XAVIER UNIVERSITY, BHUWANESWAR

Will the loaders and unloaders

engaged casually or by the
transporter, be covered under the
ESI Act?
Hindustan Petroleum Corporation Ltd. v. Employees' State Insurance Corporation
(represented by its Regional Director), 2008 LLR 490 (AP HC)

Submitted by: Team Members: -

Group 1 (Section B)
Aayush Gandhi (UH14053)
Abhishek Dasgupta

(UH14055)
Akshaya Venkateswaran
(UH14056)

BACKGROUND AND CASE ANALYSIS

The appellant, HPCL alleges that the workers were contract workers and they had no control
over them and hence they were not liable to pay the contribution.
Respondents contend that the appellant being the principal employer is liable to pay the
contribution.
According to the respondent, the appellant was exempted from paying contribution only with
respect to regular employees, but not in respect of employees engaged by contractors.
In the initial judgment the learned chairman had stated that the appellant is liable to pay
contribution to contract workers as a principal employer and recover the same later on.
The appellants basic contention thereafter was that the workers were engaged by the
contractor independently and the appellant had no control over them. Hence, the appellant
cannot be termed as principal employer.
The respondents basic contention was that the contract workers do their duty in connection
with the execution of the work of the appellant and they come within the meaning of
employee and the appellant is the principal employer under relevant sections of the Act.
Hence the appellant is liable to pay compensation.
Central Government, under its power, has exempted the appellant corporation from the
application of the Act insofar as its employees are concerned and hence the appellant is not
liable to pay any contribution.
The workers at various depots throughout India engaged for the purpose for loading and
unloading are entrusted the work by contractors.
The workers engaged for loading and unloading on vehicles and also the vehicles engaged
for transport keeps changing and the appellant is not concerned with the logistics part and nor
any control over the same.
Though the respondents allege that the vehicles carry tag inscribing on contract with HPCL,
yet the vehicle is not kept permanently at the disposal of the appellant and neither the
workers are engaged on the same vehicles all times as they would also supply oil to other
companies.
Also under one of the clauses of the transport contract agreement, it is stated that the driver
and the cleaner are the authorized representatives of contractor. Nowhere is it stated in the
agreement that the workers employed by the contractor for the purpose of loading and
unloading would perform the duty under the supervision of Appellant Corporation.
Also, various clauses in the agreement pertaining to the liability of the contractors show that
loading and unloading would be the sole responsibility of the contractor, even though the
same is done with the help of the personnel of the Corporation and the contractor is solely
responsible for safe transport and lawful practice en route.
The engagement of the workers is at the option of the contractor over which the appellantCorporation has no say ensuring proper execution of the work, hence the appellant-

Corporation has absolutely no domain or control over the workers engaged by the
contractors.

RELEVANT SECTIONS OF THE ACT

Section 2 (9): Definition of Employee

Section 2 (13): Definition of Immediate Employer
Section 40: Principle employer to pay compensation in the first instance
Section 75: Matters to be decided by Employees Insurance Court
Section 45 (A): Determination of contributions in certain cases
Section 82: Appeal
Section 88: Exemption of persons or class of persons

JUDGEMENT AND ITS INTERPRETATION

The AP High Court had held that the employer corporation had given a contract to the transporter
for loading and unloading of petroleum manufactured by it; the employer corporation would not
be liable for covering loaders and unloaders under the ESI act.
Also the loaders and unloaders performing the work for the corporation but engaged by
transporters even though coming at the premises of the principal employer for loading and
unloading will not come within the definition of employees (Section 2 (9) (ii)) to be covered
under the ESI by the principal employer (section 2(13)) as they only make a casual entry into the
premises and are answerable only to the contractor for due performance.
Such workers are engaged for the purpose of executing the work undertaken by the contractor
and not for the purpose of executing any work of appellant-Corporation. The said workers are
not involved to work on the premises of the depots of the Corporation either on regular or casual
basis. Certainly, the appellant-Corporation would not have any control over the workers engaged
by the contractor, whose responsibility it is to ensure proper execution of the work without any
breach of the terms of the agreement.
Consequently, no liability can be fastened on the appellant-Corporation, i.e. HPCL to collect
contribution in respect of such workers under Section 40 of the Act.