* HIGH COURT OF DELHI : NEW DELHI
FAO. No.211/1999
% Judgment reserved on: 13th July, 2009
Judgment delivered on: 21st July, 2009
Employees‟ State Insurance Corp.
Through its Regional Director,
Regional Office,
DDA Shopping-cum-Office Complex,
Rajindra Place,
New Delhi ....Appellant
Through: Mr. K.P. Mavi, Adv.
Versus
M/s. B.S. Electro Chem,
9th Mile Stone,
Bawana Road,
Delhi-110 042,
(Through its Managing Partner
S. Kuldip Singh) ...Respondent.
Through: Mr. Ved Prakash Trikha,
Adv.
Coram:
HON'BLE MR. JUSTICE V.B. GUPTA
1. Whether the Reporters of local papers may
be allowed to see the judgment? Yes
2. To be referred to Reporter or not? Yes
3. Whether the judgment should be reported
in the Digest? Yes
FAO No.211/1999 Page 1 of 10
V.B.Gupta, J.
Appellant has filed present appeal under Section 82 of the Employees State Insurance Act, 1948 (for short as „Act‟) challenging the judgment dated 5th February, 1999, vide which Senior Civil Judge, Delhi, allowed petition of respondent filed under Section 75 of the Act.
2. Brief facts of case are, that respondent is running his factory at Bawana, Delhi. On 7th December, 1989, an inspector of appellant visited factory premises and informed respondent that his factory along with office, is covered under the provisions of the Act. Respondent was also informed that they will receive a communication from the appellant in the shape of "Code Number" so that he may deposit monthly contributions of the employees.
3. In March, 1994, respondent received Code Number "11-22623-34" from appellant and thereafter, respondent started complying the provisions of the Act, regularly w.e.f. 11th March, 1994.
FAO No.211/1999 Page 2 of 10
4. In April, 1994, respondent received letter dated 25th March, 1994, wherein he was asked to pay contribution w.e.f. 25th August, 1989. In July, 1994, respondent received a show cause notice wherein, he was asked to pay Rs.64,705.53p. as contribution for the period from 25th August, 1989.
5. Representative of respondent appeared before appellant‟s Officer and explained the position about non receipt of the Code Number. It is alleged that appellant threatened to recover the contribution to the tune of 62,435.35p along with the interest, which is barred by time as well as illegal and unjustified.
6. Appellant contested the petition and stated that respondent was given a Code Number, which was intimated to him, vide letter dated 6th March, 1990 which was duly sent and served upon respondent. In spite of receipt of Code Number, respondent did not bother to comply with the provisions of the Act and did not make payment. It is denied that demand is barred by time or illegal.
FAO No.211/1999 Page 3 of 10
7. Vide impugned judgment, trial court held;
"Petitioner is not liable to pay the contribution for the period from 25th August, 1989 to 31st March, 1994 on adhoc basis, and it is declared that the applicant could not make the compliance under the provisions of the Act as he was not supplied with the Code Number which is very essential for making the compliance, and the respondent is not competent in this case to take any action against the application under Section 45-A to 45-I of the ESI Act. However, as submitted by the counsel for the petitioner, the ESIC may recover the actual amount on the basis of actual record existing in the office and factory of petitioner on actual basis"
8. It is contended by learned counsel for appellant that Code Number was intimated to respondent on 6th March, 1990, which was duly served and received by him. As respondent is covered under the Act, w.e.f. 25th August, 1989, he was liable to pay contribution in accordance with law. It is also contended that under the provisions of the Act and regulations made there under, as soon as a unit of employer is covered under the provisions of the Act, a duty is cast upon employer to get the unit covered under the provisions of the Act FAO No.211/1999 Page 4 of 10 and to comply with its provisions. Admittedly, as on 25th August, 1989, respondent employed 21 employees, thus, his unit was covered under the provisions of the Act and demand of appellant is totally legal, just and valid.
9. On the other hand, it is contended by learned counsel for respondent that, demand raised by appellant is time barred. Respondent never received Code Number, except the same was received in March, 1994 and respondent made compliance thereafter. Respondent could not make the compliance for the period from 25th August, 1989 to 1994, as they did not receive any Code Number for this period.
10. There is no denying of the fact that establishment of respondent, is covered under the provisions of the Act. Short question for consideration is, as to what is effect of non receipt of "Code Number" by respondent.
