M/S. Lions Eye Hospital vs Union Of India
2021 Latest Caselaw 7171 Ker

               IN THE HIGH COURT OF KERALA AT ERNAKULAM

                               PRESENT

                 THE HONOURABLE MR. JUSTICE A.M.BADAR

    TUESDAY, THE 02ND DAY OF MARCH 2021 / 11TH PHALGUNA, 1942

                       WP(C).No.5300 OF 2021(J)


PETITIONERS:

      1        M/S. LIONS EYE HOSPITAL
               PUTHIYIDOM(H), PAIKA,
               POOVARANI P.O., KOTTAYAM DISTRICT
               -686577, REPRESENTED BY ITS ADMINISTRATOR, M.S.
               RAMAKRISHNAN, RESIDING AT . MADATHIL HOUSE,
               URULIKUNNAM, MADUKKAKUNNU P.O., KOTTAYAM DISTRICT-
               686577.

      2        DR. GEORGE MATHEW
               MANAGING TRUSTEE, M/S LIONS EYE HOSPITAL,
               PUTHIYIDOM(H), PAIKA, POOVARANI P.O., KOTTAYAM
               DISTRICT-686577, RESIDING AT.
               PUTHIYEDATH HOUSE, PAIKA, POOVARANI P.O.,
               KOTTAYAM DISTRICT-686577.

               BY ADVS.
               SRI.M.P.KRISHNAN NAIR
               SMT.RAJESWARI KRISHNAN
               SMT.SEEMA KRISHNAN
               SHRI.NANDAKUMAR K.

RESPONDENTS:

      1        UNION OF INDIA,
               REPRESENTED BY SECRETARY, MINISTRY OF LABOUR AND
               EMPLOYMENT GOVERNMENT OF INDIA, NORTH BLOCK, NEW
               DELHI-110001.

      2        THE DIRECTOR
               EMPLOYEES STATE INSURANCE CORPORATION, NEW
               DELHI.110001.

      3        THE ASSISTANT DIRECTOR
               EMPLOYEES STATE INSURANCE CORPORATION, SUB REGIONAL
               OFFICE, MALU'S COMPLEX,
               ST.FRANCIS CHURCH ROD, KALOOR, ERNAKULAM-682017.

      4        STATE OF KERALA
               REPRESENTED BY SECRETARY., DEPARTMENT OF LABOUR AND
               EMPLOYMENT, SECRETARIAT, THIRUVANANTHAPURAM-695001.
 WP(C).No.5300 OF 2021(J)

                               2

      5      THE OFFICER IN-CHARGE
             INSPECTION OFFICE,
             EMPLOYEES STATE INSURANCE CORPORATION, PERUMBAVOOR-
             683542.

      6      SUBRAHMANIYA PILLAI M.
             SOCIAL SECURITY OFFICER,
             EMPLOYEES STATE INSURANCE CORPORATION, BRANCH
             OFFICE, NEAR AMBADY HOTEL,
             THODUPUZHA-685584.

      7      THE REGIONAL DIRECTOR
             EMPLOYEES STATE INSURANCE CORPORATION, REGIONAL
             OFFICE, PANCHDEEP BHAVAN,
             NORTH SWARAJ ROUND,
             THRISSUR-680020.


OTHER PRESENT:

             SC, ESIC- SRI. T.V.AJAYAKUMAR ,GP- SMT. POOJA
             SURENDRAN.,ASGI- SRI. P.VIJAYAKUMAR

     THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON
02.03.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
 WP(C).No.5300 OF 2021(J)

                                      3

                               JUDGMENT

Dated this the 2nd day of March 2021

This is a petition by the establishment who has suffered an order

under Section 45-A of the Employees State Insurance Act, 1948 in

respect of determination of contribution by the ESI Corporation.

Following reliefs are claimed in the instant petition.

