BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED : 05/04/2006
CORAM:
THE HONOURABLE MR.JUSTICE A.C.ARUMUGAPERUMAL ADITYAN
C.M.A.(MD)No.1439 of 1997
The Deputy Regional Director,
ESI Corporation
Tallakulam
Madurai ... Appellant
Vs
1. Tirunelveli Co-op. Milk Supply
Society Limited,
rep. by Special Officer
Tirunelveli Kattabomman District.
2. The District Collector of
Nellai Kattabomman district
Tirunelveli
The 2nd respondent is
not a necessary party. Hence the
respondent is given up. ... Respondents
Prayer
Appeal filed under Section 82 of the Employees State Insurance Act
against the Judgment and decree passed by the learned Principal District
Judge(The Employees' State Insurance Judge) Tirunelveli made in E.S.I.O.P.NO.4
of 1992 dated 13.9.1995.
!For Appellant .... Mr. P.Sermakani
^For Respondents .... Mr.V.Rajagopalan-R1
:JUDGMENT
This appeal has been preferred against the order of E.S.I.Court/Principal
District Judge, Tirunelveli in E.S.I.O.P.NO.4 of 1992 dated 13.9.1995.
E.S.I.Corporation is the appellant herein.
2. The first respondent herein has preferred E.S.I.O.P.No.4 of 1992
challenging Ex P4 notice issued under Form C-18 demanding the E.S.I.Contribution
to the tune of Rs.5,797/-. The abovesaid Form C-18 under Ex P4 notice is in
respect of the E.S.I.Contribution for the arrears of pay to the employees for
the period from 1.1.1991 to 31.3.1991, incentive bonus paid to the employees for
the period from 1.4.1989 to 31.3.1991, and also 7.25% interest towards the
balance of the E.S.I.Contribution and also for incentive paid to the employees
for the sale of over and above 100 litres of milk per day. The petitioner in
E.S.I.O.P.No.4 of 1992 ie., the first respondent herein namely the Cooperative
Milk Supply Society, Tirunelveli has challenged the notice issued under Ex P4
before the E.S.I.Court in E.S.I.O.P.No.4 of 1992.
3. The E.S.I. Corporation has resisted the contention of the petitioner in
the O.P. by saying that the incentive paid to the employees who have sold over
and above 100 litres of milk were paid five paise per litre every day towards
bonus and that it will squarely come within the ambit of Section 2(22) of the
E.S.I.Act 1948. It was also contended on behalf of the petitioner in
E.S.I.O.P.No.4 of 1992 that the mandatory provision under Section 45 A of the
E.S.I.Act was not followed, while demanding the E.S.I. Contribution by the
E.S.I.Corporation.
4. Before the E.S.I.Court , Exs P1 to P5 were marked on the side of the
petitioner and Exs R.1 and R2 were marked on the side of the respondents. No
oral evidence was let in by both parties.
5. The learned E.S.I.Judge(Principal District Judge) Tirunelveli, after
going through the available evidence, has held that the notice under Ex P4 is
not maintainable and consequently allowed the petition as prayed for. Aggrieved
by the order of the learned E.S.I.Judge(Principal District Judge) Tirunelveli,
E.S.I.Corporation has preferred this appeal.
6. Now the substantial question of law that arises for determination in
this appeal is whether a demand by the E.S.I.Corporation for payment of
E.S.I.Contribution from the respondent without an order under Section 45 A of
the E.S.I.Act is valid?
7. The Point:
The foremost substantial question of law is to be decided in this appeal is
whether a demand by the E.S.I.Corporation for payment of E.S.I.Contribution from
the respondent without an order under Section 45 A of the E.S.I.Act is valid.
It is admitted by both the parties that there was no order passed under Section
45 A of the E.S.I.Act against the respondent for E.S.I.Contribution . Section 45
A of E.S.I.Act runs as follows:
“Determination of contributions in certain cases:
(1) Where in respect of a factory or establishment no returns, particulars,
registers or records are submitted, furnished or maintained in accordance with
the provisions of Section 44 or any Inspector or other official of the
Corporation referred to in Sub Section(2) of Section 45 is prevented in any
manner by the principal or immediate employer or any other person, in exercising
his functions or discharging his duties under Section 45, the Corporation may,
on the basis of information available to it, by order, determine the amount of
contributions payable in respect of the employees of that factory or
establishment:
(Provided that no such order shall be passed by the Corporation unless the
principal or immediate employer or the person in charge of the factory or
establishment has been given a reasonable opportunity of being heard)
2. An order made by the Corporation under Sub-Section(1) shall be sufficient
proof of the claim of the Corporation under Section 75 or for recovery of the
amount determined by such order as an arrear of land revenue under Section 45B (
or the recovery under Sections 45C to 45-I)
So from the above said provision of law, it is seen that before making any
demand by the E.S.I.Corporation, an order to be passed under Section 45A of the
E.S.I.Act that too after giving an opportunity to the other side for hearing.
