judgement:
Appeal No. 1735 of 1972.
From the Judgement and Order dated the 29th October 1971 of the High Court of Goa, Daman and Diu in S.C.A. No. 31 of 1970.
V. section Desai and Miss A. Subhashini for the, Appellant.
section T. Desai, M. V. Shah and R. P. Kapur for Respondent.
The Judgment of the Court was delivered by CHANDRACHUD, C.J.
The respondent, Gosalia Shipping Private Limited, which is a company incorporated under the Indian Companies Act does the business of Clearing and Forwarding and as Steamship Agents.
In 1970, respondent acted as the shipping agent of 'Aluminium Company of Canada, Limited ' which is a non resident company.
The, Aluminium Company time chartered a ship "M. V. Sparto" belonging to a non resident company called Sparto Compania Naviera of Panama.
The said ship called at the port of Betul, Goa, on March 1, 1970 where it loaded 13,000 long tons of bauxite belonging to the time charterers, the Aluminium Company.
On March 20, 1970 the ship left for Alfred port, Canada.
The ship was allowed to leave the port of Betul on the basis of a guarantee bond executed by the respondent in favour of the President of India, undertaking to pay the income tax payable by the time charterers under section 172 of the Income tax Act, 1961.
On April 15, 1970, the First Income tax Officer, Margao, Goa, issued a demand notice to the respondent for payment of Rs. 51,191 by way of income tax under the aforesaid provision.
The respondent filed Special Civil Application No. 31 of 1970 in the Court of the Judicial Commissioner, 'boa, asking for a writ of Mandamus directing the Income tax Officer to withdraw the demand notice.
By a judgment dated October 29, 1971, 945 the learned Judicial Commissioner allowed the respondent 's Writ Petition and passed an order quashing the demand notice.
Having obtained from the Judicial Commissioner a certificate of fitness to appeal to this Court under article 133(1)(b) and (c) of the constitution, the Union of India has filed this appeal.
The question as to whether the respondent is liable to pay the income tax demanded of it by the Income tax Officer, depends for its decision on the construction of section 172 of the Income tax Act, 1961, which read as follows at the relevant time : "172.
(1) The provisions of this section, shall, notwithstanding anything contained in the other provisions of this Act, apply for the purpose of the levy and recovery of tax in the case of any ship, belonging to or chartered by a nonresident, which carries passengers, live stock, mail or goods shipped at a port in India.
(2) Where such a ship carries passengers,live stock, mail or goods shipped at a port in India ,one sixth of the amount paid or payable on account of such carriage to the owner or the charterer or to any person on his behalf, whether that amount is paid or payable in or out of India, shall be deemed to be income accruing in India to the owner or charterer on account of such carriage.
(3) Before the departure from any port in India of any such ship, the master of the ship shall prepare and furnish to the Income tax Officer a return of the full amount paid or payable to the owner or charterer or any person on his behalf, on account of the carri age of all passengers, live stock, mail or goods shipped at that port since the last arrival of the ship thereat : Provided that where the Income tax Officer is satisfied that it is not possible for the master of the, ship to furnish the return required by this sub section before the departure of the ship from the port and provided the master of the ship has made satisfactory arrangements for the filing of the return and payment of the tax by any other person on his behalf the Income tax Officer may, if the return is filed within thirty days of the departure of the ship, deem the filing of the return by the person so authorised by the master as sufficient compliance with this subsection.
(4) On receipt of the return, the Income tax Officer shall assess the income referred to in sub section (2) and determine the sum payable as tax thereon at the 946 rate or rates in force applicable to the total income of a company which has not made the arrangements referred to 'in section 194 and such sum shall be payable by the master of the ship.
(5) For the purpose of determining the tax payable under sub section (4), the Income tax Officer may call for such accounts or documents as he may require.
(6) A port clearance shall not be granted to the ship until the Collector of Customs, or other Officer duly authorised to grant the same, is satisfied that the tax assessable under this section has been duly paid or that satisfactory arrangements have been made for the payment thereof.
(7) Nothing in this section shall be deemed to prevent the owner or charterer of a ship from claiming before the expiry of the assessment year relevant to the previous year in which the date of departure of the ship from the Indian port falls, that an assessment be made of his total income of the previous year and the tax payable on the basis thereof be determined in accordance with the other provisions of this Act, and if he so claims, any payment made under this section in respect of the passengers, live stock, mail or goods shipped at Indian port during that previous year shall be treated as a payment in advance of the tax leviable for that assessment year, and the difference between the sum so paid and the amount of tax found payable by him on such assessment shall be paid by him or refunded to him, as the case may be.
" Section 172 occurs in Chapter XV which is entitled "liability in special cases" and the sub heading of the section is "Profits of nonresidents from occasional shipping business.
" It creates a tax liability in respect of occasional shipping by making a special provision for the levy and recovery of tax in the case of a ship belonging to or chartered by a non resident which carries passengers livestock mail or goods shipped at a port in India.
The object of the section is to ensure the levy and recovery of tax in the case of ships belonging to or chartered by nonresidents.
The section brings to tax the profits made by them from occasional shipping, by means of a summary them assessment in which one sixth of the gross amount received by of the is deemed to be the assessable profit.
Before the departure ship, the master of the ship has to furnish to the Income tax Officer a return of the full amount paid or payable to the owner or charterer on account of the carriage of passengers, goods etc., shipped at the port in India since the last arrival of the ship at the port.
In the event that, to the satisfaction of the Income tax Officer, the master is 9 47 unable so to do, he has to make Satisfactory arrangements for the filing of the return and payment of the tax by any other person on his behalf.
A port clearance cannot be granted to the ship until the tax assessable under the section is duly paid or satisfactory arrangements have been made for the payment thereof.
The assessee in this case is the Aluminium Company of Canada which had time chartered the ship and on whose behalf its shipping agent, the respondent, had executed the guarantee bond.
Since the Company is a non resident and the ship carried goods which were shipped at a port in India, the conditions specified in sub section (1) are satisfied and the provisions of section 172 will apply for the purpose of levy of tax, notwithstanding anything contained in the other provisions of the Income tax Act.
The charging provision it contained in sub section (2) of section 172, the relevant part of which provides that where a ship belonging to or chartered by a nonresident carries goods shipped at a port in India, one sixth of the amount paid or payable "on account of such carriage" to the owner or the charterer or to any person on his behalf shall be deemed to be income accruing in India to the owner or char terer on account of such carriage.
The ship was delivered to the time charterers at Betul, Goa, whereupon they loaded it with their own goods to the fullest capacity of the ship.
Under the charter party, the charterer had agreed to pay to the owners of the ship a sum of 4.50 U.S. dollars per ton on the total dead weight carrying capacity per calendar month, commencing on and from the date of the delivery of the ship.
The short question for consideration is whether the amount which the time charterers had agreed to pay to the owners of the ship was payable "on account of" the carriage of goods.
