Moharir, J.
1. This Letters Patent Appeal is directed against the judgment and decree in First Appeal No. 4/77 decided by the learned Single Judge of this Court, confirming the dismissal of an applications made by the appellant, under Section 75(g) of the Employees State Insurance Act, seeking certain declarations.
2. The said application under Section 75(g) of the Employees State Insurance Act was filed by the appellant in the Court of Civil Judge, Junior Division, Hinganghat as the Employees State Insurance Court. The application came to be dismissed on 15.6.1976. The application was dismissed for want of prosecution. The applicant filed the First Appeal under Section 82(2) of the Employees State Insurance Act, the prayer being that the order of the lower court dated 15.6.1976, dismissing his application be set aside and the case be remanded to the said Court for a proper and fair adjudication according to law. In the First Appeal, however, the order passed was that the point which was involved in the said case, viz., whether persons employed by a contractor are employees within the meaning of Section 2(9) of the Employees State Insurance Act had been concluded by the decision of the Supreme Court reported in Royal Talkies v. Employees' State Insurance Corporation 1978 L.I.C. 1245 and therefore the appeal was dismissed. It is against that dismissal of the first appeal that the appeal in Letters Patent has come to be filed.
3. In the application being Miscellaneous Case No. 1/70, the present appellant Raisaheb Rekhchand Mohota, Spinning and Weaving Mills, Private Limited, Hinganghat district Wardha alleged that it had engaged the services of a certain contractor for transporting coal, required for running the mill, from the Railway Station siding to the site of the mills. The contractor had engaged a motor truck on hire for this purpose. With the, help of these trucks, coal was brought from the Railway siding to the Mills, naturally only when wagons were received at the Railway siding. This was not, therefore, a day to day work, nor was the volume of work so done a fixed one. The volume of work depended upon the number of wagons received and ft was limited only to the time taken for transportation from the Railway siding to the Mills. The contractor and his family members actually worked on the job. Even on an assumption that certain other labourers were engaged, for the duration of the required period, the said workers would not be employees of the Mill, within the meaning and the definition of 'employee' as given in Section 2(9) of the Act.
4. Inasmuch as the work of transporting coal was done through the contractor for a long time, no demand in respect of such workers was made upon the appellant, irrespective of the fact that the Mill was covered by the provisions of the Employees State Insurance Act long ago in May 1956. However, it was almost all of a sudden and for reasons best known to the non-applicant Employees State Insurance Corporation, that a demand came to be made upon the appellant, demanding from him payment of Rs. 240/- as the employer's special contribution and Rs. 220.32 Paise as the employees contribution, in all Rs. 460.32, for the period January 1968, to June, 1969. This was opposed, as the applicant further alleged, inasmuch as the computation and the demand so made did not indicate as to what was the basis of such computation with reference to the number of the employees, the period and the wages paid. Payments made by the appellant Mill to its transporting contractor were not wages. According to the appellant, these labourers who were engaged by the transporting contractor for unloading the coal from the wagons, loading it in the truck taking it to the premises of the Mill and then unloading it there, could not be considered as employees, they did not fall within the definition as given. This was for various reasons and under various facts and circumstances as set out in detail in para 6 of the application. In the circumstances, the Mill as the alleged employer has raised reasonable dispute before the Corporation. It's representations in that behalf were not heeded. The non-applicant Corporation thereupon took to coercive measures under Section 45-B for recovery of the contribution. The Mills was, therefore, in the absence of any other remedy open to it, compelled to file the side application under Section 75(g) of the Act.
5. The application was opposed by the Corporation. On 15.6.1976 on which date the application was to be heard i.e. on which date the evidence of parties in support of their contentions, particularly those of the appellant was to be recorded, an adjournment was sought on account of some difficulty. The application for adjournment was rejected and immediately thereafter the main application itself came to be dismissed, for want of prosecution as it is said.
6. It will, therefore, be appreciated that though in view of the several contentions raised by the non-applicant Corporation and several issues of facts came to be critically framed by the trial Court, no findings whatsoever came to be recorded.
7. It was, therefore, upon dismissal in a state of no finding on any issue of fact that the matter reached the High Court in First Appeal. Even so, on 20-6-1984, the learned Single Judge held without his own findings about these labourers being employees that the point as to whether the transport operator's labourers employees were covered by the definition of 'employees' as given in Section 2(9) of the Act had come to be covered and concluded by a decision of the Supreme Court in Royal Talkies v. Employees State Insurance Corporation 1978 LIC 1245, and therefore, the first appeal came to be dismissed, it must be said almost summarily.