(i)To call for the entire records of the petitioners case leading to issue of Exts.P1 Visit Note, P12 final order and P19 proceedings of the Appellate Authority and quash Exts.P1, P12 and P19 and all action taken in pursuance thereof.

(ii)To issue a writ of mandamus or any other appropriate writ, order or direction declaring that the ON CALL DUTY doctors which are mentioned in the panel of doctors in the Attendance Register, Ext.P3 and are being paid only honorarium are not covered in the definition of "employee" as per Sec. 2(9) of ESI Act and therefore, the petitioners' establishment M/s. Lions Eye Hospital is not coverable under the ESI Act and the Visit Note Ext.P1 and final order Ext.P12 and proceedings of the Appellate Authority Ext.P19 are highly illegal, arbitrary and ab initio void, unjust, unreasonable and liable to be set aside by this Hon'ble Court;

(iii)To issue a writ of mandamus or any appropriate writ, order or direction setting aside Ext.P1 Visit Note, Ext.P12 order and P19 proceedings of the Appellate Authority and all action taken in pursuance of Ext.P1, P12 and P19;

(iv)To issue a writ of mandamus or any other appropriate writ, order or direction directing the respondents to act according WP(C).No.5300 OF 2021(J)

to law and not to further harass and victimize the petitioners;

(v)To pass any other order/orders which are deemed fit and proper in the facts and circumstances of the case.

(vi)To award cost to the petitioners from the respondents."

2. Heard the learned counsel for the petitioners at sufficient

length of time. He argued that the petitioner No.1 is a renowned

hospital having international repute where treatment is given free of

cost. It is run on no profit basis. The learned counsel for the

petitioners further argued that the muster rolls filed at Ext.P3 would

show that the petitioner No.1 hospital was not having more than 5 to

7 employees at any point of time. There were four doctors on call who

used to render services daily for 3 to 4 hours for which they were paid

honorarium. The learned counsel for the petitioners argued that those

4 doctors on call cannot be treated as employees within the meaning

of the said term under the Employees State Insurance Act, 1948. It is

further argued that honorarium paid to them cannot be termed as

wages under Section 2(22) of the said Act.

3. With this, the learned counsel for the petitioners argued

that this Court, in WP(C) No. 428/2021 had directed the Appellate

Authority to consider the application for waiver of pre-deposit after

affording necessary opportunity of hearing to the petitioners as seen

from paragraph 9 of the said judgment, Ext.P15. However, without

complying with this direction, the learned Appellate Authority had WP(C).No.5300 OF 2021(J)

passed erroneous order at Ext.P19 rejecting the application for waiver

of pre-deposit and thereby refused to consider the appeal on merit.

This is how, according to the learned counsel for the petitioner, now

this Court must decide the challenge to the order under Section 45-A

of the Employees State Insurance Act, 1948. In support of the

challenge to this impugned order at Ext.P12, the learned counsel for

the petitioners relied on staff attendance register at Ext.P3.

4. The learned counsel for the petitioners further argued that

as the petitioner No.1 is an international charitable hospital, enmity

developed against it and at the instance of other hospitals in the

vicinity, vindictive action is taken by the State Insurance Corporation.

5. The learned standing counsel by taking notice for

respondents No.2, 3, 5 and 7 argued that the petition as framed and

filed is not maintainable in view of provisions under Section 75 of the

ESI Act. It is further argued that the petition involves disputed

question of facts and that, it cannot be entertained. It is further

argued on behalf of the respondents that the communications at

Ext.P17 and P18 shows that the petitioner was heard in the matter of

waiver of pre-deposit and as per the provision of ESI Act, the pre-

deposit cannot be waived.

6. I have considered the submissions so advanced and also WP(C).No.5300 OF 2021(J)

perused the entire materials placed on record by the petitioner.

7. At the outset, let us put on record, relevant provisions of

the Employees State Insurance Act, 1948 for better understanding of

the matter. These are the relevant provisions material for deciding the

instant petition.