If any guidance is to B sought from the terms of the agreement between the parties, the conclusion seems inescapable that the amount which the time charterers where required to pay to the owners of the ship was not payable on account of the carriage of goods but was payable on account of the use and hire of the ship.
The charter party provided by clause (4) that the charterers shall pay a sum at the rate of 4.50 U.S. dollars on the total dead weight carrying capacity of the ship, "for the use and hire of the said vessel".
It is true that one cannot place over reliance on the form which the parties give to their agreement or on the label which they attach to the payment due from one to the other.
One must have regard to the substance of the matter and, if necessary, tear the veil in order to see whether the true character of a payment is something other than what, by a clever device of drafting, it is made to appear.
But we see no reason to hold that the real intention of the parties was something different from what the words used by them convey in their accepted sense.
The charterparty was drawn in a standard form approved by the 'New York Produce Exchange ' and there is no warrant for supposing that though the payment which the Charterers bound themselves to make to the owners of the ship was on account of the 948 carriage of goods, the parties described it as; being payable for the use and hire of the vessel, in order to avoid the payment of Indian income tax.
Indeed, the other terms of the charterparty and the general tenor of the document show that the payment was in fact to be made by the time charterers for use and hire of the ship.
Under the agreement, charterers had the "liberty to sublet" the vessel for all or any part of the time covered by the agreement.
The Captain of the ship was to be under the orders and directions of the, charterers as regards employment and agency.
And if the vessel be lost, money paid in advance and not earned was to be returned by the owners to the charterers at once.
These terms and conditions of the contract between the parties are not consistent with the theory that the charterers were liable to pay to the owners any amount on account of the carriage of goods.
In order that it may be said that the amount was payable on account of the carriage of goods.
Under the terms of charterparty, the the consideration for the other, that is to say, that the payment which the charterers had agreed to make to the owners of the ship was in consideration of the carriage of goods.
If the charterers are liable to pay the amount irrespective of whether they carry the goods or not, it would be difficult to say that the amount was payable on account of the carriage of goods.
Under the terms of Charterparty, the owners of the ship received the amount as charges for the use and hire of the ship.
The character of the payment cannot change according to the use to which the charterers put the ship or according as to whether the ship is loaded with goods in a port in India.
What is payable as hire charges for the use of the ship cannot transform itself into an amount payable on account of the carriage of goods, by reason of the circumstance that the ship was loaded with goods in India.
It is relevant, for the decision of the question under consideration.
that the time charterers loaded the ship at Betul, Goa, with their own goods.
They did not sub let the ship for the purpose of carriage of goods nor did they load the ship with, goods belonging to a third party in which event they might have earned some freight on account of the carriage of goods.
They paid hire charges to the owner of the ship for the use of the ship and since they loaded the ship with their own goods, they received nothing on account of the carriage of the goods.
Neither the one nor the other, therefore, received any amount on account of the carriage of the goods.
The weakness of the argument advanced by the appellant 's counsel consists in its assumption that the charterparty has to be, an agreement for the carriage of something like goods, passengers, livestock or mail.
A contract by charterparty, says, B. C. Mitra in his "Law of Carriage by Sea" (Tagore Law Lectures 1972), : "is a contract by which an entire ship or some principal part thereof is let to a merchant who is called the charterer, for the conveyance of goods on a determined voyage to one or more places, or until the expiration of a specified period; in the former case it is called a 'voyage charterparty ', and in the latter a 'time charterparty ' ".
A time charter, according to the 949 author is "one in which the ownership and also possession of the ship remain in the original owner whose remuneration or hire is generally calculated at a monthly rate on the tonnage, of the ship, while a voyage charter is a contract to carry specified goods on a defined voyage on a remuneration or freight usually calculated according to the quantity of cargo carried.
" In Carver 's "Carriage by Sell" (Eleventh ed., 1963, page 263), it is stated that "all charterparties are not contracts of carriage.
Sometimes the ship itself, and the control over her working and navigation, are transferred for the time being to the persons who use her.
In such cases the contract is really one of letting the ship, and, subject to the express terms of the charterparty, the liabilities of the shipowner and the charterer to one another are to be determined by the law which relates to the hiring of chattels and not by reference to the liabilities of carriers and shippers.
" According to Scrutton on Charterparties (seventeenth ed., 1964, page 4), charterparties fall into three main categories (i) charters by demise (ii) time charters (not by way of demise), and (iii) voyage charters.
Sometimes categories (i) and (ii) are both referred to as time charters as distinguished from category (iii), and they have this in common that the shipowner 's remuneration is reckoned by the time during which the charterer is entitled to the use of services of his ship.
" The contract in the instant case is of the nature of time charterparty, whether there is a demise of the ship or not being immaterial.
Clause 4 of the charterparty provides for the payment by the charterers "for the use and hire" of the vessel at the rate of U.S. 4.50 dollars per ton on vessel 's total dead weight carrying capacity, per calender month, commencing on and from the date of deliver of the ship, "hire to continue until the hour of the day of her redelivery.
" These clauses of the charterparty show that the Aluminium company took the ship from its owners on a time charterparty, that the owners were entitled to payment for the use and hire of the ship, that the amount was payable irrespective of what use the ship was put to by the time charterers or indeed, whether it was put to any use at all and that no part of the payment can be said to have been made on account of the carriage of goods.
Similies can be misleading but if a hall is hired for a marriage, the charges payable to the owner of the place are for the use and hire of the place, not on account of marriage.
For these reasons we confirm the judgment of the learned Judicial Commissioner and dismiss the appeal with costs.
S.R. Appeal dismissed.

dataset_name: IN-Abs

summary:
The respondent which is a company incorporated under the Indian Companies Act does the business of Clearing and Forwarding and as Steamship agents.
In 1970, respondent acted as the shipping agents of "Aluminium Company of Canada Ltd." which is a non resident company.
The Aluminium company time chartered a ship "M.V. Sparto" belonging to another nonresident company.
Clause 4 of the Charter party provided for the payment by the charterers "for the use and hire" of the vessel at the rate of U.S. 4.50 dollars per ton on vessels ' total dead weight carrying capacity per calendar month commencing on and from the date of delivery of the ship.
"hire to continue until the hour of the day of her redelivery".
The said 'ship called at the port of Betul.
Goa on March 1, 1970 and loaded 13000 long tons of bauxite belonging to the time charterers, the Aluminium Co. The ship was allowed to leave the port of Betal on the basis of the guarantee bond executed by the respondent in favour of the President of India undertaking to pay the income tax payable by the time charterers under Section 172 of the Income Tax Act, 1961.
On April 15, 1970, the First Income Tax Officer, Margoa issued a demand notice to the respondent for the payment of Rs. 51,191/ by way of income tax under the aforesaid provision.
The respondent filed a Writ Petition asking for a mandamus directing the Income Tax Officer to withdraw the notice.
The petition was allowed by the Judicial Commissioner Goa.
Dismissing the appeal by Certificate, the Court HELD : 1.
The amount which the time charterers were required to pay, to the owners of the ship was not payable on account of the carriage of goods but was payable on account of the use and hire of the ship.
