Holding

Section 45A empowers the authority to recover ESI contributions from both principal and immediate employers and requires that they be given a reasonable opportunity of being heard, including the possibility of impleading contractors as parties.

Summary

Bharat Heavy Electricals Ltd. (BHEL), a public sector undertaking, received a notice under Section 45A of the Employees' State Insurance Act, 1948 for non‑payment of ESI contributions for the period 1981‑1991. BHEL argued that the workers were employed by contractors and therefore sought to implead those contractors as parties to determine the liability. The ESI authority rejected the prayer, holding that BHEL could recover the contributions from the contractors under Sections 40 and 41 and that impleadment was unnecessary. BHEL challenged this decision before the Madras High Court, which dismissed the writ petition, and the matter was appealed to the Supreme Court. The Supreme Court held that Section 45A recognises both principal and immediate employers, mandates a reasonable opportunity of being heard, and authorises the authority to summon or implead contractors to ascertain the exact liability. Consequently, the Court set aside the impugned order, allowed the appeal and remitted the matter to the ESI corporation to consider impleadment or summoning of the contractors, with no order as to costs.

Issues considered

The scope of Section 45A of the Employees' State Insurance Act, 1948 with respect to the rights of both principal and immediate employers in contribution recovery.
Whether the determining authority must give a reasonable opportunity of being heard to the contractor (immediate employer) and may implead them as parties in proceedings under Section 45A.
Whether the High Court erred in holding that impleadment of contractors was unnecessary for determining liability.

Legislation cited

Contract Labour (Regulation and Abolition) Act, 1970
Employees' Provident Funds and Miscellaneous Provisions Act, 1952s. 7A
Employees' State Insurance Act, 1948s. 40, s. 41, s. 44, s. 45, s. 45A
Employees' State Insurance (General) Regulations, 1950s. Regulation 32

Subjects

Employees' State Insurance ActSection 45Aimmediate employerprincipal employernatural justiceimpleadmentcontribution recoverycontract labourwrit petitioncivil procedure

Judgment

-+
[2008] 2 S.C.R. 900

A BHARAT HEAVY ELECTRICALS LTD.
v.
ESI CORPORATION
(Civil Appeal No.1271 of 2008)
FEBRUARY 14, 2008
B
(S.B. SINHA AND V.S. SIRPURKAR, JJ.)
- ;. ~·
Employees' State Insurance Act, 1948:
s. 45-A - Proceedings for recovery of Employees' State
c Insurance contribution - Noticee pleading engagement of
workers by immediate employers, (contractors) and praying
for their impleadment in the proceedings - Prayer declined
by determining authority - Held: The Act recognizes
'immediate employer' - Section 45A enables to recover the
D dues both from principal as also the immediate employer - It
provides for an opportunity of hearing to both of them - Matter ~

remitted to determining authority either to implead the
contractors as parties and/or summon them for producing
necessary records - Principles of natural justice - Opportunity
E of hearing - Practice and Procedure - lmpleadment of
necessary party
The appellant, a Public Sector Undertaking, was
issued notice u/s 45A of the Employees' State Insurance
Act, 1948 stating that it did not deposit Employees' State
F Insurance contribution for the period 19. 7 .1981 to i
30.9.1991. The appellant contended that it engaged
contractors who employed the workmen concerned for
execution of its works and the contractors would be in
possession of the relevant records. The appellant prayed
G for impleadment of the said contractors as parties in the
proceedings. The prayer was rejected stating that the ~
appellant, being the principal employer, could recover the
ESI contribution from the immediate employers, i.e. the
contractors, under ss.40 and 41 of the Act and, therefore,
H 900
-
t
BHARAT HEAVY ELECTRICALS LTD. v. 901
ESI CORPORATION
...., J,._
it was not necessary to implead the contractors. The A
appellant filed a writ petition which was ultimately
dismissed by a Division Bench of the High Court.
Aggrieved, the noticee BHEL filed the instant appeal.
Allowing the appeal, the Court
B
HELD: 1.1 In the proceedings initiated under Section
~ 45A of the Employees' State Insurance Act, 1948, an
immediate employer and/or principal employer may also
show that they are not liable to deposit any contribution
on behalf of the employees on the ground that the c
establishment in question did not come within the purview
thereof. The purpose of the proceedings, both under the
Act as also the Employees Provident Fund Act, is to
determine the amount due from any employer in respect
' of the employees under the statutory schemes. Both the
Acts envisage compliance of principles of natural justice.
D
The proviso appended to Section 45A of the Act provides
for a statutory mandate of giving a reasonable opportunity
of being heard. [para 12] [912-B, C, D]
1.2 Section 45A of the Act enables the appropriate E
authority to recover the dues both from the principal as
also the immediate employer. An order passed under
Section 45A of the Act has a serious civil and/or financial
consequence as the amount so determined is liable to be
recovered as arrears of land revenue. The quantum of F
~
amount due has to be determined in respect of all contract
workers engaged by the contractors. The principal
employer has a statutory right to recover the contributions
from the contractors, they being the immediate employers.
[para 13] [912-E, F, G; 913-A]
G
~
1.3 The ESI Act recognizes the existence of an
immediate employer. Section 44 of the Act not only
mandates the principal employer, but also the immediate
employer to file its reports and maintain registers. Further,
it is also to be seen that in terms of the provisions. of the H
902 SUPREME COURT REPORTS [2008] 2 S.C.R.

