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TMI Blog1984 (11) TMI 316X X X X Extracts X X X X X X X X Extracts X X X X ..... partner of a firm is an employee within the meaning of Section 2(9) of the Employees State Insurance Act, 1948 (hereinafter called the Act ). Respondent Ramanuja Match Industries which is a firm is engaged in manufacturing of matches within the Trichur area of Kerala State and the question as to whether it is covered under the provisions of the Act fell for consideration. The Inspector found that there were 18 regular employees and three of the partners who worked regularly for wages were to be put together. Thus the number of 20 employees as required by the Act was satisfied and the respondent did incur liability for contribution The respondent challenged its liability before the Employees Insurance Court at Calicut by contending that partners were not employees and when the three partners were excluded, the total number of employees did not exceed the statutory minimum. The Insurance Court found in favour of the respondent and an appeal under the Act was carried to the High Court by the appellant and a Division Bench of that Court following its earlier decision in Regional Director of E.S.I. Corporation v. M/s. Oosmanja Tile Works, Alwaye,( I.L.R. 1975 (2) Kerala 207) held t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a partner which is done to carry on, in the usual way, business of the kind carried on by the firm, binds the firm. A partnership firm is not a legal entity. This Court in Champaran Cane Concern v. State of Bihar and Anr.,([1964] 2 S.C.R. 921) pointed out that in a partnership each partner acts an agent of the other. The position of a partner qua the firm is thus not that of a master and a servant or employee which concept involves an element of subordination but that of equality. The partnership business belongs to the partners and each one of them is an owner thereof. In common parlance the status of a partner qua the firm is thus different from employees working under the firm, it may be that a partner is being paid some remuneration for any special attention which he devotes but that would not involve any change of status and bring him within the definition of employee. Learned counsel for the appellant strongly relied on a case of the Rajasthan High Court in Regional Director of E.S.I. Corporation, Jaipur v. P.C. Kasliwal and Anr.,([1981] Labour Industrial Cases 671) The learned Single Judge has taken the view that a partner can be employed by the firm and if he draws emolum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al; but he is not in hire as an employee and that he may perform labour even with the employees of the partnership and of the same kind as they perform does not make him an employee of the other partners or of the partnership, and hence such partner cannot be counted to constitute one of the workmen necessary for application of the Employers Liability and Workman s Compensation Act to the partnership business. In United States Fidelity Guarantee Company v. Neal (188 Ga. 105) it has been held that a partner not an employee of the partnership within the Compensation Act though at the time of the injury he was performing special services under contract with his partner, separate and independent from the articles of partnership, and is A being paid compensation therefore in addition to his shale in profits. Again, in Le Clear v. Smith, (202 N.Y.S. 514) it was held that a partner, though he received a salary in addition to his share of the profits, was an employer and an not employee entitled to compensation under the Workman s Compensation Law, where the insurer did not insure the employers. In Berger Fidelity Union Casualty Co., v. Texas,( 293 S.W. 235) it has been held that a mem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an in the employ of the partnership, and the partners as his employers within the meaning of the Act. When one looks at the provisions of the Act, they do not appear to be applicable to a case like the present. The supposition that the deceased man was employed, within the meaning of that term as used in the Act (not very different from the definition here), would appear to involve that he, as one of the partners, must be looked upon as occupying the position of being one of his own employers. It seems to me that, when one comes to analysis an arrangement of this kind, namely, one by which a partner himself works, and receives sums which are called wages, it really does not create the relation of employers adjusting the amount that must be taken to have been contributed to the partnership assets by a partner who has made what is really a contribution in kind, and does not affect his relation to the other partners which is that of co-adventurer and not employee . Lord Justice Mathew pithily but with emphasis added: The argument on behalf of the applicant in this appeal appears to involve a legal impossibility, namely, that the same person can occupy the position of bei ..... X X X X Extracts X X X X X X X X Extracts X X X X
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