Employees State Insurance ... vs Shri Om Prakash
2009 Latest Caselaw 3160 Del

*       HIGH COURT OF DELHI : NEW DELHI

FAO. No. 401/2002 & CM No.1079/2002, FAO No.
402/2002 & CM No.1080/2002, FAO No. 405/2002
& CM No.1050/2002 & FAO No.406/2002 & CM
No.1081/2002

%                Judgment reserved on: 29th July, 2009

                 Judgment delivered on: 13th August, 2009

1. FAO No.401/2002 & CM No.1079/2002

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

                             Through: Mr. K.P. Mavi, Adv.

                      Versus

Shri Om Prakash,
S/o. Chandu Lal,
R/o. 1904, Idgah Road,
Sadar Bazar,
Delhi-11006                                  ....Respondent.

                             Through: Mr.    Pradeep Kumar
                                      Arya,   Mr.    Narinder
                                      Chaudhary,          Mr.
                                      Deepankar Dutt Sharma
                                      and   Mr.   Yajuvendra,
                                      Advs.

2. FAO No.402/2002 & CM No.1080/2002

Employees State Insurance Corporation,
(Through its Regional Director),




FAO Nos.401, 402, 405 & 406/02                   Page 1 of 17
 DDA Shopping-cum-Office Complex,
Rejendra Place,
New Delhi                                       ....Appellant

                             Through: Mr. K.P. Mavi, Adv.

                      Versus

Shri Chander Mohan,
Cabin No.7,
M.G. Cement Siding,
Shakur Basti,
Delhi-110041                                  ....Respondent.

                             Through: Mr.    Pradeep Kumar
                                      Arya,   Mr.    Narinder
                                      Chaudhary,          Mr.
                                      Deepankar Dutt Sharma
                                      and   Mr.   Yajuvendra,
                                      Advs.

3. FAO No.405/2002 & CM No.1050/2002

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

                             Through: Mr. K.P. Mavi, Adv.

                      Versus

Shri Ajay Kumar Gupta,
S/o. Sh. B.K. Gupta,
R/o. B-1/74, Paschim Vihar,
New Delhi                                     ....Respondent.

                             Through: Mr.     Pradeep Kumar
                                      Arya,    Mr.   Narinder




FAO Nos.401, 402, 405 & 406/02                    Page 2 of 17
                                       Chaudhary,        Mr.
                                      Deepankar Dutt Sharma
                                      and   Mr.  Yajuvendra,
                                      Advs.

4. FAO No.406/2002 & CM No.1081/2002

Employees State Insurance Corporation,
(Through its Regional Director),
DDA Shopping-cum-Office Complex,
Rejendra Place,
New Delhi                              ....Appellant
                   Through: Mr. K.P. Mavi, Adv.

                      Versus

M/s. Aggarwal Transport Co.,
Cabin No.17,
Railway Cement Siding, Meter Gauge,
Shakur Basti,
Delhi-110034.
(Through its Proprietor Shri Amarnath) ..Respondent.

                             Through: Mr.    Pradeep Kumar
                                      Arya,   Mr.    Narinder
                                      Chaudhary,          Mr.
                                      Deepankar Dutt Sharma
                                      and   Mr.   Yajuvendra,
                                      Advs.

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 Nos.401, 402, 405 & 406/02                   Page 3 of 17
 V.B.Gupta, J.

As common question of law is involved in these

appeals and facts are similar, hence, these appeals are

being disposed of by common judgment.

2. Respondents herein, filed petitions under Section

75 of Employee State Insurance Act, 1948 (for short as

„Act‟) on the ground that provisions of this Act are not

applicable to their firms and the action of the appellant

in issuing ESI Code to them is malafide, illegal and is

liable to be quashed.

3. In reply, the case of appellant was that

respondent‟s firm had employed between 27 to 56

employees respectively, at the time when inspection

was conducted. Under these circumstances, Act in

question is applicable to the firm of respondents.

4. Trial court vide impugned judgments, held that

appellant had failed to prove that respondents

employed more than the requisite number and as such

coverage and consequent allotment of the Code

number and the impugned demand, if any, is illegal.

5. Aggrieved by the decision of the trial court,

appellant-corporation filed these appeals.

6. It is contended by learned counsel for appellant

that trial court erred in accepting version of

respondents that they never employed more than 2 to

5 persons and totally ignored the material placed on

record by appellant-corporation, including survey

report, which had been duly proved by the appellant.

It specifically states the names of the persons

employed by respondents firm and this list was

received from the office of District Labour

Commissioner, Government of NCT, Delhi.

7. It is further contended that team of officials of

appellant-corporation, visited premises of the

respondents and physically inspected the same.

Thereafter only, they filed the survey report, giving

specific number of employees employed by them.

