Case Study: Bombay High Court on ESIC Liability for Coolies & Hamalies

📌 Case

Regional Director, E.S.I. Corporation, Goa vs. Farmacia Ananta, Goa

⚖️ Court and Date

Bombay High Court
Hon’ble Mrs. Justice R.P. Sondurbaldota
Date: 2nd May 2013
Appeal under ESI No. 2/2007

📜 Relevant Law

• Employees’ State Insurance Act, 1948
  • Section 2(9): Definition of “Employee”
  • Section 45A: Determination of contributions
  • Section 75: Matters to be decided by ESI Court
  • Section 82: Appeals

🏢 Background

Farmacia Ananta, a partnership firm dealing in medicines, employed more than 31 workers during 1990–92.

• On inspection, the ESI Corporation demanded contribution for:
  1. Coolie/Freight Charges
  2. Repair & Maintenance Charges

The firm challenged this demand before the Employees’ Insurance Court (EI Court), which ruled in its favor. The ESI Corporation appealed the decision before the Bombay High Court.

❓ Legal Issue

Whether coolies/hamalies engaged for loading and unloading activities can be treated as “employees” under Section 2(9) of the ESI Act, thereby making the employer liable to pay ESI contributions.

🔑 Key Legal Findings

1. Regular Business Activity:
   • Loading and unloading of medicines was a regular and essential business activity of the respondent.
   • It was carried out under the supervision and control of the employer.
2. Coverage under Section 2(9):
   • Even if coolies/hamalies were engaged through contractors or casually, they fell under the definition of “employee” if work was done under the employer’s control.
3. Contribution Liability:
   • The employer must pay ESI contributions for such workers.
   • If exact details of labour/material costs are not available, the ESI authority can fairly determine contribution at 25% of the total amount as per memorandum dated 16.11.1981.
4. Precedents Considered:
   • Rajkamal Transport (Supreme Court, 1996): Held hamalies as employees when work is under employer’s control.
   • Parle Bottling (Bombay HC, 1989): Distinguished; in that case coolies were casual helpers, not under continuous employer control.
   • E.I.D. Parry (AP HC, 2002): Not applicable as facts were different.

🏛️ Judgment

• The appeal was partly allowed:
  ✅ Employer liable to pay ESI contributions on coolie/freight charges.
  ❌ Contribution demand on repair & maintenance charges set aside, with liberty to pass a fresh order considering the 1981 circular.

📌 Conclusion

The Court reaffirmed that:

• Casual or contract workers like hamalies/coolies are employees under ESIC if their work is part of regular business and done under employer’s supervision.
• Employers cannot escape liability merely by outsourcing or treating them as casual workers.
• ESI is a beneficial legislation meant to protect workers, and must be interpreted broadly.

💡 Key Learning

• Control & Supervision = Employee under ESIC, regardless of contract or casual status.
• Regular business activities (like loading/unloading) fall within ESIC coverage.
• Employers must maintain proper records of labour charges; otherwise, ESI authority can fix contribution at 25% of expenses.

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