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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
: NAGPUR BENCH : NAGPUR.
FIRST APPEAL NO. 514/2008
WITH
FIRST APPEAL NO.84/2005
WITH
FIRST APPEAL NO.89/2005
FIRST APPEAL NO. 514/2008
APPELLANTS : 1. Akola Taluka Sahakari Shetki Kharedi Vikri
Samiti Ltd., Akola, through its Manager
Suresh Tulshiram Harne.
2. Dhananjay Madhukarrao s/o Ramrao Bhuibar,
President, Akola Taluka Sahakari Shetki
Kharedi Vikri Samiti Ltd., Akola.
3. Anandrao Govindrao Patil, Vice-President,
Akola Taluka Sahakari Shetki Kharedi Vikri
Samiti Ltd., Akola.
VERSUS
RESPONDENTS : 1. The Joint Regional Director,
E.S.I. Corporation, Sub-Regional Office,
Nagpur - 18.
2. The Asstt. Regional Director,
E.S.I. Corporation, Sub-Regional Office,
Nagpur - 18.
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Mrs. Anjali Joshi, Advocate for the appellants.
Mr. B. P. Maldhure, Advocate for the respondent Nos.1 and 2.
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WITH
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FIRST APPEAL NO. 84/2005
APPELLANTS : 1. The Joint Director,
ESI Corporation, Sub-Regional Office,
Nagpur - 18.
2. The Assistant Regional Director,
E.S.I. Corporation, Sub-Regional Office,
Nagpur - 18.
VERSUS
RESPONDENTS : 1. Akola Taluka Sahakari Shetki Kharedi Vikri
Samiti Limited, Akola, through its Manager
Shri Sahadeo Goyindrao Choukhande.
2. Dhananjay Madhukar Bhuibhar,
President, Akola Taluka Sahakari Shetki
Kharedi Vikri Samiti Limited, Akola
C/o Akola Taluka Sahakari Shetki Kharedi
Vikri Samiti Limited, Akola.
3. Anandrao Govindrao Patil,
Vice-President, Akola Taluka Sahakari Shetki
Kharedi Vikri Samiti Limited, Akola,
C/o Akola Taluka Sahakari Shetki Kharedi
Vikri Samiti Limited, Akola.
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Mr. B. P. Maldhure, Advocate for the appellants.
Mrs. Anjali Joshi, Advocate for the respondent Nos.1 to 3.
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WITH
FIRST APPEAL NO. 89/2005
APPELLANTS : 1. The Deputy Director,
ESI Corporation, Sub-Regional Office,
Nagpur - 18.
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2. The Recovery Officer,
Shri D. Venugopal,
E.S.I. Corporation, Sub-Regional Office,
Nagpur - 18.
VERSUS
RESPONDENTS : 1. Akola Taluka Sahakari Shetki Kharedi Vikri
Samiti Limited, Akola, through its Manager
Shri Sahadeo Govindrao Choukhande.
2. Anandrao Govindrao Patil,
Vice-President, Akola Taluka Sahakari Shetki
Kharedi Vikri Samiti Limited, Akola,
C/o Akola Taluka Sahakari Shetki Kharedi
Vikri Samiti Limited, Akola.
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Mr. B. P. Maldhure, Advocate for the appellants.
Mrs. Anjali Joshi, Advocate for the respondent Nos. 1 and 2.
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CORAM : A.S.CHANDURKAR, J.
