Sri Shyamal Banerjee vs The State Of West Bengal & Ors
2023 Latest Caselaw 6646 Cal

Form No.J(2)


                 IN THE HIGH COURT AT CALCUTTA
                CONSTITUTIONAL WRIT JURISDICTION
                         APPELLATE SIDE
Present :

The Hon'ble Justice Raja Basu Chowdhury


                            WPA 4457 of 2021

                          Sri Shyamal Banerjee
                                    v.
                     The State of West Bengal & Ors.


For the petitioner      :      Mr. Subir Sanyal
                               Mr. Nayan Rakshit

For the State           :      Mr. N. C. Bhattacharya
                               Ms. Sujata Ghosh

For the respondent no.2 :      Mr. Shiv Chandra Prasad

Heard on                :      10th August, 2023.

Judgment on             :      3rd October, 2023.


Raja Basu Chowdhury, J:

1. The petitioner claims to be a proprietor of a business run

under the name and style of M/s Textile Consumer Society.

The aforesaid establishment of the petitioner is registered

under the Shop and Establishment Act, 1963. It is the

petitioner's case that although, the petitioner had started his

business in the year 1995 with 3 employees, by the passage of

time the same had doubled. According to the petitioner,

sometimes in January, 2012 the petitioner had received a

letter issued by the respondent no.4, whereby, the petitioner's

bank accounts maintained with ICICI Bank and Axis Bank

were attached on the basis of two several orders of attachment

both, dated 18th January, 2012. Challenging the aforesaid

orders of attachment, a writ petition was filed before this

Hon'ble Court, which was registered as WP 4779 (W) of 2012.

2. By an order dated 19th September, 2012 a Co-ordinate Bench

of this Hon'ble Court was, inter alia, pleased to grant liberty to

the petitioner to file an appeal within the meaning of Section

45AA of the Employees' State Insurance Act, 1948 (hereinafter

referred to as the "said Act") against the order dated 20th June,

2011 passed by the Deputy Director of the respondents under

section 45 A of the said Act.

3. At the instance of the petitioner and on the basis of an

application for modification, which was registered as CAN

1661 of 2013, the Co-ordinate Bench of this Hon'ble Court by

an order dated 13th August, 2013 was, inter alia, pleased to

modify the order dated 19th September, 2012, thereby,

granting liberty to the petitioner to agitate all issues before

appropriate forum.

4. Pursuant to the aforesaid liberty reserved, the petitioner had

moved before the Employees' State Insurance Court (in short

"E.I. Court") under Section 75(1) of the said Act, which was

registered as Tender Case No. 151 of 2012. On contested

hearing E.I. Court by an order dated 10th April, 2018 was

pleased to disposed of the said tender case, inter alia, by

directing respondents to make a fresh adjudication on the

point of coverage and then to decide on the point of

contribution, if situation arises at all. The aforesaid

determination was directed to be made by affording

opportunity of hearing to the petitioner with a further direction

upon the petitioner, to cooperate in such hearing and to

produce all relevant documents including attendance register,

salary/wages register, balance sheet, bills vouchers etc., before

the Hearing Officer. It was further provided therein that the

amount recovered by the Corporation shall abide by the

decision of the Hearing Officer. Following the aforesaid

observation, the E.I. Court was also, inter alia, pleased to set

aside the order dated 20th June, 2011, passed under Section

45A of the said Act.

5. Consequent thereon, a proceeding was initiated by the Deputy

Director of E.S.I. Corporation. By communication in writing

dated 10th July, 2018, the petitioner was informed of the

hearing to be held on 10th August, 2018. Despite notice, the

petitioner did not turn up on the said date, instead submitted

a letter contending that it required some more time for

production of relevant records.

6. At the instance of the petitioner, another opportunity of

hearing was afforded to him on 29th October, 2018, and the

same was also communicated to him by communication in

writing dated 28th August, 2018. Although, the petitioner

appeared before the authorised officer for personal hearing on

29th October, 2018, he failed to produce any record. To provide

him with another opportunity, the hearing was adjourned and

the next date for hearing was fixed on 27th November, 2018.

On the aforesaid date, the petitioner's representative Anil

Sarkar appeared before the authorised officer. Unfortunately,

he did not produce any records and requested for another

date. A further opportunity was, thus, afforded to the

petitioner on 6th February, 2019 and the same was

communicated to the petitioner by letter dated 4th January,

2019. Although, the petitioner was represented on 6th

February, 2019, before the authorised officer the petitioner did

not produce any document.

7. It is, in the facts noted above and on the basis of available

records, that the Deputy Director of the E.S.I. Corporation by

order dated 5th March 2019, determined assumed wages for 41

persons, for the period from May, 2006 to September, 2006

and assessed the contributions payable by the petitioner to be

Rs.7,95,170/- as fair and reasonable, for the period from May,

2006 to September, 2006.