[947 E F] 2.
It is true that one cannot place over reliance on the terms which the parties give to their agreement or on the label which they attach to the payment due from one to the other.
One must have regard to the substance of the matter and if necessary, tear the veil in order to see whether the true character of a payment is something other than what, by a clever device of drafting, it is made to appear.
[947 F G] In the instant case there is no reason to hold that the real intention of the parties was something different from what the words used by them, convey in their accepted sense.
The charter party was drawn in a standard form approved by the "New York Produce Exchange" and there is no warrant for supposing that though the payment which the charterers bound themselves to make to the owners of the ship was on account of the carriage of goods, the parties described it as being payable for the use and hire of the vessel, in order to avoid the payment of Indian income Tax.
The character of the payment cannot change according to the use to which the charterers put the ship or according as to whether the ship is loaded with goods in a port in India.
What is payable as hire charges for the use of the ship cannot transform itself into an amount payable on account of the carriage of goods, by reason 944 of the circumstance that the ship was loaded with goods in India.
The time charterers loaded the ship at Betul, Goa, with their own goods.
They did not sub let the ship for the purpose of carriage of goods nor did they load the ship with goods belonging to a third party in which event they might have earned some freight on account of the carriage of goods.
They paid hire charges to the owner of the ship for the use of the ship and since they loaded the ship with their own goods, they received nothing on account of the carriage of the goods.
Neither the one nor the other, therefore, received any amount on account of the carriage of the goods.
[947 G H, 948 A, B, F G] 3.
A contract by charter party is a contract by which an entire ship or some principal part thereof is let to a merchant who is called the charterer, for the conveyance of goods on a determined voyage to one or more places, or until the expiration of a specified period.
The contract ' in the instant case is of the nature of time charter party, whether there is a demise of the ship or not being immaterial.
Clause 4 of the charter party provides for the payment by the charterers "for the use and hire" of the vessel at the rate of U.S. 4.50 dollars per ton on vessel 's total dead weight carrying capacity ' per calendar month, commencing on and from the date of delivery of the ship, "hire to continue until the hour of the day of her redelivery".
These clauses of the charter party show that the Aluminium Company took the ship from its owners on a time charter party, that the owners were entitled to payment for the use and hire of the ship, that the amount was payable irrespective of what use the ship was put to by the time charterers or indeed, whether it was put to any use at all and that no part of the payment can be said to have been made on account of the carriage of goods.
[948 G H, 949 D F]


judgement:
Special Leave Petition (Civil) Nos.
1731 and 927 of 1978.
From the Judgment and order dated 3 11 76 of the Allahabad High Court (Lucknow Bench) in W.P. 116 of 1971 and from the Judgment and order dated 5 8 77 of the Allahabad High Court (Lucknow Bench) in Revision Application No. 29/77 respectively.
R. K. Garg, Madan Mohan and V. J. Francis for the Petitioner.
The order of the Court was delivered by KRISHNA IYER, J.
For around 50 years, a man and a woman, as the facts in this case unfold, lived as husband and wife.
An adventurist challenge to the factum of marriage between the two, by the petitioner in this special leave petition, has been negatived by the High Court.
A strong presumption arises in favour of wed lock where the partners have lived together for a long spell as husband and wife.
Although the presumption is rebuttable, a heavy burden lies on him who seeks to deprive the relationship of legal origin.
Law leans in favour of legitimacy and frowns upon bastardy.
In this view, the contention of Shri Garg, for the petitioner, that long after the alleged marriage, evidence has not been produced to sustain its ceremonial process by examining the priest or other witnesses, deserves no consideration.
If man and woman who live as husband and wife in society are compelled to prove, half a century later, by eye witness evidence that they were validly married, few will succeed.
The contention deserves to be negatived and we do so without hesitation.
The special leave petitions are dismissed.
S.R. Petitions dismissed.

summary:
Dismissing the special leave petition, the Court ^ HELD: If man and woman who live as husband and wife in society are compelled to prove, after half a century of wedlock by eye witness evidence that they were validly married fifty years earlier, few will succeed.
` A strong presumption arises in favour of wed lock where the partners have lived together for a long spell as husband and wife.
Although the presumption IS rebuttable, a heavy burden lies on him who seeks to deprive the relationship of its legal origin.
Law leans in favour of legitimacy and frowns upon bastardy.
[1 F H]


judgement:
Civil Appeal No. 1264 of 1978.
Appeal by Special Leave from the Judgment and order dated 11 8 1976.
Of the Madras High Court in CRP.
No. 2084/76.
K. section Ramamurthy, A. T. M. Sampath, section Gopalakrishna and A. N. Ramjani for the Appellant.
K. Jayaram and K. A. Bala Subramaniam and K. Ram Kumar for the Respondents.
ORDER Leave granted.
It is unfortunate that long years have been spent by the courts below on a combat between two parties on the question of court fee leaving the real issues to be fought between them to come up leisurely.
Two things have to be made clear.
Courts should be anxious to 69 grapple with the real issues and not spend their energies on peripheral A ones.
Secondly, court fee, if it seriously restricts the rights of a person to seek his remedies in courts of justice, should be strictly construed.
After all access to justice is the basis of the legal system.
In that view, where there is a doubt, reasonable of course, the benefit must go to him who says that the lesser court fee alone be paid.
In this particular case there is hardly any difficulty in holding that the plaintiff in paragraph 14 of the plaint has clearly alleged that sh., is in joint possession and is seeking partition and separate possession of her half share in the suit properties as heir of deceased, Paramayee.
Obviously, the court fee that is payable is as she has claimed, namely under sec.
37(2) which corresponds to article 17(b) of the Central Act, which is the predecessor legislation on the subject.
We allow the appeal and send the case back to the trial court and direct that court to proceed with the suit expeditiously.
We make it clear that our decision on the question of court fee does not have any implications on the merits including the validity or otherwise of the Will.
No costs.

summary:
The appellant paid the correct court fee under Section 37(2) of the Madras Court Fees and Suits Valuation Act clearly alleging in para 14 of the plaint that she is in joint possession and is seeking partition and separate possession of her half share in the suit properties as heir of deceased Paramayee.
The preliminary objection as to the correct court fee payable raised and taken up resulted in the final appeal before this court.
Allowing the appeal by Special Leave, the Court ^ HELD: (a) Courts should be anxious to grapple with the real issues and not spend their energies on peripheral ones.
[68H, 69A] (b) Court fee, if it seriously restricts the right of a person to seek his remedies in Courts of justice should be strictly construed.
Since access to justice is the basis of the legal system, where there is a doubt, reasonable of course, the benefit must go to him who says that the lesser court fee alone be paid.
[69A] In the instant case, the court fee that is payable is under s.37(2) of the State Act, which corresponds to article 17 D of the Court Fees & Suits Valuation Central Act, which is the predecessor legislation on the subject.


judgement:
Civil Appeal No. 2371 of 1968.
