It was a case relating to a toddy shop and there while analysing the question of license, the Apex Court arrived at a decision holding that the rules and regulations of the Abkari Act deals with a situation where the Government under the Rules and Regulations have got
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only a power of the regulatory nature whereas the person who bids in auction will have all the right and there cannot be any interference even by the Government in the conduct of the business. In such a situation, it was held that the licencee therein can be considered as a principal employer. But on going through the strict terms and conditions incorporated in Ext.A3 which is the letter issued by the Indian Oil Corporation to the applicant it is very clear that his appointment is merely as a job contractor with limited right of entering the premises for the purpose of conducting the outlet business and even therein the Corporation has reserved the right of its employees to enter the premises for the purpose of control and supervision. In the case on hand, it has to be held that the nature of employment as specifically seen from Ext.A3 itself, is that of a job contractor. Or in other words, as held by the Division Bench it can be only the status of an immediate employer and nothing else. Learned counsel for the Corporation would contend that the court has entered into a finding that the Indian Oil Corporation is the principal employer. It can be only taken as an incidental reference for the reason that without hearing the Corporation, one cannot attribute a particular status on them. But, for the limited purpose of understanding the terms of employment and implications I hold that the status of the present applicant can be at the most be that of an immediate
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employer and not a principal employer.
So from these discussions, I find that the finding arrived at by the court below does not call for any interference. Therefore the appeal lacks merit and the same is dismissed.
## **M.N.KRISHNAN, JUDGE**
## **Cdp/-**