Section 2(9) Employee means any person employed for wages in or in connection with the work of a factory or establishment to which this Act applies and

(i) who is directly employed by the principal employer, on any work of, or incidental or preliminary to or connected with the work of, the factory or establishment, whether such work is done by the employee in the factory or establishment or elsewhere; or

(ii) who is employed by or through an immediate employer, on the premises of the factory or establishment or under the supervision of the principal employer or his agent on work which is ordinarily part of the work of the factory or establishment or which is preliminary to the work carried on in or incidental to the purpose of the factory or establishment; or

(iii) whose services are temporarily lent or let on hire to the principal employer by the person with whom the person whose services are so lent or let on hire has entered into a contract of service;

17 [and includes any person employed for wages on any work connected with the administration of the factory or establishment or any part, department or branch thereof or with the purchase of raw materials for, or the distribution or sale of the products of, the factory or establishment] 18 [or any person engaged as appren- WP(C).No.5300 OF 2021(J)

tice, not being an apprentice engaged under the Apprentices Act, 1961 (52 of 1961), 19 [and includes such person engaged as apprentice whose training period is extended to any length of time] but does not include]

(a) any member of [the Indian] naval, military or air forces; or

[(b) any person so employed whose wages (excluding

remuneration for overtime work) exceed 22 [such wages as may be prescribed by the Central Government] a month: Provided that an employee whose wages (excluding remuneration for overtime work) exceed 22 [such wages as may be prescribed by the Central Government] at any time after (and not before) the beginning of the contribution period, shall continue to be an employee until the end of that period;]

Section 2(22) wages means all remuneration paid or payable in cash to an employee, if the terms of the contract of employment, express or implied, were fulfilled and includes 34 [any payment to an employee in respect of any period of authorised leave, lock-out, strike which is not illegal or lay-off and] other additional remuneration, if any, [paid at intervals not exceeding two months], but does not include

(a) any contribution paid by the employer to any pension fund or provident fund, or under this Act;

(b) any travelling allowance or the value of any travelling concession;

(c) any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment; or

(d) any gratuity payable on discharge;

WP(C).No.5300 OF 2021(J)

Section 45-A(1) Determination of contributions in certain cases: Where in respect of a factory or establishment no returns, particulars, registers or records are submitted, furnished or maintained in accordance with the provisions of section 44 or any 120 [Social Security Officer] or other official of the Corporation referred to in sub-section (2) of section 45 is 121[prevented in any manner] by the principal or immediate employer or any other person, in exercising his functions or discharging his duties under section 45, the Corporation may, on the basis of information available to it, by order, determine the amount of contributions payable in respect of the employees of that factory or establishment:122 [Provided that no such order shall be passed by the Corporation unless the principal or immediate employer or the person in charge of the factory or establishment has been given a reasonable opportunity of being heard:] 123 [Provided further that no such order shall be passed by the Corporation in respect of the period beyond five years from the date on which the contribution shall become payable.]

45AA Appellate authority. If an employer is not satisfied with the order referred to in section 45A, he may prefer an appeal to an appellate authority as may be provided by regulation, within sixty days of the date of such order after depositing twenty-five per cent. of the contribution so ordered or the contribution as per his own calculation, whichever is higher, with the corporation: Provided that if the employer finally succeeds in the appeal, the Corporation shall refund such deposit to the employer together with such interest as may be specified in the regulation.] WP(C).No.5300 OF 2021(J)

Section 75(1) Matters to be decided by Employees' Insurance Court-(1) If any question or dispute arises as to

(a)whether any person is an employee within the meaning of this Act or whether he is liable to pay the employee's contribution, or

(b)the rate of wages or average daily wages of an employee for the purposes of this Act, or

(c)the rate of contribution payable by a principal employer in respect of any employee, or

(d)the person who is or was the principal employer in respect of any employee, or

(e)the right of any person to any benefit and as to the amount and duration thereof, or 192[(ee)any direction issued by the Corporation under section 55A on a review of any payment of dependants' benefit, or]

(g)any other matter which is in dispute between a principal employer and the Corporation, or between a principal employer and an immediate employer or between a person and the Corporation or between an employee and a principal or immediate employer, in respect of any contribution or benefit or other dues payable or recoverable under this Act,[or any other matter required to be or which may be decided by the Employees'

Insurance Court under this Act], such question or dispute [subject to the provisions of sub-section (2A)] shall be decided by the Employees' Insurance Court in accordance with the provisions of this Act."