From the Judgment and Decree dated 20th April, 1967 of the Madhya Pradesh High Court in First Appeal No. l of 1960.
section N. Kacker, Sol.
K. L. Hathi, Rajiv Datta and P. C. Kapur, for the Appellant.
L. N. Sinha, H. K. Puri, Vivek Seth, P. P. Singh and M. C. Dhingra for Respondents Nos. 1 4.
The Judgment of the Court was delivered by FAZAL ALI, J.
This appeal by certificate is directed against the judgment of the High Court of Madhya Pradesh dated 20th April 1, 1967 affirming the decree passed by the Additional District Judge Indore decreeing the plaintiff 's suit.
The facts of the case are detailed in the judgment of the High Court and that of the District Judge and it is not necessary for us to repeat the same all over again.
Briefly, the present action was brought by the plaintiff for recovery of a sum of Rs. 2,00,000 invested by the plaintiff in the Adarsh Bima Company being defendant No. 1 and the predecessor of the appellant, who is defendant No. 3 (Life Insurance Corporation of India).
The action was brought on the basis that the Managing Director of the Adarsh Bima Company by practising fraud and misrepresentation on the plaintiff induced him to part with a sum of Rs. 2,00,000 by purchasing 200 shares of Rs. 100/ each.
The courts 13 below have recorded clear findings of fact that the fraud alleged by the plaintiff has been clearly proved and that the plaintiff had parted with a sum of Rs. 2,00,000 by investing the same in purchase of 2000 shares as a result of which the shares scrips were handed over to the plaintiff and he was assured of a dividend of 4%.
it has also been found as a fact that such a resolution was contrary to the statute of the company.
The suit was contested by the appellant who is defendant No. 3 in the courts below mainly on the ground that after the appellant took over the Adarsh Bima Company, he was not liable for any act of the company which was ultra vires the statutes of the company.
In support of the appeal the Solicitor General submitted two points before us.
In the first place it was contended that on the finding that a fraud was committed on the plaintiff and the act of the Managing Director being ultra vires of the statutes of the company, the company would not be liable although the Managing Director may be personally liable.
Secondly, it was argued that assuming that the company was liable but in view of the provisions of section 7(2) of the (hereinafter called the Act), the liability of the appellant would extend only to matters appertaining to the controlled business as defined in the Act.
As regards the first contention we find absolutely no substance in the same.
There was absolutely no pleading by the defendants that the monies were received by the Managing Director personally and that the same did not go to the coffers of the company.
On the other hand, the plaintiff clearly pleaded in paragraphs 3 (b), 8 (a) and 8(b) of the plaint that the money was paid to defendant No. 1 company which after receiving the amount issued share scrips to the plaintiff.
The relevant portions of the aforesaid statements may be extracted thus: "3 (b) Relying upon the said guarantee and promise given by the defendant No. 2 on the Company 's behalf Plaintiff No. 1 on 11th June, 1947 gave at Jhabua to Defendant No. 1 Company through Defendant No. 2, Government of India 3 percent Loan Bonds of 1953 55 of the value of Rs. 1,00,000 duly endorsed in favour of Defendant No. 1 company. .
The company addressed a letter acknowledging receipt of the application for 1000 shares and the full consideration of the said shares at the rate of Rs. 100 per share and agreed to allot the said 1000 shares to plaintiff No. 4".
14 "8(a) . . . . . .
The plaintiffs submit that the transaction of selling the said 2000 shares of defendant No. 1 Company and registering the same as aforesaid in the names of plaintiffs No. 2 to 4 with a guarantee of minimum return is ultra vires the defendant No. 1 Company and is found to be void and inoperative in law.
8(b) The said 2000 shares of defendant No. 1 Company are as aforesaid applied for and registered in the names of plaintiffs No. 2 to 4.
At all material times when the said shares were registered in the name of plaintiffs No. 2 to 4, the plaintiffs No. 2 to 4 were minors.
The plaintiffs submit that the transaction of issuing the said 2000 shares to plaintiffs No. 2 to 4 who were then minors and registering them as share holders in the Register of defendant No. 1 Company is void in law".
Thus, the plaintiff has clearly alleged that the monies were paid to the defendant company and not to the Managing Director personally.
If the share scrips were issued, to the plaintiff then it must be presumed that the money was received by the company.
This fact has not been denied by the defendant appellant.
In these circumstances, therefore, it is absolutely clear that there is nothing to show that the money was paid to the Managing Director personally and not to the company.
Moreover, this is essentially a question of fact and it does not appear to have been raised before any of the courts below.
For these reasons, therefore, the first contention put forward by the Solicitor General is hereby over ruled.
Coming to the next contention the same undoubtedly merits serious consideration.
Before however examining this contention the following admitted facts may be stated thus: 1.
That the Bima Company was doing merely the business of life insurance and no other; 2.
That on the coming into force of the Act the entire interest of the Company vested in the Government: Section 7(2) of the Act runs thus: "7 (2) The assets appertaining to the controlled business of an insurer shall be deemed to include all rights and powers, and all property, whether movable and immovable, appertaining to his controlled business, including, in particular, cash balances, reserve funds, investments, deposits 15 and all other interest and rights in or arising out of such property as may be in the possession of the insurer and all books of account or documents relating to the controlled business of the insurer; and liabilities shall be deemed to include all debts, liabilities and obligations of whatever kind then existing and appertaining to the controlled business of the insurer.
Explanation: The expression 'assets appertaining to the controlled business of an insurer ' (a) in relation to a composite insurer, includes that part of the paid up capital of the insurer or assets representing such part which has or have been allocated to the controlled business of the insurer in accordance with the rules made in this behalf; (b) in relation to a Government, means the amount lying to the credit of that business on the appointed day".
D It is contended by the Solicitor General that the appellant was liable to discharge only those liabilities which pertained to the controlled business of the insurer.
Sub clause (3) of section 2 of the Act defines 'controlled business ' thus: "controlled business" means (i) in the case of any insurer specified in sub clause (a) (ii) or sub clause (b) of clause (9) of section 2 of the Insurance Act and, carrying on life insurance business . " As we have already pointed out that defendant No. 1 Adarsh Bima Company was carrying on the business of life insurance only.
Thus the moment the Act was passed, the business of the Adarsh Bima Company vested in the Corporation.
Pari passu this contention it was submitted that under section 7(2) of the Act the liability of the appellant would not extend not to any acts which are fraudulent or ultra vires of the statutes of the company.
We are, however, unable to agree with this contention.
The words of section 7(2) of the Act appear to be of the widest amplitude and the section includes all debts, liabilities, obligations of whatever kind then existing and appertaining to the controlled business of the insurer.
There can be no doubt that at the time when the appellant took over the Adarsh Bima Company the obligation to restitute the benefit received by the company from the plaintiff had been fastened and the appellant was legally bound to return the same to the plaintiff under section 65 of the Contract 16 Act in view of the finding of fact recorded by the Courts below that the contract was void.