8. The petitioner did not comply with the said order. Instead, filed

an application under Section 75(1) of the said Act, before the

E.I. Court, including an application for injunction and an

application for waiver of mandatory pre-deposit. By an order

dated 28th January, 2020, the E.I. Court, was, inter alia,

pleased to pass a conditional order of stay subject to deposit of

the 25 per cent of the claimed amount under Section 75(2B) of

the said Act by the next date. It was made clear that in the

event the petitioner fails to deposit the said amount within the

stipulated time, the case shall stand dismissed.

9. It appears that the petitioner did not comply with such

conditional order and on contrary had filed a writ petition

before this Court, inter alia, challenging the same as also

challenging the orders dated 5th March, 2019, 12th July, 2019

30th July, 2019 and 28th January 2020. At the interim stage,

by an order dated 2nd March, 2021, a Co-ordinate Bench of

this Hon'ble Court had fixed the matter for further

consideration on 8th March, 2021 at 02.00 p.m. with a

direction upon the respondents to enlighten the Court,

whether the particular application which was required to be

heard, on payment of 25 per cent of the amount on 27th

February, 2020, was still pending or not. On 8th March, 2021

when the matter was called on since, none appeared on behalf

of the E.S.I. Corporation, the Co-ordinate Bench of this Court

was, inter alia, while being pleased to stay the order dated 5th

March, 2019, 12th July, 2019 and 30th July, 2019 for a period

of 10 weeks, also issued direction for exchange of affidavits.

After exchange of affidavits, the aforesaid matter has come up

for consideration.

10. Mr. Sanyal, learned advocate representing the petitioner, by

drawing attention of this Court to the order dated 10th April,

2018, submits that by such order E.I. Court has specifically

directed the Corporation to first ascertain the issue of coverage

of the petitioner and then to assess the contributions payable

by the petitioner, if occasions so arise. The respondent no.3

without adhering to such direction and without ascertaining,

whether the petitioner is covered by the said Act, has decided

the quantum of contributions payable by the petitioner. The

aforesaid procedure adopted by the respondent no.3 is

irregular to say the least.

11. In any event, the order passed by the respondent no.3 would

demonstrate that the same is based on conjecture and surmise

and not on the basis of records. According to Mr. Sanyal, no

determination could have been made by the respondent no.3,

without identifying the actual number of employees employed

at the petitioner's establishment. In any event, no

determination could be made by assuming the number of

employees employed at the petitioner's establishment. The

determination made on the basis of assumption is contrary to

the specific directions issued by the E.I. Court. It is submitted

that the conduct of the petitioner is irrelevant, if the petitioner

has failed to produce the documents, it was for the respondent

no.3 to proceed on the basis of the materials available with

him, for the purpose of identifying the actual number of

persons employed, and not proceed on the basis of an

assumption. In support of his contention, Mr. Sanyal placed

reliance on a judgment delivered by the Hon'ble Supreme

Court in the case of E.S.I. Corpn. v. C. C. Santhakumar,

reported in (2007) 1 SCC 584. The order passed by the

respondent no.3 is bad and this Court in exercise of its

jurisdiction under Article 226 of the Constitution is competent

to decide such an issue, as the writ petition is not limited to

the challenge to the order dated 28th January, 2022 passed by

the E.I. Court. In the facts as stated herein, he submits that

the order dated 5th March, 2019 should be set aside including

the consequential demand made by the Corporation.

12. Per contra, Mr. Prasad, learned advocate representing the

E.S.I. Corporation, on the other hand, has taken me through

the records of this case, inter alia, including the affidavit-in-

opposition filed by the Corporation. By placing reliance on the

report of the preliminary inspection, carried out by the

Corporation on 22nd March, 1994, it is submitted that the

inspection report reveals that in the year 1994 itself, 23

persons were working at the establishment. Complete

inspection of all records was not possible since, the inspectors

were obstructed from carrying out their duties. Subsequently

further inspection was carried out and the establishment was

recommended to be covered under the provisions of the said

Act. In terms of the directions passed by the E.I. Court on 10th

April, 2018, repeated opportunities were afforded to the

petitioner. The petitioner did not avail the same. The petitioner

chose not to disclose the records. The petitioner also did not

produce the balance-sheet and other records. In such

circumstances and in the absence of the actual records, the

respondent no.3 had taken into consideration the assumed

wages, for the period between May, 2006 to September, 2010

and determined contributions payable by the petitioner

amounting to Rs.7,95,170/-. Despite the aforesaid direction,

the petitioner chose not to make payment, and on the contrary

had challenged the said decision by filing an application before

the E.I. Court which was registered as Tender Case No. 57 of

2019. The E.I. Court, while hearing out the petitioner's

application for temporary injunction and for waiver of pre-

deposit, had directed the petitioner to make a deposit of 25 per

cent of the claimed amount under Section 75(2B) of the said

Act, on or before the next date. There is no irregularity in the

aforesaid order, the petitioner did not comply with the said

direction instead has filed the present writ petition. The

present writ petition is but an abuse of process of Court and

the same should be dismissed.