8. Moreover, this Act, is a welfare and social

legislation and trial court ought not to have taken

technical view, that survey report should have

particulars such as name of employees, father‟s name,

designation and addresses etc. When survey report

had been signed by the inspectors of appellant-

corporation, there was no reason to discard the same.

9. On the other hand, it is contended by learned

counsel for respondents, that respondents never

employed more than 2 to 5 persons in their

establishments. The so called survey report is a

photocopy, the original of which has not been placed

or proved on record. Moreover, this survey was

conducted by Labour Department and not by the

employees of appellant-corporation.

10. It is further contended that survey report is

absolutely vague, as it does not give parentage,

address, designation, date of employment and wages,

drawn by each employee. Hence, no reliance can be

placed on the same.

11. Initial onus is upon appellant-corporation to prove

that respondents employed requisite number of

employees for the purpose of applicability of the Act.

12. Case of appellant is full of contradictions, as in

(FAO No.401/2002), in written statement, it is stated

that 56 persons were found in the establishment.

While, appellant‟s witness (RW-2), in cross-

examination, stated that, after verification they found

56 employees present, out of 85 mentioned in the list.

13. According to appellant‟s own case, there was a

list of 85 persons, purported to be working in the

establishment of respondent, while in written

statement, appellant states that 56 persons were found

working for the respondent. So, this is a glaring

contradiction in the case of appellant.

14. In (FAO No.406/2002), appellant‟s witness (RW-1),

Sh. Ghanshyam Singh, Assistant Director (Vigilance)

stated that survey report Exb.-RW1/1 bears his

signatures and they met proprietor of respondent

namely, Sh. Amarnath, who confirmed that five trucks

were working in the company. He also gave a letter,

but the same is not, at present in file. From

information gathered from the people there, at least

five persons were working on each truck. There was a

letter in which he had mentioned everything.

15. In cross-examination, RW-1 stated that they have

not mentioned the number of trucks in their report,

because the employer had given a letter in which he

has confirmed the number of trucks. RW-1, further

stated that he did not record statement of any

employee, who could say that he was working with the

respondent. He had also not taken/seen any proof of

employment of the employees. RW-1, admitted that he

never verified the number of trucks.

16. In (FAO No.405/2002), Sh. M.S. Chauhan, (RW-2),

appellant‟s witness, in cross-examination stated that

they did not record the statement of any of the workers

mentioned in the list of Labour Inspector and they had

not collected any proof of their employment with

respondent. RW-2 admitted that list of workers, is not

bearing any date or signatures of Labour Inspector,

Hargian Singh.

17. In (FAO No.402/2002), appellant‟s witness (RW-1),

Manjeet Singh, Insurance Inspector, stated that he

conducted survey of the firm, along with other

inspectors on directions of Regional Director, to verify

complaint Mark „A‟, received from the office of Labour

Commissioner.

18. Complaint mark „A‟ is purported to have been

sent by the office of Labour Commissioner, bearing

name of Hargian Singh. The same has been addressed

to Secretary, Employee Union. Thus, the survey of

respondents‟ firm, if any, was conducted by Labour

Department and report of Labour Department was sent

to the Employee Union.

19. On the basis of complaint of the union, Inspectors

of appellant-corporation conducted inspection of

premises of respondents firms. Thus, the basic

document in this case is, the survey report, conducted

by Labour Department. However, that survey report

has not been proved, as none of the officials of Labour

Department has been examined. Moreover, survey

report, is an unsigned document and is merely a scrap

of paper. No reliance can be put on this document and

trial court rightly rejected this survey report.

20. Relevant findings of the trial court in this regard

are;

"In the instant case, on perusal of the material on record, I find that Ex.RW-1/2 containing the names of 85 employees was received in the office of the respondent from Labour Department and thereupon a survey was conducted by the respondent‟s Inspectors and they found 56 employees working over there. But during inspection, I find that they neither obtained the names, addresses and signatures of these 56 employees. The petitioner has not placed any material on the record showing that he never in fact employed more than two employees but the respondents are

equally at fault in not obtaining the required particulars of the workers found to be working there. There is no material on the record by which any reliance can be placed on this photo copy of the list Ex. RW-1/2. It is not clear as to which of the employees were working and which were not working. There is no material on the record that the workers refused to disclose their names and addresses. In the absence of any supporting material, I find it difficult to believe the version of the Inspectors RW-1 to RW-3 that they found 56 employees working at the site of the petitioner, when they failed to record their names and addresses. Accordingly, no reliance can be placed on this photo copy of the list. This issue is accordingly decided in favour of the petitioner and against the respondent."

Further held;

"In the instant cases, there is a dispute about the number of employees and none of the parties have placed any documentary evidence on the record from which the number of employees or the amount of wages paid to the employees can be ascertained. In an authority reported as Employees State Insurance Corporation vs. Karnataka Asbestos Cement Products, Vol.79 F.J.R. 188, wherein it observed by the Karnataka High court that at the time of inspection, the Inspector must record the name, father‟s name, place from which the employee hails, the designation, the length of services, emoluments etc.