11. Regulation 10B of "The Employees‟ State Insurance (General) Regulations, 1950", which deals with allotment of "Code Number" reads as under; FAO No.211/1999 Page 5 of 10
"10B. Registration of factories or establishments:-
"(a) The employer in respect of a factory or an establishment to which the Act applies for the first time and to which an Employer‟s Code Number is not yet allotted and the employer in respect of a factory or an establishment to which the Act previously applied but has ceased to apply for the time being, shall furnish to the appropriate Regional Office not later than 15 days after the Act becomes applicable, as the case may be, to the factory or establishment, a declaration of registration in writing in Form 01 (hereinafter referred to as Employer‟s Registration Form).
(b) The employer shall be responsible for the correctness of all the particulars and information required for and furnished on the Employer‟s Registration Form.
(c) The appropriate Regional Office may direct the employer who fails to comply with the requirements of paragraph (a) of this regulation within the time stated therein, to furnish to that office Employer‟s Registration Form duly completed within such further time as may be specified and such employer shall, FAO No.211/1999 Page 6 of 10 thereupon, comply with the instructions, issued by that office in this behalf.
[(cc) The employer in respect of a factory or establishment to which a Code Number has been issued by the Corporation based on information collected or decision taken regarding applicability of the Act to such factory or establishment, shall, within fifteen days or receipt of information of allotment of Code Number, furnish a declaration in Form-01.]
(d) Upon receipt of the completed Employer‟s Registration Form, the appropriate Regional Office shall, if satisfied that the factory or the establishment is one to which the Act applies, allot to it an Employer‟s Code Number (unless the factory or the establishment has already been allotted an Employer‟s Code Number) and shall inform the employer of that number.
(e) The employer shall enter the Employer‟s Code Number on all documents prepared or completed by him in connection with the Act, the rules and these regulations and in all correspondence with the appropriate office."FAO No.211/1999 Page 7 of 10
12. As per these regulations it is clear, that once Employer‟s Registration form is received by appropriate Regional Office, they shall allot a Code Number, called as "Employer‟s Code Number" to the employer, whose establishment is governed under the Act. The word used in the Regulation is „Shall‟ which means, it is the duty of the Regional Office, to provide with Code Number without which, contribution is not possible.
13. Appellant‟s case is that Code Number was sent and delivered to respondent on 6th March, 1990, whereas, respondent‟s case is that it did not receive any Code Number on that date.
14. Sh. R.K.Arya (RW-2), appellant‟s witness in cross examination admitted;
"There is no document on record in the shape of postal receipt which could suggest that the plaintiff was sent the Code Number to comply with the provisions of the Act. If the Code Number is not sent to the employer that the amount cannot be deposited."FAO No.211/1999 Page 8 of 10
15. Trial court, accordingly held;
"The respondent has taken the plea that the Code Number was sent and delivered to the petitioner on 6th March, 1990. But no evidence has been led to prove that the Code Number was duly sent and received by the petitioner. No evidence has been led to prove that it was actually served upon the petitioner. In the absence of issuance of the Code Number, the petitioner could not have deposited the contribution as argued by him."
16. It is further held;
"The claim that it was sent on 6th March, 1990 has not been proved on the record either by leading evidence or proving the receipt of the same. The mode of sending the same has also not been disclosed and no postal receipt of the AD has been filed and proved on the record. It is in the interest of justice and the principles of natural justice demand that communication for deposit of the contribution be made within reasonable time, so as to enable the employer to deposit the contribution. In the present case, it has taken five long years to send the notice -that too adhoc assessment recovery notice by the respondent to the petitioner, which is against the principles of natural justice and FAO No.211/1999 Page 9 of 10 suggest latches on the part of the ESIC."
17. So, as per testimony of RW 2, contribution cannot be made without issuance of Code Number and appellant failed to prove issuance of Code Number to respondent on 6th March, 1990. Respondent, being a bonafide employer, is complying with the provisions of the Act, from the date of receipt of "Code Number" and has not committed any default, since then.
18. In view of the above evidence on record, no infirmity or ambiguity can be found in the judgment of trial court.
19. Present appeal, therefore, is not maintainable and same is hereby dismissed, with costs throughout.
20. Trial court record be sent back.
July 21, 2009 V.B.GUPTA, J.
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FAO No.211/1999 Page 10 of 10