Calcutta High Court (Appellete Side)

The Ganga Manufacturing Co. Ltd vs The Employees' State Insurance ... on 4 January, 2023

    21                    IN THE HIGH COURT AT CALCUTTA
04.01.2023               CONSTITUTIONAL WRIT JURISDICTION
  sb
   Ct 550                        APPELLATE SIDE


                                  WPA 13783 of 2017

                          The Ganga Manufacturing Co. Ltd.
                                          Vs.
                   The Employees' State Insurance Corporation & Ors.



                         Mr. P. B. Chowdhury
                         Mr. S. K. Singh
                         Mr. R. K. Dubey
                                      ... For the petitioner.

                         Mr. S. C. Prasad
                                     ... For the ESI authority.




                   The present writ application has been filed inter alia

             challenging the order dated 19th February, 2015 passed

             by the Deputy Director, Employees' State Insurance

             Corporation (in short, ESIC), being the respondent no.3.

             The petitioner also challenges the demand notice dated

             6th March, 2017, issued by the Recovery Officer of the

             ESIC, which is at page 67 of the writ application.


                   The petitioner claims to be the owner of a jute mill

             and is covered by the provisions of Employees State

             Insurance Act, 1948 (hereinafter referred to as the "said

             Act"). It is the petitioner's case that challenging the orders

             passed under Section 45A and 45AA of the said Act, the

             petitioner had moved before the Employees Insurance

             Court under Section 75 of the said Act and three separate
                             2




cases being ESI Case No. 122 of 2009, ESI Case No. 53 of

2013 and ESI Case No.6 of 2014 were registered.


      The petitioner says that during the pendency of the

proceedings before the Employees Insurance Court, the

respondent no.1 introduced a scheme popularly knows as

'New Amnesty Scheme 2014' (hereinafter referred to as the

said Scheme), for withdrawal of criminal cases filed

against insured persons and employers under Sections

84, 85 and 85A of the said Act and for settlement of cases

filed by employers under Section 75 of the said Act.


      Mr. Chowdhury, learned advocate representing the

writ petitioner by drawing attention of this Court to page

48 of the writ application submits that since the petitioner

had already filed proceedings before the Employees

Insurance Court under Section 75 of the said Act,

disputing the contributions payable by the petitioner and

since the assessment made by the respondents was not

made on actual basis, the petitioner became entitled to

apply in terms of clause A(2) of the said Scheme. The

petitioner says that the aforesaid scheme was extremely

attractive since an employer who had raised dispute as

regards contributions payable by him, was entitled to pay

the contributions as per his records or in the alternative if

no records could be produced and assessment having

been made in respect of wages, other than wages shown in

Regulation 32 Registrar, to pay contributions no less than
                              3




30% of the assessed amount provided assessment has not

been made on actual basis.


      He says that withdrawal of Court cases was made a

condition precedent for applying under the said Scheme.

By referring to Annexure 'A', which is at page 52 of the

writ application, he says that the petitioner, as required,

duly applied as per the said Annexure for withdrawal of

the two pending cases before the Employees Insurance

Court. It is submitted that on the basis of the applications

made by the petitioner, by two separate orders dated 24th

December, 2014 and 30th December, 2014, Employees

Insurance Court was inter alia pleased to permit the

petitioner to withdraw the cases, to avail the benefits

under the Scheme, by adjusting the security given by the

petitioner   towards   the   claim.   Consequently,    upon

withdrawal of the aforesaid Court cases by an application

in writing dated 25th January, 2015 the petitioner had

exercised its right to avail the benefits of the said Scheme.

It is still further submitted that in compliance of the

provisions of the said Scheme, the petitioner complied

with the terms of deposit of 30 per cent of the total

demand raised by the respondents. According to the

petitioner, the respondents not only acknowledged the

said application but also accepted the payments made by

the petitioner. The petitioner says that subsequently, the

petitioner was shocked to receive a communication dated
                            4




19th February, 2015 issued by the respondent no.3

whereby the petitioner's application for availing the

benefits under the said Scheme had been rejected, inter

alia, on the ground that the assessment in the petitioner's

case had been made as per the Headquarters Instruction

No. P-11/13/97-Ins IV dated 26th May, 2003.


