Telangana High Court
M/S. Proven Chemical Ltd., Hyd. vs The Esi Corp. Hyd. And Another on 28 June, 2024
THE HONOURABLE SMT. JUSTICE M.G.PRIYADARSINI
CIVIL MISCELLANEOUS APPEAL No.628 of 2012
J U D G M E N T:
This Civil Miscellaneous Appeal is filed by petitioner- appellant under Section 82 of the Employees State Insurance Act, 1948 (for short referred as 'the Act, 1948') aggrieved by the Order dated 17.09.2010 passed in E.I.C.No.48 of 2003 (impugned Order) by the learned Judge, Employees Insurance Court, Hyderabad (hereinafter will be referred as 'learned trial Court).
02. For the sake of convenience, hereinafter, the parties will be referred as per their array before the learned trial Court.
03. The brief facts of the case are that petitioner i.e., M/s.Proven Chemical Limited, was a small establishment manufacturing bulk drugs. Petitioner covered under the provisions of the Act, 1948. Since petitioner had sustained losses, it stopped its production of drugs from the year 1997. The Andhra Pradesh Pollution Control Board also issued the proceedings directing 2 petitioner to stop production and accordingly, petitioner stopped activity from 07.01.1998. On account of its closure, employees also left the organization. Petitioner informed about its closure to respondents. Therefore, petitioner is not liable to pay any contribution because no worker was working from January 1998. Petitioner received an order of attachment of immovable property dated 22.09.2003 attaching the Flat No.404 and Maruthi Zen Car No.AP AR 2119. A representation was made by petitioner stating that no worker was working with petitioner but respondents did not consider the same. In the letter addressed to petitioner there was mention about many letters with dates having been addressed to petitioner establishment. Since no such letters were received by petitioner, petitioner made a representation dated 26.09.2003 to the Employees State Insurance Corporation for supply of copies of proceedings mentioned in the attachment proceedings. Respondents supplied only some of the photo copies of those proceedings along with the covering letter dated 29.09.2003 except the copies of documents shown at Serial No.1 and 3 of the annexure 3 enclosed to the attachment proceedings dated 22.09.2003. Respondents issued a letter dated 06.08.1998 asking petitioner to pay a sum of Rs.85,945/- towards the ESI contribution for the period from 01.01.1996 to 31.08.1997. On the ground that no compliance was made to the letter dated 06.08.1998 respondents had filed P.S.C.No.58 of 2001. Thereupon, petitioner had paid the amount of Rs.85,945/- demanded under letter dated 06.08.1998. Further, respondents issued two proceedings one dated 09.08.2000 seeking payment of Rs.1,15,166/- towards ESI contribution for the period from October, 1998 to March, 1999 and another proceeding seeking payment of Rs.52,901/- towards ESI contribution for the period October, 1997 to September, 1999. Further, respondents sought payment of Rs.56,328/- for the period from October, 1997 to September, 1998 through its letter dated 31.08.2000 towards ESI contribution. Claim made by respondents was not based on any valid grounds but based on assumptions. Since no employee was working from January, 1998 onwards payment of contribution did not arise. Petitioner had paid the contribution for the period 4 mentioned at Serial No.1 and 3 of the annexure enclosed to the attachment order dated 22.09.2003. Hence, petitioner is not liable to pay any amount and sought for setting aside the order of attachment of immovable properties dated 22.09.2003.
