ESIC Notification - Supreme Court Judgements
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ESIC Notification - Supreme Court Judgements

A Adhikari Started The Discussion:

My question is

Whether Manufacturing Job Work Charges attracts ESI contribution for employer ? If so, is there any notification as to from which date it is applicable ? If ther is any Supreme Court Judgements on that ?

SUSHMA RAWAT - Member Since: Sep 2007
Hi

ESI Contribution on outsourcing and Job Contractor doing work for the Principal Employer outside the premises of the factory not attracts the ESI Cont. since they are not the employee of the principal employer.
I am quoting various judgments of the Hon’ble High Court and Supreme Court of India as under wherein it has been emphatically stated that employers of Outside Agencies / Job Contractor are not employees of the Principal Employer and no ESI Contribution is payable. The Hon’ble Karnataka High Court and the Hon’ble Supreme Court of India has clearly stated the Section 2(13) of the ESI Act is not applicable to Outsourcing Agencies / Job Contractors and as such they are Independent legal entities and there is no provision under the ESI Act to club two different Independent employers for coverage. Under the constitution of India Judiciary is an independent part of the constitution and it is mandatory for the executive body to abide by the judgments of the Hon’ble High Courts and particularly the judgments of the Hon’bel Supreme Court of India.

KARNATAKA HIGH COURT
M.F.A. No. -1089/2001 (ESI)
H’ble Mr. H. BILLAPPA, J.
Decided on 15.07.2006
ESIC Vs. J.M.D Fashions
Cont..2…

-2-

SUPUREME COURT OF INDIA
Record of Proceeding
M.F.A No. -1089/1001 (ESI)
Vs. J.M.D Fashions
Order
Delay condoned
The special Leave petition is dismissed

DELHI HIGH COURT
H’ble Mr. Shiv Narayan Dhingra, J
2007 LLR 350
W.P © NO. 7984/2004
Decided on 18.10.2006
RPFC
Vs.
EPF Appellate Tribunal & Ors.

MADYA PRADESH HIGH COURT
H’ble Mr. A.K. Shrivastava, J
Misc. Appeal No. 763 of 2003
Decided on 13.03.2007
National India Rubber Works Ltd
Vs.
ESIC

MADRAS HIGH COURT
C.M.A (NPD) NO. 1765 OF 1999
Decided on 27.07.2007
E.SI. Corporation
Vs.
Bethall Engineering Company

SUSHMA RAWAT - Member Since: Sep 2007
Hi

ESI Contribution on outsourcing and Job Contractor doing work for the Principal Employer outside the premises of the factory not attracts the ESI Cont. since they are not the employee of the principal employer.
I am quoting various judgments of the Hon’ble High Court and Supreme Court of India as under wherein it has been emphatically stated that employers of Outside Agencies / Job Contractor are not employees of the Principal Employer and no ESI Contribution is payable. The Hon’ble Karnataka High Court and the Hon’ble Supreme Court of India has clearly stated the Section 2(13) of the ESI Act is not applicable to Outsourcing Agencies / Job Contractors and as such they are Independent legal entities and there is no provision under the ESI Act to club two different Independent employers for coverage. Under the constitution of India Judiciary is an independent part of the constitution and it is mandatory for the executive body to abide by the judgments of the Hon’ble High Courts and particularly the judgments of the Hon’bel Supreme Court of India. You can find the copy of judgement through the official sites of the below mentioned courts.

KARNATAKA HIGH COURT
M.F.A. No. -1089/2001 (ESI)
H’ble Mr. H. BILLAPPA, J.
Decided on 15.07.2006
ESIC Vs. J.M.D Fashions
Cont..2…

-2-

SUPUREME COURT OF INDIA
Record of Proceeding
M.F.A No. -1089/1001 (ESI)
Vs. J.M.D Fashions
Order
Delay condoned
The special Leave petition is dismissed

DELHI HIGH COURT
H’ble Mr. Shiv Narayan Dhingra, J
2007 LLR 350
W.P © NO. 7984/2004
Decided on 18.10.2006
RPFC
Vs.
EPF Appellate Tribunal & Ors.

MADYA PRADESH HIGH COURT
H’ble Mr. A.K. Shrivastava, J
Misc. Appeal No. 763 of 2003
Decided on 13.03.2007
National India Rubber Works Ltd
Vs.
ESIC

MADRAS HIGH COURT
C.M.A (NPD) NO. 1765 OF 1999
Decided on 27.07.2007
E.SI. Corporation
Vs.
Bethall Engineering Company

And for your reference I am also giving you the circular regarding this.