A Contract Labour (Regulation and Abolition) Act, 1970 and ..l.. •
the Rules framed thereunder, a contractor is required to
maintain a register of the workmen employed by him.
The contractor is also required to issue an employment
card to the said workers. Muster rolls, wages registers
B and other records in respect of each worker engaged
by the contractor are also required to be maintained.
[para 13-14] [913-A, D, E, F] . , _ ...
Food Corporation of India v. Provident Fund
Commissioner & Ors. (1990) 1 SCC 68 - relied on.
c
Ashok Leyland Limited v. Employees' State Insurance
Corporation (2000) 2 LLJ 593 - approved.
Madras Gymkhana (represented by its Honourary
Secretary), Madras v. Employees' State Insurance Corporation 1

D (represented by its Regional Director), Madras 1990 (2)
Labour Law Notes 777 and Employees' State Insurance .~
Corporation v. Harrisons Malayalam Ltd. (2nd case) [(1998)
9 sec 74 - referred to.
Employees' State Insurance Corporation v. Harrison
E Malayalam Pvt. Ltd.(1993) 4 SCC 361 - held inapplicable.
2.1 In the instant case, the applicability of the Act itself
is in question. In the proceedings under Section 45A, not
only the applicability of the Act but also the quantum
F thereof which may be held to be payable may be the
subject matter of determination. The dispute being both
in regard to the applicability as also the quantum, the
respondent authority had the requisite jurisdiction to
implead the third party or summon them before it to
G produce all relevant documents. Determination of the
exact liability on the part of the contractors is necessary
keeping in view the fact that they or some of them may
not be under the control of the principal employer having
regard to the fact that the contract has come to an end.
H [para 15-17] [914-F, G; 915-A, D]
BHARAT HEAVY ELECTRICALS LTD. v. !;SI 903
CORPORATION [S.B. SINHA, J.]

·°"" 2.2 The determining authority did not give an A
opportunity of hearing to the petitioner in regard to the ·-
names and other particulars of ttte contractors. Ifie
impugned judgment, therefore, ·cannot be sustained and
is set aside. The matter is remitted to the ESI Corporation/
determining authority for considering the matter afresh. s
The authority shall either implead the contractors as
.. "4 · parties andlor summon them for producing necessary
records for the said purpose. [para 18] [915-E, F, G]
CIVILAPPELLATE JURISDICTION: CivilAppeal No.1271
of 2008. C
· From the Judgment and Order dated 24.08.2006 of the
High Court of Judicature at Madras in Writ-Petition No.5030 of
1993. ~

Milon K. Banerji, AG., Gaurab Banerji, Saurav Agrawal and D
Ruby Singh Ahuja for the Appellant.
V ..J. Francis, Anupam Mishra and Jenis for the
Respondent.
The Judgment of the Court was delivered by E
· S.B. SINHA, J. 1. Leave granted.·
Background facts :
2. Appellant herein is a Public Sector Undertaking. It used
to engage contractors for various purposes. It received a notice F
on or about 3.9.1992 purported to have been issued under
Section 45A of the Employees' State Insurance Act, 1948 (for
short "the Act") on the premise that they had not deposited the
Employees' State Insurance contribution for the period
19.7.1981 to 30.9.1991. G
3. In its show cause, in response to the notice issued by
the respondents, the appellant stated that the workmen
concerned had been engaged by the contractors who would be
in possession of the relevant records to show as to whether or . H
904 SUP~EME COURT REPORTS . [2008] 2 S.C.R.

