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Delhi High Court
Motor & General Finance Limited vs Director General & Anr on 28 November, 2025
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment Reserved on: 13.11.2025
Judgment pronounced on:28.11.2025
+ FAO 62/2018 & CM APPLs. 5963/2018, 5965/2018, 33919/2019
MOTOR & GENERAL FINANCE LIMITED .....Appellant
Through: Mr. J.P. Sengh, Sr. Advocate
alongwith Mr. Sunil Magon,
Advocate
Versus
DIRECTOR GENERAL & ANR .....Respondents
Through: Mr. K.P. Mavi, Advocate alongwith
Mr. Arvind Kumar Bansal, Advocate
CORAM:
HON'BLE MS. JUSTICE CHANDRASEKHARAN SUDHA
JUDGMENT
CHANDRASEKHARAN SUDHA, J.
1. The present appeal under Section 82(2) of the Employees'
State Insurance Act, 1948 (the ESI Act), has been filed by the
petitioner in ESI No. 72/16/05 on the file of SCJ-cum-RC, Central
District, Tis Hazar Courts, Delhi, challenging the judgment dated
16.01.2017 whereby his petition filed under Section 75 of the ESI
Act has been dismissed. The parties in this appeal will be referred
to as described in the original proceedings.
2. Brief facts of the case are as follows:- The petitioner is a
Public Limited Company incorporated under the Companies Act,
1913, which carried out the business of hire purchase between
02.10.1998 and 30.04.1989. A show cause notice dated 19.09.1989
was issued to the petitioner by the office of the respondents to
deposit an amount of ₹51,567 towards ESI Contribution for the
period between 02.10.1998 and 30.04.1989. The petitioner replied
on 22.09.1989, stating that the Company was not covered under
the ESI Act. The respondents passed an Order dated 07.07.1993,
wherein it upheld the contribution demand. The said order was
challenged by the petitioner before this Court by way of Writ
Petition No. 4110/1993, which was disposed of vide order dated
21.07.2005, by directing the petitioner to adopt an efficacious
remedy under the ESI Act.
2.1. Pursuant to the Court's direction, an application under
Section 75 of the ESI Act was filed by the petitioner before the
EIC concerned. Vide Order dated 30.07.2011, the EIC directed the
respondents/ESIC to consider afresh the applicability of the ESI
Act on the petitioner. The documents sought by the
respondents/ESIC vide letter dated 13.09.2011 were provided.
However, the respondents/ESIC passed an order dated 28.12.2011
again holding the petitioner to be covered under the ESI Act
without properly appreciating their contentions. It was further
alleged that on the advice of respondents' officials, the petitioner
deposited a one-time amount of ₹1,62,846/- under the bona fide
belief that the matter was finally settled.
2.2. Respondent No. 1/ESIC thereafter issued fresh notices
dated 13.08.2012 alleging non-compliance and making an ad hoc
assessment of ₹74,75,606/- towards ESI contributions for the
period from 01.05.1989 to 31.05.2012. The petitioner moved the
Employees Insurance Court (the EIC) for revival of its earlier
application. The revival was allowed on 28.01.2013.
2.3. On completion of pleadings, necessary issues were
framed. The parties went to trial on the basis of the aforesaid
pleadings. PW1 to PW3 were examined, and Exhibits A to C
(colly) were marked on the side of the petitioner. On behalf of the
respondents/ESIC, RW1 to RW3 were examined and exhibits
RW/1 to RW/4 were marked. On a consideration of oral and
documentary evidence and after hearing both sides, vide the
impugned Judgment, the EIC dismissed the petition, upholding the
Order dated 13.08.2012 passed by the ESIC for ₹74,75,000/-.
Aggrieved, the petitioner has come up in appeal.
3. The learned counsel for the petitioner submitted that the
petitioner, being a non-banking finance Company registered under
the RBI Act, 1934, was neither a shop nor involved in trading
activities. The notifications issued under the ESI Act are applicable
only to shops. At the relevant time, all the employees of the
petitioner were drawing wages more than₹1600/- per month and
hence, fell under the category of exempted employees as provided
under Section 2(10) of the ESI Act. Further, a superior medi-claim
facility existed for all the employees, which far exceeded the
benefits under the ESI scheme.