DATE : 02/03/2017. ORAL JUDGMENT :
1. Since these appeals filed under Section 82 (2) of the Employees State Insurance Act, 1948 (for short "the said Act) raise challenge to the Judgment of the Industrial Court, Akola in ESI Application No.1/1987 and ESI Application No.2/99, they are being decided by this common judgment. ::: Uploaded on - 14/03/2017 ::: Downloaded on - 27/08/2017 18:34:42 :::
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2. The appellant in First Appeal No.514/2008 is a Society registered under the provisions of the Maharashtra Co-operative Societies Act, 1960. It has six Cotton Procuring Centers at Akola Zone, out of which, five are within Municipal Limits of Akola City and one is situated at Borgaon Manju. The activities of the said society are with regard to supply of seeds, fertilizers and insecticides. On 17/06/1986, the Inspector of the Employees State Insurance Corporation visited the office of the society and on that basis, show cause notice dated 19/12/1986 came to be issued to the said society calling upon it to pay contribution for the period from 01/07/1985 till 30/09/1986. The society submitted its reply on 16/02/1987 and stated that it was not covered by the Notification dated 03/10/1981 and hence, it was not liable to pay any contribution. On 29/06/1987, an order under Section 45-A of the said Act came to be passed holding that the society was covered under the provisions of the said Act and was liable to pay contribution. Accordingly, demand of Rs.27,641/- came to be made. Thereafter, Recovery Certificate was also issued under the provisions of the said Act. Being aggrieved, the society filed two applications under the provisions of Section 75 of the said Act and by judgment dated 22/11/2004, it was held that the establishment of the society was covered under the said Act. The order directing payment of interest was set aside and the society was directed to pay only the actual amount of contribution. The society being aggrieved by the aforesaid order, ::: Uploaded on - 14/03/2017 ::: Downloaded on - 27/08/2017 18:34:43 ::: 5 FA-514-08.odt has filed First Appeal No.514/2008. The Corporation being aggrieved by the order refusing to grant interest on the amount of contribution has filed First Appeal Nos. 84/2005 and 89/2005.
3. Smt. Joshi, learned counsel for the appellant in First Appeal No.514/2008 submitted that the activities done by the society did not qualify for being covered under the provisions of the said Act. It was submitted that only the activity of purchasing agricultural produce was done from non- members while all other activities were carried out only with regard to members of the society. The Fertilizer Depot did not permit purchase by non- members. She submitted that insofar as the Petrol Pump operated by the society was concerned, the same was independently registered as a commercial establishment. Every activity of the society was independent and not inter-dependent. The word "shop" was not defined under the said Act and same could not be given a wide meaning as was done by the Industrial Court. It was then submitted that presently, there were only seven the employees of the society and at no point of time did the number of employees exceed 20. It was, therefore, submitted that the question of applicability of the Act was required to be decided in favour of the society. There was therefore no question of paying any contribution. ::: Uploaded on - 14/03/2017 ::: Downloaded on - 27/08/2017 18:34:43 :::
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4. Smt. Maldhure, learned counsel for the Corporation, on the other hand, submitted that activities conducted by the society were systematic in nature and were also inter-dependent with each other. Referring to the bye- laws of the society, it was submitted that services were provided by the society even to members of the public. She submitted that as per the Notification dated 03/10/1981, the activities of the society were covered and during inspection, it was found that about 29 workers were engaged by the society. It was then submitted that exemption granted to the society on 08/06/2004 from making contribution itself indicated that earlier the establishment was covered due to which exemption was required to be granted. Even if certain activities were conducted beyond the areas specified in the Notification, they would be treated as activities of the establishment. In support of her submissions, the learned counsel placed reliance on the following decisions :
i) Transport Corporation of India Vrs. Employees' State Insurance Corpn. and another AIR 2000 SC 238.
ii) M/s Cochin Shipping Co. Vrs. E.S.I. Corporation (1992) 4 SCC 245. ::: Uploaded on - 14/03/2017 ::: Downloaded on - 27/08/2017 18:34:43 :::
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iii) Dhule Agricultural Produce Market Committee Vrs. Employees State Insurance Corporation and others 2003 (3) Mh. L. J. 916.
iv) Local Officer, Akola Area Office, Employees State Insurance Corporation and another Vrs. Ramdas s/o Ramrao Parika in F. A. No. 209/2004 decided on 03/12/2015.
It was, therefore, submitted that the order insofar as the demand for interest has been set aside is liable to be quashed.
