Oral Judgment:
1. On the basis of the inspection carried out in the establishment of the appellant on 25.10.1985, the appellant was called upon by the communication dated 22.01.1986 to remit the total contribution of Rs. 4447.50 under the Employee State Insurance Scheme in respect of honorarium at the rate of Rs.150/- per month paid to one Shri Shankarrao Padhye from April, 1984 to September, 1986 (Rs.474.90) and to Shri R.M.Aswale at the rate of Rs.350/- per month (Rs.6550.00) and daily wages paid to Choukidar for the period from April, 1985 to 24.09.1985 of Rs.29.75. The appellant replied to this communication stating that two persons namely Shri Shankarrao Padhye and Shri R.M.Aswale were not the employees but the members of the Society for rendering service to the appellant establishment.
2. The respondent passed an order under Section 45A of the Employees State Insurance Act (in short "the ESI Act") rejecting the contention and calling upon the appellant to pay Rs.4447.50 towards contribution and Rs.613.85 towards interest. The appellant preferred an application under Section 75(1) of the ESI Act before the Employee State Insurance Court challenging the recovery, which has been dismissed on 24.09.2004. The appellant is, therefore, before this Court.
3. On 11.04.2005, this Court passed an order admitting the matter and framed the following substantial questions of law;
(i) Whether Mazdoori Khata paid to staff for working during the lunch hours is wages within the meaning of Section 2(22) of the Employees' State Insurance Act, 1948?
(ii) Whether the honorarium paid to the elected secretaries is wages within the meaning of Section 2(22) of the Employees' State Insurance Act, 1948?
(iii) Whether the wages paid to Choukidar under Bhavan Suraksha Khata are wages within the meaning of Section 2(22) of the Employees' State Insurance Act, 1948?
(iv) Whether the wages paid for cotton, silk and woolen stitching to the tailors are wages within the meaning of Section 2(22) of the Employees' State Insurance Act, 1948?
Question No. (i)
4. In respect of the first substantial question of law, the ESI Court placed reliance upon the Majurikhata ledger which finds reference in the inspection report dated 22.01.1986. The inspection report does not give details of this Majurikhata. The inspector who prepared this inspection report has not entered the witness box to depose. The ESI Court has not referred to such ledger account. The demand on the basis of such inspection report was, therefore, totally unwarranted.
Question No. (ii)
5. So far as substantial question of law at Sr.No.(ii) is concerned, the burden of proof to establish relationship of employer and employee between the appellant and the two persons namely Shri Shankarrao Padhye and Shri R.M.Aswale, whose names appeared in the inspection report, was upon the respondent Corporation. There is absolutely no evidence on record to establish such relationship. Merely because they were being paid honorarium, that would not attract the contribution under the ESI Act. On the contrary, the aforesaid two persons were the members of the society and payment to them established the contract for service.
6. The learned counsel Smt. Maldhure appearing for the respondent Corporation has invited my attention to the definition of "wages" under Section 2(22) of the said Act, which speaks about the remuneration paid to the employees. She has also invited my attention to the decision of the Gauhati High Court in the case of Frontier Motor Car Co. (P) Ltd vrs. Regional Director, ESIC, Gauhati reported in 1992ILLJ828, wherein it has been held that the honorarium paid to the employee is also covered by the definition of "wages', which is construed to be wide. The proposition of law laid down in the said decision is not disputed and it would operate only in the event if the relationship of employer and employee is established. In the present case, as has already been held that the relationship of employer and employee between the appellant and two persons has not been established. Hence, the amount paid to them by way of honorarium cannot be called as wages within the meaning of Section 2(22) of the said Act.
Question No. (iii)
7. As to the third substantial question of law, it is not disputed before this Court that it was the case of the Choukidar employed by the appellant and hence, the liability to that extent would be attracted and the question as to whether he was terminated from service or was granted reinstatement would not have any material bearing on the liability of the appellant to pay the amount of contribution during the period when he was in employment. The fourth substantial question of law does not at all arise in the present case.
8. Since the question of payment of contribution in respect of the stitching by the tailors is already rejected in First Appeal No. 753 of 2004. For the same reasons, the appellant cannot be held liable to pay the contribution and the appellant would be entitled to refund to that extend also.
9. In the result, the appeal is partly allowed. The judgment and order dated 24.09.2004 passed by the Employees' State Insurance Court in Application (ESI) No. 4 of 1986 is hereby quashed and set aside only to the extent of payment of contribution under the ESI Act in respect of two persons namely Shri Shanarrao Padhye and Shri R.M.Aswale and on the basis of the ledger account, it is held that the appellant would be liable to pay the contribution in respect of choukidar. No order as to costs.
10. It is informed that the appellant has deposited some amount in the ESI Court. The ESI Court shall accordingly calculate the amount payable by the appellant on the basis of this judgment and refund the balance amount to the appellant along with interest, if any, accrued thereon. The amount payable in respect of choukidar in terms of this judgment shall be refunded to the respondent.