A not any contribution was payable or whether the Act was ,j..

applicable in respect of the concerned workmen. A list of
contractors along with their addresses who were involved during ~

~
the period in question was annexed to the said show-cause. A
prayer was made before the Authority to implead the said
B contractors as parties in the said proceedings under Section
45A of the Act as immediate employers.
4. By a letter dated 8.3.1993 the said prayer was rejected
. ~ .,,
by the competent authority of the respondent, stating :

c "With reference to the above, I have to invite your kind
attention on the above subject and inform you that
engaging the contractors for SHEL works is an internal
affair of the factory and our Corporation is not preventing t.

you in any manner in bringing along with you those I

contractors to explain the nature of expenditure incurred
D
by you through the contractors. You are not denied ~my
opportunity to represent your case properly. You may ~ .
lr
~.
recover the ESI cqntribution along with employers share
from your contractors (i.e. immediate employer) under '{
Section 40 and 41 of the ESI Act. As per Section 41 (1) of
E the ESI Act, the principal employer can recover the .
contributions from the immediate employer even as
dedu~tion from any amount payable by them. under any
L
contract or even as a debt payable by the contractors. So,
(

it is not necessary for the Employees State Insurance
F Corporation to implead the contractors to enable you "f
(principal employer) to invoke your right of recovery. I am
therefore, to intimate you that your request as
communicated in the affidavit cannot be acceded to."
Proceedings :
G
5. A Writ Petition was preferred thereagainst before the -;1
Madras High Court wherein a decision of the said court in
Madras Gymkhana (represented by its Honourary Secretary), "'-
Madras v. Employees' State Insurance Corporation
-H (represented by its Regional Director), Madras [1990 (2) ·.

--
l
BHARAT HEAVY ELECTRICALS LTD. v. ESI 905
CORPORATION [S.B. SINHA, J.]
..l Labour Law Notes 777] was relied upon. By an order dated. A
--"'., 11.4.2000, a learned Single Judge, doubting the correctness
of the said decision, referred the matter to a Division Bench
(
opining:
"In view of the judgment of the Hon'ble Supreme Court of
India referred to above, namely, AIR 1993 SC pg.2655 B
.. ~.
and the other judgment namely, JT 1989 (4) SC 380, I am
of the respectful opinion that the judgment of this Court
reported in 1990-2 L. L. N pg. 777 does not appear to have
decided the issue correctly and, therefore, it definitely calls
for a reconsideration by a larger Bench. The Registry is, c
therefore, directed to place this order of reference, my
judgment containing reasons and the material papers
before My Lord the Hon'ble Chief Justice for referring the
issue involved in this case for consideration by a larger
Bench." D
6. By reason of the impugned judgment, a Division Bench
of the Madras High Court, while overruling the said decision in
Madras Gymkhana (supra) held :
"The scheme of the ESI Act does not envisage separate E
and independent determination of contribution payable
by the principal employer and the immediate employer in
respect of employees directly employed by the principal
employer and the contract employees respectively. When
once the authority is satisfied that persons were employed F
by or through an immediate on the premises of the factory
or establishment or under the supervision of the principal
employer and if for any reason the principal employer fails
!o submit, furnish or maintain. the records and registers in
accordance with the provisions of Sec.44, the Corporation
G
is wi~hin their powers to determine the contribution payable
):;
in respect of contract employees against the principal
employer without looking for the immediate employer. As
---"'..
already stated, in an enquiry under Section 45-A of the
ESI Act a~I that is required is the authority must. give a
H

-
,,.
. ,;;
906 SUPREME COURT REPORTS [2008] 2 S.C.R.

