{"id":270192,"date":"2010-12-01T00:00:00","date_gmt":"2010-11-30T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/transport-vs-employees-on-1-december-2010"},"modified":"2016-01-27T15:18:39","modified_gmt":"2016-01-27T09:48:39","slug":"transport-vs-employees-on-1-december-2010","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/transport-vs-employees-on-1-december-2010","title":{"rendered":"Transport vs Employees on 1 December, 2010"},"content":{"rendered":"
Gujarat High Court<\/div>\n
Transport vs Employees on 1 December, 2010<\/div>\n
Author: Ks Jhaveri,&Nbsp;<\/div>\n
   Gujarat High Court Case Information System \n\n  \n  \n    \n\n \n \n    \t      \n         \n\t    \n\t\t   Print\n\t\t\t\t          \n\n  \n\n\n\t \n\t \n\t \n\t \n\t \n\t \n\t \n\t \n\t \n\t\n\n\n \n\n\n\t \n\nSCA\/25273\/2006\t 7\/ 7\tJUDGMENT \n \n \n\n\t\n\n \n\nIN\nTHE HIGH COURT OF GUJARAT AT AHMEDABAD\n \n\n \n\n\n \n\nSPECIAL\nCIVIL APPLICATION No. 25273 of 2006\n \n\n \nFor\nApproval and Signature:  \n \nHONOURABLE\nMR.JUSTICE KS JHAVERI\n \n \n=========================================================\n\n \n\t  \n\t \n\t  \n\t\t \n\t\t\t \n\n1\n\t\t\n\t\t \n\t\t\t \n\nWhether\n\t\t\tReporters of Local Papers may be allowed to see the judgment ?\n\t\t\n\t\n\n \n\t  \n\t \n\t  \n\t\t \n\t\t\t \n\n2\n\t\t\n\t\t \n\t\t\t \n\nTo be\n\t\t\treferred to the Reporter or not ?\n\t\t\n\t\n\n \n\t  \n\t \n\t  \n\t\t \n\t\t\t \n\n3\n\t\t\n\t\t \n\t\t\t \n\nWhether\n\t\t\ttheir Lordships wish to see the fair copy of the judgment ?\n\t\t\n\t\n\n \n\t  \n\t \n\t  \n\t\t \n\t\t\t \n\n4\n\t\t\n\t\t \n\t\t\t \n\nWhether\n\t\t\tthis case involves a substantial question of law as to the\n\t\t\tinterpretation of the constitution of India, 1950 or any order\n\t\t\tmade thereunder ?\n\t\t\n\t\n\n \n\t  \n\t \n\t  \n\t\t \n\t\t\t \n\n5\n\t\t\n\t\t \n\t\t\t \n\nWhether\n\t\t\tit is to be circulated to the civil judge ?\n\t\t\n\t\n\n \n\n \n=========================================================\n\n \n\nTRANSPORT\nCORPORATION OF INDIALTD.THROUGH DIPTESH MATHUR - Petitioner(s)\n \n\nVersus\n \n\nEMPLOYEES\nSTATE INSURANCE - CORPORATON. & 2 - Respondent(s)\n \n\n=========================================================\n \nAppearance\n: \nMR\nMC BHATT for\nPetitioner(s) : 1, \nMR SACHIN D VASAVADA for Respondent(s) :\n1, \nRULE SERVED for Respondent(s) : 2 -\n3. \n=========================================================\n\n\n \n\t  \n\t \n\t  \n\t\t \n\t\t\t \n\nCORAM\n\t\t\t: \n\t\t\t\n\t\t\n\t\t \n\t\t\t \n\nHONOURABLE\n\t\t\tMR.JUSTICE KS JHAVERI\n\t\t\n\t\n\n \n\n \n \n\n\n \n\nDate\n: 09\/02\/2010 \n\n \n\n \nORAL\nJUDGMENT<\/pre>\n
1.\t\tThe
\npetitioner has prayed to quash and set  aside the impugned order
\ndated 23rd
\nNovember  2006 passed  by the respondent No. 1 Employee State
\nInsurance Corporation  directing the petitioner  to pay the interest
\namount of Rs 21,27,087\/- with interest   from 30th
\nMarch 1975 to 31st
\n March 1988 towards ESI
\ncontribution payable  by the petitioner and further  directing the
\npetitioner to pay Rs 39,722\/- as interest  amount  from 1st
\nMarch  2006 to 2nd
\n August 2006.\n<\/p>\n
2.\t\tThe
\npetitioner company has business operations in various parts of
\nGujarat. A dispute arose between the petitioner and the respondent
\nno.1 regarding the date from which the Employees State Insurance Act<\/a>
\nwould be applicable to the business establishments of the petitioner
\nin the State of Gujarat. According to the petitioner the provisions
\nthe Employees State Insurance Act<\/a> did not apply to the business
\nestablishments of the petitioner company from 30th
\nMarch 1975 to 31st
\nMarch 1988. The respondent no.1 issued notice dated 6th
\nApril 1990 demanding a sum of Rs.7,79,491\/- as ESI dues from 30th
\nMarch 1975 to 31st
\nMarch 1988 and also made demand of Rs.3,47,122\/- under the head of
\ninterest payable from 1st
\nApril 1988 to 31st
\nJuly 1990. Thus, the respondent no.1 demanded a total sum of
