Gujarat High Court
Regional Director Esi Corporation vs Sun Pharmaceutical Indstries Ltd on 30 July, 2025
NEUTRAL CITATION
C/FA/3253/2001 JUDGMENT DATED: 30/07/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 3253 of 2001
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE HEMANT M. PRACHCHHAK
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Approved for Reporting Yes No
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REGIONAL DIRECTOR ESI CORPORATION
Versus
SUN PHARMACEUTICAL INDSTRIES LTD
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Appearance:
MR SACHIN D VASAVADA(3342) for the Appellant(s) No. 1
MR KAUSTUBH SHRIVASTAV FOR NANAVATI ASSOCIATES(1375) for the
Defendant(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE HEMANT M.
PRACHCHHAK
Date : 30/07/2025
ORAL JUDGMENT
1. Present appeal is filed by the appellant - Employees State Insurance Corporation against the judgment and order dated 13.04.2000 passed by the Employees State Insurance Court, Vadodara (hereinafter referred to as 'the E.S.I. Court") in E.S.I. Application No. 10 of 1998, whereby, the application filed by the respondent-Company was allowed and the respondent was exempted from paying any amount towards contribution as demanded by the appellant - Corporation.
2. The short facts giving rise to present appeal are that, the respondent company had filed an application against the appellant Corporation under the E.S.I. Act, 1948, stating that the appellant issued notices to the respondent on 08.09.1997 Page 1 of 6 Uploaded by DOLLY CHETAN VADUKAR(HC01392) on Tue Aug 05 2025 Downloaded on : Tue Aug 05 21:46:21 IST 2025 NEUTRAL CITATION C/FA/3253/2001 JUDGMENT DATED: 30/07/2025 undefined and 16.10.1997 and demanded payment under E.S.I. Act, contribution amounting to Rs. 1,09,466/- and interest of Rs. 28,477/-, totaling Rs. 1,37,943/-, for the period from 01.04.1992 to 31.03.1994. In this regard, the respondent requested the appellant on 20.10.1997 for time to conduct verification concerning the said matter. However, that request was not accepted and another notice was issued on 19.10.1995 and therefore, the respondent had filed the application before the ESI Court seeking to cancel the said notice and the demand for contribution, as they were against the law and the respondent company bears no liability in that regard. That, the respondent had also stated in the application that the amount mentioned in the notice was pertaining to wages for workers, which is illegal and unreasonable. Moreover, the respondent company had included the amount paid to the contractor for the work in the wages, which was not fair, as the work done by the persons of contractor through the contractor was not performed by the company's direct or permanent employees. However, the work was done through a contract agency and the company did not pay any money to those workers directly. Therefore, as per Section 2(9) of the Act, the persons of contractor cannot be considered as the employees of the company. Further, any amount paid to a contract agency for work cannot fall under the definition of "wages" as per the law. Therefore, the respondent requested the ESI Court that the notice issued by the appellant Corporation for payment, based on merely an assumption of wages, be declared illegal and to held that the respondent company is not liable to pay the said amount and the Page 2 of 6 Uploaded by DOLLY CHETAN VADUKAR(HC01392) on Tue Aug 05 2025 Downloaded on : Tue Aug 05 21:46:21 IST 2025 NEUTRAL CITATION C/FA/3253/2001 JUDGMENT DATED: 30/07/2025 undefined Corporation is not entitled to recover it. The respondent also contended that looking to the impugned notice alongwith the Annexure attached, the ESI Corporation had asked for contribution on the basis of the entire amount payable to contractor for the entire contract which included labour charges and payments for work done by the contractor regarding miscellaneous work of the company and therefore, demand raised by the Corporation was not on the basis of "wages" paid by the company and hence, illegal. The ESI Court allowed the application filed by the respondent herein vide judgment and order dated 13.04.2000 and the respondent was exempted from paying any amount towards contribution as demanded by the appellant - Corporation.
3. Being aggrieved and dissatisfied with the aforesaid judgment and order passed by the ESI Court, the appellant ESI Corporation has filed the present First Appeal under Section 82 of the Employees State Insurance Act, 1948.
4. Heard learned advocate Mr. Sachin D. Vasavada, appearing for the appellant - ESI Corporation and learned advocate Mr. Kaustubh Shrivastav, appearing on behalf of Nanavati Associates for the respondent - original applicant.