~
A reasonable opportunity of being heard to the employer
concerned. That has been complied with by the respondent
,..,.
in the present case by issuing the show cause notice dated \-
3.9.1991, wherein the Corporation has also afforded a
personal hearing to the petitioner. The decisions relied on
B by the petitioner, viz. Food Corporation of India, Ashok
Leyland Limited and Chennai Petroleum Corporation Ltd.,
I

cited supra, are of no assistance to them." . f>. .,,

Contentions :

c 7. Mr. Milon K. Banerjee, learned Attorney General for India
appearing for the appellant, submitted that the High Court
committed a serious error in passing the impugned judgment
in so far as it failed to construe the provisions of the Act in their
proper perspective. Learned Attorney General has placed strong
reliance upon a decision of P. Sathasivam, J., (as His Lordship
D
then was) in Ashok Leyland Limited v. Employees' State
Insurance Corporation ((2000) 2 LLJ 593].
8. Mr. Francis, learned counsel appearing on tiehalf of the
respondent would, however, support the impugned judgment.
E
The Act:
9. The Act was enacted to provide for certain benefits to
the employees in cases of sickness, maternity and employment
injury and to make provisions fO>r certain other matters in relation
thereto.
F -1
The term 'employee' has been given a wide definition. In
terms of sub-section (9) of Section 2 of the Act, tt includes a
person employed directly by the principal employer or by or
through an immediate employer.
G
'ln:imediate employer' has been defined ir:i Section 2(13) ·~
to mean:
~
"2(13) 'immediate employer', in relation to employees
employed by or through him, IJleans a person who has
H undertaken the execution, on the premises of a factory or
';
'
BHARAT HEAVY ELECTRICAL$ LTD. v. ESI 907 '
CORPORATION [S.B. SINHA, .J.]

...t, an establishment to which this Act applies or under the A
.....,. supervision of the principal employer or his agent, of the
whole or any part of any work which is ordinarily part of the
work of the factory or establishment of the principal
employer or is preliminary to the worK carried on in, or
incidental to the purpose of, any such factory or B
establishment, and includes a person by whom the services
.,.- ~. of an employee who has entered into a contract of service
with him are temporarily lent or let on hire to the principal
employer and includes a contractor;"
Section 2(17) defines 'principal employer' in the following c
~ terms:
\

"2(17) 'principal employer' mens-
(i) . in a factory, the owner or occupier of the factory and
includes the managing agent of such owner or D
occupier, and where a person has been named as
the manager of the factory under the Factories Act,
1948 (63 of 1948), the person so named;
(ii) in any establishment under the control of any
department of any Government in India, the authority E
appointed by such Government ih this behalf or where
no authority is so appointed, the head of the
Department;
(iii) in any other establishment, any person responsible F
~ for the supervision and control of the establishment;"
Chapter IV of the Act provides for mandatory insurance of
all the employees in the mann.er provided for therein. Section
39 provides for payment of contribution. Section 40 provides
for the principal employer to pay contribution in the first instance, G
'~
whereas an enabling provision has been enacted for recovery
of the contribution from the employee directly if he is employed
by the principal employer directly. Section 41 empowers the
principal employer to recover the amount of the contribution so
paid from the immediate employer either by deduction from any H
908 SUPREME COURT REPORTS [2008] 2 S.C.R.

A amount payble to him by the principal employer under any J..
contract 9r as a debt payable by the immediate employer. Sub- ~

'
section (1A) of Section 41 mandates that the immediate
employer shall maintain a register of employees employed by
or through him as provided for in the regulations and submit the
B same to the principal employer before the settlement of any
amourit payable under sub-section (1 ).
. ~ ....
We may, however, notice that the said provision was
introduced by Act No.29 of 1989 w.e.f 1.2.1991. Section 45A
lays down the manner in which the contributions payable in·
c certain cases shall be determined, sub-section (1) whereof
reads, thus: "'·
'·'45A(1) Where in respect of a factory or establishment no
returns, particulars, registers or records are submitted,
furnished or maintained in accordance with the provisions
D
of Section 44 or any Inspector or other official of the
~
. Corporation referred to in sub-section (2) of Section 45 is
prevented in any manner by the principal or immediate
employer or any other person, in exercising his functions
or discharging his duties under Section 45, the Corporation
E may, on the basis of information available to it, by order,
determine the amount of contributions payable in respect
of the employees of that factory or establishment.
Provided that no such order shall be passed by the
F Corporation unless the principal or immediate employer or the
person in charge of the factory or establishment has been given
a reasonable opportunity of being heard."
" I