04. Respondents filed written statement stating that on the basis of Inspection Report dated 23.01.1992 of the Inspector of the Insurance Corporation who visited and inspected petitioner-company on 23.01.1992 and Respondent No.1-Corporation issued an intimation proceedings No. AP/PICI/52-9445-34 dated 30.01.1992 covering petitioner under the provisions of the Act, 1948. The administrative office of petitioner situated at Yusufguda was also allotted a sub code No.52-9445-34/A and petitioner was advised to make compliance in respect of its administrative office. Inspector of respondent No.1- Corporation who visited and inspected petitioner company on 29.09.1997 reported that petitioner had not paid ESI contribution. Thereupon, respondent No.1-Corporation issued a notice in Form C-18 (Actuals) dated 21.11.1997, asking petitioner to pay the ESI contribution within 15 5 days from the date of receipt of the said notice. Since petitioner had failed to pay ESI contribution amount demanded under Form C-18 Notice dated 21.11.997 respondent No.1-Corporation issued proceedings on 06.08.1998 authorizing the Recovery Officer to recover the amounts 1) Rs.21,948/- (Rs.17,958+3,990 Interest) towards ESI contribution in respect of the office staff for the period from 1/96 to 8/97, 2) Rs.85,945/- (Rs.70,332 + 15,623 Interest) towards ESI contribution in respect of factory staff for the period from 1/96 to 8/97, 3) Rs.4,674/- (Rs.4,251 + 423 Interest) towards ESI contribution on the omitted wages for the period from 4/95 to 3/96. Petitioner had paid Rs.85,945/- towards ESI contribution subsequently. Since petitioner subsequently failed to comply with the provisions by not submitting as required under Section 44 of the Act, 1948 Respondent No.1-Corporation issued the notice in Form C-18 directing petitioner to show-cause as to why an amount of Rs.27,188/- should not be determined as payable on adhoc basis. So issuing such proceedings, petitioner was given an opportunity of explaining its case on personal hearing 6 dated 15.03.1999. Since petitioner has not responded to the opportunity given Respondent No.1-Corporation issued proceedings under Section 45-A of the Act, 1948 on 30.04.1999 directing petitioner to pay ESI contribution in respect of the office staff, the said amount was also remained as not paid. Thereafter, respondent No.1- Corporation issued notices in Form C-18 (Adhoc) 1) dated 15.12.1999 assessing ESI contribution as Rs.44,616/- payable in respect of the office staff under the code No.52- 9445-34/A for the period from 10/97 to 9/99, 2) dated 12.11.1999 assessing ESI contribution as Rs.12,548/- payable in respect of the factory staff for the period from 10/97 to 3/99 and 3) dated 17.04.2000 assessing ESI contribution as Rs.1,07,358/- payable in respect of the remaining 77 factory employees for the period from 10/97 to 3/99. Even though, petitioner was given an opportunity of personal hearing, it had not availed nor made compliance under the provisions of the Act, 1948. Therefore, respondent No.1-Corporation issued orders under Section 45-A of the Act, 1948 on 27.03.2000, 05.05.2000 and 23.06.2000 respectively. Thereafter, the 7 Recovery Officer of respondent No.1-Corporation issued the recovery notices in Form ESI CP-2 calling upon petitioner to pay the amount within 15 days along with interest. Since petitioner failed to make payment of ESI contribution, when Recovery Officer started initiating the coercive steps for recovery of ESI contribution, petitioner filed a petition before the learned trial Court. Petitioner made contradictory statements as regards the closure of factory, at one breath, it was stated that petitioner- company ceased to function from January, 1997, at another breath, it was stated that petitioner-company ceased to function from 17.01.1998 onwards. Petitioner had paid Rs.85,945/- towards ESI contribution along with interest for the period from 1/96 to 8/97 in respect of factory staff but contribution for the office staff for the same period is still due from petitioner. There was no overlapping in proceedings dated 05.07.1998 and 06.08.1998. While C-19 dated 05.07.1998 was issued for the period from 1/96 to 9/98, C-19 dated 06.08.1998 was issued for the period from 1/96 to 8/97 only. By oversight respondents have claimed contribution for the period from 8 10/97 to 3/99 twice for an amount of Rs.52,901/- and Rs.56,238/- in Form C-19 dated 09.08.2000 and 31.08.2000 respectively. Subsequently, C-19 dated 31.08.2000 for Rs.56,238 is withdrawn. However, there are two different C-19 notices for the same period from 10/98 and 3/99 for different number of factory employees and they are in order. Still there are 19 notices pending for payment by petitioner. There are no valid and justified grounds either for granting any relief to petitioner and sought for dismissal of the petition.
05. Before the learned trial Court, on behalf of appellant, the Managing Director of Appellant-company was examined as PW1 and got marked Exs.P1 to P7. On behalf of respondents, their officers are examined as RW1 and RW2 and got marked Exs.R1 to R17.