In these cases, the respondents have relied upon a list sent by the Labour Union. In Petition No.9/95, RW-1, Sh. Ghan-shyam Singh has conceded in the cross- examination that he has not taken any proof of the employment of the employees nor made any enquiry from the Secretary of the Union. He has not confirmed the number of trucks. This has been corroborated by RW-3, Janak Kumar also. Similar is the statement of Sh. M.S. Chauhan, RW-2 in Petition No.2/96. In Petition No.5/96 the evidence of RW-1, Manjeet Singh is slightly different but he has also not collected any evidence about the employees but relied solely upon the list supplied by the Labour Union. In all the three cases, the respondents have not examined anyone from the Labour Department or from the Labour Union nor have collected any evidence on their own about the number of employees. In view of these observations, there is no evidence about the number of employees being employed by the petitioners. I have no option but to believe the version of the petitioners that they were not employing the required number of employees. The issues are accordingly decided in favour of the petitioners and against the respondents."

21. I do not find any reason to disagree with the

reasoning given by the trial court. Appellant-

corporation has miserably failed to prove the number

of employees working with the respondents at the time

of inspection. Thus, provisions of the Act, do not apply

to any of respondents‟ firm.

+CM Nos.1079/2002, 1080/2002, 1050/2002 &1081/2002

22. Appellant had filed these applications seeking

permission to prove the report of Labour Officer and

examine employees of the respondents.

23. Provision applicable to produce additional

evidence in appellate court, is Order 41 Rule 27 CPC

which reads as under;

27. Production of additional evidence in Appellate court- (1) The parties to an appeal shall not be entitled to produce additional evidence, whether oral or documentary, in the Appellate Court. But if-

(a) the Court from whose decree the appeal is preferred has refused to admit evidence which ought to have been admitted, or [(aa) the party seeking to produce additional evidence, establishes that notwithstanding the exercise of due diligence, such evidence was not within his knowledge or could not, after the exercise

of due diligence, be produced by him at the time when the decree appealed against was passed, or]

(b) the Appellate Court requires any document to be produced, or any witness to be examined to enable it to pronounce judgment, or for any other substantial cause, the Appellate Court may allow such evidence or document to be produced, or witness to be examined.

(2) Whenever additional evidence is allowed to be produced by an Appellate Court, the Court shall record the reason for its admission."

24. According to sub-clause (aa), a party may be

permitted to produce additional evidence in appellate

court, if it establishes that such evidence, which it

seeks to produce as additional evidence, was not

within his knowledge or could not, after the exercise of

due diligence, produced by him.

25. In the present case, additional evidence sought to

be produced is, the survey report of the Labour

Officer. This report was already on record, before the

trial court. It is not the case of appellant, that this

evidence was not available with it. Moreover, survey

report sought to be proved now, is an unsigned

document which is not more than a scrap of paper.

26. Under these circumstances, no ground is made

out for allowing these applications for additional

evidence.

27. In view of above discussion, I do not find any

ambiguity or infirmity in the impugned judgments.

The present appeals as well as applications for

additional evidence, are not maintainable and are

dismissed with consolidated costs of Rs.25,000/-.

28. Costs of Rs.25,000/- be deposited within eight

weeks with Registrar General of this Court, failing

which trial court shall recover the same in accordance

with law.

29. These costs have been imposed keeping in view

the careless and negligent attitude of appellant

officials as they were gross negligent in not proving

even the basic document, i.e. the survey report, on

which appellant has based its case.

30. Appellant-corporation is having large number of

legal officials, at its disposal. It is apparent that none

of them, scrutinized the survey report received from

the Labour Department, which was neither original nor

the same was signed by anyone. Thus, there is a clear

cut dereliction of duties, on their part, who without

looking into the primary document, went on contesting

these matters, before the trial court.

31. After getting an adverse decision, appellant/

corporation, which is a statutory body, still choose to

file these appeals, when admittedly it knew, that it has

no legs to stand in the appellate court and that is why,

it also filed application for additional evidence in each

appeal.

32. Officials of appellant-corporation did not

scrutinize or examine these files properly, before filing

the appeals. It is a usual practice with Public Sector

Undertaking/Statutory Bodies, to go on filing appeals,

without proper application of mind. These officials

work in a mechanical manner and give their opinion as

"fit for appeal" in every matter. These officials have

scant regard for public exchequer as well as Court‟s

time.

33. It is hoped that legal officials of appellant/

corporation will henceforth, properly scrutinize each

and every case, before filing any appeal in appellate

court. Chairman of appellant-corporation shall issue

necessary guidelines to its legal officials, in this

regard.

34. Registrar General will send a copy of this

judgment to the Chairman of appellant-corporation.

35. List for compliance on 15th October, 2009.

13th August, 2009                   V.B.GUPTA, J.
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