News By/Courtesy: Madhavi Shrivastava | 09 Feb 2019 21:45pm IST

HIGHLIGHTS

  • The Supreme Court in the case of Employees State Insurance Corporation v/s Venus Alloys Private Limited has held that directors of a company who are receiving remuneration are employees.
  • Appeal was filed against the order passed by Madhya Pradesh high court wherein it had held that the directors of the establishment do not come, within the purview of the “employees”
  • The ESI Court observed that the directors do not fall under the category of employees and declared that the order passed by the corporation was void and unfair.

The Supreme Court on 5th February 2009 in the case of Employees State Insurance Corporation v/s Venus Alloys Private Limited has held that directors of a company who are receiving remuneration are employees under the section 2(9) of the Employees State Insurance Act 1948. A bench comprising of Justice Abhay Manohar Sapre and Dinesh Maheshwari was hearing the matter and appeal filed against the order passed by Madhya Pradesh high court wherein it had held that the directors of the establishment do not come, within the purview of the “employees” as defined under section 2(9) of ESI act 1948. In this case, Employees State Insurance Corporation directed the company to make a payment of contribution in relation to the remuneration paid to the directors. Such a demand was questioned by the company. The ESI Court observed that the directors do not fall under the category of employees and declared that the order passed by the corporation was void and unfair. This decision of the high court was affirmed by Madhya Pradesh high court. Aggrieved by the decision the corporation filed an appeal before the Supreme Court. The bench set aside the orders of the ESI court as well as that of Madhya Pradesh high court while observing that, “The ESI Court attempted to distinguish the decision of this court in Apex engineering only with reference to the fact that there in amount was being received, by the managing director. The High Court on  the other hand overlooked the said decision of this court had relied only on the decisions of the Bombay High Court, though the propositions in the referred decisions of the Bombay high Court stood effectively overruled by the decision in Apex engineering, where this court held in no uncertain terms that the High Court was an error in taking the view that the managing director of the company was not an employee, within the meaning of section 2(9) of the ESI Act. The said decision directly applied to the present case and we have no hesitation in concluding that the high court in the present case has been an error in assuming that the director of a company who has been receiving remuneration for discharge of duties assigned to him, not fall within the definition of an employee for the purpose of ESI act.”

Section Editor: Priyanshu Gupta | 09 Feb 2019 21:54pm IST


Tags : #India#Youth

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