06. The learned trial Court after considering the submissions of both sides and evidence available on record both oral and documentary, has partly allowed the petition by setting aside the Order of Attachment dated 22.09.2003 in respect of claim for Rs.85,945/- under Form No.C-19 9 dated 06.08.1998 and Rs.56,238/- under Form No.C-19 dated 31.08.2000. Petition is dismissed in respect of claim for Rs.4,674/- under Form No.C-19 dated 06.08.1998, Rs.21,948/- under Form No.C-19 dated 06.08.1998, Rs.1,15,166/- under Form No.C-19 dated 09.08.1998, Rs.14,717/- under Form No.C-19 dated 31.08.2000, Rs.52,901/- under Form No.C-19 dated 09.08.2000 and Rs.31,056/- under Form No.C-19 dated 05.07.1998 under Order of Attachment dated 22.09.2003.
07. Aggrieved by the same, petitioner preferred this Civil Miscellaneous Appeal seeking to set aside the dismissal Order.
08. Heard Sri G.Pedda Babu, learned counsel for appellant and Sri P.Rajashekar, learned counsel for respondents and perused the record available before the Court.
09. The contention of learned counsel for appellant is that the learned trial Court ought to have considered the fact that petitioner-company has closed its activity from 07.01.1998 onwards pursuant to notice of the Andhra 10 Pradesh Pollution Control Board and that thereafter employees left the organization; and that neither RW1 nor RW2 stated that appellant continued its manufacturing/working operations after September, 1997 nor did they inspect and produce any evidence to that effect and prayed to set aside the impugned Order.
10. On the other hand, learned counsel for respondents has contended that the learned trial Court after considering the oral and documentary evidence available on record has passed impugned Order with reasons.
11. Now the point for consideration is that:
Whether the impugned Order dated 17.09.2010 passed in E.I.C.No.48 of 2003 by the learned trial Court, is liable to be set aside?
P O I N T:
12. This Court has perused the entire evidence and documents available on record.
13. The Managing Director of Petitioner-company was examined as PW1 and reiterated the contents of 11 petition and got marked Exs.P1 to P7. A perusal of Ex.P1- Order of Attachment of Immovable property dated 22.09.2003 discloses that the property of petitioner- company i.e., Flat No.404 and Maruthi Zen Car No.AP AR 2119 are attached by respondents for non-payment of ESI contribution amount. Ex.P2-Representation dated 26.09.2003 submitted by petitioner to respondents with reference to Ex.P1, requesting respondents to supply relevant documents for taking necessary action. Ex.P3- Letter dated 29.09.2003 issued by respondents showing the details of documents supplied to petitioner with reference to Ex.P2-Representation. Ex.P4-Proceedings of the Andhra Pradesh Pollution Control Board, Hyderabad dated 07.01.1998 discloses that petitioner-company has not complied with the directives of the Andhra Pradesh Pollution Control Board, Hyderabad, for which the Andhra Pradesh Pollution Control Board has directed petitioner- company to stop its activity with immediate effect. Ex.P5- Representation dated 04.01.2000 made by petitioner informing respondents about closure of petitioner-company from January, 1998 as per Orders of the Andhra Pradesh 12 Pollution Control Board vide Ex.P4. Ex.P6-Letter dated 18.05.2000 issued by petitioner informing respondents that petitioner-company was closed and assured respondents that petitioner-company will pay ESI contributions after restart of the unit. Ex.P7-Certified Copy of Judgment dated 13.09.2002 passed in Prosecution Case No.58 of 2001 in C.C.No.277 of 1999 by the learned Judicial Magistrate of First Class for the Offences under the Act, 1948 and Industrial Tribunal-I, Andhra Pradesh, Hyderabad wherein respondents herein was shown as complainant and petitioner was shown as accused, discloses that petitioner was found guilty for the offence under Section 85(a) of the Act, 1948 for not informing respondents-Corporation about closure of petitioner- company.
14. RW1-Manager of Respondents-Corporation by way of his chief affidavit stated that he inspected the premises of petitioner-company on 29.09.1997 and found that petitioner failed to pay ESI contributions amounting to Rs.70,322/- and omitted wages contributions of 13 Rs.4,251/- and Rs.17,958/- in respect of Registered Office and prepared Inspection Report.
