Gujarat High Court
M/S. Maruti Travels vs E.S.I. Corporation on 29 July, 2025
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C/FA/4183/2024 ORDER DATED: 29/07/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 4183 of 2024
With
CIVIL APPLICATION (FOR STAY) NO. 1 of 2024
In R/FIRST APPEAL NO. 4183 of 2024
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M/S. MARUTI TRAVELS
Versus
E.S.I. CORPORATION
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Appearance:
MR DG SHUKLA(1998) for the Appellant(s) No. 1
MR HARSHEEL D SHUKLA(6158) for the Appellant(s) No. 1
SHIVANG P JANI(8285) for the Defendant(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE DEVAN M. DESAI
Date : 29/07/2025
ORAL ORDER
1. The present First Appeal is filed by the appellant-original
applicant under Section 82(2) of the Employees' State Insurance
Act, 1948 (hereinafter referred to as 'the Act') challenging the
judgment and order dated 19.09.2024 in E.S.I. Application
No.25 of 2017 passed by Learned Employees' State Insurance
Court, Ahmedabad.
2. Heard learned advocate Ms. Meshwa H. Bhatt for learned
advocate Mr. D.G. Shukla for the appellant and learned advocate
Mr. Shivang P. Jani for the respondent. Perused the record.
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3. With the request and consent of learned advocates for the
parties, the present First Appeal is taken up for final hearing.
4. The brief facts of the case are as under:-
4.1. The Appellant Establishment was engaged in the business
of travels. The Ahmedabad Municipal Corporation had invited
tenders for availing CNG buses on a rental basis. Pursuant
thereto, the Appellant Establishment submitted its bid, which
came to be accepted on 19.05.2005. In compliance thereof, the
Appellant Establishment supplied 12 buses. Officer of the
Respondent Corporation visited the Appellant Establishment
and unilaterally allotted ESI Code No. 37000261080001006.
4.2. Subsequently, with effect from 19.02.2008, the
Ahmedabad Municipal Corporation terminated the bus services
and restrained the Appellant Establishment from operating the
buses. Consequently, after 19.02.2008, the Appellant
Establishment disengaged its drivers and confined its activities
solely for the collection of revenue.
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4.3. Thereafter, Respondent Corporation carried out an ad hoc
assessment for the period commencing from 19.05.2005 to
30.09.2010, and passed an order dated 19.07.2011 under Section
45-A of the Act against the Appellant Establishment.
4.4. Subsequently, the Appellant Establishment preferred an
ESI Application No.74 of 2015, assailing the order dated
19.07.2011 passed by the Respondent Corporation.
4.5. However, the Respondent Corporation issued form C-18
dated 29.11.2016 for the period from November 2011 to
October 2016. In the course of the said proceedings, the
Appellant Establishment submitted all requisite documentary
evidence in support of its case. However, disregarding the same,
the Respondent Corporation proceeded unilaterally to pass an
order dated 20.02.2017 under Section 45A of the Employees'
State Insurance Act, 1948, thereby raising a demand of
Rs.13,06,305/- against the Appellant Establishment.
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4.6. Thereafter, the Appellant Establishment preferred ESI
Application No.25 of 2017, challenging the order dated
20.02.2017 passed by the Respondent Corporation, before the
Learned Employees' State Insurance Court.
4.7 Respondent Corporation appeared and filed Written
Statement vide Exhibit-8. Issues were framed. Appellant
Establishment relied on Examination-in-Chief Exhibit-13 and
produced other documentary evidence in support of its
application. Respondent Corporation also produced
documentary evidence. After considering the evidence and
material placed on record, Learned ESI Court vide judgment and
order dated 19.09.2024, dismissed the said application.
4.8. Being aggrieved and dissatisfied with the impugned
judgment and order dated 19.09.2024 passed by the Learned
Employees' State Insurance Court, the Appellant Establishment
has preferred the present appeal before this Court.
