IN THE HIGH COURT OF KERALA AT ERNAKULAM
Ins APP No. 2 of 2003()
1. THE REGIONAL DIRECTOR, EMPLOYEES STATE
... Petitioner
2. THE RECOVERY OFFICER, EMPLOYEES STATE
Vs
1. K.V.RUGMINI, DAUGHTER OF AMBU VYDIAR,
... Respondent
For Petitioner :SRI.TPM.IBRAHIM KHAN
For Respondent :SRI.C.P.PEETHAMBARAN
The Hon'ble MRS. Justice K.HEMA
Dated :07/12/2006
O R D E R
K. HEMA, J.
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INSURANCE APPEAL No.2 OF 2003
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Dated this the 7th day of December, 2006.
J U D G M E N T
The respondent filed an application under Sections 75 and
76 of the Employees State Insurance Act (Act, for short) before
the Employees Insurance Court (Court, for short).
2. According to the respondent, she is the proprietrix of
M/s. Latest Offset Press which was started functioning since
December 1995. Ever since the establishment of M/s. Latest
Offset Press, the respondent had no occasion to employ more
than eight employees on any day. It is a small scale industrial
unit run with the financial assistance rendered by the Nedungadi
Bank Limited. The provisions contained in the Act and the
scheme framed are not applicable to the said press. Therefore,
the appellant-Corporation has no right to enforce the provisions
of the Act against the respondent. It is also averred in the
petition that, before establishing Latest Offset Press, the
respondent was running a printing press under the name and
style of “Latest Power Press” at a different premises in a rented
building. It was closed down in November 1995. Both these
INS. APP. No. 2/03 2
units have no connection with each other. The printing and
composing systems are totally different, employees are different.
They have no right to enforce the provisions of the Act.
3. In September 1998, the respondent received a letter
dated 16.09.1998, that is Exhibit P9, directing her to pay
Rs.14,925/- for the period from 01.04.1996 to 31.07.1998 as
contribution. A reply was sent disputing the coverage of her
establishment and liability to pay contribution. Later without
giving the respondent any opportunity of hearing, recovery officer
was instructed to realize the amount resulting to revenue
recovery proceedings. She received a notice dated 01.03.1997,
Exhibit P10, from the recovery officer alleging that she is bound
to pay Rs. 89,570/- by way of contribution. No previous notice of
information was sent to the respondent to pay the said amount of
contribution in respect of M/s. Latest Offset Press. The entire
recovery proceedings initiated are irregular, illegal and against
the principle of natural justice.
4. The appellants also not informed the respondent about
the reason for insisting coverage of the respondent’s
establishment. In the above circumstances, the respondent filed
INS. APP. No. 2/03 3
the application for a declaration that the Act and the scheme are
not applicable to M/s. Latest Offset Press and the respondent is
not liable to pay any amount by way of contribution in respect of
the said press. Declaration that coverage of Latest Offset Press
under the Act and enforcing the provisions of the Act are illegal
and unlawful. A declaration that Exhibit P10 notice is illegal was
sought for. Permanent injunction restraining appellants from
demanding, claiming or collecting any amount on the basis of
impugned coverage was also sought for.
5. The respondent filed a written statement and denied all
the allegations. It was contended that, the respondent’s
establishment was a continuation of another press by name
“Latest Power Press”, which was conducted in a rented building.
The respondent, however, did not pay contribution nor produce
any documents, records or registers at the time of inspection by
the inspectors in the establishment and hence they were forced
to initiate action on the ground that the Latest Offset Press is a
continuation of Latest Power Press with a change in the name and
change in the premises.
INS. APP. No. 2/03 4
6. Evidence was adduced by both sides. The evidence on
the side of the respondent consists of oral testimony of PW1. On
the side of the respondent Exhibits P1 to P11 were marked. The
appellants examined DWs 1 and 2 and marked Exhibits D1 to D5.
On consideration of the entire evidence on record, the court
below found that the Latest Offset Press is not liable to be
covered under the Act. It was held that M/s. Latest Offset Press
cannot be treated as a factory under Section 2(12) of the Act as
the stipulations as to minimum employment of ten is not
satisfied. It was also held that the technology, the premises and
the employees of both the press are different and on totality of
all materials on record, the conclusion inescapable is that
M/s. Latest Offset Press is not a continuation of Latest Power
Press, but it is a new press. Therefore, Latest Offset Press
cannot be treated as a continuation of the Latest Power Press and
hence E.S.I coverage cannot be extended as per Section 1(6) of
the Act. Various reasons are also given in the order.
7. The court below declared that M/s. Latest Offset Press is
not liable to be covered under the Act independently or as a
continuation of M/s. Latest Power Press. It is also clarified that
INS. APP. No. 2/03 5
the respondent is liable to pay E.S.I contributions in respect of
Latest Power Press till the date of its closure. It was also
declared that the application is not hit by resjudicata as per the
orders of the court below in E.I.C. 94/1992 or E.I.C. 12/1997.
The said order is challenged in this appeal on various grounds by
the Corporation.
The substantial question of law raised in this appeal is,
whether the appellant-Corporation is empowered to cover an
establishment under Section 1(6) of the Act even if it has shifted
to a different premises by assigning a new name. Another
question raised is, whether the establishment can escape from
the statutory liability of the continued coverage under
Section 1(6) of the Act on the sole reason that it has shifted to a
new place by giving new name. The third question is, what is the
statutory value of the Manager of the Corporation in deciding the
coverage of an establishment. At the time of hearing, the third
question was not argued. With respect to the first and second
question the learned counsel appearing for the appellants fairly
conceded that, as per the decision reported in Abdul Azeez vs.
Regional Director (2005 (2) KLT S.N. 66) the finding of the
INS. APP. No. 2/03 6
Insurance Court is essentially a finding of fact with respect to the
question whether the disputed establishment is a new one or
continuation of old establishment and no substantial question of
law arises from such findings. In the said decision the only
question arising for consideration was whether the establishment
run by the respondent is a new one or the continuation of the old
one and hence the appeal was held to be not maintainable. It
was hence fairly conceded that the appeal may not be
maintainable, since the only question to be decided is the
question of fact and not any question of law. Hence, I do not find
any reason to probe into further details. This appeal is only to be
dismissed and I do so.
This appeal is dismissed.
K. HEMA, JUDGE
smp