IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 15.02.2011 CORAM: THE HONBLE MR.JUSTICE K.CHANDRU W.P.Nos.6002 to 6004 of 2006 1.The Tamil Nadu Civil Supplies Corporation Ltd., Rep. By its Chairman and Managing Director, 12, Thambusamy Road, Kilpauk, Chennai 600 010. 2.The Tamil Nadu Civil Supplies Corporation Ltd., Rep. By its Regional Manager (South) 9, Cornon Smith Road, Gopalapuram, Chennai 600 086. ...Petitioner in all the WPs Vs 1.Authorised Officer, Insurance Branch -VI, Employees State Insurance Corporation, Chennai 600 034. 2.The Recovery Officer, Regional Office, ESI Corporation, Chennai 600 034. 3.Regional Director, ESI Corporation, Chennai 600 034. 4.The Chief Manager, State Bank of India, Gopalapuram Branch, Chennai 600 086. 5.Secretary to Government of Tamil Nadu, Labour and Employment Department, Fort St.George, Chennai 600 009. ...Respondents
in all WPs
W.P.No.6002/2006
Prayer :Petition under Article 226 of the Constitution of India praying for a Writ of certiorarified mandamus, calling for the records of the third respondent relating to his proceedings TN/INSVI/51-36330 C.18 Actual dated 5.1.2006 and recovery order passed by the first respondent by its proceedings TN/INS-VI/51-36330 C-19 dated 7.2.2006 for Rs.3,95,176/- and quash the same and direct the second respondent to refund the sum of Rs.3,95,176/- along with the interest of Rs.162.40 per day from 27.1.2006 recovered in proceedings NO. TN/RECY/45(G)51/36330. CCR.No.34862 to 864 dated 13.2.2006 to the petitioner.
W.P.No.6002/2006
Prayer :Petition under Article 226 of the Constitution of India praying for a Writ of certiorarified mandamus, calling for the records of the third respondent relating to his proceedings TN/INSVI/51-36330 C.18 Actual dated 5.1.2006 and recovery order passed by the first respondent by its proceedings TN/INS-VI/51-36330 C-19 dated 7.2.2006 for Rs.24,91,602/- and quash the same and direct the second respondent to refund the sum of Rs.24,91,602/- along with penal interest recovered in proceedings NO.TN/RECY/45(G)51/ 36330.CCR.No.34862 to 864 dated 13.2.2006 to the petitioner.
W.P.No.6004/2006
Prayer :Petition under Article 226 of the Constitution of India praying for a Writ of certiorarified mandamus, calling for the records of the third respondent relating to his proceedings TN/INSVI/51-36330 C.18 Actual dated 5.1.2006 and recovery order passed by the first respondent by its proceedings TN/INS-VI/51-36330 C-19 dated 7.2.2006 for Rs.6,27,411/- and quash the same and direct the second respondent to refund the sum of Rs.6,27,411/- along with penal interest recovered in proceedings NO.TN/RECY/45(G)51/ 36330.CCR.No.34862 to 864 dated 13.2.2006 to the petitioner.
For Petitioner : Mr.P.S.Raman, AG
Assisted by Mr.V.Selvanayagam
for TNCSC
For Respondents : Mr.A.Paramasivam
for R1 to R3
Mr.K.S.Sundar for R4
Mr.R.Murali for R5
C O M M O N O R D E R
The three writ petitions are filed by the Tamil Nadu Civil Supplies Corporation, represented by its Chairman and Managing Director. The first writ petition (W.P.No.6002/2006) is filed to set aside the order of the third respondent ESI dated 05.01.2006 as well as the recovery order dated 07.02.2006 and seeks for a direction to refund a sum of Rs.3,95,176/- along with interest pursuant to the garnishee notice dated 13.02.2006 to the State Bank of India, Gopalapuram Branch, who are the bankers of the petitioner Tamil Nadu Civil Supplies Corporation Ltd. (for short TNCSC).
2. In the second writ petition (W.P.No.6003/2006), the challenge is to the order dated 05.01.2006 and the recovery order dated 07.02.2006 claiming a sum of Rs.24,91,602/-.
3. In the third writ petition (W.P.No.6004/2006), the challenge is to the notice dated 05.01.2006 and the recovery order dated 07.02.2006 claiming a sum of Rs.6,27,411/- and after setting aside the same seeks for a refund of the said amount recovered already by attaching their bank account with the State Bank of India, Gopalapuram Branch.
4. All the three writ petitions were admitted on 02.03.2006. Pending the writ petitions, only notice was ordered in the interim applications. Subsequently, on 11.03.2008, this Court held that unless the petitioner succeeds, the question of refund of amount will not arise. Hence, the interim applications for direction was dismissed.
5. On notice from this Court, the respondent ESI had filed a counter affidavit dated 03.06.2007.
6. Mr.P.S.Raman, learned Advocate General leading Mr.V.Selvanayagam, Standing Counsel for TNCSC submitted that it was unnecessary to go into the details of the notice. It is suffice that the petitioner TNCSC had obtained exemption orders from the State Government from the application of the ESI Act by various orders starting from 01.07.1972 to 30.06.1994.
