2009 (3) TMI 861 - HC - Companies Law

Whether the factory has been declared to have been covered under the provisions of Employees State Insurance Act, 1948 since the directors were counted as employees of the factory? Held that - In the present case as well, it was found by the Corporation s Inspector and it is admitted fact that three directors were taking remuneration from the respondent, therefore in view of the decision of the apex court in the case of Employees State Insurance Corporation v. Apex Engineering (P.) Ltd 1997 (11) TMI 514 - SUPREME COURT those three directors were also the employees of the company and are to be counted with other 7 employees. Thus, the respondent comes within the purview of the Act. Thus the present appeals filed by the Corporation are allowed.

Summary

The High Court of Punjab and Haryana, with Judge Rakesh Kumar Jain presiding, issued a judgment on two F. A. Os. (Nos. 433 and 442 of 1988) regarding an order from the Employees Insurance Court in Gurgaon. The case involved the Employees State Insurance Corporation and Haryana Biological (P.) Ltd. The respondent, Haryana Biological, challenged a demand from the Corporation for contributions between 4/1983 and 11/1983. Haryana Biological argued that they were not subject to the Employees' State Insurance Act, as they had not employed 10 or more persons on wages in the previous 12 months. The Corporation claimed that 10 persons were working during an inspection, including the directors who received remuneration. The lower court ruled in favor of Haryana Biological, stating that the directors were not covered under the Act. The Corporation appealed, citing a previous apex court decision that managing directors can be considered employees under the Act. Judge Jain agreed with the Corporation, stating that the three directors receiving remuneration from Haryana Biological were employees and therefore the company fell under the Act. The appeals filed by the Corporation were allowed, the lower court's order was set aside, and the petition under the Employees' State Insurance Act was dismissed.