Employee State Insurance ... vs Ramanlal G Shah
2022 Latest Caselaw 8943 Guj

     C/FA/354/2020                              ORDER DATED: 10/10/2022




           IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

                     R/FIRST APPEAL NO.354 of 2020
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             EMPLOYEE STATE INSURANCE CORPORATION
                             Versus
                       RAMANLAL G SHAH
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Appearance:
MS DIMPLE A THAKER(6838) for the Appellant(s) No. 1
MR DIPAK R DAVE(1232) for the Defendant(s) No. 1
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 CORAM:HONOURABLE MR. JUSTICE A.S. SUPEHIA
                  Date : 10/10/2022
                   ORAL ORDER

1. The present appeal emanates from the judgment and award dated 30.03.2019 passed by the Employee State Insurance Court, Ahmedabad in E.S.I. Application No.61 of 2014, filed under section 85 of the Employee State Insurance Corporation Act, 1948 (in short "the ESIC Act"), by which the court below has allowed the application holding that the action of the Employee State Insurance Corporation of issuing notice dated 20.10.2014 to the opponent-Firm under the ESIC Act, is illegal and unreasonable.

2. On 23.09.2014, the Inspector of the appellant- Corporation visited the premises of the respondent and on perusal of various papers, the appellant-Corporation issued ESI Code stating that the ESIC Act will be applicable to the respondent from 01.01.2012. Aggrieved by the said order dated 01.01.2012, the respondent preferred an application before the Employee State Insurance Court, Ahmedabad under Section 75 of the ESIC Act along with an application for stay praying that the ESIC Act is not applicable to them. The appellant-Corporation filed a reply at Exh.11 mentioning that

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the respondent herein is involved in the business and is involved in the commercial activity and is 'establishment' under Section 1(5) of the ESIC Act. Vide order dated 30.03.2019, the Employee State Insurance Court has allowed the application of the respondent, holding that the order dated 01.01.2012 passed by the appellant-Corporation is illegal and that the ESIC Act is not applicable to the respondent and, therefore, no payment is required to be done by the respondent to the appellant.

3. Learned advocate Mr.Dave has submitted that the present case is squarely covered by the judgment passed by this Court dated 07.10.2022 in First Appeal No.3001 of 2022. It is submitted that same order may be passed in the present case also.

4. Learned advocate Ms.Dimple Thaker appearing for the appellant-Corporation has submitted that the difference is that in the present case the opponent is a Chartered Accountant Firm, whereas in the aforesaid matter, which has been decided by this Court vide judgment dated 07.10.2022, the opponent is an advocates' firm. She has submitted that 22 employees were found to have been engaged by the opponent-Firm, whose contribution towards the provident fund was being paid by the firm and hence, it is submitted that the provisions of the ESI Act are applicable.

5. This Court, while examining a similar controversy in case of an advocates' firm, which was paying the contribution of its employees under the Employees Provident Fund Act, 1952,

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and was brought within the ambit of the ESI Act; after examining the provisions of both the Acts, vide judgment dated 07.10.2022 passed in First Appeal No.3001 of 2022, has held that such a firm cannot be encompassed within the provisions of the ESI Act, unless a Notification is issued by the appropriate Government under sub-section (5) of section 1 of the ESIC Act. This Court has held thus:

"(5) In the present appeals, the substantial questions of law, which falls for consideration are:

(a) Whether the opponent-Firm which is engaged in the work of patent and trade mark and are engaging attorney and advocates can be encompassed under the provisions of Employees' State Insurance Company Act, 1948 (for short "the ESIC Act") , and

(b) Whether the employees of the opponent-Firm can be termed as the employees under the Act merely because their contribution is being made under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (for short "the Act")

(6) It is the case of the appellant-Corporation that the court below has fallen in error in appreciating the provisions of the ESIC Act by holding that the provisions of the said Act cannot be extended to the opponent-firm in view of the fact that its employees, who are working in the opponent-firm, are being extended the benefit of the EPF Act. It is the case of the appellant-Corporation that since the opponent-firm is contributing towards the provident fund of its employee under the EPF Act, the provisions of the ESIC Act can be made applicable to the opponent-firm as it would be covered in the definition of commercial establishment under the provisions of Section 1(5) of the ESIC Act.

(7) It is asserted by the Corporation that the activities of the opponent-firm can be said to be "commercial" and hence it can be brought within the ambit of the ESIC Act by resorting to the provisions of Section 1(5) of the ESIC Act. The facts of the case suggest that the appellant-Corporation had issued a C-11 notice to the opponent-firm covering it under the ESIC Act w.e.f. 01.01.2007, which was subject matter of challenge before the court below. An ad-hoc assessment notice dated 06.04.2009 was also issued by the appellant-Corporation under Section 45 of the Act after hearing respective parties and examining the evidence on record. The ESI Court has partly allowed the Application No.31 of 2009 of the opponent-firm by setting aside

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the notice issued under C-11 encompassing the respondent- Corporation within the ambit of the ESIC Act. The ad-hoc assessment notice dated 06.04.2009 to the opponent-firm is also set aside. The ESI Court after examining the evidence on record has concluded that the respondent-firm is doing the work of patent and trade mark attorney and advocates are engaged by the firm. The firm is not registered under any law and the advocates engaged by the firm appeared to have been filing their respective vakalatnama.