8. Bare reading of the relevant provisions of ESI Act, 1948

makes it clear that in this social security legislation, any person WP(C).No.5300 OF 2021(J)

employed for wages is termed as an employee. Even a person doing

incidental or preliminary work of the employer and a person whose

services are temporarily lent or let on hire to the principal employer is

also covered. A person engaged as an apprentice, even though he is

not engaged under the provisions of the Apprentice's Act, 1961, so

also the person engaged as an apprentice, whose training period is

extended is also covered by the Employee's State Insurance Act,

1948. The principal object seems to be to extent the benefit of this

social security legislation to as many persons employed by the

employer establishment as possible. Even definition of the term wages

in this act is very wide to cover all remuneration paid or payable in

cash to an employee. Honorarium paid to the employee is not

excluded from the definition of the term 'wages'.

9. As per provisions of Section 45-A of the ESI Act, any Social

Security Officer or other empowered officer can determine amount of

contribution payable in respect of the employees of the establishment,

if it is found that the establishment has failed to submit returns or

record. Such determination of the amount of contribution by the Social

Security Officer or the empowered officer is subject to the scrutiny in

appeal by the Appellate Authority as per provisions of Section 45 AA of

the ESI Act, 1948.

WP(C).No.5300 OF 2021(J)

10. In the case in hand, order at Ext.P12 passed by the

Assistant Director of the ESI Corporation shows that though, the

petitioner No. 1 is covered by the ESI Act, 1948, it has failed to pay

contribution as required by law for the wage period from July 2015 to

August, 2019. With this allegation, the enquiry contemplated under

Section 45A of the ESI Act, 1948 was conducted. Following paragraphs

from the order under Section 45A, Ext.P12 are relevant and therefore

needs reproduction.

"The objections are scrutinized and do observed as follows. This is an establishment covered based on the preliminary survey report of the Social Security Officer of the ESI Corporation. The Social Security Officer who verified the relevant records on 10.08.2015 has reported that the establishment had employed 11 persons including 5 doctors as on 01.07.2015. The administrator has submitted a duly signed list of employees in their letter head. The Social Security Officer thus recommend for coverage from 01/07/2015. Acceeding to the report, a notice in Form C11 dated 16.11.2015 was issued conveying the coverage from 01.07.2015 and requiring compliance with the provisions of the ESI Act including registration of employees and payment of contribution on the wages paid to employees which was duly served on. However the employer failed to comply leading to the proceedings herein.

For the above mentioned reasons, I, Muraleedharan.T, Assistant Director, in exercise of powers delegated to me by the ESI Corporation think fit and accordingly hold that the principal employer is liable to pay contributions totalling Rs.1,85,910/- (Rupees One Lakh Eighty Five Thousand Nine Hundred and Ten only) for the wage periods from 11/2015 to 8/2019 is finally determined and you, as one of the present employers, are hereby ordered to pay the said amount within a period of 15 days from the date of this order failing which it shall be recovered from the employer in accordance with the provisions of Section 45-C to 45-I of the ESI Act."

WP(C).No.5300 OF 2021(J)

11. Thus it is clear that the respondent Corporation concluded

that the petitioner No. 1 establishment had employed 11 persons

including 5 doctors, but had failed to comply with the provisions of ESI

Act regarding the registration of Employees and payment of

contribution on the wages paid to them. That is how, a contribution

totalling to Rs.1,85,910/- came to be determined and the petitioners

were directed to pay the same within 15 days from that order.

