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TMI Blog2019 (2) TMI 2127X X X X Extracts X X X X X X X X Extracts X X X X ..... on with reference to the wages paid to some of its employees. However, in an inspection carried out by the Appellant-Employees' State Insurance Corporation ('the Corporation'), it was observed that the respondent-Company had not made the contribution in respect of the remuneration paid to the Directors. There had been exchange of communications in regard to the liability of the respondent-Company and ultimately, by the order dated 06.04.2005, the Deputy Director of the appellant-Corporation called upon the respondent to make payment of contribution in relation to the remuneration paid to the Directors. Such a demand was questioned by the respondent-Company by way of an application under Section 75 of the ESI Act (Case No. 171 of 2005) that was considered and decided by the Employees State Insurance Court at Indore ('the ESI Court') by its order dated 24.12.2005. 4. The ESI Court noted that both the parties had not adduced any evidence and sought disposal of the case only on the basis of arguments. The parties referred to a few citations but in essence, both the parties relied upon the decision of this Court in the case of Employees' State Insurance Corporat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the ESI Act and dismissed the appeal with the following observations:- "10. On due consideration of the aforesaid and in view of the law laid down by the Bombay High Court, I am of the view that the Directors of the respondent establishment does not come within the purview of the employee as defined under section 2(9) of the ESI Act. The learned court has not committed any legal error in setting aside the order dated 06.04.2005" 6. Assailing the judgment aforesaid, learned counsel for the appellant-Corporation, while strongly relying on the decision of this Court in Employees' State Insurance Corporation Vs. Apex Engineering Pvt. Ltd.: (1998) 1 SCC 86, has argued that if remuneration is paid to a person who satisfies the definition of "employee" as per Section 2(9) of the ESI Act for discharge of the work assigned to him, such remuneration would be covered under the definition of "wages" as per Section 2 (22) of the ESI Act and, therefore, necessary contribution for that employee is to be paid. Learned counsel has also relied upon the decision in Saraswath Films Vs. Regional Director, Employees' State Insurance Corporation, Trichur: 2010(11) SCC 553. Per contra, learned C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ork connected with the administration of the factory or establishment or any part, department or branch thereof or with the purchase of raw materials for, or the distribution or sale of the products of, the factory or establishment, or any person engaged as apprentice, not being an apprentice engaged under the Apprentices Act, 1961 (52 of 1961), [and includes such person engaged as apprentice whose training period is extended to any length of time] Note: the expressions in parenthesis were substituted by Act No. 18 of 2010 w.e.f. 01.06.2010 in place of the expressions "or under the standing orders of the establishment". but does not include- (a) any member of the Indian naval, military or air forces; or (b) any person so employed whose wages (excluding remuneration for overtime work) exceed such wages as may be prescribed by the Central Government a month: Provided that an employee whose wages (excluding remuneration for overtime work) exceed such wages as may be prescribed by the Central Government at any time after (and not before) the beginning of the contribution period, shall continue to be an employee until the end of that period;" 9. The expression "wages" is defi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clear to us that in this case the security guards come within the purview of the expression "employee" as defined in Section 2(9) of the Act. " 11. In the case of Apex Engineering (supra), the Board of Directors of respondent-Company resolved to elect one of its Directors as Managing Director of the Company and to grant him annual remuneration of Rs. 12,000/- for rendering services as Managing Director. The question was as to whether the said Managing Director was an "employee" within the meaning of Section 2(9) of the ESI Act? Though the High Court and the ESI Court had answered this question against the Corporation, but this Court allowed the appeal and, inter alia, held that the Managing Director, even when to be treated as principal employer, could also be an employee and could carry such dual capacity. This Court said,- "8. But even assuming that the High Court was right that Shri Dhanwate could be said to be principal employer there is nothing in the Act to indicate that a managing director being the principal employer cannot also be an employee. In other words he can have dual capacity...." This Court also approved the interpretation of relevant provisions of the ESI A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is noticed that in the present case, the appellant-Corporation in its impugned order dated 06.04.2005 specifically asserted that the Directors of the Company were paid remuneration at the rate of Rs. 3,000/- p.m. and they were falling within the definition of "employee" under the ESI Act and hence, contribution was payable in regard to the amount paid to them. Interestingly, even while seeking to challenge the aforesaid order dated 06.04.2005 by way of proceedings under Section 75 of the ESI Act, the respondent-Company chose not to lead any evidence before the Court. Hence, there was nothing on record to displace the facts asserted on behalf of the appellant-Corporation in its order dated 06.04.2005; rather the factual assertions in the said order remained uncontroverted. The order dated 06.04.2005 had been questioned by the respondent-Company only on the contention that the Directors do not fall within the category of "employee" but no attempt was made to show as to how and why the remuneration paid to its Directors would not fall within the purview of "wages" as per the meaning assigned by sub-section (22) of Section 2 of the ESI Act? 14. The ESI Court cursorily attempted to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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