5. The following substantial questions of law have been framed in the appeals. In First Appeal No.514/2008, the following substantial question of law was framed on 24/06/2008 :
Does the establishment of appellant attract the third part of the notification dated 03/10/1981 referred in this case and qualifies for coverage as a "shop" as contemplated by said notification and whether the trial Court committed an error in not considering the appellant on this material issue which goes to the root of the controversy involved in this case ?
6. In First Appeal No.84/2005, the following substantial question of law was framed :
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8 FA-514-08.odt Whether the Industrial Court was right in refusing the claim for interest in view of provisions of Section 39(5)(a) of E.S.I. Act is a substantial question of law ?
7. In First Appeal No.89/2005, the following substantial question of law was framed :
Whether the Court is erred in not awarding of the interest despite of mandatory provisions of Section 39 of the Employees State Insurance Act, 1948 ?
8. I have heard learned counsel for the parties at length and I have perused the records of the case.
9. As per the bye-laws of the society, various activities carried out by the society have been stipulated. The major activities carried out are with regard to the marketing of cotton, supply of seeds and fertilizers, advancing loans to the farmers, running Petrol Pump and various other activities. As per the document at Exh.C-19, it was found that during the course of inspection about 29 employees were discharging duties on behalf of the society. Though it was urged on behalf of the society that the engagement of some of the employees was of temporary nature, the fact remains that during the course of inspection, their presence was noted.
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10. In M/s. Cochin Shipping Company (supra), the Hon'ble Supreme Court has held that where an establishment carries out systematic commercial activities or economic activities, the establishment could be treated as being covered by the expression "shop". This decision has been subsequently followed in various other decisions and in Transport Corporation of India (supra), it has been further held that even if one of the offices or branches is situated outside the area as notified by the Notification, it would also be covered under the Act if it has functionary integrality with the Head Office. In the present case, the Industrial Court after considering the entire material on record came to the conclusion that the Corporation had rightly covered the society by treating it as an establishment. The finding as recorded is based on the evidence available on record and after correctly applying the applicable legal principles. The Industrial Court has noted that the Muster Roll and Payment Registers for relevant period were not produced to indicate that the number of employees were less than those stipulated. Thus, considering the aforesaid evidence, I do not find that it can be held that the society is not covered as an establishment under Notification dated 03/10/1981. The substantial question of law as framed in First Appeal No.514/2008 is, therefore, answered against the society. ::: Uploaded on - 14/03/2017 ::: Downloaded on - 27/08/2017 18:34:43 :::
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11. Once it is found that the activities of the society are covered under the provisions of the said Act, then it is clear that contribution can be demanded from it and if the same is not paid on the due date, interest is also liable to be paid as per the provisions of Section 39(5) of the said Act. Considering the provisions of Section 39(5) of the said Act read with Regulation No.31 (A) of the Employees State Insurance (General) Regulations, 1950, it is clear that the society would also be liable to pay interest on the amount of contribution. The decision in Local Officer, Akola Area Office (supra) supports the case of the Corporation. The Industrial Court committed an error when it held that interest was not liable to be paid by the society. The substantial questions of law as framed in First Appeal Nos.84/2005 and 89/2005 are answered in favour of the Corporation.
12. In view of aforesaid discussions, the following order is passed.
ORDER
i) The common judgment dated 22/11/2004 passed in ESI Application Nos.1/1987 and 2/1999 is partly modified. It is held that the establishment of the society is covered by provisions of the said Act and the society is liable to pay ::: Uploaded on - 14/03/2017 ::: Downloaded on - 27/08/2017 18:34:43 ::: 11 FA-514-08.odt contribution alongwith interest as demanded under Section 45-A of the said Act dated 29/06/1987.
ii) The interest on the amount of contribution shall be calculated in accordance with the provisions of Section 39(5) of the said Act read with Regulation No. 31(A) of the Employees State Insurance (General) Regulations, 1950.
iii) Accordingly, First Appeal Nos. 84/2005 and 89/2005 are allowed while First Appeal No.514/2008 stands dismissed. There shall be no order as to costs.
JUDGE Choulwar ::: Uploaded on - 14/03/2017 ::: Downloaded on - 27/08/2017 18:34:43 :::