The question as to whether or not the transaction was ultra vires of the statutes of the company was wholly irrelevant because that was the reason why the contract was void and not a ground for exempting the appellant from its liability to pay.
The words "of whatever kind" are wide enough, to take within their sweep all kinds of transactions entered into by the predecessor company.
The present transaction was undoubtedly entered into by the predecessor company which had received the sum of Rs. 2,00,000 from the plaintiff and had issued share scrips.
In these circumstances, therefore, we do not see how the defendant No. 3 can escape his liability even under section 7(2) of the Act.
As however the plaintiff will be entitled to restitution of the benefits under section 65 of the Act, he can only get the amount which he had paid to the appellant company and not any interest thereon up to the date of the suit.
For these reasons, we are of the opinion that the judgment of the High Court is correct and does not require any interference except a slight modification in the form of the decree.
We, therefore, direct that the plaintiff will be entitled to the decree of Rs. 2,00,000 passed by the courts below but not to the interest of Rs. 47,000 claimed by him and to that extent the decree is hereby modified.
The plaintiff will however be entitled to interest at six per cent per annum from the date of the suit to the date of the payment.
With this modification the appeal is dismissed, but in the circumstances without any order as to costs.
S.R. Appeal dismissed.

summary:
The plaintiff respondent filed a suit for recovery of a sum of Rs. 2 lakhs invested by him in the Adarsh Bima Company, which was taken over by the appellant, (defendant No. 3) herein, on the basis that the managing,, director of the Adarsh Bima Company by practising fraud and misrepresentation on the plaintiff that the plaintiff would be entitled to an assured dividend of 4%, that too contrary to the statute of the company induced him to part with the said sum by purchasing 200 shares of Rs. 100/ each.
The suit was contested by the appellant mainly on the ground that after the appellant took over the Adarsh Bima Company he was not liable for any act of the company which was ultra vires of the statutes of the company.
The trial Court passed a decree in favour of the respondents and the High Court affirmed it by dismissing the appeal by the appellant.
In appeal by certificate, the appellant contended (a) that on the finding that fraud was committed on the plaintiff and the act of the managing director being ultra vires of the statutes of the company, the company would not be liable although the managing director may be personally liable; and (b) assuming that the company was liable, but in view of the provisions of section 7(2) of the , the liability of the appellant would extend only to matters appertaining to, the controlled business as defined in the Act.
Dismissing the appeal the Court.
^ HELD : (1) The words of section 7(2) of the are of the widest amplitude and the section includes all debts, liabilities, obligations of whatever kind then existing and appertaining to the controlled business of the insurer.
There can be no doubt that but the time when the appellant took over the Adarsh Bima Company.
the obligation to restitute the benefit received by the company from the plaintiff had been fastened and the appellant was legally bound to return the same to the plaintiff under section 65 of the Contract Act, in view of the findings of the Courts below that the contract was void.
[15G H, 16A I] (2) The question as to whether or not the transaction was ultra vires of the statutes of the company was wholly irrelevant because that was the reason why the contract was void and not a ground for exempting the appellant from its liability to pay.
[16A] (3) The words "of whatever kind" in section 7(2) are wide enough to take within its sweep all kinds of transactions entered into by the predecessor company.
The present transaction was undoubtedly entered into by the Predecessor 12 company which had received the sum of Rs. 2 lakhs from the plaintiff and had issued share slips and the appellant, therefore, cannot escape his liability even under section 7(2).
[16 A C] (4) As the plaintiff will be entitled to restitution of the benefits under section 65 of the Contract Act, he can get only the amount which he had paid to the appellant company and not any interest upto the date of the suit.
[16C] [However the Court awarded interest at six percent per annum from the date of the suit, to the date of payment under section 34 of the C.P.C.] (5) The contention that on the finding that a fraud was committed on the plaintiff and the act of the managing director being ultra vires of the statutes of the company, the company would not be liable although the managing director may be personally liable is wrong.
There was absolutely no pleading by the defendants that the monies were received by the managing director personally and in fact the same did not go to the coffers of the company.
From the issue of the share scrips to the plaintiff, it must be presumed that the money was received by the company.
Moreover this question not having being raised before any Courts below and also being a question of fact cannot be gone into.
[13C, E, F, 14D E]


judgement:
Civil Appeal Nos.
122 1244 of 1978.
Appeal by special leave from the Judgment and order dated 23 11 77 of the Andhra Pradesh High Court in appeals against orders Nos. 236, 237, 241 to 243, 246, 253 to 260, 287, 288, 293, and 294 of 1977.
Y. section Chitale, A. A. Khan, J. B. Dadachanji and D. N. Mishra for the appellants.
S.V. Gupte, Attorney General of India and Girish Chandra for the Respondent.
83 The order of the Court was delivered by KRISHNA IYER, J. Law is essentially the formal expression of the regulation of economic relations in society.
That is the key note thought in this case" where the core question is: who is an employee ? Secondly, to decide the meaning of a welfare measure a feeling for the soul of the measure is a surer guide than meticulous dissection with lexical tools alone.
The definitional amplitude of 'employee ' in section 2(9) of the , (hereinafter referred to as the Act), is the sole contentious issue canvassed by counsel at the bar.
We have heard Sri Chitale for the appellant and the learned Attorney General for the respondent Corporation at some length, because a decision by this Court as to the width of the definition and consequential fall out of statutory obligations may cover a considerable number of establishments.
We have granted leave to appeal on that basis and now proceed to study the anatomy of 'employee ' as defined in section 2(9) of the Act.
A brief factual narration may help get a hang of the case.
The High Court, before which the present appellants had filed fruitless appeals has summarised the facts succinctly thus: "The appellants are owners of theatres in the twin cities of Hyderabad and Secunderabad, where films are exhibited.
Within the same premises as the theatre, in every case, there in a canteen and a cycle stand.
The canteen and the cycle stand are leased out to contractors under instruments of lease.
The contractors employ their own servants to run the can teen and the cycle stand.
In regard to persons so employed by the contractors, the owners of the theatres were treated 'Principal Employers ' and notices of demand were issued to them calling upon them to pay contribution under the employees ' State Insurance Act.
Thereupon the owners of theaters filed application under Section 75 of the Employees State Insurance Act before the Employees Insurance Court for a declaration that the provisions of the Act were not applicable to their theaters and that they were not liable to any contribution in respect of the persons employed in the can teens and cycle stands attached to the theaters.
The Insurance Court, on a consideration of the relevant lease deeds and other evidence, noticed the following features in regard to the running of the canteens: "(1) All these canteens are within the premisses of the cinema theatres (2) A few of these canteens have access 84 directly from the abutting roads whereas the other canteens can be reached only through the open space inside the cinema theatres.
(3) The persons running the canteens are them selves responsible for equipping the canteens with the necessary furniture and for providing the required utensils.
(4) The Managements of all these Cinema theaters pay the electricity charges due in respect of these canteens.
(5) The persons working in these canteens are employed only by the contractors or tenants who run the canteens and they alone are responsible for the salaries payable to the persons.