      Mr. Chowdhury submits that a perusal of the said

Scheme would demonstrate that the respondents did not

reserve in themselves any right to deny the benefits of the

said Scheme to an applicant on the grounds other than

those specified in the said Scheme. The ground cited by

the respondents as regards assessment having been made

as per the instruction issued by the headquarters, to deny

benefit of the scheme is dehors the scheme itself. It is

submitted that the respondents are discriminating against

the petitioner. The petitioner has already altered its

position and had withdrawn the pending cases. The

petitioner had already complied with the terms of deposit

of 30 per cent of the demand raised by the respondents,

for availing the benefits under the said Scheme. The

respondents having led the petitioner to alter its position

to its disadvantage, cannot today turn around and deny

the benefits of the said Scheme to the petitioner by citing

grounds which does not constitute grounds as envisaged
                               5




in the said Scheme to deny the benefit of the said Scheme.

In support of his contention he places reliance on a

judgment delivered by the Hon'ble Supreme Court in the

case of S.V.A. Steel Rerolling Mills Limited and Others.

-Vs.- State of Kerala and Others., reported in (2014) 4

SCC 186. It is submitted that the aforesaid order is

violative of Article 14 of the Constitution of India and

should be set aside. The petitioner says that the petitioner

had complied with all formalities, as are required for

availing the benefits under the said Scheme. By once

again referring to clause A(2) of the said Scheme and its

various paragraphs, it is submitted that there was nothing

more required to be done, for the petitioner, for availing

the benefits under the said Scheme. He says that the

petitioner had since by letter dated 21st April, 2015

demanded justice, but the same has been denied. He

prays that the respondents should be directed to afford

the petitioner the benefits as are available under the said

Scheme. He submits that after the application for availing

benefits under the Scheme was turned down, the recovery

officer taking advantage of withdrawal of the Court cases

had levied a demand which is unjustified. He prays for

quashing of the same.


      Per   contra,     Mr.   Prasad,   learned    advocate

representing the respondents by relying on the affidavit-

in-opposition submits that in the instant case, the
                              6




determination of dues has been made under Section 45A

of the said Act on actual basis. He says that by merely

paying 30 per cent of the demand, the petitioner cannot

avoid its liability. He submits that the prayer for out of

court settlement had already been rejected by the

competent authority. It is submitted that there was a cut-

off date for availing the benefits. Such date is long over.

Today the clock cannot be turned back so as to direct the

respondents to reconsider the case.       He says that the

present application is devoid of merits and should be

dismissed.


      I have heard the submissions made by the learned

advocates for the respective parties and considered the

materials on record. I find that the present application has

been filed in effect for claiming benefits arising out of the

said Scheme, introduced by the respondents. I find that

the aforesaid Scheme not only provides for amnesty from

criminal cases but also provides for settlement of cases

filed by the employers under Section 75 of the said Act

before the Employees Insurance Court. I find that the

petitioner had filed separate proceedings before the

Employees Insurance Court which were pending as on the

date when the aforesaid Scheme was introduced. In this

contest it would be profitable to refer to the relevant

provisions of the Scheme:-
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"A. SETTLEMENT OF COURT CASES FILED
U/S. 75 AND APPEAL U/S 82

1. DISPUTE OF COVERAGE - The Scheme shall
include all cases filed in which the employer has
disputed the coverage which may be settled
subject to the following conditions:-

           ...............................................

If the factory is functioning and the employer produces genuine records to substantiate his plea regarding non-coverage or coverage from later date.

