Director In Charge Esi ... vs M/S Delkan Buildtech (P) Ltd
2017 Latest Caselaw 4672 Del

     IN THE HIGH COURT OF DELHI AT NEW DELHI

                            Judgment reserved on : 30th August, 2017
                              Date of decision : 01st September, 2017
W.P.(C) 2388/2017
DIRECTOR IN CHARGE ESI CORPORATION
AND ORS                            ..... Petitioner

                         Through      Mr. A.K. Verma, Advocate

                         versus

M/S DELKAN BUILDTECH (P) LTD                       ..... Respondent

                         Through      Mr. Gopi Chand, Advocate

CORAM:
HON'BLE MS. JUSTICE ANU MALHOTRA
                            JUDGMENT

ANU MALHOTRA, J.

1. The writ petition bearing W.P. (C) 2388/2017 has been filed by

the petitioners Director-In-Charge, ESI Corporation, Recovery

Officer, ESIC and Regional Director, ESIC, whereby they have

assailed the impugned order dated 04.11.2016 of the ASCJ/JSCC/G.

Judge (East), Delhi whereby the petitioner's application under Order 6

rule 17 CPC, 1908 as amended was dismissed observing to the effect

that merely because one of the Directors of the petitioner was also the

owner of another Proprietorship concern, had no relevance to the

liability of the petitioner.

2. Through the petition, it has been submitted that the respondent

company had submitted 01 Form with the list of employees applying

for the registration of the company under the ESI Act indicating 20

coverable and 02 exempted employees.

3. The petitioner has asserted that the respondent company applied

for the registration under the ESI Scheme by submission of the

application dated 29.07.2009 and was also allotted code No. 11-30-

107966 (which now has no. 10001079660001001) w.e.f. 23.06.2009

vide C-11 dated 11.08.2009 by the petitioner. The petitioner further

submitted that consequent upon default in payment of the contribution

by the respondent no. 3, a notice dated 28.02.2013, No. C-

18(adhoc)/notice for the claim of ESI contribution for the period from

May, 2011 to December, 2012 an amount of Rs.2,14,500/- was issued

and as the respondent company defaulted in attending the date of

personal hearing on 20.03.2013 to explain its case and did not submit

any written representation in response thereto.

4. The petitioner inter-alia submitted that subsequent to the

assessment order, the respondent company through a letter dated

16.05.2013 submitted the NIL returns for the period from April, 2011

to September, 2011, October, 2011 to March, 2012, April, 2012 to

September, 2012 and October, 2012 to March, 2013 which did not

amount per se to permanent closure of the respondent company. It was

further submitted by the petitioner that the recovery certificate dated

04.09.2013 for non compliance of assessment order dated 16.04.2013

for Rs.2,14,500/- was issued against the respondent company and

apart from the advance deposit nothing was paid.

5. The petitioner further submitted that the post-assessment

intimation of closure of the company forwarded to the petitioner / ESI

Corporation could not be accepted lawful discontinued operation.

6. It has been submitted further in the petition that the respondent

company filed a petition in the District / EI Court challenging the

assessment order dated 12.04.2013 for Rs.2,14,500/-.

7. The petitioner further submitted that it learnt in 2015 that one of

the Directors of the respondent company had a proprietorship concern

since 1999 and was engaged in the same business and was conducting

its operations from the same address and thus an application for

amendment of the written statement on gaining such knowledge was

filed by the petitioner before the District Court / EI Court, which

application was dismissed vide the impugned order. The petitioner has

thus assailed the impugned order dated 04.11.2016 of the

ASCJ/JSCC/G. Judge (East), Delhi whereby the application under

Order 6 rule 17 CPC filed by the petitioner herein as respondent in

ESIC - 03/15 was dismissed contending that the said dismissal was

erroneous and illegal and that the Court concerned ought to have lifted

the corporate veil to come to the conclusion that the respondent herein

was in fact running the proprietorship concern in the name of M/s.

Aggarwal Construction of which the Director of the respondent herein

and of M/s. Aggarwal Construction were the same and that they were

running their business from the same place where the respondent

herein M/s. Delkan Buildtech (P) Limited was running the business. It

was also contended on behalf of the petitioner that the nature of the

work done by the respondent M/s. Aggarwal Construction was the

same and that thus the petitioner had sought to incorporate in para 4 of

the Preliminary Objections to the effect : -

"That the Petitioner Shri Sanjeev Aggarwal Director of

M/S Delkan Buildtech (P) Ltd had started another

company in the name and style of M/s. Aggrawal

Construction and Shri Sanjeev Aggrawal himself is

Proprietor and the nature of the work and Registered

Office of the two firm is also same. That the Petitioner

to evade himself from the liability from the ESI dues

has started another firm."

to contend that the respondent had flouted the norms for

causing loss of the statutory ESI contribution to the petitioner.

8. On behalf of the respondent, no counter affidavit was sought to

be filed.

9. Oral arguments have thus been addressed on behalf of either

side.

10. Learned counsel for the petitioner urged that the corporate veil

ought to have been lifted by the Trial Court concerned and that the

prayer made seeking amendment in para 4 of the Preliminary

Objections of the written statement ought to have been allowed as it

would not have changed the nature of case in any manner. It was

further submitted on behalf of the petitioner that the amendment

sought was necessary for the effective adjudication of the case and

that no malafides could be attributed to the petitioner in bringing on

record the amendment sought.

11. On behalf of the respondent, the petition has been vehemently

opposed by the learned counsel for the respondent submitting to the

effect that the permission as sought on behalf of the respondent has

been rightly rejected.

12. A bare perusal of the averments made in the petition and in the

impugned order dated 04.11.2016 of the ASCJ/JSCC/G. Judge (East),

Delhi makes it very clear that M/s. Delkan Buildtech (P) Limited of

which Mr. Sanjeev Aggarwal was one of its Directors and M/s.

Aggarwal Construction of which also the same Mr. Sanjeev Aggarwal

was a proprietor, are both separate legal entities, separate from each

other.

13. The respondent company had claimed before the trial court

concerned that it was involved in the business of construction of the

buildings which work had closed down on 31.01.2011 and thus there

was no liability incurred by M/s. Delkan Buildtech (P) Limited w.e.f.

31.01.2011 to 2013. The learned Trial Court also held that merely

because one of the Directors of M/s. Delkan Buildtech (P) Limited i.e.

the petitioner herein was also the owner of the separate proprietorship

concern named M/s. Aggarwal Constructions had no reliance to the

liability of the petitioner. In these circumstances, it is apparent that it

was rightly not considered appropriate by the trial court to lift the

corporate veil to attribute any common liability to the respondent

company herein common to that of M/s. Aggarwal Construction

company.

14. In these circumstances, it is held that there is no infirmity in the

impugned order dated 04.11.2016 of the ASCJ/JSCC/G. Judge (East),

Delhi and thus the W.P.(C) 2388/2017 is dismissed.

ANU MALHOTRA, J

SEPTEMBER 01st, 2017/mk