Gujarat High Court
M/S. Maruti Travels vs E.S.I. Corporation on 29 July, 2025
NEUTRAL CITATION
C/FA/4183/2024 ORDER DATED: 29/07/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 4183 of 2024
With
CIVIL APPLICATION (FOR STAY) NO. 1 of 2024
In R/FIRST APPEAL NO. 4183 of 2024
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M/S. MARUTI TRAVELS
Versus
E.S.I. CORPORATION
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Appearance:
MR DG SHUKLA(1998) for the Appellant(s) No. 1
MR HARSHEEL D SHUKLA(6158) for the Appellant(s) No. 1
SHIVANG P JANI(8285) for the Defendant(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE DEVAN M. DESAI
Date : 29/07/2025
ORAL ORDER
1. The present First Appeal is filed by the appellant-original applicant under Section 82(2) of the Employees' State Insurance Act, 1948 (hereinafter referred to as 'the Act') challenging the judgment and order dated 19.09.2024 in E.S.I. Application No.25 of 2017 passed by Learned Employees' State Insurance Court, Ahmedabad.
2. Heard learned advocate Ms. Meshwa H. Bhatt for learned advocate Mr. D.G. Shukla for the appellant and learned advocate Mr. Shivang P. Jani for the respondent. Perused the record.
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3. With the request and consent of learned advocates for the parties, the present First Appeal is taken up for final hearing.
4. The brief facts of the case are as under:-
4.1. The Appellant Establishment was engaged in the business of travels. The Ahmedabad Municipal Corporation had invited tenders for availing CNG buses on a rental basis. Pursuant thereto, the Appellant Establishment submitted its bid, which came to be accepted on 19.05.2005. In compliance thereof, the Appellant Establishment supplied 12 buses. Officer of the Respondent Corporation visited the Appellant Establishment and unilaterally allotted ESI Code No. 37000261080001006. 4.2. Subsequently, with effect from 19.02.2008, the Ahmedabad Municipal Corporation terminated the bus services and restrained the Appellant Establishment from operating the buses. Consequently, after 19.02.2008, the Appellant Establishment disengaged its drivers and confined its activities solely for the collection of revenue.
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NEUTRAL CITATION C/FA/4183/2024 ORDER DATED: 29/07/2025 undefined 4.3. Thereafter, Respondent Corporation carried out an ad hoc assessment for the period commencing from 19.05.2005 to 30.09.2010, and passed an order dated 19.07.2011 under Section 45-A of the Act against the Appellant Establishment. 4.4. Subsequently, the Appellant Establishment preferred an ESI Application No.74 of 2015, assailing the order dated 19.07.2011 passed by the Respondent Corporation. 4.5. However, the Respondent Corporation issued form C-18 dated 29.11.2016 for the period from November 2011 to October 2016. In the course of the said proceedings, the Appellant Establishment submitted all requisite documentary evidence in support of its case. However, disregarding the same, the Respondent Corporation proceeded unilaterally to pass an order dated 20.02.2017 under Section 45A of the Employees' State Insurance Act, 1948, thereby raising a demand of Rs.13,06,305/- against the Appellant Establishment.
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4.6. Thereafter, the Appellant Establishment preferred ESI Application No.25 of 2017, challenging the order dated 20.02.2017 passed by the Respondent Corporation, before the Learned Employees' State Insurance Court. 4.7 Respondent Corporation appeared and filed Written Statement vide Exhibit-8. Issues were framed. Appellant Establishment relied on Examination-in-Chief Exhibit-13 and produced other documentary evidence in support of its application. Respondent Corporation also produced documentary evidence. After considering the evidence and material placed on record, Learned ESI Court vide judgment and order dated 19.09.2024, dismissed the said application. 4.8. Being aggrieved and dissatisfied with the impugned judgment and order dated 19.09.2024 passed by the Learned Employees' State Insurance Court, the Appellant Establishment has preferred the present appeal before this Court.
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5. Learned advocate for the appellant has submitted that appellant was having contract of providing C.N.G. Mini Buses with Ahmedabad Municipal Transport Service. Contract was terminated with effect from 19.02.2008. It is further submitted that respondent-Corporation issued Notice dated 13.07.2016 to appellant informing that appellant has not paid E.S.I. contribution for the month of October, 2010 till date. Said notice was issued even though respondent-Corporation was aware that the contract of appellant with A.M.T.S. has been terminated since 19.02.2008.
5.2. It is further submitted that respondent-Corporation thereafter issued Form C-18 dated 29.11.2016 proposing to determine and recover the amount of contribution payment amounting to Rs.13,51,350/- for the period from November, 2011 to October, 2016 under Section 45A of the Act and to show-cause as to why assessment should not be made as proposed.
