Xavier University, Bhuwaneswar

Will the loaders and unloaders engaged casually or by the transporter, be covered under the ESI Act?

Hindustan Petroleum Corporation Ltd. v. Employees' State Insurance Corporation (represented by its Regional Director), 2008 LLR 490 (AP HC)

Submitted by: - Group 1 (Section B)

Team Members: - Aayush Gandhi (UH14053)

Abhishek Dasgupta (UH14055)

Akshaya Venkateswaran (UH14056)

Anish Gupta (UH14057)

BACKGROUND AND CASE ANALYSIS The appellant, HPCL alleges that the workers were contract workers and they had no control

over them and hence they were not liable to pay the contribution. Respondents’ contend that the appellant being the principal employer is liable to pay the

contribution. According to the respondent, the appellant was exempted from paying contribution only with

respect to regular employees, but not in respect of employees engaged by contractors. In the initial judgment the learned chairman had stated that the appellant is liable to pay

contribution to contract workers as a principal employer and recover the same later on. The appellant’s basic contention thereafter was that the workers were engaged by the

contractor independently and the appellant had no control over them. Hence, the appellant cannot be termed as principal employer.

The respondents’ basic contention was that the contract workers do their duty in connection with the execution of the work of the appellant and they come within the meaning of employee and the appellant is the principal employer under relevant sections of the Act. Hence the appellant is liable to pay compensation.

Central Government, under its power, has exempted the appellant corporation from the application of the Act insofar as its employees are concerned and hence the appellant is not liable to pay any contribution.

The workers at various depots throughout India engaged for the purpose for loading and unloading are entrusted the work by contractors.

The workers engaged for loading and unloading on vehicles and also the vehicles engaged for transport keeps changing and the appellant is not concerned with the logistics part and nor any control over the same.

Though the respondents allege that the vehicles carry tag inscribing ‘on contract with HPCL’, yet the vehicle is not kept permanently at the disposal of the appellant and neither the workers are engaged on the same vehicles all times as they would also supply oil to other companies.

Also under one of the clauses of the transport contract agreement, it is stated that the driver and the cleaner are the authorized representatives of contractor. Nowhere is it stated in the agreement that the workers employed by the contractor for the purpose of loading and unloading would perform the duty under the supervision of Appellant Corporation.

Also, various clauses in the agreement pertaining to the liability of the contractors show that loading and unloading would be the sole responsibility of the contractor, even though the same is done with the help of the personnel of the Corporation and the contractor is solely responsible for safe transport and lawful practice en route.

The engagement of the workers is at the option of the contractor over which the appellant-Corporation has no say ensuring proper execution of the work, hence the appellant-

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Corporation has absolutely no domain or control over the workers engaged by the contractors.

RELEVANT SECTIONS OF THE ACT Section 2 (9): Definition of Employee Section 2 (13): Definition of Immediate Employer Section 40: Principle employer to pay compensation in the first instance Section 75: Matters to be decided by Employees’ Insurance Court Section 45 (A): Determination of contributions in certain cases Section 82: Appeal Section 88: Exemption of persons or class of persons

JUDGEMENT AND ITS INTERPRETATION The AP High Court had held that the employer corporation had given a contract to the transporter for loading and unloading of petroleum manufactured by it; the employer corporation would not be liable for covering loaders and unloaders under the ESI act.

Also the loaders and unloaders performing the work for the corporation but engaged by transporters even though coming at the premises of the principal employer for loading and unloading will not come within the definition of employees (Section 2 (9) (ii)) to be covered under the ESI by the principal employer (section 2(13)) as they only make a casual entry into the premises and are answerable only to the contractor for due performance.

Such workers are engaged for the purpose of executing the work undertaken by the contractor and not for the purpose of executing any work of appellant-Corporation. The said workers are not involved to work on the premises of the depots of the Corporation either on regular or casual basis. Certainly, the appellant-Corporation would not have any control over the workers engaged by the contractor, whose responsibility it is to ensure proper execution of the work without any breach of the terms of the agreement.

Consequently, no liability can be fastened on the appellant-Corporation, i.e. HPCL to collect contribution in respect of such workers under Section 40 of the Act.

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