Respected Members

We feel pleasure to announce that the ESI Authorities at Head Quarter, Kotla Road, New Delhi-110001 has agreed to implement the judgments of the Hon’ble High Court and Hon’ble Supreme Court of India for not claiming ESI contribution on job work got done by outsourcing agencies and independent contractors doing work for the principal employer outside the premises. We also thank to Sh. Mangat Ram Singhal, Minister of Industries and Labour N.C.T Delhi who was kind enough to take up the matter with the Director General on our behalf and convinced the Director General and high official of the ESI Corporation for implementation of the judgments the Hon’ble High Court and Hon’ble Supreme Court of India that ESI Contribution is not payable by the principal employer for the work executed by outside agencies/ Labour Contractor. It has been reliably learned that ESI authorities at Kotla Road have instructed the Regional Directors not to proceed with claiming contribution as stated above. However final notification from the ESI Head Quarter is expected soon. We will appraise further developments shortly.

We thank our Labour Law Advisor Sh. R.C. Malhotra- Ex Officer of ESI Corporation for his cooperation / knowledge for drafting all correspondence on our behalf with the higher authorities.

With Regards

Yours Sincerely

H.D. Joshi
Hony. General Secretary

I am also attaching herewith the Judgement of the Hon'ble High Court of Madars and a circular received by me only yesterday. But I m not able to attach that circular give me you email id i'll send it to you.

If you need any other matter on the above cited subject let me know.

Best Regards
Sushma


Attached FilesProvided by community member SUSHMA RAWAT. Join us to learn and grow with your peers.
File Type: doc hc_fb_mad_240707_outside_198.doc (51.5 KB, 1439 views)
Abhinav9412516071 - Member Since: Aug 2007
Please send me that circular as i need it for reference i am also an labour laws advisor, i can help some of my clients who are all ready disscussing the same problem.

Regards

Abhinav Rastogi
e- mail:

vikramlamhe - Member Since: Nov 2005
Pl send me the copy of circular on mail id vikramlamhe@sify.com

Anuradha Ramkumar - Member Since: Feb 2009
Dear Sir, I request you to send the circular to my mail id as below, kumarrams2006@yahoo.com. Thanking You. Regards, S.Ram Kumar

raghuvirks - Member Since: Feb 2010
Hello all,
This post is very usefull and intresting, we have a similar issue on primary and secondary employer which iam describing below

We have a manufacturing industry - a pvt ltd wherin family members are the directors, this company outsources activities to a number of smaller companies who are basically subcontractors doing job work and raising labour charges bills.

One of the subcontracting companies is owned by the director of the pvt ltd company . The ESI dept has raised an issue saying that esi for employees of this subcontracting company has to be paid by the pvt ltd company even if employees are less than 10 (for subcontarctor) and has held the pvt ltd company as principal employer and demanding esi payment based on labour charges bills on a propotional basis.
The subcontarctor is a propreitor owned and having separate building power
and separate balance sheet . Recently the number of employees of this subcontrator increased more than 10 and they have immedeately gone under esi purview
Is the demand of payment for previous years ( prior to esi purview) by esi dept correct, if not what should be our counter argument.
thanks in advance
raghuvir

premson - Member Since: May 2008
Dear all
i have a specific query
ours is psu. The area of which is not covered under esi.
But to ensure better medical coverage for the contract labour we got the contract labour engaged by the contractors covered under esi. Now the esi is insisting that as we have a separate code we are also to be covered and all our employees are to be covered under esi.
Our contention has been that
i) we have better medical facility
ii) our employees are drawing more salary than the ceiling limit of esi.
Iii) moreover the area in which our factory is situated is not coming under the esi area ( the documents of which are yet to be traced from the town municpality as it is a very old factory - 80 years)
has anyone got any reference case to help us out of the situation as the esi has asked us to apy a hefty sum of money towards contribution, interest and damages
regards
premson

vsyamprasad - Member Since: Mar 2009
I think u are not coming up with the facts......ur narration is not clear.......since contribution is not payable if an unit is in a non implemented area..... try to give clear cut details of ur case....

premson - Member Since: May 2008
Dear Syam
The case is like this.
We have an office in Bangalore.
Our HQ is situated in an area not coming under the ESI jurisdiction
Based on ESI court verdict regarding the contract labour engaged in our Bangalore office, the Management decided to get a code only for the purpose of getting the contract labours engaged by the contractors both at Bangalore and its HQ covered under ESI. Added to this, most of our employees were also drawing more than the ceiling limit of the ESI.
We have our own 200 bedded hospital with referral facility to Super speciality hospitals and reimbursement of medical bills and expenditure. In addition we have mediclaim scheme after retirement. So in addition to the area jurisdiction we had claimed non applicability of ESI to our regular employees.
Now ESI is claiming that since we have got a ESI code and since we have allowed the returns to be filed periodically (though for the contract labour engaged by the contractors) we have accepted their jurisdiction and hence liable to pay the
contribution
interest
damages
of the regular employees for a period exceeding 10 years.
I hope the case is put up more succinctly
Regards
Premson



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