14. Dissatisfied by this order of determination of contribution,

the petitioner preferred appeal at Ext.P13 with an affidavit for

dispensing with the condition of pre-deposit of 25% of the amount

determined under Section 45A.

15. It seems that even on earlier occasion, the petitioner has

approached this Court challenging Ext.P1 Visit Note and final order at

Ext.P12 passed by the Assistant Director under Section 45A of the

Employees State Insurance Act, 1948. The very same order and the

Visit Note are again impugned in the instant petition. While deciding

the said writ petition, bearing number WP(C) No.428/2021 this Court

in paragraph 6 of the judgment, (Ext.P15) has recorded the following

finding:-

"I am, therefore, of the firm view that this writ petition cannot be found to be maintainable at this stage and that the petitioners must pursue Exts.P13 and P14 as per law, before the Appellate Authority."

WP(C).No.5300 OF 2021(J)

16. It is thus clear that the very same challenge which is

sought to be raised in the instant writ petition came to be negated by

this Court by holding that the writ petition challenging the Visit Note at

(Ext.P1) and the order of determination of contribution passed under

Section 45A of the ESI Act (Ext.P12) cannot be validly entertained.

This Court has held that the petitioner must pursue their statutory

appeal before the Appellate Authority. Despite this categorical finding

rendered by this Court on earlier occasion, the petitioner has again

ventured to challenge the Visit Note, Ext.P1, so also the final order of

determination of contribution, Ext.P12, by this petition. Hence, the

petition as framed and filed cannot be validly entertained in the light

of earlier finding recorded by this Court in WP(C) No. 428/2021 and

the same deserves to be rejected on this ground itself.

17. Now what remains is prayer for declaration that ON CALL

DUTY DOCTORS cannot be termed as employees. It is seen that

definition of the term wages in the ESI Act, 1948 covers remuneration

of all types including honorarium. Considering the object of welfare

statute, ie, Employees State Insurance Act, 1948, it cannot be said

that Doctors who are rendering ON CALL DUTY and receiving

remuneration in the form of honorarium are not employees as defined

by Section 2(9) of the ESI Act, 1948. Ultimately they are engaged WP(C).No.5300 OF 2021(J)

directly in connection with the work of the hospital which is a covered

establishment under the Employees State Insurance Act, 1948. Hence

the declaration as prayed by the petitioner cannot be granted in their

favour.

18. The challenge to the impugned order at Ext.P19 directing

the petitioner to remit 25% of the amount determined under Section

45A of the ESI Act also fails for the reason that the learned Appellate

Authority has not committed any error of law or of fact while deciding

the request for waiver of the pre-deposit. Section 45AA of the

Employees State Insurance Act, 1948 nowhere empowers the

Appellate Authority to waive pre-deposit of 25% of the contribution

ordered to be paid under Section 45A of the ESI Act, 1948. The appeal

is required to be entertained by the Appellate Authority, as per

mandate of Section 45AA of the ESI Act, only after depositing 25% of

the contribution by the establishment. The learned Appellate Authority

has correctly arrived at the finding that provisions of Section 45A of

the ESI Act, 1948 as well as that of Regulation 31-A and 31-E of the

ESI (General) Regulations 1950, makes it clear that deposit of 25% of

contribution assessed is mandatory and there is no provision

empowering the Appellate Authority to reduce or waive that deposit.

The Appellate Authority in obedience of direction of this Court in WP(C).No.5300 OF 2021(J)

judgment at Ext.P15 had undertook the exercise of examining the

financial status of the petitioner No.1. For that purpose, the

communication at Ext.P17 was also issued to the petitioner. The

petitioner, accordingly produced the relevant record and that is how,

the order at Ext.P19 rejecting the request for waiver of pre-deposit is

passed by the Appellate Authority. No error of law or perversity can be

found in the impugned order at Ext.P19. It cannot be said that the

said order at Ext.P19 suffers from breach of principles of natural

justice.