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5. Learned advocate for the appellant has submitted that
appellant was having contract of providing C.N.G. Mini Buses
with Ahmedabad Municipal Transport Service. Contract was
terminated with effect from 19.02.2008. It is further submitted
that respondent-Corporation issued Notice dated 13.07.2016 to
appellant informing that appellant has not paid E.S.I.
contribution for the month of October, 2010 till date. Said notice
was issued even though respondent-Corporation was aware that
the contract of appellant with A.M.T.S. has been terminated
since 19.02.2008.
5.2. It is further submitted that respondent-Corporation
thereafter issued Form C-18 dated 29.11.2016 proposing to
determine and recover the amount of contribution payment
amounting to Rs.13,51,350/- for the period from November,
2011 to October, 2016 under Section 45A of the Act and to
show-cause as to why assessment should not be made as
proposed.
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5.3. It is further submitted that appellant submitted Letter dated
31.01.2017 alongwith documents about the closure of the
business w.e.f. 31.03.2010. It is further submitted that
respondent-Corporation without appreciating documentary
evidence, passed Order under Section 45-A of the Act. It is
further submitted that appellant had submitted List of
Documents at Exhibit-17 alongwith the deposition of affidavit
of Shri Jagdishbhai Barot dated 01.03.2017. It is further
submitted that learned ESI Court has passed impugned judgment
and order without properly taking into consideration the
documentary as well oral evidence submitted by the appellant.
The impugned judgment and order dated 19.09.2024 is illegal,
improper, unjust and perversed, and therefore, deserves to be
quashed and set aside.
6. Per contra, learned advocate for the respondent has
submitted that the order under section 45-A of the Employees'
State Insurance Act, 1948 dated 20th February, 2017 directing
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appellant to pay Rs.13,06,305/- as arrears of contribution is just
and legal. It is further submitted that the order was passed after
affording opportunity of hearing to the appellant. The order
dated 20th February, 2017 was passed based on notice dated 29 th
November, 2016 indicating failure of appellant to pay
contribution of Rs.13,06,305/- for period from November, 2011
to October, 2016.
6.1. It is further submitted that respondent issued show cause
notice on 29th November, 2016 to appellant calling upon to show
cause that appellant had not paid contribution for assume wages
for the period from November, 2011 to October, 2016. It is
further submitted that appellant had not produced any valid
documentary evidence in support of their contention of closure
of their unit though demanded vide letter dated 5 th September,
2011. It is further submitted that Social Security Officer of
respondent visited the appellant's unit on 11 th January, 2008 to
ascertain whether the appellant's unit is amenable to provisions
of the Act and found that the appellant's unit is amenable under
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section 1(5) of the Act with effect from 19 th May, 2005 by virtue
of employing more than 19 employees. It is further submitted
that appellant was making default in payment of contribution.