8. At the hearing of this appeal today, we have given our anxious attention to the submissions of learned counsel Shri Puranik appearing for the appellant. His first submission is that, before the case of the transporting contractor's employees could be taken to fall within the definition of 'employees' vis-a-vis the appellant Mill as the employer, several findings of fact were required to be arrived at before it could be said that the liability of the appellant Mill to pay to the respondent-Employees State Insurance Corporation any contribution, such as the employer's special contribution or the employees general contribution could arise and be demanded to be discharged. In particular, the learned counsel pointed out that for covering the state of employment within Section 2(9) of the Act, in particular Sub-section (i) thereof, the employment had to be a direct one by the principal employer i.e. the present appellant Mill here. This was obviously not the case of the respondent Employees State Insurance Corporation. Further it is also pointed out by him that the work, for attracting the definition as given in Clause (ii) of Section 2(9), it was required that the employment should be on the premises of the establishment of the factory which was not the case of the respondent. The employment was further required to be under the supervision of the principal employer which was also not the case, as per the contentions of the appellant. Nor was it a case of being the work which was ordinarily a part of the work of the factory or which was the preliminary to the work carried out or incidental to the purpose or incidental to the performance of the factory. It was also required to be appreciated that any payment to the contractor had not been made by the appellant Mill by way of wages, nor was any employer's special contribution payable, nor was there any contract of employment as such between the appellant Mill and the said persons employed by the transporting contractor, if any, under law such persons could not be employees of the Corporation. Therefore, according to Shri Puranik, there were several questions of fact and following them several important questions of law which were raised in the appellant's application before the Employees State Insurance Court, which were required to be decided upon facts and evidence which could only be available upon evidence being recorded and to that opportunity of showing that the fact and circumstances on the basis of which the definition of the word 'employee' could apply to the present case was not available, was denied to the appellant. Similarly, it was pointed out by Shri Puranik that proceeding upon the assumption that the transporting contractor's employees were the employees of the appellant Mill, for the purpose of computation of the contribution required to be paid by the appellant Mill. Both as its special contribution as an employer and as and by way of the employee's contribution, there was no indication of what was the basis for such computation, it had not been ascertained as to what was the number of employees, what was the period for which they had been employed and what were the wages or the rate of wages at which they were paid.
9. Shri Masodkar appearing for the respondent, however,' pointed out that in the written statement filed by the Corporation before the Employees State Insurance Court, as to what was the basis for the computation had been elaborately explained, and therefore, material was available to the Court meaning of course the Court hearing the matter at the stage of the First Appeal, for coming to the conclusion that the decision in Royal Talkies case (supra) was fully applicable, upon the particular facts of the present case also. However we rightly noticed even from this written statement that the facts upon which the respondent Employees State Insurance Corporation has depended for the purpose of ascertainment of certain particulars regarding the rate of payment of wages or total payment of wages or the period etc., in that behalf, the dependence is upon what was presented by the transport contractor and not upon what was admitted by the present appellant Mill as the principal employer, vis-a-vis the transport contractor as the immediate employer. We are, therefore, satisfied that even on this premise, it was absolutely necessary that the nature and extent of the contribution which the appellant Mill was liable to pay to the Corporation was a question of fact which was required to be gone into by recording evidence of parties and in that behalf an opportunity had come to be only denied to the appellant Mill when it's application dated 15.6.1976 for an adjournment came to be rejected and the matter disposed of simply for want of prosecution.