Application of the Act :

G 10. The period in question is 19.7.1981to30.9.1991. No
return of contribution is also said to have been filed for the said
-;.1
period.
Clause (4) ofthe show-cause notice dated 3.9.1992 reads
as under:
H
BHARAT HEAVY ELECTRICALS LTD. v. ESI 909
CORPORATION [S.B. SINHA, J.)

"And whereas it is proposed to determine and recover the A
amount of contribution payable in respect of the employees
of your factory establishment under Section 45A of the
Act, as under : 1,

S.No. Nature of Period Amount of Basis for
Dues contribution calculation B
payable
From To
1 2 3a 3b 4 5
Contributbn July 1981 Sept.1991 Rs.3,32,45,042.95 As shown c
due on the inthe .
wages paid appendices
through
immediate
employer
(contractors) D

And whereas, it is proposed to afford M/s. an opportunity
as required under Section 45A(1 )(b) to show cause
. against the said determination and recovery.
Please show cause within 15 days here of as to why E
assessment should not be made as proposed above. In
case you have any objections you are hereby given an
opportunity to explain the same and or to file a statement
giving full particulars of the contributions actually due as
per your records for the above said period within the time · F
specified above. In case you desire to represent your case
personally you may appear before the undersigned in
person or through an authorized representative on
24.09.1992 at 10.00 am with necessary document to
. explain your case." G
· 11. Appellant herein affirmed an affidavit in support of its
application in implead the third parties/contractor, stating :
"For the period in question, third parties/contractors are
involved ~nd only they would be in possession of !~ords H

'
• 910 SUPREME COURT REPORTS [2008) 2 S.C.R.

A relevant to determine whether or not contributions at all >
are payable or as to whether at all the Employees' State
lnsur~nce Act, 1948 is applicable in the first place~

This Management viz., Bharat Heavy Electricals Ltd., do
· not have details with regards to the work of wages, if any, paid
B by the third parties/contractors. The relevant information,
materials and such like would be available·only with said third
parties/contractors whose names and addresses in so far as . ~ ....
· · they are available at present are enclosed as annexures to this
petiti.on. The names and addresses of the rest of the third parties/
c contractors who were involved for the period in question would
. be furnished as and when the same are available." II
I
A prayer was made to implead the contractors mentioned
in the an~_~xures to the said affidavit as parties.
D Precedent : .
12: In Food Corporation of India v. Provident Fund .+--
. Comrnissioner & Ors. [(1990) 1 SCC 68), this Court·while
considering the provisions of Section 7A of the Employees'
Provident Funds and Miscellaneous Provisions Act, 1952 held:
E
"It· will be seen from the above provisions that the
Commissioner is authorised to enforce attendance in
person and also to examine any person on oath. He has ,..
the power requiring the discovery and production ·of
F documents. This power was given to the Commissioner
to decide not abstract questions of law, but only to "'f
determine actual concrete differences in payment of
CO(ltribution· and other dues by identifying the workmen.
The Commissioner should exercise all his powers to collect
G· all evidence and collate all material before coming to
proper conclusion. That is the legal duty of the
Commissioner. It would be failure to exercise the -;f
jurisdiction particularly when a party to the proceedings
requests for summoning. evidence from· a particular ,.
person."
H
BHARAT HEAVY ELECTRICALS LTD. v. ESI 911
CORPORATION [S.B. SINHA, J.]