2. DISPUTE OF CONTRIBUTION - This Scheme shall also include cases in which the employer has disputed the determination or recovery of contribution in the Employees' State Insurance Court, U/S 75 of the ESI Act and appeal u/s 82 Upto 31st December 2013, subject to the fulfillment of the following conditions:-

I) The employer shall file a petition before the court where he has raised the dispute and seek permission of Hon'ble Court for out of the court settlement of matter under litigation. If court allows, then the matter shall be settled as per this Scheme. The employer/IP shall apply for the scheme in the enclosed proforma of Annexure 'A'.

II) The employer shall pay both the Employees' and Employers' share of contribution in full as per their records, which he shall produce before the assessing officers if the contribution has been assessed on assumed wages and he shall comply

with other provisions of the Act.

III) In case the relevant records are not available with the employer, they shall produce alternative records such as Income Tax Record etc and shall pay the contribution accordingly as per that record.

IV) However, if the employer is not able to produce any records and the assessment has been made in respect of wages other than the wages shown in Regulation 32 Register, he shall pay the contribution which shall not be less than 30% of the assessed amount of contribution. The cases where assessment has already been made or where the contribution has been assessed on actual bases will not fall under the purview of this Scheme.

V) The employer pays the Interest in full.

VI) No damages shall be levied.

VII) The employer shall also furnish an undertaking to the Corporation to the effect that he/she shall be regular in compliance in the provisions of ESI Act in future or else he/she shall forfeit the right to avail of such amnesty scheme.

...............................................

D. The Scheme will also be available to those employers/insured persons who have already availed of the benefits of earlier Amnesty

Schemes.

E. The New Amnesty Scheme-2014 will be in force from 28/1/2014 to 27/1/2015."

From the aforesaid it would appear in order to avail

the provisions of the aforesaid Scheme an applicant

should be eligible as per the said scheme and is required

to apply as per the enclosed pro-forma, forming Annexure

'A' to the said Scheme. The said pro-forma provides for

withdrawal of Court cases. I find that the petitioner claims

to be eligible as per the scheme and had duly applied as

per Annexure 'A' in pro-forma for withdrawal of the

pending Court cases before the Employees Insurance

Court and on the basis of the application made by the

petitioner and after hearing the advocates appearing for

both the parties the Employees Insurance Court permitted

the petitioner to withdraw the ESI Case No.122/2009 and

53/2013 by its orders dated 30th December, 2014 and

24th December, 2014 respectively. It does not appear from

the aforesaid orders which form part of the aforesaid

application that any objection was raised by the

respondents. It would, however, appear from the

provisions of the said Scheme that the same was to be in

force from 28th January, 2014 to 27th January, 2015. The

petitioner's application claiming benefits under the said

Scheme appears to be made within the time specified

in the said Scheme. The petitioner had also while

applying in terms of the provisions of the said Scheme

deposited 30 per cent of the demanded amount. In

paragraph 8 of the writ application it has also been

categorically asserted by the petitioner that the petitioner

in order to avail the benefit of the aforesaid Scheme had

complied with the necessary formalities like deposit of 30

per cent of the demanded amount. Such fact has not been

denied by the respondents in their affidavit-in-opposition.

I find that the ground provided in the order dated 19th

February, 2015 for not accepting the petitioner's

application does not find place in the said Scheme. In my

view, the respondents having introduced the said Scheme

and having permitted the petitioner to withdraw its cases

pending before the Employees Insurance Court for availing

benefits of the said Scheme, cannot subsequently turn

around and reject the petitioner's application inter alia by

holding that the assessment has been made as per the

headquarters' instructions. I find that the orders forming

subject matter of challenge before the Employees

Insurance Court concerns two separate proceedings. In

ESI Case No. 122 of 2009 arising out of tender case no.

61 of 2009, the order dated 23rd March, 2009 passed

under section 45A of the said Act was under challenge,

while in ESI Case No. 53 of 2013 arising out of Tender

Case No. 63 of 2013, both the orders under section 45A

and 45AA of the said Act, dated 30th November, 2012

and 25th March, 2013 respectively were under challenge.

