Esi Corporation Rep By Its Asst ... vs Rns Motor A Unit Of Rn Shetty And Co, ...
2022 Latest Caselaw 761 Kant

                            :1:


          IN THE HIGH COURT OF KARNATAKA
                  DHARWAD BENCH

   DATED THIS THE 17TH DAY OF JANUARY, 2022

                         BEFORE

        THE HON'BLE MR. JUSTICE R. NATARAJ

MISCELLANEOUS FIRST APPEAL NO.23515/2010 (ESI)

 BETWEEN:

       ESI CORPORATION
       REP BY ITS
       ASSISTANT DIRECTOR
       ESI CORPORATION
       SUB-REGIONAL OFFICE,
       NO.H-42 GROUND FLOOR,
       NIKETAN, DOLLARS COLONY,
       ADJ. NEW CENTRAL BUS-STAND,
       HUBLI -580030
                                     APPELLANT

 (BY SRI VINAY S. KOUJALAGI, ADVOCATE FOR SRI V.M.
 SHEELVANT, ADVOCATE)

 AND

       R.N.S MOTOR A UNIT OF R.N SHETTY AND CO,
       UNKAL, HUBLI, REPRESENTED BY
       ITS MANAGING DIRECTOR
       SHRI. SUNIL R SHETTY

                                  RESPONDENT

 (BY SRI D.L. LADKHAN, ADVOCATE AND SRI N.M. HANSI,
 ADVOCATE)
                                :2:


     THIS APPEAL IS FILED UNDER SECTION 82(2) OF THE
EMPLOYEES STATE INSURANCE ACT, 1948 AGAINST THE
JUDGMENT AND ORDER DATED:31-05-2010 PASSED IN ESI
APPLICATION NO.12/2006 ON THE FILE OF THE EMPLOYEES
STATE INSURANCE COURT, HUBLI, AT HUBLI, PARTLY
ALLOWING THE APPLICATION FILED UNDER SECTION 75 OF THE
EMPLOYEES     STATE      INSURANCE      ACT,     1948.

     THIS APPEAL COMING ON FOR FINAL HEARING THIS DAY,
THE COURT MADE THE FOLLOWING:


                           JUDGMENT

The appellant has challenged the Order dated 31.05.2010

passed by the Employees State Insurance Court (henceforth

referred to as 'the ESI Court'), Hubli, in ESI Application

No.12/2006, by which it directed the respondent herein to pay

contribution at 6.5% on 40% of the amount of omitted wages.

2. The respondent is a dealer of cars which had

established a Unit that was covered by the provisions of the

Employees State Insurance Act, 1948. It was also supplying

accessories to the vehicles of the customers, such as fixing of

sun film on the car windows and providing Teflon coating to the

vehicles. For that purpose, it had engaged suppliers to supply the

materials and to carry out the Teflon coating. It claimed that

the suppliers had their own independent business and were

supplying accessories to various other customers. On

22.03.2005, the Inspector attached to the appellant visited the

respondent - Establishment for examination of the records for

the period April 1997 to March 2004. After examination, he

submitted his observation and raised a demand for a sum of

Rs.6,29,788/- being the ESI contribution on the omitted wages.

Close thereafter on 01.12.2005, a vigilance team of the appellant

inspected the establishment and submitted a report. On the

basis of the report, the appellant issued a notice dated

17.01.2006 to the respondent demanding further contribution of

Rs.1,78,754/- under various heads as omitted wages for the

period 1998-99 to 2003-04. It was claimed in the said notice

that the respondent had omitted the wages of a sum of

Rs.27,50,061/- for the period 1998-99 to 2003-04 and a sum of

Rs.1,78,754/- was claimed as contribution payable by the

respondent.

3. This was challenged by the respondent before the

ESI Court in ESI Application No.12/2006. The ESI Court

considered the omitted wages of Rs.27,50,601/- and held that

40% of the same was labour cost while 60% was the material

cost. Based on the above, it calculated 40% of Rs.1,78,754/-

and treated Rs.71,501/- as the contribution payable by the

respondent. Accordingly, the ESI Court partly allowed the

Application filed by the respondent herein and partly set aside

the notice dated 17.01.2006 and directed the respondent herein

to pay a sum of Rs.1,04,042/- comprising of the ESI contribution

amount of Rs.71,501/- and simple interest at 12% per annum

till the date of the order i.e., 31.05.2010. This order is

challenged by the petitioner in the present petition.

4. The learned counsel for the appellant submitted that

the ESI Court committed an error in ordering a sum of

Rs.71,501/- as the contribution being 40% of Rs.1,78,754/-. He

contended that the Court must have considered 40% of a sum of

Rs.27,50,601/-.

5. The appellant has not disputed the fact that the

vouchers that were taken into account by it for the purpose of

determining the omitted wages, not only included the material

costs, but also the labour costs. The appellant did not dispute

the fact that in a given case, 60% would be considered as

material cost while 40% would be labour cost. Even if the labour

cost is taken at 40% of Rs.27,50,601/-, it would amount to

Rs.11,00,240/- and the ESI contribution at 6.5% would be

Rs.71,516/-. However, in the present case, the ESI Court has

directed the respondent herein to pay a sum of Rs.71,501/-

being the contribution on the omitted wages with simple interest

at 12% per annum as per the calculation made in the body of the

order. The difference in actual contribution would be a sum of

Rs.15/- and for such a miniscule difference, the Order of the ESI

Court need not be disturbed. Hence, the Appeal lacks merit and

is therefore dismissed.

Sd/-

JUDGE

sma