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Issues Involved:
1. Whether the Directors of a Public Limited Company are principal employers under S. 2(17) of the Employees' State Insurance Act, 1948. 2. The impact of the Bombay Relief Undertaking (Special Provisions) Act, 1958 on the obligations and liabilities of the Directors. 3. The liability of the Directors for contributions after ceasing to be Directors. Issue-wise Detailed Analysis: 1. Principal Employers under S. 2(17) of the Employees' State Insurance Act, 1948: The core issue was whether the Directors of a Public Limited Company qualify as "principal employers" under S. 2(17) of the Employees' State Insurance Act, 1948. The petitioners, who were Directors of Digvijay Spinning and Weaving Company Ltd., argued that they were not the principal employers, and thus not personally liable for the contributions under the Act. The court noted that the Act is a piece of beneficial legislation aimed at providing certain benefits to employees. Section 40 of the Act mandates that the principal employer must pay both the employer's and the employees' contributions. The term "principal employer" under S. 2(17) includes the owner or occupier of a factory. The Factories Act defines "occupier" as the person who has ultimate control over the affairs of the factory. The court found that the Directors, by virtue of S. 291 of the Companies Act, have ultimate control over the day-to-day affairs of the company, thus qualifying them as "occupiers" and consequently as "principal employers" under S. 2(17) of the Act. 2. Impact of the Bombay Relief Undertaking (Special Provisions) Act, 1958: The petitioners contended that the actions against them were illegal due to the moratorium declared under the Bombay Relief Undertaking (Special Provisions) Act, 1958, which suspended any right, privilege, obligation, or liability against the undertaking. The court rejected this argument, stating that the moratorium applied to the undertaking and not to the individual obligations and liabilities of the Directors. The court referred to the Supreme Court decision in Inderjit C. Parekh and others v. V. K. Bhatt and another, which clarified that the personal liability of the Directors under the Act is not suspended by the notification under S. 4(1)(a)(iv) of the Bombay Relief Undertaking (Special Provisions) Act, 1958. 3. Liability for Contributions after Ceasing to be Directors: The petitioners ceased to be Directors from July 9, 1969, but the demand notice included contributions for periods ending March 31, 1970. The court acknowledged that the petitioners could not be held responsible for contributions beyond the quarter immediately following July 1969. The respondents agreed to reissue the demand notice after recalculating the correct amount for the period during which the petitioners were still Directors. Conclusion: The court concluded that the Directors of the company are principal employers under S. 2(17) of the Employees' State Insurance Act, 1948, and are liable for the contributions. The actions taken by the respondents were deemed valid, except for the period after the petitioners ceased to be Directors. The petition was dismissed, with the respondents agreeing to issue a fresh demand notice for the correct period.
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