~ The Division Bench of the High Court distinguished the A
said decision holding that the provisions of Section 7A of the
Employees Provident Fund and Miscellaneous Provisions Act,
1952 are not in pari materia with the provisions of the Act stating :
"An inquiry under sub-section (1) of Section 7-A can be
initiated to decide the dispute regarding the applicability. B
of the Act to an establishment and to determine the amount
t ' -...+ .
due from any employer under any provisions of the Act,
the Scheme or the Pension Scheme or the Insurance
Scheme, as the case may be. For the purposes of such
inquiry, the authorities under the Act are vested with the c
same powers as are vested in a civil court for trying a suit
though such powers are restricted to certain specified
matters, viz. to enforce the attendance of any person or
examining him on oath, requiring the discovery and
production of documents, receiving evidence on affidavit, D
issuing commission for the examination of witnesses. A
-+
fiction is created under Section 7-A that an inquiry
thereunder is deemed to be a judicial proceeding. The
observance of principles of natural justice is also mandated
vide sub-section (3) which say~ that no order under sub- E
section (1) shall be made unless the employer concerned
is given a reasonable opportunity of representing his case.
Thus, it is obvious that such specific powers are given to
the authorities concerned to decide not abstract question
_J
of law, but to determine actual concrete differences in F
~
payment of contribution and other dues by identifying the
workmen and the authorities should exercise all their
powers to collect all evidence and collate all material
before coming to proper conclusion and as such an inquiry
under Section 7~A is more or the less a trial of a suit
G
· before a civil court and judicial in nature. The power6 so
~ conferred on the authorities concerned are being statutory
powers, a legal duty is cast on such authorities to exercise
the same when situation arises.and failure to exercise the
) jurisdiction, especially when a party "to the proceedings
If. H
--le
~

912 SUPREME COURT REPORTS [2008] 2 S.C.R.

A requests for such exercise, would lead to nullification of >-
the order passed in the inquiry."
Analysis:
12. We, with respect to the learned Judges, fail to notice
B any significant difference in the purport and object of both the
provisions. The purport and object of both the statutes, for all
intent and purport, in our opinion, is the same. In the proceedings . ,..._--.
initiated under Section 45A of the Act, an immediate employer
or principal employer may also show that they are not liable to
c deposit any contribution on behalf of the· employees as the
establishment in question did not come within the purview
thereof. The purpose of the proceedings, both under the Act as
also the Employees Provident Fund Act, is to determine .the
amount due from any employer in respect of the employees
under the statutory schemes. Both the Acts envisage compliance
D
of principles of natural justice. The proviso appended to Section
4.5A of the Act provides for a statutory mandate of giving a +-
reasonable opportunity of being heard.
13. The quantum of amount due has to be determined in
E respect of a11·contract workers engaged by the contractors. The
principal employer would be entitled to recover the contributions
from the contractor; they being the immediate employers.
Whereas under the Provident Fund Act, the principal employer
is statutorily liable in terms of the provisions of the Act to comply
F w.ith the provisions therein; in terms of the Act, the principal
employer is entitled to recover the amount of contribution payable 1
by the immediate employer for them.
Section 45A of the Act enables the appropriate authority
to recover such dues both from the principal as also the
G immediate employer. It provides for an opportunity of hearing to
both of them. ~

Apart from Section 41 (1A), Regulation 32 of the
Employees' States Insurance (General) Regulations, 1950
mandates an immediate employers to maintain registers in the
H >
J
BHARAT HEAVY ELECTR.ICALS LTD. v. ESI 913
CORPORATION [S.S. SINHA, J.]
,.._
prescribed form(s). An order passed under Section 45A of the A
Act has a serious civil and/or financial consequence as the
amount so determined is liable to be recovered as arrears of
land revenue. Section 44 of the Act, not only mandates the
principal employer, but also the immediate employer to file its
reports and maintain registers. Under Sub-section (2) of Section B
44, when such reports are not submitted either by the principal
~
..... employer or by the immediate employers, the Corporation may
require the person in charge of the factory or establishment to
furnish such particulars as it may consider necessary for the
purpose of enabling the Corporation to decide whether the c
factory or establishment is a factory or establishment to which
this Act applies. Sub-section (3) of Section 44 of the Act enjoins
upon the principal as also the immediate employers to maintain
registers or records as may be required by regulations. Section
45 also empowers the lnspectqr of Corporation to require an
D
immediate or principal employer to furnish to him· such
--+ information as he may consider necessary in regard to the
compliance of the provisions of the Act by them. The Act,
therefore, recognizes the existence of an immediate employer.
14. We may also notice that in terms of the provisions of E
the Contract Labour (Regulation and Abolition) Act, 1970 and
the Rules framed thereunder, a contractor is required to maintain
a register of the workmen employed by him. The contractor is
also required to issue an employment card to the said workers.
Muster rolls, wages registers and other records in respect of F
' r each worker engaged by the contractor are also required to be
maintained.
Reliance has been placed by the Division Bench as also
by Mr. Francis on Employees' State Insurance Corporation v.
Harrison Malayalam Pvt. Ltd. [(1993) 4 SCC 361]. Unfortunately, G
~ therein attention of this Court was not drawn to the case of Food
Corporation of India (supra). Even otherwise, the said decision
has no application to the fact ·of the present case. The .question
"""" therein which
. arose for consideration was as to whether the.
..... employees of the contractor who were casual. employees were H .
;;
.
~