15. RW2-Inpsector of Respondents-ESI Corporation, Legal Branch, deposed that he gave evidence based on the records available in their office and stated about inspection in the similar lines of RW1 and also stated about issuance of notices for payment of ESI contributions under Exs.R9, R10, R14 and R15.
16. Now coming to the documentary evidence, Ex.R1-Copy of C-18 notice dated 21.11.1997 issued by respondents demanding petitioner-company to pay ESI contributions from 1/96 to 8/97 for Rs.17,958, Ex.R2- Copy of C-18 notice dated 15.12.1999 issued by respondents demanding petitioner-company to pay ESI contributions from 01.10.1997 to 30.09.1999 for Rs.44,616, Ex.R3-Copy of Order dated 05.05.2000 under Section 45-A of the Act, 1948 issued by respondents directing petitioner to pay default contribution amount along with interest, Ex.R4-Copy of HRO-325 showing the details of petitioner-company, Ex.R5-Copy of Visit Note 14 dated 29.09.1997 issued by RW1 shows that petitioner committed default of Rs.70,322/- for the period from 1/96 to 8/97 and it is also mentioned that petitioner-company has deducted ESI contributions from the employees including contract workers and accordingly issued Ex.R6 and R7-Inpsection Reports. Ex.R8-Copy of Visit Note issued by RW1 also shows that petitioner committed default of ESI contributions. Ex.R9-Copy of C-18 Notice (actual basis) dated 21.11.1997 asking petitioner-company the pay ESI contributions along with interest or otherwise cautioned of recovery under Section 45-C and 45-I of the Act, 1948, Ex.R10-Copy of C-18 notice dated 08.01.1999 asking petitioner-company to pay Rs.27,188/- towards ESI contributions along with interest, Ex.R11-Letter of petitioner dated 04.10.1997 addressed to respondents seeking time to produce ledgers for the year 1996-97 as audition for filing Income Tax Returns was going on. Ex.R12-Copy of Order dated 30.04.1999 under Section 45- A of the Act, 1948 issued by respondents directing petitioner to pay default contribution amount along with interest, Ex.R13-Copy of Order dated 27.03.2000 under 15 Section 45-A of the Act, 1948 issued by respondents directing petitioner to pay default contribution amount along with interest, Ex.R14-Copy of C-18 notice dated 12.01.1999 asking petitioner-company to pay Rs.12,548/- towards ESI contributions along with interest, Ex.R15- Copy of Recovery Notice dated 23.06.2000 under Section 45-A of the Act, 1948 for the period from 01.10.1998 to 31.03.1999, Ex.R16 and R17-Copies of showcause notices dated 21.11.1997 issued by respondents to petitioner for non-payment of ESI contributions.
17. It is an admitted fact that RW1 visited and inspected petitioner-company on 29.09.1997 in the presence of PW1 and found that there were 87 employees working as on that date and it was further noticed that no ESI contribution amount was paid for the period from January, 1996 and August, 1997 even after ESI contributions were deducted from the employees. Further, even as per Ex.R11-Letter dated 04.10.1997 by petitioner addressed to respondents, petitioner sought time to produce ledgers for the year 1996-97 as audition for filing Income Tax Returns was going on, but later on petitioner 16 failed to file those ledgers. Even during cross-examination, PW1 admitted that he did not file ledgers for the period 1996-1997 and 1997-1998.
18. After careful scrutiny of entire record, it is crystal clear that petitioner had committed default in payment of ESI contribution amount even after deducting concerned amount from the salaries of workers-employees. After issuance of notices, petitioner paid an amount of Rs.85,945/- as demanded under Letter dated 06.08.1998. Admittedly, petitioner has not filed any document to show that M/s.Proven Chemical Limited was closed on 07.01.1998. It is pertinent to note that no document was filed showing the closure of petitioner-company even by way of additional evidence before this Court.