(8) It is the case of the appellant-Corporation that since the opponent-firm is paying contribution of its employee under the EPF Act, and the employee of such firm are automatically treated as employees under the ESIC Act, hence they are covered under the ESIC Act. It is well settled proposition of law that the provisions of one statute cannot be made applicable to the another statute until it is specifically provided in either of the statutes. Neither the EPF Act nor the ESIC Act stipulates any such provision, which extends the applicability of any provision of each Act to the workmen or the employees, who are governed under such Act. Thus, the contention raised by the opponent-firm by seeking shelter under the definition of employee and the payment of contribution by the firm cannot rescue the Corporation and merely because the opponent-firm is voluntarily paying the contribution under the EPFAct, the same will not ipso facto encompass the opponent-firm under the ESIC Act.

(9) At this stage, it would be apposite to refer to Section 1 of the ESIC Act, which reads as under:-

"1. Short title, extent, commencement and application (1) This Act may be called the Employees' State Insurance Act,1948.

(2) It extends to the whole of India 1[***].

(3) It shall come into force on such 2 date or dates as the Central Government may, by notification in the Official Gazette, appoint, and different dates may be appointed for different provisions of this Act and 3 [ for different States or for different parts thereof]. (4) It shall apply, in the first instance, to all factories (including factories belonging to the government) other than seasonal factories:

4[PROVIDED that nothing contained in this sub-section shall apply to a factory or establishment belonging to or under the control of the government whose employees are otherwise in receipt of benefits substantially similar or superior to the benefits provided under this Act.]

(5) The appropriate government may, in consultation with the Corporation and 5 [where the appropriate government is a State Government, with the approval of the Central

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Government], after giving six months' notice of its intention of so doing by notification in the Official Gazette, extend the provisions of this Act or any of them, to any other establishment or class of establishments, industrial, commercial, agricultural or otherwise

6[PROVIDED that where the provisions of this Act have been brought into force in any part of a State, the said provisions shall stand extended to any such establishment or class of establishments within that part if the provisions have already been extended to similar establishment or class of establishments in another part of that State.]

4[(6) A factory or an establishment to which this Act applies shall continue to be governed by this Act notwithstanding that the number of persons employed therein at any time falls below the limit specified by or under this Act or the manufacturing process therein ceases to be carried on with the aid of power.]"

A plain and literal reading of the provision of Section 1, more particularly sub-Section (4) indicates that the Act applies to all factories or establishment belonging to or under control of the government. The appellants have premised their submissions of sub-Section (5) of Section 1 of the ESIC Act. Sub-Section (5) of Section 1 of the ESIC Act unequivocally confers the powers on the appropriate government to extend the provisions of the Act to any other establishment or class of establishment, industrial, commercial, agricultural or otherwise after giving one month's notice of its intention to do so and by issuing a notification in the official gazette. Unquestionably, in the present case, no such notification is issued under the provisions of sub-Section (5) of Section 1 of the ESIC Act encompassing the advocates' firm like the present opponent extending the provisions of the ESIC Act.

(10) Thus, until and unless such notification is issued by the appropriate government, the provisions of the ESIC Act cannot be made applicable to the opponent advocates' firm. The definition of employee as envisaged in sub-Section (9) of Section 2 of the ESIC Act also in not uncertain term applies to the employees of the opponent- firm since it stipulates that the same pertains to such employees, who are employed for wages in connection with the working of factory or establishment.

(11) Thus, the appellant-Corporation cannot be allowed to cover the opponent- firm under the umbrella of EISC Act only for the reason that the Firm voluntary contributing the fund of its employees under the EPF Act. Such an action is impermissible unless the statute

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permits.

(12) The appellant have also resorted to the provisions of the Bombay Shops and Establishment Act, 1948. It is the case of the appellant that in view of Section 2(4) of the Bombay Shops and Establishment Act, 1948, the respondent, which is an advocates' firm can be said to be engaged in a "profession" as defined under the commercial establishment and hence, the provisions of the ESIC Act are required to be extended to such firm. In the considered opinion of this Court, such a contention is mis-conceived since the applicability of the ESIC Act on the opponent-firm cannot be extended only on the definition of "commercial establishment" stipulated under the Bombay Shops and Establishment Act, 1948 in wake of the fact that neither the opponent-firm falls under the definition of factory or any establishment industrial, commercial, agricultural or otherwise since no notification is issued by the State Government under the provisions of sub-Section(5) of Section 1 of the ESIC Act."

6. Thus, the substantial questions of law which arise in the present appeal will also be similar which are framed and decided by this Court in the aforementioned judgment and order.

7. Hence, the present appeal is disposed of in light of the observations made by this Court in the judgment dated 07.10.2022 passed by this Court in First Appeal No.3001 of 2022. The first appeal fails.

8. Record and proceedings be sent back to the concerned court forthwith.

(A. S. SUPEHIA, J)

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