IN THE IHGH COURT OF KARNATAKA. BANGALORE
DATED THIS THE 2339 DAY OF AUGUST 2010
BEFORE
THE HoN'BLE MR. JUSTICE ARAVIND;V'i§II1Vfi§€i3.'?i:_:V"
MISCELLANEOUS FIRST APPEAL NO. s727o1«f '2loo7(F.§;g xi
BETWEEN :
M/S. TECHNO I-IEAT OVENS AND
FURNACES PVT. LTD., 1, H'
7TH CROSS, 1ST STAGE,"-.
PEENYA INDUSTRIAL .._p
BANGALORE-580~~..Q58_{ '
By its Director S _
Shri.ThomaS Joseph, '
" ...APPELLANT
(By
ESiicoRPoRA'rI"oia'd;
g "BINNYFIE;LDS, '
' }3INNypE'f,« ..... .. v
BANAG-ALoRE~56o 023.
V t' '' ...RESPONDENT
V. Narasimha I-Iolla, Adv.,)
H T.1iis appeal is filed under Section 82(2) of E8} Act,
~ against the Order dated I9~4-2007 passed in ESI Application
‘ I\”¥o..’?1/2005 on the file of the Judge, ESI Court, Bangalore
“partly allowing” the application, setting aside the demand
.. _ jnade by the corporation.
(b) Whether E.S.I. contributions are payable on
assumed wages or an actual wages
workmen?
3. The facts in nutshell le_a.d.ing to the
appeal are as under:
The appellant ._engaged._:””‘i11″j they
manufacture and sale opfl-~–iia:l<ei§z_ allied
products and is provisions of
Employees p_Sliate_ (hereinafter
referred {to brevity). The E.S.I.
:VreriViied"_'ti'1e;records of the appellant
for to September 2004 and
made certairi.Vpobseri/'ations and issued inspection
obiserxiations and"'deinanded contributions on payments
niaded »o"uts_ide security agencies, building Work in
on payments made to contractors, who
were "d,_oing job works to the appellant. A letter dated
V."Vi.A",;?.'1_~.:"3–'~2O(}5 came to be issued asking the employer to
mpiay the contributions duly bifurcating the labour
$/
4. It is the contention of Sri.J.Kanikraj, learned
counsel appearing for the appellant that attthjorities
having perused the muster roil and Wage
job work contractors erred in arriving at”t11–ei’_Wage’sV paid” .i
to the workmen as low by
assuming 60% of the to
wage apart from the icontribntioiisii by the
Contraetor/ ‘4 contended that
eontributionsgarei paid to the
workrneni. there to establish
the have travelled beyond
the reeordsd in law. He would
contend thatior-deriofithe E.S.I.Court holding that 60%
. .Qf””the’.”‘a1Iionnt to the Contractor to be treated as
Vw_ages..V’:andfjcyontributions on the said amount to be
demand’ed«:’~”is without any basis and contends that no
..reasons” are forthcoming from the order under challenge
‘ “~_and’:submits that it is not sustainable in law. He would
” “also submit that if the wages paid to workmen was to be
$/t
construed as low the authorities should have considered
minimum wages paid to the said category of4,Wo.rkmen
as wages payable and contributions to
accordingly. He would submitthat coiitribiutions
been deducted on the actual
contract workers, basedlgong the»
muster roll maintained by contends
that these documentshayeii-.been’:_ maintained by the
employer Inspector
and as discarded and
contends considering the
material’: come to conclusion that
employer not produced the muster roll and wage
‘l V. re’giste:tf accordingly seek for allowing of the appeal
Vi’.a.side the order of the authority as well as
E.S._.I.
5. Per contra Sri.V.Narasimha I-Iolla, learned
ciounsel appearing for the respondent Corporation
@/
would support the order passed by the authority has also
the E.S.I.Court and contends that employer’
produced the individual income tax a
respect of contractors to establish–.as7_ptoyviiat vvas the f A’
actual wages paid to the
nature of work involved
under Section 45–A held} that 60%
of the total bill amount as wages and
contribution of such
wages is and prays for dismissal
of the appeail i
6. learned advocate appearing
forttlfie partiAes.,_the substantial questions of law as
hereinabove is being analysed and
anslweredljp
The narrow compass in which this appeal
areqdires to be considered is with reference to the
‘ “payment made to sub~contractors, the employer has
4/
booked and paid the subcontractor charges vsfor the
period 19992000 to 2002-03 to about 2ct[iirmfe25
contractors. The said amount of
to the sub contractors for the”\X7o1’l§ i
with the assistance of a few
contention of the employeitjis that of biilh
amount is due having
completed the work -‘th_e’.~said claim they
have vivattendance register.
Admittedly baid income–tax and
employer has deducted the
incorrie paid to the contractors and
the;’en_1p}oyerA’ ‘having not produced the income tax
;-o’tuVrn’s:’ issued to the contractor, the question of
I wages would not arise under the
EQ;-3-‘.1 Act.» tilt is for the employer to establish by cogent
materials to demonstrate as to what was the actual
“Wages paid and contributions having been remitted on
“the actual Wages paid. However, in the absence of any
W
material being placed, authorities would be justified in
applying “Best Judgment Method” to arrive Vi’».ati._V’the
probable wages that would have been
employer to its employees and claim eo1’ivt.r:ibu’tionVs
the said amount arrived at as ‘wages.. said to”‘h.av:e–..been
paid by the employer to itsemployees. .
8. It is the cont.e_nti_on”_oil:.tli.e-..pappellanlt that the
wage register and contractors
workmen ha’d”i’3e’en proiduceld authority who
adjudicated ’45–A’;§ VA perusal of the order
datedi._1 5-1 that “relevant records” were
producedgin hearing held on 30–6-2005.
é_ Thei’.:au_t11ority”hasnot assigned any reason as to why it
‘ -the said documentary evidence produced
bythe In Vi€W of this factual error this Court
is of considered View that demand of Rs.2,98,267/-
is 6.5%) cannot be sustained. Accordingly the
demand raised in the order dated 15-11-2005 as
W
’10
confirmed in E.S.I. Application No.71 /2005 requires to
be set aside and matter deserves to be remanded back
to the authority namely E.S.i Court
adjudicated afresh under 8.45-A only in
sub-contractors amount is consideredr ” .1: it b
9. Hence the following order
(i) Appeal is allowed; qdestions of
law are left open it back to the
authority for 7
eittfij 194-2007 passed in E.S.I.
Application by the Employees’ State
insurance islhereby set aside.
~__’I’he Vmrlriatter is remitted back to the
1 for adjudication under Section 45-
Avof .-.theA:Alct afresh in accordance with law and said
at authority is directed to consider the material produced
l”‘._VVVby’:the appellant and authority is also entitled to call
upon the appellant to produce such of those material as
4,,»