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TMI Blog2010 (12) TMI 1073X X X X Extracts X X X X X X X X Extracts X X X X ..... tion and it is held that (i) The director/managing director of the company, who is working for remuneration is an employee under section 2(9) of the Act (ii) The director/managing director of the company, who is not the owner or the sole occupier of the factory is not the "principal employer" (iii) the salary paid to the director/managing director of the company, who is working in the factory, is wages under section 2(22) of the Act. Appeal allowed. - F.A.O. NO. 547 OF 1989 - - - Dated:- 2-12-2010 - RAKESH KUMAR JAIN, J. S. Bhalla for the Appellant. V.G. Dogra for the Respondent. JUDGMENT 1. The questions involved in this appeal are (i) whether the director/managing director of the company is an employee within the mean ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or is neither the employee nor salary paid to them comes within the purview of wages rather he is the principal employer in terms of section 2(17) of the Act. 3. Learned counsel for the appellant has submitted that the question posed in the beginning of the appeal is now answered in the latest decision of the Supreme Court in the case of Employees' State Insurance Corpn. v. Apex Engineering (P.) Ltd. [1997] 9 JT 54, wherein it has been held that the director/managing director, who is being paid salary falls within the definition of "employee" and is not the principal employer and his salary falls within the definition of wages. 4. In order to appreciate the controversy, the definition of "employee", "wages" and "principal employer" are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... include- (a) any member of the Indian naval, military or air forces ; or (b) any person so employed whose wages (excluding remuneration for overtime work) exceed such wages as may be prescribed by the Central Government : Provided that an employee whose wages (excluding remuneration for overtime work) exceed such wages as may be prescribed by the Central Government 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 . . . (17) 'principal employer' means- (i) in a factory, the owner or occupier of the factory and includes the managing agent of such owner or occupier, the legal representative of a deceased owner or occupier, and where a person has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e authority of the board of directors and was not himself occupier of the factory which is owned by the company. It is also not in dispute that the demand has been raised by the appellant-Corporation on account of non-deposit of the contribution out of the salary paid to the managing director which had incurred interest as well. The issue was, thus, about the status of the director/managing director of the company as to whether he would fall within the definition of "employee" or would have to be considered as principal employer to avoid the payment of contribution from the salary which is being treated as wages by the appellant-Corporation. 6. In the case of Bombay Metal Works (P.) Ltd. (supra), the said company was called upon by the Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere 19 employees in the company but the Corporation included the managing director also as an employee to complete the quorum of 20 employees in order to cover the said company by the provisions of section 2(12) of the Act. The said company was aggrieved against the order of the Corporation and filed a petition under section 75 read with section 76 of the Act before the Employees' Insurance Court in which the plea was raised that the company/factory was not covered under section 2(12) of the Act as it had only 19 employees and Shri Dhanwante cannot be treated to be an employee within the meaning of section 2(9) of the Act. The ESI Court decided the lis in favour of the company which was challenged by the Corporation before the High Court. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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