Ordinarily, such orders are best-judgment assessments

and are subject to final decision by the Employees

Insurance Court. The scope of an order passed under

Section 45A of the said Act has been discussed by the

Hon'ble Supreme Court in the judgment delivered in the

case of ESI Corpn. -Vs. - C.C. Santhakumar, reported in

(2007) 1 SCC 584, wherein it has been, inter alia,

observed as follows:

"25. Section 45-A of the Act contemplates a summary method to determine contribution in case of deliberate default on the part of the employer. By Amendment Act 29 of 1989, Sections 45-C to 45-I were inserted in the Principal Act, for the purpose of effecting recovery of arrears by attachment and sale of movable and immovable properties or establishment of the principal or immediate employer, without having recourse to law or the ESI Court. Therefore, it cannot be said that a proceeding for recovery as arrears of land revenue by issuing a certificate could be equated to either a suit, appeal or application in the court. Under Section 68(2) and Sections 45-C to 45-I, after determination of contribution, recovery can be made straightaway. If the employer disputes the correctness of the order under Section 45-A, he could challenge the same under Section 75 of the Act before the ESI Court.

26. On a plain reading of Sections 45-A and 45-B in Chapter IV and Sections 75 and 77 in Chapter VI of the Act, as indicated above, there cannot be any doubt that the area and the scope and ambit of Sections 45-A and 75 are quite different."

Although in one of the case an appeal appears to

have been preferred, subsequent to incorporation of

section 45AA of the said Act in the statute, however, both

the orders passed under Section 45A and Section 45AA of

the said Act has been changed under Section 75 of the

said Act before the Employees' State Insurance Court. It

further appears that the respondents apart from making a

bald statement that order under Section 45A of the said

Act has been passed on actual basis, have not disclosed

any document in support thereof. In any event, as noted

above, orders passed under section 45A and 45AA of the

said Act are passed in a summary manner which can be

challenged before the Employees' State Insurance Court. .

It is, therefore, difficult to accept the respondents'

contention that determination of dues under Section 45A

and 45AA of the said Act was made on actual basis. The

only other contention raised by the learned advocate for

the respondents is that the petitioner by merely paying 30

per cent of the demand, cannot evade the entire liability. I

am afraid, the aforesaid stand cannot be accepted, for

reasons discussed hereinafter. The Hon'ble Supreme

Court in the case of S.V.A. Steel Rerolling Mills Limited

and Others., (supra) has, inter alia, been pleased to

observe as follows:

"29. Framing such policies and doing the needful for its implementation are administrative functions of the

respondent State and therefore, normally this Court would not like to interfere with its policies but looking at the peculiar facts of the case, where an assurance had been given for uninterrupted supply of electricity, one would presume that the respondent State must have made necessary arrangements to provide 100% uninterrupted supply of electricity for 5 years to the new units. If for any reason it was not possible to supply electricity as assured, the respondent State ought to have extended the period of 5 years by the period during which assured electricity was not supplied. By doing so, the respondent State could have made an effort to fulfil its promise and satisfied the persons who had acted on an assurance given by the State and set up their manufacturing units in the State of Kerala.

30. Before laying down any policy which would give benefits to its subjects, the State must think about pros and cons of the policy and its capacity to give the benefits. Without proper appreciation of all the relevant factors, the State should not give any assurance, not only because that would be in violation of the principles of promissory estoppel but it would be unfair and immoral on the part of the State not to act as per its promise."

In the light of the above, I am of the view that the

respondents having themselves introduced the said

Scheme are bound by the terms of such Scheme and are

estopped from denying the benefits of the Scheme to

petitioner by referring to grounds which are not envisaged

and do not find place in the said Scheme, especially after

having permitted the petitioner to withdraw their cases for

claiming benefit under the said Scheme. If the

respondents were so aggrieved on the petitioner getting

away by merely paying 30 per cent of the demand, they

ought to have thought so before introducing the Scheme.

Having introduced the Scheme and having led the