Gujarat High Court
Regional Director vs Patel Detergent'Sm Harisiddhi ... on 14 February, 2024
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 2694 of 2004
With
CIVIL APPLICATION (FOR STAY) NO. 1 of 2004
In R/FIRST APPEAL NO. 2694 of 2004
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REGIONAL DIRECTOR & 2 other(s)
Versus
PATEL DETERGENT'SM HARISIDDHI SPECIFIC FAMILY TURST & 1
other(s)
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Appearance:
MR HEMANT S SHAH(756) for the Appellant(s) No. 1,2,3
GANDHI LAW ASSOCIATES(12275) for the Defendant(s) No. 1,2
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CORAM:HONOURABLE MR. JUSTICE DEVAN M. DESAI
Date : 14/02/2024
ORAL ORDER
1. Heard learned advocate Mr. Nirav A. Joshi with learned
advocate Mr. Divyesh D. Bais for Gandhi Law Associates for
respondents. Learned advocate Mr. Hemant S. Shah for appellants is
absent.
2. This appeal is filed under Section 82(2) of Employees' State
Insurance Act, 1948 challenging the judgment and order dated
11.11.2003 passed by Employees Insurance Court, Ahmedabad in
E.S.I. Application No.64 of 1989.
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3. The brief facts of the case are as under:-
3.1 The respondents were engaged are in the business of
manufacturing and selling synthetic detergents with effect from
01.09.1983 at the address being plot No.3601/3602, Phase-IV, GIDC
Estate, Vatva, Mehmedabad road, Ahmedabad. The provisions of
Employees' State Insurance Act was made applicable to the
respondent with effect from 01.03.1988 and all of a sudden, the
decision was taken by the appellants directing the applicability of the
Employees' State Insurance Act, 1948 (hereinafter referred to as
"the said Act") with effect from 01.09.1986 by the order dated
29.06.1989. Respondents were directed to pay Rs.43,03,541/- for the
period from 01.09.1983 to 28.02.1988. Various notices were issued
by the appellants claiming contribution towards E.S.I. amounting to
of Rs.45,57,881/- from the respondents and also claimed additional
amount of Rs.6,14,198/- for the period from 01.03.1988 to
28.02.1989 with interest from 01.08.1989. Vide notice dated
01.08.1989, the present respondents were directed to pay total
amount of Rs.51,72,079/- (Rs.45,57,881/- + Rs.6,14,198/-) along
with interest. Vide notice dated 12.04.1989, the respondents were
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directed to pay Rs.5,76,400/- towards the contribution under the said
Act for the period from 01.03.1988 to 28.02.1989. The respondents
challenged the recovery decision by way of E.S.I. Application No.64
of 1989 under Section 76 of the Employees' State Insurance Act,
1948 before the learned Employees State Insurance Court,
Ahmedabad. The learned Court framed issues at Exhibit-12.
4. The present respondents submitted oral evidence by way of
Examination-in-Chief vide Exhibit-25 and also examined the
supervisor of the respondent No.1 vide Exhibit-35. The appellants
also examined various witnesses vide Exhibit-42, Exhibit-50,
Exhibit-63 and Exhibit-103. The appellants also examined the
Inspector-Mr. Subhash Harbhagvan Mehta, Superintendent-Mr.
Arvindbhai Labhshankare, Factory Inspector-Mr. Nathabhai Ditaji
Joshiyara and Mr.-Rakeshbhai Vyas of Ahmedabad Electricity
Company respectively.
5. The case of the respondents was before the learned Employees
State Insurance Court that the authority has wrongly applied the
provisions of the said Act from 01/09/1983. The recovery notices are
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bad in law and against the provisions of said Act. It was also the case
of the respondents that in manufacturing and selling activities of
synthetic detergents, no electricity is required and as per the
certificate issued by chief factory inspector, appellants have not used
electric power between 1983 to 1986. Hence, the provisions of
Section 2(12) of the said Act are not applicable. Various notices
issued by the authority are bad in law. The case of the respondents
was that the inspection of premises was carried out on 01.06.1989
and prior to that date, there was no inspection of the manufacturing
place of respondents. By the notification No.SO8013/4/88/S.S.I., in
February, 1988, the scheme was implemented and the respondents
were allotted code numbers from 01.03.1988.
