Gopi Chand And Ors. vs Employees State Insurance Corp.
2010 Latest Caselaw 4431 Del

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*     IN THE HIGH COURT OF DELHI AT NEW DELHI



+     FAO 568/2003
                          Reserved on:      13th September, 2010.
                          Date of decision: 21st September, 2010.

      GOPI CHAND AND ORS.                            ..... Appellants
                   Through:          Mr. Pradeep Kumar Arya, Adv.
                                     with Mr. Narinder Chaudhary
                                     and Mr. Mukesh Sharma, Advs.

                    versus

      EMPLOYEES STATE INSURANCE CORP.        ..... Respondent
                   Through: Mr. K.P. Mavi, Adv.


      CORAM:
      HON'BLE MR. JUSTICE SIDDHARTH MRIDUL

      1.       Whether reporters of local papers may be allowed to see
               the judgment?                                 YES.
      2.       To be referred to the Reporter or not?        YES.

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

                             JUDGMENT

SIDDHARTH MRIDUL, J.

1. The present appeal under Section 82 of the Employees State

Insurance Act, 1948 (hereinafter referred to as „the Act‟) assails the

order dated 5th May, 2003 passed by the ESIC Court, Tis Hazari

Court in ESIC Petition No.20/96.

2. The appellants submitted before the ESIC Court that the

appellant No.1 carries on the business of cement siding at Shakur

Basti, New Delhi and owns a truck bearing registration No.DLH

2255. The appellant No.1 also stated that he has a cabin bearing

No.10, allotted to him at Badi Lane, Shakur Basti Railway Siding,

Delhi. It was also stated that the appellant No.1 had five sons i.e.

appellant No.2 to 6 herein who also had their independent transport

business. The appellant further stated that all the appellants are

income tax assessee having their own individual income tax account

numbers and are carrying on business in their own name and

maintaining books of accounts separately. It was further stated by

the appellants that they are all independent business persons/units

carrying on their own business in their own name and neither the

supervision nor the control of the business units of the appellants is

in one hand. The appellants, therefore, assailed the order of the

respondent-corporation dated the 9th July, 1993 before the ESIC

Court on the ground that the respondent-corporation had clubbed

the businesses of all the appellants and presumed it to be a single

unit. It was further stated by the appellants before the ESIC Court

that one truck could have a maximum of seven employees only and

as such none of the appellants could be covered by the Act.

3. The respondent-corporation filed a written statement to the

petition filed by the appellant herein, before the ESIC Court and

stated that a survey of the appellants‟ businesses was conducted on

the 3rd May, 1993 and 52 persons were found working with them.

The respondent-corporation further submitted that all the appellants

are carrying on their business together and the supervision and

control of the businesses is in one single unit and as such the

appellants are covered under the Act.

4. After the completion of the pleadings, the learned ESIC Court

framed the following issues:-

"(i) Whether the clubbing and covering of the petitioner is illegal and as such the impugned demand is liable to be set-aside?

(ii) Relief."

5. By the impugned order dated the 5th May, 2003, the ESIC

Court held that the appellants have been rightly clubbed together

and are consequently covered under the Act. The ESIC Court,

therefore, dismissed the petition filed by the appellants herein as

being without merit.

6. Aggrieved by the impugned order, the appellants have

preferred the present appeal praying therein that the impugned

order dated 5th May, 2003 passed in ESIC Case No.20/96 may be set

aside and the petition under Section 75 of the Act filed by the

appellants be allowed.

7. On behalf of the appellants the sole ground that has been

urged is that, the ESIC Court did not appreciate the evidence on

record since it failed to consider that no suggestion or cross-

examination was done by the respondents suggesting to the

appellants that their supervision and control is in one hand, and that

their employment figure stated in the respective examination-in-

chief is wrong and incorrect.

8. Per contra, on behalf of the respondent-corporation it was

urged that the appellants were all operating from one place and that

they had failed to produce the best evidence in their possession to

establish that there was no unity or supervision or control.