13. Heard the learned advocates appearing for the respective

parties and considered the materials on record. It is noted that

since, the year 1994, inspection had been carried out at the

petitioner's establishment. Despite directions from time to

time, the petitioner has chosen not to comply with the

directions, for making payment of contributions. After nearly

two decades from the date of first inspection when orders of

attachment were attempted to be enforced by attaching the

petitioner's bank accounts maintained with ICICI Bank and

Axis Bank, the petitioner had filed a writ petition challenging

the same, which was registered as WP 4779 (W) of 2012.

Although, by an order dated 19th September, 2012, a liberty

was afforded to the petitioner by the Coordinate Bench of this

Court to file an appeal within the meaning of Section 45AA of

the said Act, however, at the instance of the petitioner the said

order was modified, thereby, deleting the specific provisions of

the said Act, however, by reserving the liberty to the petitioner

to agitate all issues, which were incorporated in the writ

petition, before Appropriate Authority, in accordance with the

provisions of the said Act.

14. Pursuant to the liberty so reserved, the petitioner had moved

the E.I. Court under Section 75(1) of the said Act. On contest,

by an order dated 10th April, 2018, the E.I. Court was, inter

alia, pleased to dispose of the said tender case by directing the

Corporation to make fresh adjudication on the point of

coverage and then to decide on the point of contribution. The

E.I. Court by the aforesaid order had also set aside the

determination made under Section 45AA of the said Act on

20th June, 2011.

15. Following the aforesaid a fresh proceeding was initiated by the

respondent no.3 and the proceeding was heard on the

following dates as under.

10th August, 2018 Petitioner did not turn up instead

submitted a letter that it required

more time for production of

relevant records.

29th October, 2018 The petitioner appeared before the

authorised officer but failed to

produce any records. To provide

him with another opportunity, the

hearing was adjourned.

27th November, 2018 Petitioner appeared through his

representatives, however, did not

produce any records and requested

for another date.

6th February, 2019 The petitioner was represented

before the respondents, however,

did not produce any documents.

16. It is in the fact as noted hereinabove, the respondent no.3 on

the basis of the available records was compelled to determine

assumed wages at the rate of Rs.4,125/- per month for 41

employees for the period from May, 2006 to September, 2006

totaling to Rs.8,45,625/- and assumed wages at the rate of

Rs.5,500/- per month for 41 persons from October, 2006 to

April, 2010 totaling to Rs. 96,96,500/- and at the rate of

Rs.8,250/- per month per employee for 41 persons for the

period May, 2010 to September, 2010 aggregating to

Rs.16,91,250. As such, the total aggregating assumed wages

work out to Rs. 1,22,33,375/- and the contributions thereon

at the rate of 6.5 per cent, works out to be Rs.7,95,170/-. It is,

on the basis of the aforesaid determination that the petitioner

was called upon to deposit the aforesaid amount. The

petitioner did not comply with the said order, instead filed a

case under Section 75(1) of the said Act, before the E.I. Court.

An application for injunction, as also waiver of pre deposit was

also filed. By an order dated 28th January, 2022, the E.I. Court

was, inter alia, pleased to pass a conditional order of stay,

subject to deposit of 25 per cent of claimed amount under

Section 75(2B) of the said Act by the next date. The petitioner

did not comply with such direction instead filed the present

writ petition on 10th February, 2021.

17. I find that Mr. Sanyal has strenuously argued by placing

reliance on a judgment delivered by the Hon'ble Supreme

Court in the case of C. C. Santhakumar (supra), that the

respondent no.3 ought not to have determined assumed

wages, in absence of the actual records and without identifying

the actual number of employees. Even if the petitioner had

failed to produce the documents, it was for the respondent

no.3 to proceed on the basis of materials available with him,

for the purpose of identifying the actual number of persons

employed at the establishment and not to proceed on the basis

of assumption. I must, however, note that the provisions of the

said Act, in particular Section 44, casts an obligation on the

employer to furnish returns and maintain registers. Section

45A of the said Act, authorises the Corporation to determine

the contributions. To appropriately appreciate the aforesaid,

Section 45A of the said Act, is reproduced herein below.