5. Mr. Vasavada, learned advocate for the appellant, has submitted that the impugned judgment and order passed by the ESI Court is erroneous, illegal and contrary to the provisions of law and facts. He has submitted that the appellant had issued notice to the respondent and after giving Page 3 of 6 Uploaded by DOLLY CHETAN VADUKAR(HC01392) on Tue Aug 05 2025 Downloaded on : Tue Aug 05 21:46:21 IST 2025 NEUTRAL CITATION C/FA/3253/2001 JUDGMENT DATED: 30/07/2025 undefined opportunity of hearing, had passed the order under Section 45(a), which was challenged by the respondent before the ESI Court. He has submitted that the ESI Court has committed serious error of law and on facts as without considering the issue involved in the matter and without framing any issues, the court ha passed the impugned judgment and order. He has further submitted that the ESI Court, without discussing any of the documents and without any evidence led before it and without framing any issue, has passed the impugned judgment and order and thus, this is the substantial question of law involved in the present. Of course, learned advocate Mr. Vasavada has candidly submitted that though it was not framed at the relevant point of time and even not framed at the time of admission of the present appeal but, at the time of final hearing, it is permissible to agitate before the Court in view of the decision of this Court in case of Employees' State Insurance Corporation, Ahmedabad vs. Vasantbhai Bhudarbhai Parmar, reported in [2007] 1 GLR 879, and urged that it can be agitated at the time of final hearing and thus, in view of the said decision, Mr. Vasavada has submitted that looking to the impugned judgment and order passed by the ESI Court, there is no discussion at all and no issues were framed by the ESI Court even there was no discussion with regard to any issue involved and merely on the basis of decision of the Madras High Court relied upon by the respondent, the ESI Court has passed the impugned judgment and order, which is erroneous, illegal and unjust and the same is required to be quashed and set aside and the present appeal is required to be allowed.
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6. As against that, Mr. Shrivastav, learned advocate appearing on behalf of Nanavati Associates for the respondent
- Company, has supported the impugned judgment and order passed by the ESI Court and submitted that there is no any illegality or any irregularity committed by the ESI Court while passing the impugned judgment and order. He has submitted that the ESI Court has found reasons in the submissions advanced by the respondent before it and after recording the same while discussing in para-5 and 6, the ESI Court has rightly passed the impugned judgment and order and there is no any substantial question of law involved in the present appeal and thus, the present appeal is required to be dismissed and no interference is required to be called for in the impugned judgment and order passed by the ESI Court.
7. I have heard the learned advocates appearing for the respective parties and perused the material placed on record. On perusal of the impugned judgment and order, on prima facie reading of the same, it appears that the ESI Court has not followed proper procedure while deciding the application in accordance with law. Even the Court has not discussed relevant facts of the case and not discussed anything with regard to the reply and the evidence and merely observed that the parties have not adhere any oral evidence and not produced any documentary evidence. On perusal of the records produce before this Court, it appears that the ESI Court has not even framed issues and not adjudicated as to what is the issue involved in the matter and has passed the impugned Page 5 of 6 Uploaded by DOLLY CHETAN VADUKAR(HC01392) on Tue Aug 05 2025 Downloaded on : Tue Aug 05 21:46:21 IST 2025 NEUTRAL CITATION C/FA/3253/2001 JUDGMENT DATED: 30/07/2025 undefined judgment and order which is erroneous, illegal and arbitrary. Even the ESI Court has also not assigned any reason and thus, in my opinion, the present appeal deserves to be allowed and the impugned judgment and order passed by the ESI Court deserves to be quashed and set aside.
8. In the result, the present appeal is partly allowed. The judgment and order dated 13.04.2000 passed by the Employees State Insurance Court, Vadodara in E.S.I. Application No. 10 of 1998 is hereby quashed and set aside and the matter is remanded back to the ESI Court, Vadodara.
8.1 It is open for the ESI Court that after following due procedure and after framing the issues considering the pleadings of both the sides and after giving proper opportunity to both the sides to lead oral as well as documentary evidence, decide the application afresh in accordance with law. It is also expected that since the matter is of the year 1998, the ESI Court shall adhere the hearing of the application as expeditiously as possible preferably within a period of 1 year from the date of receipt of order of this Court. It is expected that all the concerned parties shall co-operate with the ESI Court without seeking any unnecessary adjournments.
9. Record and proceedings, if any, be sent back to the concerned Court forthwith.
(HEMANT M. PRACHCHHAK,J) Dolly Page 6 of 6 Uploaded by DOLLY CHETAN VADUKAR(HC01392) on Tue Aug 05 2025 Downloaded on : Tue Aug 05 21:46:21 IST 2025