914 SUPREME COURT REPORTS [2008] 2 S.C.R.

A identifiable or not. It is in that context, this Court opined : >
"Under the Act, the scheme is more akin to group
insurance. The contribution paid entitles the workman
. ·insured to the benefit under the Act. However, he does not
get any part of the contribution back if during the benefit
B period, he does not qualify for any of the benefits. The
contribution made by him and by his employer is credited
to the insurance fund created under the Act and it becomes ..........
available for others or .for himself, during other benefit
periods, if he continues in employment. What is more,
c there is no relation between contribution made and the
benefit availed of. The contribution is uniform for all
workmen and is a percentage of the wages earned by
them. It has no relation to the risks against which the
workman stands statutorily insured. It is for this reason
D that the Act envisages automatic obligation to pay the
contribution once the factory or the establishment is
covered by the Act, and the obligation to pay the t-
contribution r;ommences from the date of the application
of the Act to such factory or establishment. The obligation
E ceases only when the Act ceases to apply to the factory/
establishment. The obligation to make contribution does
not depend upon whether the particular employee or
employees cease to be employee/employees after the
contribution period and the benefit period expire."
F 15. In that case, it was not disputed that the Act applied to
--.·
casual workmen. Here, however, the applicability of the Act itself
is in question. In proceedings under Section 45A, not only the
applicability of the Act but also the quantum thereof which may
be held to be payable may be the subject matter of
G determination.
16. Reliance has also been placed on a decision of this ~
Court in Employees' State Insurance Corporation v. Harrisons
Malayalam Ltd. (2nd case) [(1998) 9 SCC 74, wherein this Court ·
referring to the first case opined that the liability of the employer
H '
,.,.
t-
BHARAT HEAVY ELECTRICALS LTD. v. ESI 915
CORPORATION [S.B. SINHA, J.]
,..._
:o contribute arose from the very first day of employment. There A
1s no dispute with regard to the aforementioned proposition of
law but the dispute being both in regard to the applicability as
also the quantum, in our opinion~ the respondent authority had
the requisite jurisdiction to implead the third party or summon
them before it to produce all relevant documents. B
~ ~. In Ashok Leyland, P. Sathasivam, J following the Food
Corporation (supra) and Madras Gymkhana (supra) held :
"13 .... The respondent is also directed to implead the
contractors/sub-contractors if it (respondent) feels that they c
are necessary and proper parties on the basis of the
information furnished by the petitioner, for adjudication of
the matter in controversy and to proceed further."
Conclusion :
D
..... 17. Determination of the exact liability on the part of the
contractors is necessary keeping in view the fact tnat they or
some of them may not be under the control of the principal
.. employer having regard to the fact that the contract has come ·
to an end. It will bear repetition to state that the principal
employers have a statutory right to recover the dues from the E
contractors/immediate employers.
18. It appears that the determining authority did not give
an opportunity of hearing to the petitioner in regard to the names
)- and other particulars of the contractors. The impugned judgment, F
therefore, cannot be sustained. It is set aside accordingly. The
· appeal is allowed and the matter is remitted to the ESI
Corporation/determination authority for considedng the m~tter
. afresh. The authority shall either implead the contractors as
parties and/or summon them for producing necessary records
G
IJt forthe said purpose, In the facts and circumstances of the case,
there shall be no order as to costs.
R.P. Appeal allowed.
,. .
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