JUDGMENT
Vineet Saran, J.
1. The Employees State Insurance (ESI) Corporation recovered certain amount of Employees State Insurance from the Petitioner-U.P. State Road Transport Corporation (UPSRTC) even though the matter regarding grant of exemption to the petitioner-Corporation from the applicability of the ESI Act was pending with the State Government. It is such dispute between the two statutory Corporations, which has been brought before this Court.
2. The brief relevant facts are that the petitioner-Corporation has three wings; namely, workshop, operational and administrative. Treating its workshop wing to be a factory, the provisions of the Employees State Insurance Act were made applicable to the employees of such wing. The workers of the workshop wing had been agitating the matter for being exempted from the provisions of the Employees State Insurance Act. Such workers, as well as the petitioner-Corporation, had earlier filed writ petitions before this Court, in which initially interim orders had been granted but ultimately the said writ petitions were dismissed on 19.7.2001 with the direction that the petitioners therein may approach the ESI Court for redressal of their grievances. The petitioner-Corporation thereafter approached the ESI Court (respondent No. 3) for staying the recovery of any amount under the Employees State Insurance Act from the petitioner-Corporation. When the ESI Court did not pass any order, and in the meantime on 27.3.2003 the Recovery Officer under the Employees State Insurance Act issued recovery certificate directly to the Bank, this writ petition was filed, initially with the prayer for quashing the said recovery.
3. At the time of the filing of this writ petition, since the bank had already attached the amount of Rs. 84,90,902/-, on 7.4.2003 this Court directed that the amount so attached under the impugned recovery notice may not be withdrawn by the ESI Corporation. However, thereafter since the bank had already prepared the Bankers’ cheque in favour of the ESI Corporation, on 16.4.2003, this Court modified the interim order, the operative portion of which is quoted below:
The Bankers’ cheque has been issued in favour of E.S.I. Corporation, the same may be encashed because it has been stated by the B.S.I. Corporation that before issuing bankers’ cheque, the amount has been debited to the account of UPSRTC. The staying of encashment of the bankers’ cheque mill not result any benefit by way of interest to the UPSRTC and on the other hand it will deprive the E.S.I. Corporation from interest. Therefore balance of convenience is in favour of the E.S.I. Corporation.
It was in such circumstances that the amount that was to be recovered from the petitioner-Corporation was credited to the account of the respondent E.S.I. Corporation.
4. At this stage, certain developments that had taken place prior to the filing of this writ petition may also be noted. The petitioner-Corporation had on 24.7.2002 already filed an application under Section 88 read with Section 91A of the ESI Act before the State Government for granting exemption from the applicability of the Act with retrospective effect from 14.1.1986. However, since during the pendency of such application, the petitioner-Corporation apprehended that the ESI Corporation may initiate recovery proceedings against them, the Managing Director of the petitioner-Corporation wrote to the State Government on 25.2.2003 apprising it of the factual situation and requested that the ESI Corporation be directed not to make any recovery. Considering that the application of the petitioner-Corporation for exemption was under active consideration, the following order was passed by the State Government on the same date i.e. 25.2.2003:
This application has been presented before me by M.D.U.P.S.R.T.C. on behalf of U.P. State Road Transport Corporation. The issue of exemption of employees of U.P.S.R.T.C. from the provisions of ESI Act, 1948 is already under consideration by the undersigned vide Hon’ble High Court’s Order dated 10.10.2002 in writ petition number 44018 of 2002. Pending the final disposal of the issue as per the directions of the Hon’ble High Court, the opposite party No. 2, the Employees State Insurance Corporation through its Regional Director, Employees’ State Insurance Corporation, Kanpur is restrained from attachment of any Bank account and property of U.P. State Road Transport Corporation.
Let this order be sent to Regional Director Employees State Insurance Corporation, Kanpur for the information and compliance of the above order with a copy to Managing Director, U.P. State Road Transport Corporation, Tihri Kothi, Lucknow.
5. It was in the backdrop of the aforesaid facts that the recovery notice dated 27.3.2003 issued by the ESI Corporation had been challenged in this writ petition in which the interim orders of 7.4.2003 and 16.4.2003 had been passed, details of which have already been noted above,
6. Subsequently, during the pendency of this writ petition, on 5.5,2003, the State Government issued a notification under Sections 88 and 91A of the ESI Act granting exemption to the petitioner-Corporation from the operation of the Act with retrospective effect from 14.1.1986. The petitioner then approached the Recovery Officer of the ESI Corporation for refund of the amount already recovered, which was refused by the order dated 28.7.2003. Then by way of an amendment application, the aforesaid notification and the order dated 28,7.2003 were brought on record and the prayer made in this writ petition was suitably amended, and the prayers for quashing the order dated 28.7.2003 and also for a direction to the ESI Corporation to refund the amount of Rs, 84,90,902/- alongwith interest, were added.