"[45-A. Determination of contributions in certain cases. -- (1) Where in respect of a factory or establishment no returns, particulars, registers or records are submitted, furnished or maintained in accordance with the provisions of section 44 or any [Social Security Officer] or other official of the Corporation referred to in sub-section (2) of section 45 is [prevented in any manner] by the principal or immediate employer or any other person, in exercising his functions or discharging his duties under section 45, the Corporation may, on the basis of information available to it, by order, determine the amount of contributions payable in respect of the employees of that factory or establishment.:

[Provided that no such order shall be passed by the Corporation unless the principal or immediate employer or the person in charge of the factory or establishment has been given a reasonable opportunity of being heard.]

[Provided further that no such order shall be passed by the Corporation in respect of the period beyond five years from the date on which the contribution shall become payable.] (2) An order made by the Corporation under sub- section (1) shall be sufficient proof of the claim of the Corporation under section 75 or for recovery of the amount determined by such order as an arrear of land revenue under section 45-B [or the recovery under section 45-C to section 45-I]."

18. As would appear from the above, Section 45A of the said Act in

no uncertain terms authorises the Corporation to determine

the amount of contribution payable in respect of employees of

a factory or establishment, on the basis of information

available with it. Section 45AA of the said Act, provides for an

opportunity to appeal before an Appellate Authority, while

Section 75 (1) of the said Act, provides for the matters to be

decided by the E.I. Court.

19. Admittedly, by an order dated 10th April, 2018, the E.I. Court

in order to afford an opportunity to the petitioner to present its

case had remanded the matter back to the respondent no.3 for

fresh adjudication on the point of coverage and then on the

point of contribution. Such decision was directed to be taken

after affording opportunity of hearing to the petitioner, with a

further direction upon the petitioner to cooperate in such

hearing and to produce relevant documents including

attendance register, salary/wages register, balance sheet, bills,

vouchers etc., before the Hearing Officer or as directed by the

Officer. The order of attachment including the order passed

under Section 45A of the said Act dated 20th June, 2011 were

also set aside. The petitioner was, thereafter, afforded

reasonable opportunity to produce documents. The petitioner

not only failed to produce documents despite taking repeated

adjournment but when an order was passed for determining

the contributions payable, based on assumed wages, for failure

on the part of the petitioner to disclose documents, the

petitioner had once again challenged such order dated 5th

March, 2019 before the E.I. Court, which was registered as

Tender Case No. 57 of 2019. Simultaneously, while

challenging the aforesaid determination, on 5th March, 2019,

the petitioner had also filed an application for injunction, as

also an application for waiver of pre-deposit.

20. It is, in connection with such application that by an order

dated 28th January, 2020 that the E.I. Court had directed the

petitioner to make payment of 25 per cent of the claimed

amount. It was further made clear that in the event, the

petitioner failed to make such deposit, the aforesaid case shall

stand dismissed. I, however, notice that Section 75(2B) of the

said Act, inter alia, provides as follows:

Section 75 (2B) : -

"[(2-B) No matter which is in dispute between a principal employer and the Corporation in respect of any contribution or any other dues shall be raised by the principal employer in the Employees' Insurance Court unless he has deposited with the Court fifty per cent of the amount due from him as claimed by the Corporation:

Provided that the Court may, for reasons to be recorded in writing waive or reduce the amount to be deposited under this sub-section.]"

21. Having regard to the aforesaid, I am of the view that there was

no irregularity on the part of the E.I. Court in issuing the

aforesaid direction for deposit of 25 per cent of the claimed

amount. Since, the aforesaid order had been passed in the

year 2020 and since, the petitioner was enjoying the stay, I am

of the view that the petitioner should be afforded with a further

opportunity to produce the records before the E.I. Court, in

accordance with the judgement delivered by the Hon'ble

Supreme Court in the case of C. C. Santhakumar (supra),

provided the petitioner complies with the direction to secure 25

percent of the claimed amount. At the same time, the fact that

the petitioner had not deposited the 25 per cent of the claimed

amount cannot be lost sight of. The petitioner, thus, cannot be

permitted to take advantage of its own wrong. In any event in

terms of section 75(2B) of the said Act, the petitioner is

required to deposit 50 percent of the amount claimed by the

Corporation, unless waived or reduced. In view thereof, I direct

E.I. Court to hear out the case, subject to the petitioner

making deposit of 25 per cent of the claimed amount, within a

period of four weeks from date of the communication of this

order. In the event, the petitioner complies with the direction

for pre-deposit, as indicated and in the manner as directed

hereinabove, the E.I. Court shall hear out the case, by

registering the same as a regular case, in accordance with law.

In the alternative, if no such deposit is made by the petitioner

within the time specified above, it shall be open to the

Corporation to take such steps as may be available in law, for

enforcement of its claim.

22. The writ petition is accordingly, disposed of.

23. There shall, however, be no order as to costs.

24. Urgent photostat certified copy of this order, if applied for, be

given to the parties upon compliance of necessary formalities.

(Raja Basu Chowdhury, J.)

sb.