(6) The managements of the cinema theatres have absolutely no supervisory control over the persons employed in these canteens.
(7) These canteens have to be run only during the show hours.
This is made abundantly clear by Exhibits P 7 to P 10 and in the, face of the recitals contained in these agreements, I am not prepared to accept P.W. 1 's evidence that the tenants of these canteens are at liberty to run them at other times also.
In particular Exhibit P 10 provides that the lessee shall run the business only during the show hours and that it shall be closed as soon as the cinema shows are closed.
(8) A few of the persons working in the can teens are allowed inside the auditorium during the interval for vending eatables and beverages.
They can enter the auditorium a few minutes before the interval and can remain inside the auditorium for a few minutes after the interval.
(9) It is seen Freon Ex P. 10 that the management of the cinema theatre had reserved to itself the right to specify what types of things should be sold in the canteen.
The canteens are expected to maintain a high degree of cleanliness and sanitation.
(10) In some cases the managements of the theatres reserve the right to enter the canteen premises at all reasonable time for purposes of check and inspection.
exhibit P. 9 contains a specific clause in that regard.
" These features led the Insurance Court to arrive at the following findings of fact. "From the several circumstance mentioned above it is clear that these canteens are meant primarily for the convenience and comfort of those visiting the cinema theatres though in a few cases the persons in charge of canteens seem to be allowing the general public also to have access to the canteens taking advantage of the fact that the canteens can be recalls directly from the abutting road.
But this Circum 85 stance does not by itself indicate that these canteens are A thrown open to the general public as other hotels, restaurants or eating houses.
" In regard to cycle stands, the Insurance Court held: "Hence it may safely be concluded that these cycle stands are meant exclusively for the convenience of persons visiting B, the theaters." The Insurance Court found that the owners of theaters where principal employers with reference to the persons employed by contractors in the canteens and the cycle stands attached to the theaters and rejected the applications filed by the owners of theaters under Sec. 75 of the Act.
The disappointed theatre owners appealed under Sec. 82, without avail, but undaunted.
moved this Court for Special Leave to Appeal which we have granted, as stated earlier, so that we may discuss the facets of the definitional dispute in some detail and lay down the law on the main question.
A conspectus of the statute, to the extent relevant, is necessary to appreciate the controversy at the Bar.
The statutory personality and the social mission of the Act once projected, the resolution of the conflict of interpretation raised in this case is simple.
Although, technically, the Act is a pre Constitution one, it is a post Independence measure and shares the passion of the Constitution for social justice.
Articles 38, 39, 41, 42,,43 and 43 A of the Constitution show concern for workers and their welfare.
Since Independence, this legislative motivation has found expression in many enactments.
We are concerned with one such law designed to confer benefits on this weaker segment in situations of distress as is apparent from the Preamble.
The machinery for state insurance is set up in the shape of a Corporation and subsidiary agencies.
All employees in Factories or establishments are sought to be insured against sickness and allied disabilities, but the funding, to implement the policy of insurance, is by contributions from the employer and the employee.
In view of the complexities of modern business organisation the principal employer is made primarily liable for payment of contribution "in respect of every employee, whether directly employed by him or by or through an immediate employer".
Of course, where the employee is not directly employed by him but through another 'immediate employer ', the principal employer is empowered to recoup the contribution paid by him on behalf of the immediate employer (section 41).
There is an Inspectorate to supervise the determination and levy of the contributions.
86 There is a chapter prescribing penalties; there is an adjudicating machinery and there are other policing processes for the smooth working of the benign project envisaged by the Act.
The benefits belong to the employees and are intended to embrace is extensive a circle as is feasible.
In short, the social orientation, protective purpose and human coverage of the Act are important considerations in the statutory construction, more weighty than mere logomachy or grammatical nicety.
With this prefatory statement we may go straight to the crucial definition.
The essential question is whether a cinema theatre manager who has no statutory obligation to run a canteen or provide a cycle stand but, for the better amenities of his customers and improvement of his business, enters into an arrangement with another to maintain a canteen and a cycle stand and that other employs, on his own, workers in connection with the canteen and the cycle stand, can be held liable for contribution as the principal employer of the workmen although they are engaged independently by the owner of the canteen or the cycle stand.
It is common ground that there is no statutory obligation on me part of the appellants to run canteens or keep cycle stands.
It is common ground? again.
that the workers with whom we are concerned are not directly employed by the appellants and, if we go by the master and servant relationship under the law of contracts, there is no employer employee nexus.
Even so, it has been held cone currently by the Insurance Court and the High Court that "canteens are meant primarily for the convenience and comfort of persons visiting the theatres and the cycle stands are meant exclusively for the convenience of the persons visiting theatres" and "that the persons employed in the` canteens and cycle stands are persons employed on work which is ordinarily part of the work of the theatre or incidental to the purpose of the theatres.
In relation to the person so employed, therefore, the owners of the theatres are principal employers. ' ' The High Court proceeded further to affirm: "By undertaking to run the canteen or the cycle stand the contractor has undertaken the execution of the whole or part of the work which is ordinarily part of the work of the theatre of the principal employer or is incidental for the purpose of the theatre.
We have already held that the running of canteen or cycle stand is work carried on in connection with the work of the theatre, work which may be considered to be either ordinarily part of the work of the theatre or incidental to the purpose of the theatre.
If so, there is no reason why the contractor should not come within the definition of 'immediate employer ' ".
87 Before us counsel have mainly focussed on the definition of "employee" since the short proposition which creates or absolves liability of the appellants depends on the canteen workers and the cycle stand attendants being 'employees ' vis a vis the theatre owners.
There is no doubt that a cinema theatre is an 'establishment ' and that the appellants, as theatre owners, are principal employers, being persons responsible for the supervision and control of the establishment.
Admittedly, the canteens and cycle stands are within the theatre premises.
Within this factual metrix let us see if the definition in section 2(9) will fit.
We may read the definition of "employee" once again before analysing the components thereof 2(9) "employee" means any person employed for wages in or in connection with the work of a factory or establishment to which this Act applies, and (i) who is directly employed by the principal employer or any work of, or incidental or preliminary to or connected with the work, of the factory or establishment, whether such work is done by the employee in the factory or establishment or elsewhere; or (ii) who is employed by or through an immediate employer on the premises of the factory of establishment or under the supervision of the principal employer or his agent on work which is ordinarily part of the work of the factory or establishment or which is preliminary to the work carried on in or incidental to the purpose of the factory or establishment, or (iii)whose services are temporarily lent or let on hire to the principal employer by the person with whom the person whose services are so lent or let on hire has entered into a contract of service; and includes any person employed for wages on any work connected with the administration of the factory or establishment or any part, department or branch thereof or with the purchase of raw materials for, or the distribution or sale of the products of, the factory or establishment; but does not include: (a) any member of the Indian naval, military or air forces; or 88 (b) any person so employed whose wages (excluding remuneration for overtimes work) exceed five hundred rupees a month: Provided that an employee whose wages (excluding remuneration for overtime work) exceed five hundred rupees a month at any time after and not before, the beginning of the contribution period, shall continue to be an employee until the end of that period.