Respondent issued notice dated 13th July, 2016 and demanded
payment of contribution. Appellant had not produced any record
indicating that appellant had paid contribution. It is further
submitted that question of law framed by appellant cannot be
said to be substantial question of law but it is matter of fact. It is
further submitted that closure of unit is fabricated story to avoid
payment of contribution and statutory dues. Respondent submits
that appellant has not produced any records indicating that the
appellant has closed its unit with effect from 19 th February,
2008. It is submitted that appeal is liable to be dismissed.
7. I have considered the submissions canvassed by learned
advocates for the parties and also perused the Record and
Proceedings. An undisputed fact in the present appeal is that the
appellant was covered under Section 1 (5) of the Act with effect
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from 19.05.2005. Social Security Officer of the respondent
visited the appellant unit on 11.01.2008. As applicant was found
making default in payment of contribution, a notice came to be
issued on 13.07.2016, wherein on the basis of assume wages,
contribution was determined at Rs.13,51,350/- from November
2011 to October 2016. Applicant by communication dated
31.01.2017 (Exhibit-31) informed the Regional Director of
respondent-Corporation that the establishment has been closed
from 31.03.2010 and there is no business during the period from
October 2010 to October 2016. Documents regarding
cancellation letter from Service Tax Department showing the
status of the establishment as inactive, letter written to the
Assistant PF Commissioner (Enforcement) regarding
cancellation of PF dated 25.09.2014, visit note of the
Enforcement Officer of Employees Provident Fund Organisation
dated 07.05.2012, final report of Enforcement Officer showing
closure of PF registration were submitted. A communication
dated 10.12.2011 written to the Superintendent of Service Tax,
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Ahmedabad by appellant was also submitted before the
Regional Director of the respondent-Corporation. Despite this
evidence on record with the respondent-Corporation,
respondent passed an order dated 20.02.2017 under section 45-A
of the Act and total contribution payable by applicant was
worked out at Rs.13,06,305/- for the period between January
2012 to October 2016 for 42 employees. The order came to be
assailed before learned ESI Court by the appellant. Learned
E.S.I. Court rejected the application by upholding the order
passed under section 45-A of the Act. On perusal of Written
Statement filed by the respondent-Corporation Exhibit-5,
Corporation has admitted that applicant had intimated disclosure
of their unit to respondent on 26.08.2011. It appears from the
record that respondent-Corporation has produced documentary
evidence which were submitted by appellant at the time of
personal hearing before the corporation. Thus, it can be said that
closure of applicant establishment was well within the
knowledge of the respondent-Corporation. The visit note of the
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employees Provident Fund organisation also indicates that the
establishment is closed from 31.03.2010. On July 2015,
appellant paid the miscellaneous administration charges to the
respondent-Corporation. It appears from the notice C-18 (ad
hoc) dated 29.11.2016, the calculation of assume wages was
made from November 2010 to October 2016, but when the order
under Section 45-A of the Act came to be passed, period of
demand of contribution was changed and the period is
mentioned as of January 2012 to October 2016. There is no
explanation with regard to the change of period. It is pertinent to
observe that in the notice dated 29.11.2016, the demand of
contribution is from November 2010 to October 2016 and the
demand of contribution for the period between January 2012 to
October 2016, is also Rs.13, 51,350/-. Moreover, when the order
dated 20.02.2017 came to be passed by respondent-Corporation,
they were having sufficient material that the business of
appellant establishment has been closed from 31.03.2010 and
there was no business between 01.10.2010 to 01.10.2016. There
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was ample material available with respondent-Corporation to
revoke demand of contribution. The preliminary survey report
Exhibit-22 dated 11.01.2008 indicates that officer of respondent
has recorded the position as on 19.05.2005 and has further
recorded that 26 employees covered as on 19.05.2005. The
survey report Exhibit-22 does not mention details of employees
engaged in the establishment on the date of inspection. The
position of 2005 is irrelevant when respondent-Corporation is
claiming unpaid contribution for the period between November
2011 and October 2016. The record reveals that the
establishment was closed from March 2010. It is for the
respondent-Corporation to primarily establish that the demand
of contribution for the period between November 2011, upto
October 2016 was legal and justifiable. When the business of the
establishment was closed from 31.03.2010, the question of
contribution starting from 01.10.2010 to 01.10.2016 is uncalled
for. If the oral deposition of appellant is considered, which is
recorded at Exhibit-13, appellant has reiterated the fact that
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establishment was closed from 31.03.2010 and there was no
business since then. On the aspect of closure of establishment,
there is no effective cross-examination by Corporation. In the
cross-examination, appellant has stated that the business has
been stopped and Corporation was intimated with regard to
closure of establishment. When the demand of contribution
under notice 29.11.2016 is faulty and based on assume wages,
the order passed under section 45-A of the Act does not stand in
the eyes of law. Learned ESI Court has failed to consider the
evidence placed on record and has failed to appreciate the
admitted fact that when the notice of demand was made for the
period between October 2010 to October 2016, the
establishment was closed and there was no business. When
learned ESI Court has failed to appreciate the admitted position
on record, in my opinion, the appeal deserves to be allowed and
the same is allowed. Accordingly, the judgment and order dated
19.09.2024 in E.S.I. Application No.25 of 2017 passed by
learned Employees' State Insurance Court, Ahmedabad is
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hereby quashed and set aside. The E.S.I. Application No.25 of
2017 is allowed. The connected Civil Application with the
present First Appeal is also stands disposed of. No order as to
costs.
9. Record and Proceedings, if any, be sent back to the learned
Tribunal / Court forthwith.
(D. M. DESAI,J)
RINKU MALI
