Central Cottage Industries ... vs Employees State Insurance ...
2011 Latest Caselaw 3317 Del

*              IN THE HIGH COURT OF DELHI AT NEW DELHI

+                          FAO No.278/2008

%                                                        13th July, 2011

CENTRAL COTTAGE INDUSTRIES CORPORATION OF INDIA LIMITED
                                              ...... Appellant

                           Through:    Mr. Amit Kumar and Mr. Jawahar
                                       Narang and Mr. Ashish Kumar,
                                       Advocates.


                           VERSUS

EMPLOYEES STATE INSURANCE CORPORATION & ANR.
                                                          ...... Respondents
                           Through:    Mr. K.P.Mavi, Advocate.
CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA

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

    2.   To be referred to the Reporter or not?

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


    VALMIKI J. MEHTA, J (ORAL)

1.       The challenge by means of this first appeal under Section 82 of

the Employees State Insurance Act, 1948 (in short „ESI Act‟), is to the

impugned order dated 7.7.2008 passed by the lower appellate court

which has decided the following two issues in favour of the

respondents herein:-


         "1)   Whether, the notice/judgment dated 27-03-1996
               issued by respondent no.1and 2 is liable to be set
               aside as violative of principles of natural justice or of
               the procedure prescribed under the ESI Act? OPP.

FAO No.278/2008                                                Page 1 of 3
      2)       Whether the impugned notice/demand dated 27-03-
              96 raised by respondents no.1 and 2 is barred by
              limitation? OPP"
2.            So far as the issue no.1 is concerned, the lower appellate

court has rightly observed as under, and with which I completely

agree:-


              "It is pertinent to mention here that even vide the
          impugned order dated 27-3-1996, the petitioner was
          given an opportunity not only of filing objections but also
          for personal hearing. Even in response to the said
          impugned order the only response filed by the petitioner
          was that it has applied to the Government for exemption
          u/s 90. Hence, the petitioner failed to show (or even
          contended) that the Act was not applicable to it. In other
          words, no dispute with regard to the applicability of the
          Act was raised by the petitioner before the respondents.
          Hence, the contention of the petitioner is rejected."
3.            Learned counsel for the appellant placed reliance upon

Srinivasa Rice Mills & others Vs. ESI Corpn. (2007) 1 SCC 705

and para 18 whereof which reads as under:-


              "18. Before an Act is made applicable, in the event a
           dispute is raised, the authorities exercising statutory
           power    must      determine    the    jurisdictional  fact.
           Applicability of the Act would be a jurisdictional question.
           The employer is entitled to raise such a question before
           the appropriate authority. Such a question can also be
           raised for the first time before a court exercising the
           power of judicial review although ordinarily the same
           should be raised before the authority concerned as a
           preliminary issue. (See Express Newspapers Ltd. v.
           Workers & Staff AIR 1963 SC 569 para 15)."
4.            It is accordingly argued that since the appellant has already

pleaded that it is exempted from operation of the ESI Act, by virtue of

the proviso to Section 1(4) of the ESI Act, the trial court was bound to

FAO No.278/2008                                               Page 2 of 3
 consider this issue before proceeding further. I may note that there is

no dispute to the aforesaid proposition of law, however, the appeal of

the appellant is still pending before the ESI court and this disputed

question of fact as to whether the appellant falls within the proviso to

Section 1(4) of the ESI Act, so as to be exempted from operation of the

Act, will be an issue before the ESI court and will have to be decided

after trial at the stage of final judgment.   The impugned order only

decides the aforesaid two issues.


5.   The issue with respect to the limitation, and which was the

subject matter of issue no.2 before the ESI court, has not been pressed

before me. The issue as to whether the appellant is or is not covered

under the ESI Act by virtue of the proviso to Section 1(4) of the ESI Act,

is left open to be decided after the parties have led evidence and at

the final stage of hearing before the ESI court, before which the main

matter is still pending. The appeal is accordingly dismissed with the

aforesaid observations. Trial court record be sent back.




JULY 13, 2011                                  VALMIKI J. MEHTA, J.

ib