7. I have heard Sri Samir Sharma, learned Counsel appearing for the petitioner- Corporation and Sri P.K. Pandey, learned Counsel for the contesting respondents No. 2 and 4-ESI Corporation and the learned Standing Counsel appearing for respondent No. 1. Sri C.P. Misra has filed his appearance on behalf of the bank, respondent No. 5. Pleading between the contesting parties have been exchanged and with the consent of the learned Counsel for the parties, this writ petition is being disposed of at this stage. It is noteworthy that the counter affidavit on behalf of ESI Corporation has been filed only on 1.8.2006, which is more than three years after the filing of this writ petition.
8. The only justification given by the respondent-ESI Corporation for not refunding the amount of Rs. 84,90,902/- is that no such direction for refund of the amount already recovered was given by the notification dated 5.5.2003 (whereby exemption had been granted by the State Government). In support of this Sri Pandey has submitted that in all the other similar notifications whereby exemption had been granted by the State Government, it had been provided that the amount already recovered would not be refunded and as such applying the same principle, the refund was not to be made to the petitioner-Corporation. Three such notifications have been filed alongwith the counter affidavit.
9. In the facts of this case, in my view, the absence of such a clause in the notification dated 5.5.2003 makes it clear that the intention of the State Government, in the case of the petitioner-Corporation, had been that the amount recovered was to be refunded. The respondent cannot get any benefit of such a position. As such, even though the recovery has already been made but since the exemption has now been granted by the State Government, and it is not disputed that the State Government has power under Section 91A to grant exemption with retrospective effect, the submission of the respondent that since in other such notifications granting exemptions, the State Government had imposed a condition for non-refund of the amount already exempted should be read in the notification dated 5.5.2003 also, cannot be accepted. The exclusion of such condition in the said notification dated 5.5.2003 makes it clear that the amount so realized from the petitioner-Corporation was to be refunded.
10. Even otherwise, prior to the recovery order having been issued on 27.3.2003, the State Government had already passed an order dated 25.2.2003 directing the ESI Corporation not to make any recovery by way of attachment of any bank account and property of the petitioner-Corporation. The submission of Sri P.K. Pandey, learned Counsel for the respondent that since the ESI Corporation is a Central Government Corporation, they would not be governed by the directions issued by the State Government, is also not worthy of acceptance in the facts and circumstances of the present case.
11. Admittedly the exemption application was pending consideration before the State Government (which was the appropriate authority under Sections 88 and 91A of the ESI Act) and such application was to be decided under certain orders passed by this Court in Writ Petition No. 44018 of 2002. The State Government had, vide its order dated 25,2.2003, pointed out that the application for exemption was under consideration. In such circumstances, even if presuming that the order of the State Government was not to be treated as a direction, the same ought to have been taken as a request from the State Government and when such dispute is between two statutory Corporations, propriety demands that no recovery ought to have been made by the ESI Corporation till such application of the petitioner-Corporation for exemption was decided. Instead of giving any regard to the aforesaid order of the State Government, the ESI Corporation issued the recovery certificate in a haste, without even responding to the communication of the State Government or finding out the status of the exemption application or seeking any clarification of the stay order dated 25.2.2003. In fact it appears that the passing of the stay order by the State Government only accelerated the process of recovery from the petitioner-Corporation by the ESI Corporation. This Court deprecates such hasty action taken by one Government Corporation against another Government Corporation.
12. Even otherwise, the amount in dispute has been realized only during the pendency of this writ petition. It was merely as a matter of grace and on considering the balance of convenience, that by order dated 16.4.2003 this Court had permitted that the bankers’ cheque already prepared in favour of the ESI Corporation be handed over to and be encashed by the ESI Corporation so that there may not be any loss of interest. In effect the ESI Corporation was thus to keep the amount merely as a custodian and not as a matter of right, as this Court had not finally adjudicated the rights of the parties.
13. In view of the foregoing discussion, since this Court is of the firm opinion that after the issuance of the notification dated 5.5,2003 the petitioner-Corporation was exempted from the operation of the Act with retrospective effect, the amount which had been recovered from the petitioner-Corporation (specially during the pendency of this writ petition) ought to have been refunded to the petitioner immediately after the issuance of the said notification. In such view of the matter, besides quashing of the impugned recovery, the petitioner-Corporation would also be entitled to the mandamus as prayed for, which is for the refund of the amount recovered from them, alongwith interest.
14. For the foregoing reasons, this writ petition stands allowed. The impugned recovery certificate issued by the ESI Corporation as well as the order dated 28.7.2003 passed by the ESI Court refusing to refund the recovered amount, are hereby quashed. A further direction in the nature of mandamus is issued to the respondent No. 2, the Regional Director, Employees State Insurance Corporation, Panchsheel Bhawan, Sarvodaya Nagar, Kanpur to refund the amount of Rs. 84,90,902/- to the petitioner-Corporation within three months from today, alongwith 6% interest from the date of notification dated 5.5.2003 till date of payment.