Important Case Studies

Topics: Employment, Milk, Dairy product Pages: 15 (5837 words) Published: February 14, 2013
Milk Producer''S Society Union ... vs Employees State Insurance ... on 26 April, 2010

Bench: R M Lodha, R V Raveendran
(Arising out of SLP(C) No. 746 of 2006)
The Managing Director, Hassan Co-operative Milk Producer's Society Union Limited ...Appellant Versus
The Assistant Regional Director
Employees State Insurance Corporation ...Respondent
(Arising out of SLP(C) No. 3455 of 2008)

R.M. Lodha, J.
Leave granted.
2. These two appeals, by special leave, are concerned with the liability of the appellants to pay ESI contribution in respect of the workers employed by the contractors in performance of the contract awarded to them for transportation of milk. 3. The two appeals arise out of different proceedings. Brief narration of facts in relation to each of the appellants may be set out first. Hassan Cooperative Milk Producer's Society Union Limited (for short, `HCMPSU Ltd.'). 4. HCMPSU Ltd. is a federal society. Its main business is purchasing milk and pasteurization of the same. The milk procured by member societies is transported in lorries/vans to the appellant's dairy. For that purpose, contract is awarded on the basis of rate per kilometer to the lowest bidder. The contractor collects the milk from the various societies in cans on specified routes and transports to the appellant's dairy. The empty cans are retransported and returned to the respective member societies. On September 23, 1994, a show cause notice was issued by the Assistant Regional Director, Employees' State Insurance Corporation, Bangalore to the HCMPSU Ltd. calling upon them to furnish explanation and show cause as to why action should not be taken against them for non-payment of contribution under the Employees' State Insurance Act, 1948 (for short, `1948 Act') in respect of the employees of the appellant. It is not in dispute that this notice related to the employees engaged by the contractors for the transportation of milk. The appellant responded to the show cause notice by filing their reply on October 10, 1994, inter-alia, stating therein (a) that the main business of the appellant is to process milk, receive and sell the same to the public in the concerned districts through their agents. The appellant does not appoint the officers and subordinates to collect the milk from the societies located in different places and (b) that appellant calls for tenders and awards the contract for transportation of milk for specified period at a particular rate per kilometer. The contractors engage workers for that work but such workers are neither directly nor indirectly employees of the appellant and; the appellants have no control over such employees nor they supervise their work. The wages or salary of such workers have also not been paid by the appellant. Another notice was also issued by the concerned authority to which reply was submitted by the appellant stating therein that the workers so engaged by the contractors do not work in the premises of the appellant's establishment and for this reason also 1948 Act is not applicable. It appears that inspection of the appellant's establishment was conducted by the concerned authority under the 1948 Act and thereafter an order under Section 45A of 1948 Act came to be passed on March 21/24, 1995 calling upon the appellant to pay contributions totaling Rs. 65,834/- for the period April 1, 1989 to March 31, 1990 in respect of the workers employed for transportation and procurement of milk together with interest payable at the rate of 12 per cent per annum upto August 31, 1994 and 15 per cent from September 1, 1994 till the date of actual payment, within a period of 15 days from the date of receipt of the order. The appellant challenged the aforesaid order under Section 75 read with Sections 76 and 77 of 1948 Act before the Employees' State...
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