The reach and range of the definition is apparently wide and deliberately transcends pure contractual relationships.
We are in the field of labour jurisprudence, welfare legislation and statutory construction which must have due regard to Part IV of the Constitution.
A teleological approach and social perspective must play upon the interpretative process.
Now here is a break up of Sec.
The clause contains two substantive parts.
Unless the person employed qualifies under both he is not an 'employee '.
Firstly he must be employed "in or in connection with the work of an establishment.
The expression "in connection with the work of an establishment" ropes in a wide variety of workmen who may not be employed in the establishment but may be engaged only in connection with the work of the establishment.
Some nexus must exist between the establishment and the work of the employee but it may be a loose connection. 'in connection with the work of an establishment ' only postulates some connection between what the employee does and the work of the establishment.
He may not do anything directly for the establishment; he may not do anything statutorily obligatory in the establishment; he may not even do any thing which is primary or necessary for the survival or smooth running of the establishment or integral to the adventure.
It is enough if the employee does some work which is ancillary, incidental or has relevance to or link with the object of the establishment.
Surely, an amenity or facility for the customers who frequent the establishment has connection with the work of the establishment.
The question is not whether without that amenity or facility the establishment cannot be carried on but whether such amenity or facility, even peripheral may be, has not a link with the establishment.
Illustrations may not be exhaustive but may be informative.
Taking the present case, an establishment like a cinema theatre is not bound to run a canteen or keep a cycle stand (in Andhra Pradesh) but no one will deny that a can teen service, a toilet service, a car park or cycle stand, a booth foresail of catchy film literature on actors, song hits and the like, surely have connection with the cinema theatre and even further the venture.
89 On the other hand, a book stall where scientific works or tools are A sold or stall where religious propaganda is done, may not have anything to do with the cinema establishment and may, therefore, be excluded on the score that the employees do not do any work in connection with the establishment, that is, the theatre.
In the case of a five star hotel, for instance, a barber shop or an arcade, massage parlour, foreign exchange counter or tourist assistance counter may be run by some one other than the owner of the establishment but the employees so engaged do work in connection With the establishment or the hotel even though there is no obligation for a hotel to, maintain such an ancillary attraction.
By contrast, not a lawyer 's chamber or architect 's consultancy.
Nor indeed, is it a legal ingredient that such adjunct should be exclusively for the establishment, if it is mainly its ancillary.
The primary test in the substantive clause being thus wide, the employees of the canteen and the cycle stand may be correctly described as employed in connection with the work of the establishment.
A narrower construction may be possible but a larger ambit is clearly imported by a purpose oriented interpretation.
The whole goal of the statute is to make the principal employer primarily liable for the insurance of kindred kinds of employees on the premises, whether they are there in the work or are merely in connection with the work of the establishment.
Merely being employed in connection with the work of an establishment, in itself, does not entitle a person to be 'employee '.
He must not only be employed in connection with the work of the establishment but also be shown to be employed in one or other of the three categories mentioned in Sec.
2(9) (i) covers only employees who are directly employed by the principal employer.
Even here, there are expressions which take in a wider group of employees than traditionally so regarded, but it is imperative that any employee who is not directly employed by the principal employer cannot be eligible under Sec. 2 '(9) (i) .
In the present case, the employees concerned are admittedly not directly employed by the cinema proprietors.
Therefore, we move down to Sec.
2(9) (ii).
Here again, the language used is extensive and diffusive imaginatively embracing all Possible alternatives of employment by or through all independent employer.
In such cases, the 'principal employer ' has no direct employment relationship since the 'immediate employer ' of the employee, concerned is some one else.
Even so, such an employee, if 7 520SCI/78 90 he works (a) on the premises of the establishment, or (b) under the supervision of the Principal employer or his agent '`on work which is ordinarily part of the work of the establishment or which is preliminary to the work carried on in or incidental to the purpose of the establishment", qualifies under Sec.
2(9) (ii).
The plurality of persons engaged in various activities who are brought into the definitional net is wide and considerable; and all that is necessary is that the employee be on the premises or be under the supervision of the principal employer or his agent.
Assuming that the last part of Sec.
2(9) (ii) qualifies both these categories, all that is needed to satisfy that requirement is that the work done by the employee must be (a) such as is ordinarily (not necessarily nor statutorily) part of the work of the establishment, or (b) which is merely preliminary to the work carried on in the establishment, or (c) is just incidental to the purpose of the establishment.
No one can seriously say that a canteen or cycle stand or cinema magazine booth is not even incidental to the purpose of the theatre.
The cinema goers ordinarily find such work an advantage, a facility an amenity and some times a necessity.
All that the statute requires is that the work should not be irrelevant to the purpose of the establishment.
It is sufficient if it is incidental to it.
A thing is incidental to another if it merely appertains to something else as primary.
Surely, such work should not be extraneous or contrary to the purpose of the establishment but need not be integral to it either.
Much depends on time and place, habits and appetites, ordinary expectations and social circumstances.
In our view, clearly the two operations in the present case, namely, keeping a cycle stand and running canteen are incidental or adjuncts to the primary purpose of the theatre.
We are not concerned with Sec.
2(9) (iii) nor with the rest of the definitional provision.
Shri Chitale tried to convince us that on a minute dissection of the various clauses of the provision it was possible to exclude canteen employees and cycle stand attendants.
May be, punctilious sense of grammar and minute precision of language may sometimes lend unwitting support to narrow interpretation.
But language is handmaid, not mistress.
Maxwell and Fowler move along different streets, sometimes.
When, as in Sec.
2(9), the definition has been cast deliberately in the widest terms and the draftsman has endeavoured to cover every possibility so as not to exclude even distant categories of men employed either in the primary work or cognate activities, it will defeat the object of the statute to truncate its semantic sweep and throw out of its ambit those who obviously are within the benign 91 contemplation of the Act.
Salvationary effort, when the welfare of the weaker sections of society is the statutory object and is faced with stultifying effect, is permissible judicial exercise.
In this view we have no doubt that the findings assailed before us are correct and that the conclusion reached deserves to be affirmed.
We do so.
Learned counsel for the appellants finally submitted that, in this event of our negativing his legal contention, he should be given the benefit of natural justice.
We agree.
The assessment of the quantum of the employers ' contribution has now been made on an ad hoc basis because they merely pleaded non viability and made no returns.
on the strength of Sec.
45A the contribution was determined without hearing.
In the circumstances of the case, and the learned Attorney General has no obiection we think it right to direct the relevant Corporation authorities to give a fresh hearing to the principal employers concerned, if sought within 2 months from to day, to prove any errors or infirmities in the physical determination of the contribution.
Such a hearing in tune with the ruling, of this Court in the Central Press case(1) is fair and so we order that the assessment shall be reconsidered in the light of a de novo hearing to the appellants and the quantum of contribution affirmed or modified by fresh orders.