9. In support of the submissions of the respondent-corporation

Mr. K.P. Mavi, Advocate invited the attention of this Court to the

decision of the Supreme Court in LLJ Vol.I 1960-Associated

Cement Companies Ltd. vs. Their Workmen. In the said

decision, the Supreme Court stated as under:-

"The Act not having prescribed any specific tests for determining what is "one establishment," we must fall back on such considerations as in the ordinary industrial or business sense determines the unity of an industrial establishment, having regard no doubt to the scheme and object of the Act and other relevant provisions of the Mines Act, 1952, or the Factories Act, 1948. What then is "one establishment" in the ordinary industrial or business sense? The question of unity or oneness presents difficulties when the industrial establishment consists of parts, units, departments, branches, etc. If it is strictly unitary in the sense of having one location and one unit only, there is little difficulty in saying that it is one establishment." (emphasis supplied)

10. Mr. Mavi also invited the attention of this Court to the decision

of the Supreme Court in 1997 SCC (L&S) 190-Employees' State

Insurance Corporation vs. F. Fibre Banglore (P) Ltd., where the

Supreme Court held as under:-

"The Full Bench of the High Court has held that in a case where the order under Section 45-A becomes final, there is no need for the Corporation to seek adjudication before the Insurance Court. In all other cases, the Corporation is required to go to the Insurance Court, have it adjudicated and then make a demand. We are of the view that the Full Bench of the High Court is clearly in error to reach that conclusion. Though Section 75 of the Act does not envisage as to who has to approach the Insurance Court, by necessary implication when the employer denies the liability or applicability of the provisions of the Act or the quantum of the contribution to be deposited by the employer, it is for him to approach the Insurance Court and seek adjudication. It is not for the Corporation in each case whenever there is a dispute, to go to the Insurance Court and have the dispute adjudicated. Otherwise, the Act would become

unworkable and defeat the object and purpose of the Act". (emphasis supplied)

11. Counsel for the respondent-corporation with reference to

Section 101 and 103 of the Indian Evidence Act, 1872 further

submitted that since the appellants who were in possession of the

register of employees and the register of salary, had withheld this

information, they had failed to discharge the burden of proving that

they employed lesser employees so as to fall outside the purview of

the Act.

12. I have gone through the pleadings of the parties and the

record of the case and have considered the submissions made by

counsel before this Court.

13. In the present case it is seen that during the cross-examination

of each of the appellants, most of them stated in cross-examination

that their office address is Cabin No.10, which was also stated to be

the office of appellant No.1. Although, appellant No.2 in his cross-

examination denied that he had anything to do with Cabin No.10, the

said appellant did not disclose as to from where he is operating at

the Shakur Basti Cement Siding. Similarly, appellant No.6 did not

enter the witness box. Furthermore, the appellants did not place on

record either before the ESIC Court or before this Court on record,

any books of account maintained by them. The appellants also did

not place on record or produce the best evidence in their possession,

namely, the register of employees or the register of salary paid to

the employees, which would have clearly substantiated the claim

made by them that since they did not employ the requisite number of

employees independently they were not covered under the purview

of the Act. It is also noticed that the appellant No.2 to 6 did not

disclose at any juncture the number of employees employed by them

purportedly independently.

14. For the aforesaid reason, it is safe to presume that since the

appellants were operating from the same cabin and had six trucks in

all, the survey report indicating that they were together employing

52 employees appear to be correct and could not be disbelieved.

This is also owing to the disclosure made by the appellant No.1 in

the petition itself that one truck could employ seven employees

namely i.e. one driver, one cleaner and five labourers. The decision

of the Apex Court in Associated Cement Companies Ltd. vs.

Their Workmen (supra) supports this view.

15. In addition, since the facts with regard to the employment of

employees were especially within the knowledge of the appellants

themselves, the burden of proving the fact that they in fact employed

less employees, then the number covered under the Act, was cast on

them. Further as held by the Apex Court in Employees' State

Insurance Corporation vs. F. Fibre Banglore (P) Ltd. (supra)

where the employer denies the liability or applicability of the

provisions of the Act, it is for him to approach the Insurance Court

and seek adjudication. Consequently, it was for the appellants to

establish that they did not employ the number of employees

requisite to fall within the purview of the Act. However, the

appellants have failed to discharge this burden by withholding the

best evidence in their possession by way of register of employees

and register of salary of employees.

16. Thus, for the reasons aforesaid it is held that the appellants

have rightly been clubbed together and covered under the Act. In

view of this finding, there is no infirmity in the order under

challenge passed by the ESIC Court so as to warrant interference in

appeal. Consequently, the appeal is dismissed. No order as to costs.

SIDDHARTH MRIDUL, J

SEPTEMBER 21, 2010 dn