19. It is relevant to mention here that petitioner filed petition under Section 75(1)(g) of the Act, 1948 before the learned trial Court in the year 2003, which reads as under:
"any other matter which is in dispute between a principal employer and the Corporation, or between a principal employer and an immediate employer or between a person and the 17 Corporation or between an employee and a principal or immediate employer, in respect of any contribution or benefit or other dues payable or recoverable under this Act, or any other matter required to be or which may be decided by the Employees' Insurance Court under this Act, such question or dispute subject to the provisions of sub-section (2A) shall be decided by the Employees' Insurance Court in accordance with the provisions of this Act."
Section 77(1)(A) of the Act, 1948 reads as under:
Every such application shall be made within a period of three years from the date on which the cause of action arose.
Explanation: For the purpose of this sub- section,--(a) the cause of action in respect of a claim for benefit shall not be deemed to arise unless the insured person or in the case of dependants' benefit, the dependants of the insured person claims or claim that benefit in accordance with the regulations made in that behalf within a period twelve months after the claim became due or within such further period as the Employees' Insurance Court may allow on grounds which appear to it to be reasonable;
(b) the cause of action in respect of a claim by the Corporation for recovering contributions (including interest and damages) from the principal employer shall be deemed to have arisen on the date on which such claim is made by the Corporation for the first time:
Provided that no claim shall be made by the Corporation after five years of the period to which the claim relates;
(c) the cause of action in respect of a claim by the principal employer for recovering contributions from an immediate employer shall not be deemed to arise till the date by which the evidence of 18 contributions having been paid is due to be received by the Corporation under the regulations.
20. In the above statute, it is clear that every application shall be made before the learned trial Court within a period of three years from the date on which the cause of action arose. In the present case on hand, as seen from the record, respondents issued Form C-19 notices which are of the years 1998 and 1999 issued by respondents. Without filing any application rendering explanation, a petition under Section 75(1)(g) of the Act, 1948 was filed before the learned trial Court, therefore, the same is barred by limitation. Therefore, there are no grounds to interfere with the findings of the learned trial Court.
21. Now coming to the substantial question of law, in Shri Debananda Dam vs The Employees' State Insurance Corporation 1 it was held that the sub-section (1) of Section 82 of the Act, 1948 contemplates that no appeal shall lie from an order of an Employees' Insurance Court, save and expressly provided in this section making 1 MFA 02 OF 2019 dated 13.01.2022 by the High Court of Tripura at Agartala 19 it implicit that the filing of appeal against the judgment passed by the Insurance court is not automatic rather conditional. The condition is encrypted in sub-section (2) of Section 82, which mandates that there must be substantial question of law to file an appeal to the High Court from an order of the Insurance Court. So, existence of substantial question of law is a condition precedent to prefer appeal before the High Court against the judgment and decree passed by the Insurance court. It can easily be said that to file an appeal, the appellant has to comply the essentialities of Section 100 of the Code of Civil Procedure, 1908. So, for hearing an appeal against the Judgment and decree passed by the Insurance Court existence of substantial question of law is a sine qua non for exercise of jurisdiction under Section 82(2) and the procedure is mandatory as provided under Section 100 CPC. It is settled proposition of law that second appeal does not lie on the erroneous findings of facts based on appreciation of relevant evidences. Further, the scope of exercise of jurisdiction by the High Court in second appeal under Section 100 CPC is limited to the substantial question of 20 law. To be a substantial question of law, it must be debatable, not previously settled by law of the land or a binding precedent and answer to the same will have a material bearing as to the rights of parties before the Court. In the present case on hand, there is no substantial question of law.
22. In view of the above discussion, this Court is of the considered view that the learned trial Court after considering all the aspects has rightly passed the impugned Order by partly allowing the petition to the extent which petitioner has paid ESI contribution amount and rightly dismissed the petition to the extent of remaining claim, upholding the impugned proceedings issued by respondents. Thus, there is no infirmity, or irregularity, or illegality in the impugned Order passed by the learned trial Court, for which this Court do not find any reason to interfere with the same. Hence, the Civil Miscellaneous Appeal is devoid of merits and it is liable to be dismissed.
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23. Accordingly, the Civil Miscellaneous Appeal is dismissed. There shall be no order as to costs.
As a sequel, miscellaneous applications if any pending shall stand closed.
________________________________ JUSTICE M.G.PRIYADARSINI Date: 28-JUN-2024 KHRM