Before we formally wind up we think it apt to make a critical remark on the cumbersome definition in Sec.
2(9) of the Act when has promoted considerable argument.
This reminds us of the well known dictum or Sir James Fitzjames Stephen "that in drafting it is not enough to gain a degree of precision which a person reading in good faith can understand, hut it is necessary to attain if possible to a degree of precision which a person reading in bad faith cannot misunderstand.
"(2) Subject to this direction we dismiss the appeals with costs (one set) .
S.R. Appeals dismissed (1)[1977] 3 S.C.R. 35.
(2)Lux Gentium Lex Than and Now 1799 1974 p. 7.

summary:
The appellants are owners of theaters in the twin cities of Hyderabad and Secunderabad, where fulls are exhibited.
Within the same premises as the theaters, in every case, there is a canteen and a cycle stand, leased out to contractors under instruments of lease.
The contractors employ their own servants to run the canteen and the cycle stand.
In regard to persons so employed by the contractors the owners of the theaters were treated as 'principal employers ' and notices of demands were issued to them calling upon them to pay contribution under the Employees State Insurance Act.
Thereupon the appellant filed an application under section 75 of the Act before the Employees Insurance Court for a declaration that the provisions of the Act were not application to their theaters and that they were not liable to any contribution in respect of the persons employed in the canteen and the cycle stands attached to their theaters.
The Insurance Court found "that the canteens are meant primarily for the convenience and comfort for those visiting the cinema theaters though in a few cases the persons in charge of the canteens seem to be allowing the general public also to have access to the canteens" and that the cycle stands "are meant exclusively for the convenience of the persons visiting the theaters".
The Insurance Court held that the owners of the theaters were, therefore, principal employers with reference to the persons employed by the contractors in the canteens and the cycle stands attached to the theaters and rejected the application filed by the contractors under section 75 of the Act.
In appeal the High Court confirmed the said findings and hence the appeal by special leave.
Dismissing the appeal, the court ^ HELD: (1) Law is essentially the formal expression of the regulation of.
economic relations in society.
In view of the complexities of modern business organisations, 'the principal employer ' is made primarily liable for payment of contribution "in respect of every employee, whether directly employed by him or by or through an immediate employer," under the Insurance Act, the main purpose of which is to insure all employees in factories or establishments against sickness and allied disabilities, but the funding.
to implement the policy of insurance is by contribution from the employers and the employees.
The benefits belong to the employees and are intended to embrace as extensive a circle 81 as is feasible.
In short the social orientation, protective purpose and human A coverage of the Act are important considerations in the statutory construction, more weighty than mere logomachy or grammatical nicety.
[83A, 85G H, 86A B] (2) In the field of labour jurisprudence, welfare legislation and statutory construction which must have due regard to Part IV of the Constitution, a teleological approach and social perspective must play upon the interpretative process. 'The reach and range of the definition of 'employee ' in section 2(9) of the E.S.I. Act is apparently wide and deliberately transcends pure contractual relationships.
[88C] (3) Clause (9) of section 2 contains two substantive parts.
Unless the person employed qualifies under both he is not an employee.
Firstly he must be employed "in or in connection with" the work of an establishment.
The expres sion "in connection with the work of an establishment ' ' ropes in a wide variety of workmen who may not be employed in the establishment.
Some nexus must exist between the establishment and the work of the employee but it may be a loose connection.
"In connection with the work of an establishment" only postulates some connection between what the employee does and the work of the establishment.
He may not do anything directly for the establishment concerned; he may not clo anything statutorily obligatory in the establishment; he may not do anything which is primary or necessary for the survival or smooth running of the establishment or integral to the adventure.
It is enough if the employee does some work which is ancillary, incidental or has relevance to or link with the object of the establishment.
Surely, the amenity or facility for the customers who frequent the establishment has connection with the work of the establishment.
the question is not whether without theat amenity or facility the establishment cannot be carried on but whether such amenity or facility even peripheral may be, has not a link with the establishment.
Nor indeed is it legal ingredient that such adjunct should be exclusively for the establishment if it is mainly its ancillary.
C] The primary test in the substantive clause being thus wide, the employees of the canteen and the cycle stand may be correctly described as employed in connection with the work of the establishment.
A narrower constriction may be possible but a larger ambit is clearly imported by a purpose oriented interpretation.
The whole goal of the statute is to make the principal employer primarily liable for the insurance of kindred kinds of employees on the premises, whether they are there in the work or are merely in connection with the work of the establishment.
Merely being employed in connection with the work of establishment, in itself, does not entitle a person to be an "employee".
He must not only be employed in connection with the work of the establishment but also be shown to be employed in one or other of the three categories mentioned in section 2(9) (1).
[89D F] (4) section 2(9) (i) covers only employees who are directly employed by the 'principal employer '.
It is imperative that any employee who is not directly employed by the principal employer cannot be eligible under section 2(9) (i).
In the present case the employees concerned are admittedly not directly employed by the cinema proprietors.
[89F G] 82 (5) The language of section 2(9) (ii) is extensive and diffusive imaginatively embracing all possible alternatives of employment by or through an independent employer.
In such cases the principal employer has no direct employment relationship since the immediate employer of the employee concerned is someone else.
Even so such an employee if he works (a) on the premises of the establishment, or (b) under the supervision of the principal employer or his agent on work which is ordinarily part of the work of the establishment or which is preliminary to the work carried on in or incidental to the purpose of the establishment", qualifies under section 2(9) (ii).
The plurality of persons engaged in various activities who are brought into the definitional net is wide and considerable and all that is necessary is that the employee be on the premises or be under the supervision of the principal employer or his agent.
[89G H, 90A B] (6) A thing is incidental to another if it merely appertains to something else as primary.
Surely such work should not be extraneous or contrary to the purpose of the establishment but need not be integral to it either.
such depends upon time and place, habits and appetites, ordinary expectations and social circumstances.
Keeping a cycle stand and running a canteen are incidental or adjuncts to the primary purpose of the theatre.
[90D E] (7) May be punctilious sense of grammar and minute precision of language may sometimes lend unwitting support to narrow interpretation.
But language is the handmaid, not mistress.
Maxwell and Fowler move along different streets, sometimes.
It will defeat the objects of the statute to truncate its semantic sweep and throw out of its ambit those who obviously are within the benign contemplation of the Act, when, as in section 2(9) the definition has been cast deliberately in the widest terms and the draftsman has endeavoured to cover every possibility so as not exclude even distant categories of men employed either in the primary work or cognate activities.
Salvationary effort, when the welfare of the weaker sections of society is the statutory object and is faced with stultifying effect, is permissible judicial exercise.
The findings, in the instant case, arc correct and the conclusion reached deserves to be affirmed.
[90G H, 91A B] [In view of the fact that the contribution was determined without hearing under section 45 A of the ESI Act, the Court directed the Corporation authorities to give a, fresh hearing to the principal employers i.e. the employers in tune with the ruling of this Court in the Central Press case [19771] 3 SCR 351.