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5.3. It is further submitted that appellant submitted Letter dated 31.01.2017 alongwith documents about the closure of the business w.e.f. 31.03.2010. It is further submitted that respondent-Corporation without appreciating documentary evidence, passed Order under Section 45-A of the Act. It is further submitted that appellant had submitted List of Documents at Exhibit-17 alongwith the deposition of affidavit of Shri Jagdishbhai Barot dated 01.03.2017. It is further submitted that learned ESI Court has passed impugned judgment and order without properly taking into consideration the documentary as well oral evidence submitted by the appellant. The impugned judgment and order dated 19.09.2024 is illegal, improper, unjust and perversed, and therefore, deserves to be quashed and set aside.
6. Per contra, learned advocate for the respondent has submitted that the order under section 45-A of the Employees' State Insurance Act, 1948 dated 20th February, 2017 directing Page 6 of 14 Uploaded by RINKU MALI(HC01574) on Mon Aug 04 2025 Downloaded on : Mon Aug 04 21:24:32 IST 2025 NEUTRAL CITATION C/FA/4183/2024 ORDER DATED: 29/07/2025 undefined appellant to pay Rs.13,06,305/- as arrears of contribution is just and legal. It is further submitted that the order was passed after affording opportunity of hearing to the appellant. The order dated 20th February, 2017 was passed based on notice dated 29 th November, 2016 indicating failure of appellant to pay contribution of Rs.13,06,305/- for period from November, 2011 to October, 2016.
6.1. It is further submitted that respondent issued show cause notice on 29th November, 2016 to appellant calling upon to show cause that appellant had not paid contribution for assume wages for the period from November, 2011 to October, 2016. It is further submitted that appellant had not produced any valid documentary evidence in support of their contention of closure of their unit though demanded vide letter dated 5 th September, 2011. It is further submitted that Social Security Officer of respondent visited the appellant's unit on 11 th January, 2008 to ascertain whether the appellant's unit is amenable to provisions of the Act and found that the appellant's unit is amenable under Page 7 of 14 Uploaded by RINKU MALI(HC01574) on Mon Aug 04 2025 Downloaded on : Mon Aug 04 21:24:32 IST 2025 NEUTRAL CITATION C/FA/4183/2024 ORDER DATED: 29/07/2025 undefined section 1(5) of the Act with effect from 19 th May, 2005 by virtue of employing more than 19 employees. It is further submitted that appellant was making default in payment of contribution. Respondent issued notice dated 13th July, 2016 and demanded payment of contribution. Appellant had not produced any record indicating that appellant had paid contribution. It is further submitted that question of law framed by appellant cannot be said to be substantial question of law but it is matter of fact. It is further submitted that closure of unit is fabricated story to avoid payment of contribution and statutory dues. Respondent submits that appellant has not produced any records indicating that the appellant has closed its unit with effect from 19 th February, 2008. It is submitted that appeal is liable to be dismissed.
7. I have considered the submissions canvassed by learned advocates for the parties and also perused the Record and Proceedings. An undisputed fact in the present appeal is that the appellant was covered under Section 1 (5) of the Act with effect Page 8 of 14 Uploaded by RINKU MALI(HC01574) on Mon Aug 04 2025 Downloaded on : Mon Aug 04 21:24:32 IST 2025 NEUTRAL CITATION C/FA/4183/2024 ORDER DATED: 29/07/2025 undefined from 19.05.2005. Social Security Officer of the respondent visited the appellant unit on 11.01.2008. As applicant was found making default in payment of contribution, a notice came to be issued on 13.07.2016, wherein on the basis of assume wages, contribution was determined at Rs.13,51,350/- from November 2011 to October 2016. Applicant by communication dated 31.01.2017 (Exhibit-31) informed the Regional Director of respondent-Corporation that the establishment has been closed from 31.03.2010 and there is no business during the period from October 2010 to October 2016. Documents regarding cancellation letter from Service Tax Department showing the status of the establishment as inactive, letter written to the Assistant PF Commissioner (Enforcement) regarding cancellation of PF dated 25.09.2014, visit note of the Enforcement Officer of Employees Provident Fund Organisation dated 07.05.2012, final report of Enforcement Officer showing closure of PF registration were submitted. A communication dated 10.12.2011 written to the Superintendent of Service Tax, Page 9 of 14 Uploaded by RINKU MALI(HC01574) on Mon Aug 04 2025 Downloaded on : Mon Aug 04 21:24:32 IST 2025 NEUTRAL CITATION C/FA/4183/2024 ORDER DATED: 29/07/2025 undefined Ahmedabad by appellant was also submitted before the Regional Director of the respondent-Corporation. Despite this evidence on record with the respondent-Corporation, respondent passed an order dated 