\nRs.11,26,613\/- from the petitioner  and  according to the notice it
\nwas an adhoc assessment.\n<\/p>\n
3.\t\tThe
\npetitioner challenged the decision of the respondent no.1 by way of
\ninitiating proceedings before Employees Insurance Court, Ahmedabad
\nbeing Application (EI) No.66 of 1990. The Employees Insurance Court,
\nAhmedabad, by judgement and order dated 17th
\nAugust 1993 upheld the contention of the petitioner  that the
\nprovisions of the said Act are not applicable to the business
\nestablishment of the petitioner from the year 1975 to 1988.\n<\/p>\n
4.\t\tFeeling
\naggrieved by the aforesaid judgement and order dated 17th
\nAugust 1993 the respondent no.1  preferred First Appeal No.1302 of
\n1996 before this Court which came to be allowed by judgement and
\norder dated 10th
\nJuly 2006 and set aside the order passed by the Employees Insurance
\nCourt. Thereafter respondent no.1 issued prohibitory order on 26th
\nJuly 2006 against the petitioner demanding a sum of Rs.29,50,743\/-
\nagainst which the petitioner has preferred Special Civil Application
\nNo.15457 of 2006 before this Court. By consensus the said petition
\nwas disposed of and the petitioner was to make a representation to
\nthe respondent no.1. The respondent no.1 made a representation
\n to the respondent  no.1 on 20th
\nNovember 2006. The respondent  no.1 passed final order on 23rd
\nNovember 2006 directing the petitioner to pay interest amount of
\nRs.21,27,087\/-  from 30.3.1975 to 31.3.1988 on ESI Contribution
\npayable by the petitioner. The petitioner was further directed to pay
\nRs.39,722\/- as interst amount from 1.3.2006 to 2.8.2006. It is
\nagainst the said order that the present petition has been filed.\n<\/p>\n
5.\t\tLearned
\nAdvocate for the petitioner submitted that  the authority has
\ncommitted gross error in mis-interpreting and misconstruing section
\n39(5)<\/a> of the Act;  that the authority has failed to appreciate and
\nfollowing the binding judgements delivered by the Apex Court; that
\nthe dispute is only for the period between 30.3.1975 and 31.3.1988
\nand now practically three times the amount is demanded; that ESI
\nCourt  held that the Act did not apply to the petitioner s
\nestablishment upto 1.4.1988 and therefore the amount was not payable
\nupto 17.5.1993 and thereafter till this Court delivered judgement
\ndated 10.7.2006 and therefore the the amount of contribution was not
\ndue from the petitioner till 10.7.2006.\n<\/p>\n
6.\t\tLearned
\nAdvocate for the petitioner submitted that  during the disputed
\nperiod employees neither availed of any medical facility provided by
\nthe ESI Corporation nor any other incidental benefits provided by the
\nESI Corporation and therefore the Corporation ought to have adopted a
\npragmatic approach and ought not to have insisted for payment of the
\nprincipal amount of contribution after the judgement of this Court.\n<\/p>\n
7.\t\tLearned
\nAdvocate for the petitioner has relied upon a decision in the case of
\n M\/s Goetze (India) Limited  Vs. Employees State Insurance
\nCorporation, reported in AIR 2008 SCW 5263 wherein it is held that in
\ncase of delay in making payment   the liability to pay interest
\nbeing statutory  there is no power  to waive  the same.\n<\/p>\n
8.\t\tMr.\n<\/p>\n
Sachin D. Vasavada, learned Advocate appearing for respondent no.1
\nsubmitted that  the petitioner has no case on merits; that the
\npetitioner has never disputed the amount of contribution for the
\ndisputed period i.e. 30.3.1975 to 31.3.1988; that in view of the
\njudgement passed by this Court in First Appeal No.1302 of 1996 the
\npetitioner is liable to make the payment and that the liability of
\ninterest is an automatic statutory liability as per section 39(5)<\/a> to
\nbe read with its Regulation No.31-A of the ESI Act and therefore the
\nrespondent no.1 is right and justified in demanding the statutory
