A. Lekshmikutty, J.
1. The first opposite party filed this appeal against the judgment in I.C. No. 61/1992 on the file of the Insurance Court, Alappuzha. The respondent a covered establishment under the E.S.I. Act filed an application before the learned Insurance Court challenging the assessment and recovery proceedings initiated by the appellant for recovery of a sum of Rs. 14,167/- towards contribution and Rs. 1,416/- towards interest. The amount sought to be recovered is with respect to the E.S.I, contribution payable for an amount of Rs. 2,03,681.99 paid as handling charges and sundry charges during the period from 1984 to 1987. The respondent contended that Pune Regional Office within the jurisdiction concerned works were done was closed in March 1986 and the distribution works were entrusted to Ware Housing Corporation of Maharashtra and the claim of the appellant is barred by limitation prescribed in Section 77 of the E.S.I. Act. The court below accepted the contention of the respondent and found that recovery proceedings initiated by the appellant is unsustainable and substantial portion of the demand is clearly barred under Section 77 of the E.S.I. Act: Against the said judgment, this appeal is filed by the opposite party.
2. The specific case of the respondent is that during the period of 1984 to 1987 the company had stocked and issued fertilisers in Pune region either by utilising the godowns of the Ware Housing Corporation or from the rail heads directly and all the employees of Pune regional office had been covered under the E.S.I. Act. So from the admission of the respondent itself it can be seen that the entire stock and distribution work were entrusted to the local Warehousing Corporation and the payments were made by them. The respondent was acovered establishment under the E.S.I. Act is not disputed. According to the respondent, Pune regional office was closed in March 1986 and the distribution works were entrusted to the Warehousing Corporation, Maharashtra. So it can be seen that they have not stopped the distribution works, but it was entrusted to the Warehousing Corporation. The wages were also paid by the respondent to the workers. It is clear from the evidence adduced in this case that the workers were engaged by the Warehousing Corporation of Maharashtra in connection with the work of the establishment of the respondent. The workers were doing loading and unloading works entrusted by the Warehousing Corporation. So they are employees of the respondent under the Employees State Insurance Act.
3. PW. 1 is the Assistant Finance Manager of FACT now working at Hyderabad. He has deposed that during 1987-88 he was the Accounting Officer at Pune and that in respect of 10 employees of FACT at Pune depots, contributions were paid because they were already under coverage of the E.S.I, scheme. The depots were closed in the year 1986. After the closing of that depot stocks were entrusted to the Warehousing Corporation. Payment for the work done by the Warehousing Corporation were on the basis of bills submitted by them and payments were made only to the Warehousing Corporation and not to any of the employees under them. PW.2 is the Deputy Chief Agronomist of FACT. As per his evidence he was working in the Pune region during the period from 1977 to 1986. The Regional office at Pune was closed in the year 1986. Both Central depots under Pune Regional office were closed in the year 1986. Such closure was after the transfer of all the employees working there. Ext.P3 is the orders of transfer and Ext.P4 is the closure notice of Pune Regional office. It is clear from the evidence of PWs.1 and 2 that even if the Pune Regional office was closed, the stocks were entrusted to the Warehousing Corporation and it was kept in the premises of Warehousing Corporation. Ext.Dl is the report submitted by DW.1, the E.S.I. Inspector attached to local office, Kalamassery. He had verified the ledgers kept in the Head office, Udyogamandal regarding the Pune regional office. He has reported that during the year 1986-87 towards handling charges and sundry charges more than 2 lakhs rupees was paid by the applicant.
4. It is clear from the evidence that even after the closure of the Pune Regional Office, the appellant has paid more than Rs. 2 lakhs as sundry charges. So the premises of the Warehousing Corporation is to be treated as the godown of the respondent and the Warehousing Corporation is the immediate employer. The finding of the court below that after closure of the Depot, there was no direct payments by the respondent to the workers is not a ground to exclude them from payment of contribution. Therefore it is to be found that the applicant is the principal employer and the Warehousing Corporation was the immediate employer. Therefore, they are liable to pay contribution as per Section 2(9) of the Act. Section 2(9) of the Employees State Insurance Act defines 'employee' to mean any person employed for wages in or in connection with the work of a factory or establishment to which the Act applies. Clause (ii) envisages that they need not necessarily be directly employed by the employer. Those who are employed by or though an immediate employer on the premises of the factory or establishment or under the supervision of the principal employer or his agent on work which is ordinarily part of the work of the factory or establishment or which is preliminary to the work carried on in or incidental to the purpose of the factory or establishment is an 'employee' within the meaning of Section 2(9) of the Act. So even if the work is done in the premises of the Warehousing Corporation, the said Corporation is the immediate employer of the respondent. In such circumstances it is to be found that the employees who are doing work at the instance of the Warehousing Corporation are the 'employees' within the meaning of Section 2(9) of the Act. Therefore, the finding of the court below that the respondentestablishmentis not liable to pay contribution to the workersisnot correct.
5. The next question to be considered is whether the claim is barred by limitation. The order of assessment was passed by the appellant as per Ext.Pl dated 30.4.1992. It is stated that it relates to the period from 1984 to 1987. As per the lower court, since the assessment was made after inspection on 10.1.1991, a substantial part of the claim is barred by limitation in view of the provisions contained in Section 77 of the E.S.I. Act. The proviso to Section 77 says that no claim shall be made by the Corporation after five years of the period to which the claim relates. Therefore, according to the learned Insurance Court, the claim for the period upto 8.5.2001 was clearly barred by limitation. This finding of the court below also is not correct. The cause of action in respect of a claim by the Corporation from the principal employer arises on the date on which the Corporation makes the claim and not on the date on which the contribution becomes due. The provisions of Sections 45-B, 75 and 77 as they stood prior to amendment of the Act by the Amendment Act 28 of 1989 reveals that the cause of action for contribution would arise only after the decision by the Insurance Court in the proceedings is laid under Section 75 of the Act. Until then the cause of action cannot be said to have arisen. Thus there is no bar of limitation for the payment of the contribution as found by the court below. The demand was made only after Ext.P1 dated 30.4.1992. So the said finding of the court below is liable to be set aside. Thus the order under challenge is set aside and the Miscellaneous First Appeal is allowed.