Gujarat High Court Remands Lijjat Papad ESI Dispute; Orders Fresh Examination Of Women Rolling Papads' Employee Status
The Court noted that the Supreme Court's ruling holding papad-rolling women at Lijjat Papad's Jabalpur branch to be "employees" was not brought to the ESI Court's notice, warranting fresh consideration.
The Gujarat High Court has remanded back to the Employees State Insurance Court, Rajkot, the question of whether Shree Mahila Gruh Udyog Lijjat Papad and the women rolling papads for it are covered under the Employees' State Insurance Act, 1948, after finding that a relevant Supreme Court judgment on the organisation's Jabalpur branch was never placed before the ESI Court when it earlier ruled in the organisation's favour.
The Court held that aspects concerning the organisation's constitution, the status of the women working under it, and the manner of selling papads in the open market required fresh examination, and directed both parties to lead evidence afresh before the ESI Court.
A Bench of Justice J.C. Doshi observed, “…one cannot lose sight to the fact that Shree Mahila Gruh Udyog Lijjat Papad has been registered under the Societies Registration Act as well as under the Gujarat Public Trust Act. There is no gainsaying that Shree Mahila Gruh Udyog Lijjat Papad has its own constitution regularity, governing the status of women working to roll papads and how to sell papads in open market. Therefore, all these aspects requires to be re-analyzed. The parties in this regard may lead the necessary evidence and the shift and weight of the evidence is required to be independently carried out”.
Senior Advocate K.M. Patel appeared for the appellant and Advocate P.S. Gogia appeared for the respondent.
The dispute arose from two notices issued by the ESI Corporation seeking contribution under the ESI Act from Shree Mahila Gruh Udyog Lijjat Papad, a society registered under the Societies Registration Act and also as a Bombay Public Trust, operating branches across India where approximately 9,000 women roll papads at home after collecting raw material from the organisation.
The ESI Court, Rajkot, had allowed the organisation's applications challenging the notices, holding that the women did not fall within the definition of "employee" under Section 2(9) of the Act since they were not paid wages and worked without supervision, and that the organisation therefore did not constitute an "establishment" under Section 2(12).
The ESI Corporation appealed, contending that over 600 women were found working at the Rajkot branch alone, that they collected raw material and returned finished papads sold under the "Lijjat Papad" brand for profit, and that this brought the organisation within the definition of an industry. The organisation, relying on the Supreme Court's judgment in C.E.S.C. Limited & Ors. v. Subhash Chandra Bosend Others, 1992 (1) SCC 441, argued that in the absence of consistent supervisory vigil over the women's work, no employer-employee relationship could be established, and that the women were merely members of a cooperative-like structure whose memberships could be cancelled.
Examining the definitions under Sections 2(9) and 2(12) of the Act, the Court noted that the Supreme Court, in Shri Mahila Griha Udyog Lijjat Papad v. Union of Indiaand Another, 1999 (6) SCC 38, had earlier held, in proceedings under the Employees' Provident Funds and Miscellaneous Provisions Act concerning the organisation's Jabalpur branch, that women preparing papads using raw material supplied by the branch were employees of that branch.
The Court found that this judgment had not been brought to the notice of the ESI Court while it decided the present applications, and that the organisation's registration under the Societies Act and Public Trust Act, along with its internal constitution governing the women's work and sale of papads, required independent re-examination on evidence.
Without expressing any opinion on the merits, the Court set aside the ESI Court's orders in both applications and remanded the matter for fresh consideration, granting liberty to both parties to lead additional evidence, with a direction that the ESI Court decide the matter afresh preferably within nine months.
Cause Title: Regional Director v. Shree Mahila Gruh Udyog Lijjatpapad (Neutral Citation: 2026:GUJHC:44136)
Appearances:
Appellant: Hemant S. Shah, K.M. Patel, Senior Advocate.
Respondent: P.S. Gogia, Advocate.