20.02.2017 under section 45-A of the Act and total contribution payable by applicant was worked out at Rs.13,06,305/- for the period between January 2012 to October 2016 for 42 employees. The order came to be assailed before learned ESI Court by the appellant. Learned E.S.I. Court rejected the application by upholding the order passed under section 45-A of the Act. On perusal of Written Statement filed by the respondent-Corporation Exhibit-5, Corporation has admitted that applicant had intimated disclosure of their unit to respondent on 26.08.2011. It appears from the record that respondent-Corporation has produced documentary evidence which were submitted by appellant at the time of personal hearing before the corporation. Thus, it can be said that closure of applicant establishment was well within the knowledge of the respondent-Corporation. The visit note of the Page 10 of 14 Uploaded by RINKU MALI(HC01574) on Mon Aug 04 2025 Downloaded on : Mon Aug 04 21:24:32 IST 2025 NEUTRAL CITATION C/FA/4183/2024 ORDER DATED: 29/07/2025 undefined employees Provident Fund organisation also indicates that the establishment is closed from 31.03.2010. On July 2015, appellant paid the miscellaneous administration charges to the respondent-Corporation. It appears from the notice C-18 (ad hoc) dated 29.11.2016, the calculation of assume wages was made from November 2010 to October 2016, but when the order under Section 45-A of the Act came to be passed, period of demand of contribution was changed and the period is mentioned as of January 2012 to October 2016. There is no explanation with regard to the change of period. It is pertinent to observe that in the notice dated 29.11.2016, the demand of contribution is from November 2010 to October 2016 and the demand of contribution for the period between January 2012 to October 2016, is also Rs.13, 51,350/-. Moreover, when the order dated 20.02.2017 came to be passed by respondent-Corporation, they were having sufficient material that the business of appellant establishment has been closed from 31.03.2010 and there was no business between 01.10.2010 to 01.10.2016. There Page 11 of 14 Uploaded by RINKU MALI(HC01574) on Mon Aug 04 2025 Downloaded on : Mon Aug 04 21:24:32 IST 2025 NEUTRAL CITATION C/FA/4183/2024 ORDER DATED: 29/07/2025 undefined was ample material available with respondent-Corporation to revoke demand of contribution. The preliminary survey report Exhibit-22 dated 11.01.2008 indicates that officer of respondent has recorded the position as on 19.05.2005 and has further recorded that 26 employees covered as on 19.05.2005. The survey report Exhibit-22 does not mention details of employees engaged in the establishment on the date of inspection. The position of 2005 is irrelevant when respondent-Corporation is claiming unpaid contribution for the period between November 2011 and October 2016. The record reveals that the establishment was closed from March 2010. It is for the respondent-Corporation to primarily establish that the demand of contribution for the period between November 2011, upto October 2016 was legal and justifiable. When the business of the establishment was closed from 31.03.2010, the question of contribution starting from 01.10.2010 to 01.10.2016 is uncalled for. If the oral deposition of appellant is considered, which is recorded at Exhibit-13, appellant has reiterated the fact that Page 12 of 14 Uploaded by RINKU MALI(HC01574) on Mon Aug 04 2025 Downloaded on : Mon Aug 04 21:24:32 IST 2025 NEUTRAL CITATION C/FA/4183/2024 ORDER DATED: 29/07/2025 undefined establishment was closed from 31.03.2010 and there was no business since then. On the aspect of closure of establishment, there is no effective cross-examination by Corporation. In the cross-examination, appellant has stated that the business has been stopped and Corporation was intimated with regard to closure of establishment. When the demand of contribution under notice 29.11.2016 is faulty and based on assume wages, the order passed under section 45-A of the Act does not stand in the eyes of law. Learned ESI Court has failed to consider the evidence placed on record and has failed to appreciate the admitted fact that when the notice of demand was made for the period between October 2010 to October 2016, the establishment was closed and there was no business. When learned ESI Court has failed to appreciate the admitted position on record, in my opinion, the appeal deserves to be allowed and the same is allowed. Accordingly, the judgment and order dated 19.09.2024 in E.S.I. Application No.25 of 2017 passed by learned Employees' State Insurance Court, Ahmedabad is Page 13 of 14 Uploaded by RINKU MALI(HC01574) on Mon Aug 04 2025 Downloaded on : Mon Aug 04 21:24:32 IST 2025 NEUTRAL CITATION C/FA/4183/2024 ORDER DATED: 29/07/2025 undefined hereby quashed and set aside. The E.S.I. Application No.25 of 2017 is allowed. The connected Civil Application with the present First Appeal is also stands disposed of. No order as to costs.
9. Record and Proceedings, if any, be sent back to the learned Tribunal / Court forthwith.
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