10. Shri Masodkar has urged that according to him, there are no disputed questions of fact which are really required to be thrashed out by any enquiry and recording of evidence and that the substantial ones, upon which the liability of the appellant Mill has come to be determined, are virtually undisputedly or undisputed ones. This as we have pointed out earlier, does not appear to be correct, and therefore, proceeding rightly to apply the ratio of the decision in Royal Talkies case (supra) in our opinion an error is apparent on the face of record this apart from the submission of the learned advocate for the respondent that it had resulted into a gross miscarriage of justice. Even with reference to the said decision, it could be said in our opinion that determination of certain vital facts was necessary because it has been held in Royal Talkies that the reach and the range of the definition of employee in Section 2(9) is apparently wide, that it deliberately transcends pure contractual relationship and that unless the person employed qualifies under both the substantive parts for that definition, he would not be an 'employee'. Such a person as would be termed an employee had to be employed in or in connection with the work of the establishment, which expression ropes in a wide variety of workmen, who might not be employed in the establishment, but may be engaged only in connection with the work of the establishment. Secondly, merely being employed in connection with the work of an establishment did not, in itself entitle a person to be called an employee. He has also to be shown to be employed in one or the other of the three categories mentioned in Section 2(9). Further more according to us, it is also necessary that in addition to being shown that he falls in one or the other of the three categories, he must also be shown not to fall within the excluding part of the definition, viz., being a person whose wages did not exceed Rs. 1,000/- per month. It might of course be somewhat fair to assume that a worker might not exceed wages of Rs. 1,000/-per month. But this is expecting something, which is only hypothetical as being true on factual basis it cannot be so accepted. It cannot be so assumed, much less presumed in our opinion. Therefore, it did become necessary, in our opinion, that the entire factual aspect of the matter needed appreciation upon evidence to be led by parties, which did not happen in the trial Court, and therefore, in the absence of any such specific findings of fact on the basis of which the definition of employee as given in Section 2(9) of the Act would apply to the case of the transport workers' employees, it was not correct, with due respect to the learned Single Judge, to straightaway apply the ratio of the decision in Royal Talkies case. In the circumstances, we are satisfied that the decree as passed by the learned Single Judge, confirming the dismissal of the application under Section 75(g) made by the appellant would require to be set aside.
11. Further and though the decision in Royal Talkies case has been cited and relied upon by learned counsel Shri Masodkar for the respondent-Employees State Insurance Corporation, we find that even that decision spells out something, in favour of such a remand and that is as indicated in para 22 of the reported decision, from the angle of assessment of the quantum of the employer's contribution. The Supreme Court observed that the appellants there had made a statement that in the event of their legal contentions being negatived, they should be given the benefit of natural justice to which Their Lordships of the Supreme Court agreed, for the assessment of the quantum of the employers' contribution had come to be made on an ad hoc basis as is precisely the allegations and contentions raised by the appellant in para 3 of its application. The allegation was that it was 'pertinent to note that this computation or demand did not indicate the basis of computation with reference to the number of employees for each period and the wages paid to them. It is humbly submitted that such an ad hoc computation is illegal'. Their Lordships of the Supreme Court, therefore, observed that the assessment of quantum of employees' contribution was made on an ad hoc, because the employers had merely pleaded non-liability and had not made any returns. On the strength of Section 45-A, the contribution had in that case, come to be determined without any hearing. Therefore, Their Lordships of the Supreme Court considered it right to direct the relevant Corporation authorities to give a fresh hearing to the principal employer concerned. We consider it just and proper to apply the ratio and issue same directions in the present case also.
12. In the result, the First Appeal would have to be allowed on the premise that the liability to pay contribution, the employers special contribution and the employees general contribution both was fastened on the appellant Mill, without due determination of the issues involved in its application, without regard to the declarations which it had specifically claimed in the application, viz., that the work of transporting coal from the railway siding at Hinganghat was not a work of the factory, that it was not the work which was preliminary to the work carried on or incidental to the purpose of the factory. The other declaration claimed was that any person or persons that might have been or be engaged by the Coal Transporting contractor of the appellant Mill or neither the employees of the applicant Mill, nor their employment is an insurable employment. The third declaration was that no employees' contributions or the employer's special contributions are payable for the employees. If any engaged by the Coal transporting, contractor of the applicant. The claim of entitlement to such declarations was denied to the appellant Mill, by not granting to it the opportunity to establish the facts and circumstances warranting such entitlement the appeal would have, therefore, to be allowed.
13. This Letters Patent Appeal is allowed. The judgment and decree dated 20.6.1984 in First Appeal No. 4/77, confirming the order of dismissal dated 15.6.1976 in Miscellaneous Case No. 1/70 passed by the Civil Judge, Junior Division, Hinganghat, as the Employees State Insurance Court, Hinganghat, is hereby set aside.
14. The matter is now remanded to the said Employees State Insurance Court as the Court of first instance to rehear the matter on merits by giving opportunity to this appellant as the applicant mere to lead evidence on the issues as framed and such others as should appear necessary to be framed in view of the pleadings and then deciding the application in accordance with law. Parties are directed to appear in the said Court on 20.11.1989.
15. As a necessary to consequential relief, it is also directed further that the revenue recovery proceedings before the Tahsildar, Hinganghat, for recovery of the amount of contribution claimed by the respondent Corporation shall also stand quashed accordingly.
16. There shall be no order as to costs.