Employees State Insurance ... vs Ms. Radha Maheshwari
2009 Latest Caselaw 3099 Del

*      HIGH COURT OF DELHI : NEW DELHI

                   FAO No.403 of 2002

%            Judgment reserved on:,3rd August, 2009

             Judgment delivered on:11thAugust, 2009

Employees State Insurance Corporation,
(Through its Regional Director),
DDA Shopping-cum-Office Complex,
Rajendra Place,
New Delhi.
                                      ....Appellant

                      Through: Mr. K. P. Mavi.

                  Versus

Ms. Radha Maheshwari,
W/o S. M. Maheshwari,
R/o 9, Navjivan Vihar,
New Delhi-110 017.                      ...Respondent

                           Through: Nemo


Coram:

HON'BLE MR. JUSTICE V.B. GUPTA

1. Whether the Reporters of local papers may
   be allowed to see the judgment?                    Yes

2. To be referred to Reporter or not?                 Yes

3. Whether the judgment should be reported
   in the Digest?                                     Yes



FAO No.403/2002                                  Page 1 of 8
 V.B.Gupta, J.

Appellant has filed this appeal under Section 82 of the

Employee State Insurance Act, 1948 (for short as „Act‟)

against judgment of Senior Civil Judge, Delhi, dated 29 th

April, 2002, vide which petition under Section 75 of the

Act, filed by respondent, was allowed.

2. The brief facts of this case are that respondent is

stated to be carrying on business of fabrication of garments

since 1st February, 1983 in the name of M/s Radha

Maheshwari. It is her case that number of persons

employed by her in the business, never exceeded 17. No

power is being used. Appellant‟s Inspector visited the

business establishment of the respondent and informed

that since, she was using an over-locking machine which

operates with power, her establishment was liable to be

covered under the Act. Accordingly, appellant issued an

order dated 23.12.1991, creating a liability of Rs.38,270/-

on account of ESI contribution for the period 1 st April,1985

to 25th March, 1988 in the name of respondent.

3. On 1st April, 1985, respondent disposed off said over

locking machine and intimation to this effect was given to

the appellant. Despite this, appellant issued a liability of

ESI contribution in the name of respondent for the period

18th February, 1985 to 21st August, 1985. Appellant after

being satisfied that, Act ceases to have its applicability on

the respondent, rectified the liability earlier created for the

period 18th February, 1985 to 21st August, 1985 and

confined the same up to 31st March, 1985 and asked the

respondent to pay sum of Rs.1298.10/- up to 31st March,

1985. This amount was also paid by respondent under

protest. Thereafter, order dated 31st December, 1991,

under Section 45-A of the Act was passed. Respondent filed

petition before the Trial Court challenging that order. Trial

court, vide impugned judgment set aside the demand.

4. On 28th July, 2003, this matter was admitted and

came up for hearing on 27th July, 2009. On that date, none

appeared on behalf of respondent. It remained

continuously on board since 27th July 2009. As nobody

appeared on behalf of respondent since that date, on 3rd

August, 2009, arguments advance by counsel for appellant

were heard.

5. It has been contended by learned counsel for

appellant that respondent failed to discharge the burden

cast upon her to prove that she was not using power in

manufacturing process and was not employing more than

17 persons. On the contrary, vide letter dated 9 th January,

1989 it was intimated that she had now stopped the use of

power, indicating thereby, that earlier she was using power

in manufacturing process.

6. It is further contended that officer of appellant visited

the premises of respondent and physically inspected the

same and filed survey report stating that there were 17

persons employed during the period 1st April, 1985 to 31st

March, 1988, in the unit of the respondent and power is

being used in the manufacturing process.

7. Last contention made by learned counsel for

appellant is that as per Section 1 (6) of the Act, even if

respondent ceases to use the power, still the provisions of

the Act would apply to her establishment.

8. Respondent‟s case is that the number of workers

employed by her never exceeded 17 and she never used

power, as the operation of over-locking machinery is

manual. While the case of appellant is, that over-locking

machinery was operated by power.

9. Thus, the only dispute is whether power was being

used by respondent or not.

10. RW-1 Mrs. G. Nangrani, Insurance Inspector,

conducted survey of respondent‟s firm on 7th March, 1988.

At that time there were only eight employees. Again she

surveyed respondent‟s firm on 21st March, 1988. As per

survey report Ex. RW 1/1, number of employee varied from

9 to 17, from time to time.

11. In her cross-examination, she stated that as per

survey report, although the number of employees at a time

exceeded 10 but there was no evidence at the spot showing

the use of power. She never recommended levy of ESI

charges or penalties upon respondent. Survey conducted

on 21st August, 1985, was not conducted by her and she

had never seen respondent using any machine with power,

at any time of her survey.

12. Appellant has placed much reliance on letter Ex. PW

1/36, dated, 9th January, 1989 written by respondent to the

appellant. In this letter, it is stated that ;

"we are not using power anymore and which fact was verified by your Inspector on the spot."

13. As per this letter, it is clear that respondent, had been

using power earlier, but now is not using. There is nothing

to show, as to from which date, respondent stopped using

the power. But as per appellant‟s own witness RW-1, it is

clear that respondent was not using any machine with

power, at the time of her survey.

14. Learned counsel for appellant relied upon provision of

1(6) of the Act, which read as under:

"1. Short title, extent, commencement and application- (1)This Act may be called the Employees‟ State Insurance Act, 1948.

          (2 to 5)        xxx        xxx         xxx


          (6)     A factory or an establishment to

which this Act applies shall continue to be

governed by this Act notwithstanding that the number of persons employed therein at any time falls below the limit specified by or under this Act or the manufacturing process therein ceases to be carried on with the aid of power."

15. This provision was not there, when initially the Act

was enacted in 1948. It was incorporated by way of

amendment, and that too applicable only, w.e.f. 20th

October, 1989. There is nothing in the Act to show that

provisions of Section 1(6) of the Act, are to have

retrospective effect.

16. It is well settled that, no amendment can have

retrospective effect, unless it is specifically provided.

Since, amendment came into force w.e.f. 20th October,

1989, it is effective from that date only. Hence, provisions

of Section 1(6) of the Act, are not applicable to the facts of

the present case.

17. Since, impugned demand, pertains to period 1st April,

1985 to 21st March, 1988, the establishment of the

respondent was not covered under the provisions of the

Act.

18. As respondent was not using power and the number

of employees employed by her were less than twenty, the

establishment of respondent was not covered under the Act

and as such impugned demand raised by appellant was

illegal and is liable to be set aside.

19. Thus, I do not find any illegality or ambiguity in the

impugned judgment.

20. Present appeal is not maintainable and the same is

hereby dismissed.

21. No order as to costs.

22. Trial court record be sent back forthwith.

August 11th, 2009                         V.B.GUPTA, J.
bhatti