7. The following table will show the various Government orders, the period for exemption granted under the provisions of the Act under Section 87 r/w 91A of the ESI Act:
Sl.No.
G.O.No.
Date
Period
1
G.O.(D).Nos.887 to 908 Labour and Employment Department
23.09.1994
01.07.1972 to 30.06.1994
2
G.O.(D)Nos.428 to 434, Labour and Employment Department
09.04.2003
01.07.1994 to 30.06.2001
3
G.O.(D)No.168, Labour and Employment Department
03.03.2006
01.07.2001 to 30.06.2006
4
G.O.(D)No.849, Labour and Employment Department
04.12.2006
01.07.2006 to 30.06.2007
5
G.O.(D)No.29, Labour and Employment Department
21.01.2008
01.07.2007 to 30.06.2008
6
G.O(D)No.380, Labour and Employment Department
23.06.2009
01.07.2008 to 30.06.2009
7
G.O(D)No.119 Labour and Employment Department
23.02.2010
01.07.2009 to 30.06.2010
8. Therefore, on the basis of the exemption, he submitted that any demand made upto 30.06.2010 is not valid. In fact by a letter dated 16.08.2007, the Deputy Director,ESI Corporation himself after referring to the various Government orders stated that no further recovery orders will be issued upto 30.06.2007. The learned Advocate General stated that the recognised trade unions representing the employees also granted no objection for the grant of exemption and a proposal is sent to the Government dated 22.05.2010 for grant of exemption for the period from 01.07.2010 to 30.06.2011 is still pending. Hence, he stated that the impugned orders will have to go.
9. Mr.A.Paramasivam, learned counsel appearing for the respondent ESI submitted that they are not aware of the various Government orders and hence, the department had issued recovery notices. This submission of the learned Standing Counsel cannot be accepted because, before the grant of exemption from the application of ESI Act, under Section 89, mandatorily, the ESI has to be consulted. Therefore, they would have had prior notices before the grant of exemption orders. Secondly, in each of the exemption order issued by way of Government Order in the end portion of the order showed that copies have been marked to various authorities including the Director General of ESI, New Delhi, the Regional Director, ESI, Chennai -34. Therefore, they cannot feign ignorance about the grant of exemption.
10. Once an exemption is granted from the provisions of the Act, then any demand made against the ESI contribution is clearly illegal. The Standing Counsel for ESI thereafter submitted that even in respect of contract workers, the petitioner TNCS is eligible to contribute in terms of Section 40 of the ESI Act. But in the present case, the demand is not in favour of any contract workers engaged by the Contractors and outsourced by the TNCSC. In any event, exemption obtained by the petitioner TNCSC in terms of Section 87,88 r/w 91A will not enure to the benefit of the contract labour if their employers are otherwise covered by the provisions of the ESI Act.
11. Hence, all the impugned demand notices are set aside and the ESI is directed to refund the amount collected from the petitioner TNCSC through garnishee proceedings from the bankers of the TNCSC. In this context, it is necessary to refer to UP Road Transport Corporation through its Regional Manager, Gorakhpur v. E.S.I. Corporation,Kanpur and another reported in 2009 2 LLJ 247 : 2009 2 LLN 130, wherein, it was held that if there was any exemption in force, the employer is not bound to pay contributions from the date on which exemption was granted to that employer. Hence, the respondent ESI is hereby directed to refund the amount collected from the petitioner Corporation through coercive proceedings, within a period of two months from the date of receipt of a copy of the order.
12. The submission of the learned Advocate General that for the future period, their application for exemption is pending with the State Government, who is also made as a party 6th respondent in the writ petition and necessary directions may be issued to them. It must be noted that ESI Act has undergone a change by amendments made by the Central Act 18/2010. The amendments have been brought into force with effect from 01.06.2010 by a Statutory Order S.O.1296E, Ministry of Labour, Government of India, dated 01.06.2010. By virtue of the amendment, the power of exemption hence forth shall vest only with the Central Government.
13. The new provision in Section 91AA reads as follows:-
“91AA. Notwithstanding anything contained in this Act, in respect of establishments located in the States where medical benefit is provided by the Corporation, the Central Government shall be the appropriate Government”.
14. Further Section 91A earlier empowering the Government to grant exemptions either prospectively or retrospectively has been amended and henceforth any exemption order can be granted prospectively by the Government. Therefore, if at all the petitioner corporation seeks for any future exemption that has to be done only by the Central Government that too it can be done prospectively.
15. In the light of the above, all the writ petitions will stand allowed to the extent indicated above. However, the parties are allowed to bear their own costs.
15.02.2011
svki
Index : Yes/No
Internet: Yes/No
To
1.Authorised Officer,
Insurance Branch -VI,
Employees State Insurance Corporation,
Chennai 600 034.
2.The Recovery Officer,
Regional Office,
ESI Corporation,
Chennai 600 034.
3.Regional Director,
ESI Corporation,
Chennai 600 034.
4.The Chief Manager,
State Bank of India,
Gopalapuram Branch,
Chennai 600 086.
5.Secretary to Government of Tamil Nadu,
Labour and Employment Department,
Fort St.George,
Chennai 600 009.
K.CHANDRU,J.
Svki
W.P.Nos.6002 to 6004 of 2006
15.02.2011