19. There is one more reason as to why this writ petition cannot

be entertained. As per provision of Section 75 of the ESI Act, 1948,

the petitioner was having alternate and most efficacious remedy in the

instant matter.

In view of the foregoing reasons, the writ petition fails and the

same is dismissed.

Sd/-

A.M.BADAR Nsd //true copy// JUDGE PA to Judge WP(C).No.5300 OF 2021(J)

APPENDIX PETITIONER'S/S EXHIBITS:

EXHIBIT P1 TRUE COPY OF THE VISIT NOTE OF THE SOCIAL SECURITY OFFICER (6TH RESPONDENT) DATED 10.08.2015.

EXHIBIT P2 TRUE COPY OF THE LETTER DATED 16.11.2015 ISSUED BY THE 3RD RESPONDENT.

EXHIBIT P3 TRUE COPY OF THE ATTENDANCE REGISTER FOR THE PERIOD FROM JULY 2015 TO JULY 2016.

EXHIBIT P4 TRUE COPY OF THE ATTENDANCE REGISTER FOR THE PERIOD FROM JANUARY 2014 TO JUNE, 2015.

EXHIBIT P5 TRUE COPY OF THE WAGES REGISTER FOR THE PERIOD FROM MAY,2014 TO JUNE,2016.

EXHIBIT P6 TRUE COPY OF THE SHOW CAUSE NOTICE DATED 09.10.2019 ISSUED BY THE 3RD RESPONDENT.

EXHIBIT P7 TRUE COPY OF THE PAMPHLET OBTAINED BY THE PETITIONER.

EXHIBIT P8 TRUE COPY OF THE LETTER DATED 13.01.2020 ISSUED BY THE 3RD RESPONDENT TO THE PETITIONER.

EXHIBIT P9 TRUE COPY OF THE LETTER DATED 13.02.2020 SUBMITTED BY THE PETITIONERS ALONG WITH DOCUMENTS.

EXHIBIT P10 TRUE COPY OF THE LETTER DATED 26.02.2020 ISSUED BY THE 3RD RESPONDENT TO THE PETITIONERS.

EXHIBIT P11 TRUE COPY OF THE LETTER DARTED 107/09/2020 ISSUED BY THE 3RD RESPONDENT TO THE PETITIONERS.

EXHIBIT P12 TRUE COPY OF THE ORDER DATED 03.11.2020 ISSUED BY THE 3RD RESPONDENT.

EXHIBIT P13 TRUE COPY OF THE APPEAL FILED BY THE PETITIONERS BEFORE THE APPELLATE AUTHORITY I,E., 7TH RESPONDENT.

EXHIBIT P14 TRUE COPY OF THE PETITION FILED BY THE WP(C).No.5300 OF 2021(J)

PETITIONERS BEFORE THE APPELLATE AUTHORITY FOR WAIVER OF DEPOSIT OF 25% OF THE DEMAND.

EXHIBIT P15 TRUE COPY OF THE JUDGMENT DATED 08.01.2021 IN WPC NO.428/2021.

EXHIBIT P16 TRUE COPY OF THE LETTER DATED 12.01.2021 SEND BY THE COUNSEL FOR THE PETITIONERS TO THE APPELLATE AUTHORITY I,E, 7TH RESPONDENT.

EXHIBIT P17 TRUE COPY OF THE EMAIL MESSAGE SENT BY THE APPELLATE AUTHORITY I.E, 7TH RESPONDENT TO THE PETITIONERS.

EXHIBIT P18 TRUE COPY OF THE LETTER DATED 21.01.2021 SUBMITTED BY THE PETITIONERS TO THE APPELLATE AUTHORITY.

EXHIBIT P19 TRUE COPY OF THE PROCEEDINGS OF THE APPELLATE AUTHORITY I.E. TH RESPONDENT DATED 01.02.2021 ISSUED TO THE PETITIONERS.