Employees Insurance Court (Principal Labour Court), Chennai, has set aside demand notice of the Employees State Insurance Corporation (ESIC) seeking contribution from Vummidi Bangaru Jewellers based on payments made to goldsmiths towards making and polishing charges of gold ornaments and silver wares.
In its petition, Vummidi Bangaru Jewellers said ESIC issued an order on May 21, 2007 demanding a contribution of about ₹11.72 lakh for the period 1999-2000 and 2003-2004.
The company said it did not have any major manufacturing activity and that it handed over gold bars to goldsmiths who were independent contractors. The employees of the independent contractors would complete the work and hand over the finished product to them and it did not have any control and supervision over them.
ESIC argued that the goldsmiths concerned came under the supervision of the company which retained the right to rectify, through them, any defect in the product. In order to bring any person within the meaning of the employee under the Employees State Insurance Act, as per Section 2 (9), the said employee should be under the supervision of the principal employer.
The court held that the right of the principal employer to reject or accept the work done by the contractor through his employees in itself could not be construed as effective and meaningful, “supervision” as envisaged under the Act.
Therefore, the demand for contribution towards the ESI based on the payment made to goldsmiths towards manufacturing and polishing charges was without any basis and liable to be set aside, it added.
It directed the company to pay contributions in respect of other activities.