\nintesrest on unpaid amount of the contribution for the period. He
\ntherefore submitted that the petition  deserves to be dismissed <\/p>\n
9.\t\tLearned
\nAdvocate for the respondent has relied upon a decision in the case of
\nTransport Corporation of India Vs. ESIC, reported in AIR 2000 SC 238.\n<\/p>\n
10.\t\tAs
\n a result of hearing and perusal of the record, there is no dispute
\nwith regard to the  liability of the petitioner to make payment for
\nthe period from 30th
\nMarch 1975 to 31st
\nMarch 1988. In this connection the petitioner had approached ESI
\nCourt and the ESI Court had ruled in favour of the  petitioner
\nholding that the said Act did not apply to its business
\nestablishments for the period in question. The matter was examined by
\nthis Court in First Appeal No.1302\/96 and reversed the findings of
\nESI Court. The operative part of the said order reads as under:\n<\/p>\n
\t The issue  involved in this appeal
\n is squarely covered by a decision  of the Apex Court  in the case of
\n   Transport Corporation and another  reported in AIR 2000 SC 230
\nwherein  the Apex Court  held as under :\n<\/p>\n
\t  From  the definition  of the turn
\nemployee  in S.2(9) and the definition of term immediate  employer
\nin S. 2(13)<\/a> it becomes  at once clear  that if a person is employed
\non wages in connection with the  work of establishment  to which  the
\nact applies  and if the establishment is immediate  employer  of such
\na person  under whose supervision  he has to undertake  the work  and
\ncan be said to be employer  by or through the establishment
\nconcerned,  the  immediate  employer, being such establishment, under
\nwhose supervision or under whose  agent’s  supervision the employee
\nworks will get covered  by the sweep  of the Act. The term
\nPrincipal Employer  is found in sub sec. (17) of section 2<\/a>. A
\nconjoint   reading   of sub-sec, (9), (13) and (17) 9f section 2<\/a>,
\ntherefore, clearly  shows that if the head office or the registered
\noffice of the establishment is controlling  it branch office, the
\nemployee  working in its branch can obviously  be treated  to be an
\nemployee  working under the supervision of the principal employer  or
\nhis agent. Consequently, once such principal employer’s  having  head
\noffice  in one state  of Andhra Pradesh  is covered by the seep of
\nthe Act, automatically  employees  working  in its branches, may be
\nany where in India, including  the branch at Bombay  would  get
\ncovered by the seep of the Act. That would be the direct  consequence
\n of the applicability of Act by the notification of the appropriate
\ngovernment, namely the Andhra Pradesh  Government under section 1(5)<\/a>
\nof the Act. The provisions   of Section 38<\/a>, 40<\/a>, regns.10-B, 226 and
\nthe prescribed forms  make the statutory  scheme  further clear that
\nthe employees  of branch office of an establishment would get covered
\nby the beneficial sweep of the Act.\n<\/p>\n
5.2\tIn
\nabove view  of the matter,  I am of the  opinion that the Court below
\n has committed an error in passing the impugned judgement and order
\nand ought to have held that since, the head office of the opponent
\nNo. 1 is covered  by the said Act in the year 1975, the employees of
\nbranch office of the opponent No. 1 would also get covered by the
\nbeneficial sweep of the said Act. Hence, the appeal deserves to be
\nallowed.\n<\/p>\n
11.\t\tTherefore
\nit was settled that the petitioner was liable to make payment for the
\nperiod between  30th
\nmarch 1975 and  31st
\nMarch 1988. Since the Head office of the petitioner has been covered
\nfrom 1975 under the provisions of the Act, the stand of the
\nrespondent Corporation was to cover the present petitioner branch and
\naccordingly the Corporation issued various notices intimating the
\npetitioner to comply with the provisions of ESI  Act with direction
\nto start depositing the amount of contribution in ESI Corporation.