3.1. It was also submitted on behalf of the petitioner that after
revival of the matter before the EIC, both parties led evidence, and
the matter was posted to 25.09.2017 for final arguments. On that
date, there was a change of Presiding Officer. The new officer,
without hearing the final arguments or affording any opportunity
of oral submissions, reserved the matter for judgment and passed
the impugned judgment dated 16.10.2017, in violation of the
principles of natural justice.
3.2. It was further submitted that the rejection of salary
statements for non-compliance of Section 65B(4) of the Indian
Evidence Act, 1872, is wholly erroneous. The documents produced
were photocopies of original statements already furnished to the
ESIC during the inquiry, where authenticity was not disputed, and
therefore, the presumption that the computer entries might be
incorrect is without any basis.
4. Per Contra, the learned counsel for the respondent/ESIC
submitted that although the appeal has been filed under Section 82
of the ESI Act, no substantial question of law is involved in the
present case, and that only pure question of facts have been raised.
The demand for contribution was made by the respondents/ESIC
only after a survey was conducted and the necessary records
inspected. It was also submitted that the petitioner has not filed
any balance sheet to show the profit and loss account.
5. Heard both sides.
6. The petitioner first contends that there has been a violation
of the principles of natural justice, because the EIC, without
hearing the petitioner, has passed the impugned judgment.
However, the record reflects that both parties were heard. There is
no reason to disbelieve what has been recorded in the impugned
judgment on this aspect, and hence, the argument of violation of
the principles of natural justice cannot be sustained.
7. The next plea relates to the nature of the petitioner's
establishment. It was asserted that, being a non-banking financial
Company engaged in hire-purchase and financing activities, it is
not a "shop" or "factory" as contemplated under Section 2(12) of
the ESI Act, and therefore not covered under the provisions of the
said Act. Though such a contention was taken, the petitioner failed
to produce any sort of evidence, including its Memorandum or
Articles of Association, activity statements, or any evidence to
demonstrate that its primary business was outside the purview of
the Act. Hence, the EIC rightly concluded that the petitioner does
come within the purview of ESI Act.
8. The petitioner further relied on the wage ceiling applicable
during the period 1988-1989 and claimed that all its employees
were drawing more than ₹1600 per month. The burden to prove
this exclusion lay squarely on the petitioner. However, it produced
only photocopies of salary statements and computer-generated
sheets unsupported by primary records, without appointment
letters, ledger entries, audited accounts, or a certificate under
Section 65B of the Evidence Act. The documents were attempted
to be proved through the testimony of PW2. However, on going
through the testimony of PW2, it appears that he does not have
much knowledge of the said documents. Hence, his testimony is
not sufficient to prove the same. And so the documents were
rightly rejected as inadmissible or unreliable.
9. It was further submitted that Annexure A-7 inspection
report will clearly show that the relevant records were not perused
before ESIC arrived at the conclusion that the petitioner is covered
by the ESI Act. The said report shows that the Inspector merely
perused the attendance register. Hence, the argument is that, the
mere fact that the petitioner has about 116 employees will not
automatically bring it under the provisions of the ESI Act unless
the employees also fall within the wage bracket of not more than
₹1600.
10. According to the petitioner, all its employees were
drawing a minimum salary of ₹2273. Though such a contention
was taken, the same has not been substantiated or proved.
Therefore, there is no infirmity committed by the EIC on the said
aspect also.
11. The scope of an appeal under Section 82(2) is confined to
substantial questions of law. The findings recorded by the EIC
regarding the nature of the establishment, wage records,
admissibility of documents, and credibility of witnesses are pure
findings of fact. The petitioner has failed to point out any
perversity or misapplication of legal principles warranting
interference under this limited appellate jurisdiction.
12. In view of the aforesaid discussion, the appeal is
dismissed. The judgment dated 16.10.2017 of the EIC is affirmed.
The assessment and demand raised by the ESIC stands confirmed.
The appellant/petitioner shall deposit the statutory dues within
eight weeks, failing which the respondents/ESIC shall be free to
initiate recovery proceedings in accordance with law.
13. Application(s), pending if any, shall stand closed. No
order as to costs.
CHANDRASEKHARAN SUDHA
(JUDGE)
NOVEMBER 28, 2025