8. The learned counsel appearing for the appellant would fairly concede
that in this case, only on the basis of Ex P2 letter written by the respondent
dated 5.6.1991, E.S.I.contribution was demanded after an inspection by the
Inspector of E.S.I.Corporation under Ex.R1. But after Inspection by the
Inspector, an order under Section 45 A ought to have been passed, after giving
an opportunity for hearing to the other side as contemplated under E.S.I. Act
1948. But in this case, there is no order under Section 45A demanding
E.S.I.Contribution was passed against the respondent. The learned counsel
appearing for the appellant relying on M/s Sri Ganapathy Motor Service -v-
Employees State Insurance Corporation(DB)(2004-3 L.W.706) and contended that in
the absence of a mandatory order under Section 45A of the ESI Act, the appeal to
be dismissed in limine. In the said case, the State Insurance Corporation has
demanded E.S.I.contribution from M/s Ganapathy Motor Service,2-A, High Road,
Tirunelveli without passing an order under Section 45A of the E.S.I.Act 1948.
Sri Ganapathy Motor Service has preferred E.S.I.O.P. before the E.S.I.Court,
contending that there was no mandatory order passed under Section 45 A of the
E.S.I.Act. The claim made by the petitioner was dismissed by the E.S.I.Court/
District Court, Tirunelveli. Against that oder, the appeal was preferred before
this Court in C.M.A.No.117 of 1996. While disposing of the said appeal, a
Division Bench of this Court has observed as follows:
” The learned counsel for the appellant also relied on a Division Bench decision
of this Court reported in Fenner Garments -vs- Deputy Regional Director,
E.S.I.Corporation , Madras (1994 (11)LLN 171 = 1994-1 L.W.62). There is no
dispute that before determining the contribution in terms of the provisions of
the Employees’ State Insurance Act, before passing any order, it is incumbent on
the part of the Corporation to provide reasonable opportunity of being heard to
the Principal or immediate employer or the person in charge of the factory or
establishment. This is clear from the proviso to Sub-Section 1 of section 45 A
of the Act. While considering the very same provision, a Division Bench of this
Court in Fenner Garments-vs- Deputy Regional Director, ESI Corporation,
Madras(1994(11)LLN 171=1994-1 L.W.62) , has held that demand notice on the basis
of Inspector’s report without issuance of show cause notice and giving
reasonable opportunity of being heard, cannot be sustained. The said decision
is directly on the point with reference to the proviso referred to above and the
same is applicable to the case on hand . As stated earlier, there is no dispute
that the appellant herein and the petitioner therein was not given an
opportunity before issuance of the proceedings dated 9.7.1991. On this ground,
without going into the merits of the claim made by both parties, the order
passed by the Employees’ State Insurance Court(District Judge) Tirunelveli dated
7.3.1995 made in ESIOP No.9/91 is set aside. However, liberty is given to the
respondent/Employees’ State Insurance Corporation to proceed further if they so
desire, by compliance of the mandatory provision referred above.”
The learned counsel appearing for the appellant would further contend that an
opportunity may be given to the E.S.I.Corporation to proceed with the matter,
after complying with the mandatory provision under Section 45A of the E.S.I.Act
1948. The request of the learned counsel for the appellant seems to be
reasonable. Hence I hold on the point that the order passed in E.S.I.O.P.No.4
of 1992 by the E.S.I.Court (Principal District Judge) Tirunelveli dated
13.9.1995 is liable to be set aside for the reasons stated above. The point is
answered accordingly.
9. In the result, the order passed in E.S.I.O.P.No.4 of 1992 on the file
of the E.S.I.Court/Principal District Judge, Tirunelveli is hereby set aside.
However, an opportunity is given to the Employees State Insurance
Corporation/appellant to proceed further after complying the mandatory provision
under Section 45-A of the E.S.I.Act. No costs.
sg
To
The Employees State Insurance Court/Principal District Judge,
Tirunelveli.