Employees State Insurance Corporation vs Western Maharashtra Development ...
2026 Latest Caselaw 1463 Bom

Bombay High Court

Employees State Insurance Corporation vs Western Maharashtra Development ... on 9 February, 2026

2026:BHC-AS:6726
                                                                                         12-FA-402-21.doc


                                                                                                     rsk
                                 IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                                         CIVIL APPELLATE JURISDICTION

                                                  FIRST APPEAL NO.402 OF 2021

                    Employees State Insurance Corporation            ... Appellant
                         Versus
                    Western Maharashtra Development
                    Corporation Ltd.                                 ...Respondent
                         _____________________________________________________
                    Mr. Shailesh S. Pathak for the Appellant.
                    None for the Respondent.
                          _____________________________________________________

                                                           CORAM :    JITENDRA JAIN, J.

                                                           DATED :    09 FEBRUARY 2026

                    P. C.:

1. Admit. Though respondent waives service and name of the

advocate is shown on the cause list, there is no appearance. Since the

issue involved is very narrow and the order which I propose to pass,

the Court is not adjourning the matter for non-appearance of the

respondent.

2. The present appeal filed by the ESI Corporation challenges an

order dated 26 March 2019 passed by the ESI Court at Pune whereby

the Court has quashed prohibitory order dated 10 May 2012, demand

notice dated 28 July 2011 and notice in Form-C-18 dated 31 July 2009

and further directed the ESI Corporation to refund the amount

recovered from the respondent Western Maharashtra Development

Corporation (WMDC)

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3. The Court has given its reasoning in paragraph 34 of the

impugned order. With respect to the application made by WMDC to

the Government for exemption, it is stated that Government of

Maharashtra has not disposed of this application till date when the

impugned order was passed. The Court further held that in the

absence of any order under Section 45A of Employees State

Insurance Act, 1948 the Corporation cannot recover the

contribution. The Court further held that WMDC is exempt under

Section 1(4) of ESI Act.

4. The following substantial questions of law arises from this

order:

"Whether the ESI Court was justified in quashing

prohibitory order and demand notices on the ground

that there is no order under Section 45A of ESI Act and

further WMDC is exempted from the application of the

Act as per Section 1(4) of ESI Act ?"

5. Proviso to Section 1(4) of ESI Act exempts factory or

establishment belonging to or under the control of the Government

whose employees are otherwise in receipt of benefits similar or

superior to the benefits provided under the ESI Act. There is no

dispute that WMDC is under the control of the Government. In

paragraph 3 of the impugned order, Court record that WMDC have

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stated various benefits given to their employees. However, the ESI

Court has not given any finding as to whether the benefits given by

WMDC is substantially similar or superior to the benefits provided

under this Act. In my view this finding is necessary before the Court

comes to a conclusion that WMDC is exempted under proviso to

Section 1(4) of the Act. Without there being any such finding , the

ESI Court could not have come to a conclusion that WMDC is

exempted under Section 1(4) of the said Act. Therefore, the

impugned order is remanded back to the ESI Court to give its

findings on satisfaction of pre-conditions required under the

proviso to Section 1(4) of the Act.

6. WMDC made application for exemption on 25 May 2009 to

the Government of Maharashtra. The impugned order was

pronounced on 26 March 2019. Till then, the Government of

Maharashtra has not taken any decision on the application made by

the WMDC. Mr. Pathak states that the demand is made for the

period from 1 April 2007 till 31 June 2008 and from 1 July 2008

to 30 September 2008 but same was made on 31 July 2009. In my

view, the Government of Maharashtra should have processed and

taken some decision on the exemption. The Government of

Maharashtra cannot sit on application made by the Company in

which they have control for a period of almost 10 years. Therefore,

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if said application is not decided till today, then the Government

of Maharashtra though not a party to the proceeding is directed to

process the application as soon as possible and in any case on or

before 30 May 2026. The copy of this order should be forwarded

to the relevant department of the Government of Maharashtra by

the appellant- ESI Court as well as by the WMDC.

7. Since I have remanded the matter on other issue, the ESI

Court will also decide the issue of exemption application and fall

out of the decision to be taken by the Government of Maharashtra .

Therefore even on this issue the impugned order is remanded back.

8. On remand all the issues are kept open including the issue

of retrospective or prospective aspects of the exemption

notification.

9. It is made clear that I have not expressed any opinion on the

merits of the case and all contentions of both the parties are kept

open to be adjudicated afresh on remand. The ESI Court is

requested to re-frame the issues as per the pleadings of the parties.

The impugned order is set aside and remanded back to the ESI

Court on all the issues.

10. Appeal is disposed of in the above terms. Interim/Civil

Application, if any, does not survive.

[ JITENDRA JAIN, J. ]

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