\nHowever, the petitioner did not follow the provisions of law and had
\nalso not responded to various notices issued to the petitioner from
\ntime to time. It also appears
\nthat the petitioner company has not been maintaining records as per
\nsection 40<\/a> read with Regulation 39 of the ESI Act  and even the
\nOfficers of the respondent Corporation were not allowed to inspect
\nthe record. It is under these circumstances that the prohibitory
\norder to recover the amount came to be issued.\n<\/p>\n
Section
\n39<\/a> of the Act reads as under:\n<\/p>\n
39. Contribution (1)\tThe contributions
\npayable under this Act in respect tof an employee shall comprise
\ncontribution payable by the employer (hereinafter referred to as the
\nemployer s contribution) and contribution payable by the employee
\n(hereinafter referred to as the employee s contribution  and
\nshall be paid to the corporation.\n<\/p>\n
[2]\t&&<\/p>\n
[3]\t&&..\n<\/p>\n
[4]\t&&..\n<\/p>\n
[5][a]\tIf any contribution payable
\nunder this Act is not paid by the principal employer on the date on
\nwhich such contribution has become due, he shall be liable to pay
\nsimple interest at the rate of twelve percent per annum or at such
\nhigher rate as may be specified in the regulations till the date of
\nits actual payment.\n<\/p>\n
\tProvided that higher interest
\nspecified in the regulations shall not be exceed the lending rate of
\ninterest charged by any schedule bank.\n<\/p>\n
[b]\tAny interest recoverable under
\nclause (a) may be recovered as an arrear of land revenue or under
\nsection 45-C<\/a> to section 51-I<\/a> .\n<\/p>\n
13.\t\tRegulation
\n31-A reads as under:\n<\/p>\n
31-a\tInterest on contribution due, but
\nnot paid in time: – An employer fails to pay contributions within the
\nperiod specified in Regulation 31 shall be liable to pay simple
\ninterest at the rate of twelve per cent per annum in respect of each
\nday of default or delay in payment of contributions.\n<\/p>\n
Regulation 31-B\tRecovery of interest
\nAny interest payable under Regulation 31-A may be recovered as an
\narrear of land revenue or under section 45-C<\/a> to section 45-I<\/a> of the
\nAct.\n<\/p>\n
14.\t\tIn
\nview of the judgement passed by this Court in First Appeal No.
\nNo.1302\/96 the provisions of ESI Act are applicable to the Head
\nOffice as well as the present petitioner from the date of 30th
\nMarch 1975. Therefore the respondent Corporation was justified in
\ndemanding the amount of contribution from the period from 30.3.1975
\nto 31.3.1988 with interest. It is by now  well settled by the Apex
\nCourt  that interest  amount  statutorily payable cannot be waived.
\nIt is required to be noted that the respondent Corporation has
\ncarried out final assessment and accordingly petitioner was issued
\nwith 45A notice to recover the statutory dues.  Therefore it is
\nincorrect to say that the demand of the Respondent Corporation was
\nsolely on the basis of ad hoc assessment. Further, merely because the
\npetitioner was pursuing the remedy, it cannot be said that the
\npetitioner is absolved of making  interest on the amount in question.
\n Charging of interest is as per the provisions of the Act and it
\ncannot be waived even though the party was pursuing a remedy and
\nultimately failed in the litigation.\n<\/p>\n
13.\t\tIn
\nthe premises aforesaid, I do not find any merits in the petition. The
\npetition is, therefore, dismissed. Rule is discharged with no order
\nas to costs.\n<\/p>\n
\t\t\t\t\t\t\t(K.S.\n<\/p>\n
Jhaveri,J.)<\/p>\n
mary\/\/<\/p>\n
\t\t   \u00a0\u00a0\u00a0<\/p>\n
\t\t   Top<\/p>\n","protected":false},"excerpt":{"rendered":"
Gujarat High Court Transport vs Employees on 1 December, 2010 Author: Ks Jhaveri,&Nbsp; Gujarat High Court Case Information System Print SCA\/25273\/2006 7\/ 7 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 25273 of 2006 For Approval and Signature: HONOURABLE MR.JUSTICE KS JHAVERI ========================================================= 1 Whether Reporters of Local Papers may […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[16,8],"tags":[],"class_list":["post-270192","post","type-post","status-publish","format-standard","hentry","category-gujarat-high-court","category-high-court"],"yoast_head":"\nTransport vs Employees on 1 December, 2010 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/transport-vs-employees-on-1-december-2010\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Transport vs Employees on 1 December, 2010 - 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