6. Learned advocate for respondents has submitted that the
provisions of Act were not applicable, when the recovery notices
were issued for the reason that electricity connection was obtained
by the respondents in the year 1986 and prior to that, there was no
electricity connection in the premises where the business activities
were going on. It is further submitted that in manufacturing and
selling activities of synthetic detergents, use of electricity was not
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required and for drawing the material only water was needed and
that was brought from the GIDC and the bills for consumption of
water were paid by the respondents to GIDC.
7. It is also submission of learned advocate for respondents that
at the most, the liability to pay the amount can be considered from
20.01.1986, from which date the electricity was used by the
respondents for their manufacturing activities.
8. The witnesses of the appellants have deposed that when the
factory premises was visited, there was an electric meter and the
machineries were in use through electric power.
9. On considering the papers of the case together with the
impugned judgment and order, the limited question, which requires
consideration is that whether the respondents can be saddled with the
liability to pay contribution claimed in the order dated 29.06.1989,
for a period between 01.09.1983 to 29.02.1988 ? At this juncture, the
definition of factory as contemplated in Employees' State Insurance
Act, 1948 would be apposite to reproduce:-
"2(12) factory means any premises including the
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precincts thereof whereon twenty or more persons [are
employed or were employed for wages] on any day of
the preceding twelve months, and in any part of which
a manufacturing process is being carried on with the
aid of power or is ordinarily so carried on but does not
include a mine subject to the operation of the Mines
Act, 195215 (35 of 1952), 16 [or a railway running
shed]".
What is contemplated in Sub-section 12 of Section 2 of the
said Act is that to form a premises as a factory, the manufacturing
activities must be carried out with the aid of electric power. The
legislature has with specific intention, has inserted the words of
manufacturing activities to be done through electric consumption. It
has significance and this will have direct bearing in the present case.
10. On perusal of the oral evidence of Mr. Arvindbhai
Labhshankare at Exhibit-50, the reference is made with regard to the
manufacturing activities, which were carried out with the help of
electric power and existence of an electric meter and reference about
the vot of power consumption in the licence is vital factual aspect
deciding whether the respondents were carrying out the
manufacturing activities with the help of electric power. The visit, as
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per the said witness, was carried out on 01.06.1989 and on such
visit, the order dated 29.06.1989 was passed against the respondents.
On careful consideration of the evidences produced on record, I do
not find any positive evidence led by the appellants which can lay
finger that the respondents were having electric connection prior to
20/01/1986 and the manufacturing activities were carried out with
the help of electric power. The appellants and their witnesses have
failed to establish the factual aspect that the respondents were doing
the manufacturing activities from 01.09.1983 with electric power
and respondents have consumed electricity in manufacturing
activities. When the record of the case clearly demonstrates that the
respondents have started manufacturing activities by using electricity
from the year 1986, there is no reason whatsoever to believe the case
of the appellants that the manufacturing activities were carried out
by the respondents from 01.09.1983 by using the electricity. Since
the respondents are not falling within the definition of Section 2 (12)
of the said Act, the appellants could not have raised a claim from
01.09.1983. It has rightly been observed by the learned Court that at
the most, the respondents can be saddled with the claim of
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contribution form 20.01.1986 and not prior to that date. This factual
aspect has been correctly dealt with by the learned trial Court. The
substantial questions of law are missing in the present First Appeal.
In absence of such evidence, which directly touches the factual
scenario of the issue, the appellants have no merits in the present
First Appeal. With the aforesaid observations, present First Appeal
stands dismissed.
11. In view of disposal of the main matter, connected Civil
Application also stands disposed of.
12. Record and proceedings be sent back to the concerned Court
forthwith.
(D. M. DESAI,J)
Vikramsinh Amarsinh
