Nandakumar vs The Deputy Director, Esi Corporation
2024 Latest Caselaw 15196 Ker

Kerala High Court

Nandakumar vs The Deputy Director, Esi Corporation on 5 June, 2024

Author: Dinesh Kumar Singh

Bench: Dinesh Kumar Singh

                IN THE HIGH COURT OF KERALA AT ERNAKULAM
                                 PRESENT
            THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH
         WEDNESDAY, THE 5TH DAY OF JUNE 2024 / 15TH JYAISHTA, 1946
                           WP(C) NO. 4510 OF 2018
PETITIONER/S:

             NANDAKUMAR, AGED 60 YEARS, S/O NANU, SB BHAVAN, BEACH
             ROAD, THAMARAKULAM, KOLLAM

             BY ADV SRI.ARUN BABU



RESPONDENT/S:

     1       THE DEPUTY DIRECTOR, ESI CORPORATION
             SUB REGIONAL OFFICE, ASHRAMAM, KOLLAM-691 001

     2       RECOVERY OFFICER, ESI CORPORATION, SUB REGIONAL OFFICE,
             ASHRAMAM, KOLLAM-691001

     3       THE MANAGER, VIJAYA BANK, VADAYATTUKOTTAI ROAD,
             CHAMAKADA, KOLLAM-691001

             BY ADV SMT.A.K. PREETHA


         THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON
05.06.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
 W.P.(C) No.4510/2018
                                     -2-




                          JUDGMENT

Heard Mr Arun Babu learned Counsel for the petitioner,

and Ms A K Preetha learned Standing Counsel for the ESI

Corporation.

2. The present writ petition has been filed impugning

the recovery proceedings in Ext.P2 for short payment of the

employee's insurance contributions under the Employees'

State Insurance Act 1948 (for short, 'the Act') by the petitioner.

3. Learned Counsel for the petitioner submits that

unpaid/short-paid contributions have to be determined by the

1st respondent under Section 45A, which contemplates an

order passed by the Corporation for unpaid/short-paid

contributions. In the present case, no such order was passed,

and recovery action has been initiated vide Ext.P2 under

Section 45C of the Act.

3.1 Learned Counsel for the petitioner further submits

that the order passed under Section 45A is an appealable order

under Section 45AA. The petitioner's right to appeal has been

denied in the absence of an order under Section 45A. It is

further stated that no recovery can be effected from an

employer unless and until an order is passed under Section

45A determining the unpaid/short-paid contribution.

4. On the other hand, the learned Counsel for the

respondent corporation submits that the petitioner was issued

notice for detected short payment in the contribution. The

petitioner did not respond to the said notice nor furnished the

requisite documents. However, after some time, they

submitted their audited balance sheet. The said balance sheet

would show that the petitioner had not paid the correct

contribution and had paid the short contribution. Therefore,

there was no requirement for passing an order under Section

45A before taking the recovery action under Section 45B/45C

of the Act.

4.1 Learned Counsel for the respondent further

submits that, based on the documents submitted by the

petitioner himself, the amount of short-paid contribution has

been determined, and a specific order has not been passed

under Section 45A as there is no requirement for passing such

an order.

5. I have considered the submissions advanced by the

learned Counsel for the petitioner and respondent.

6. Section 45A empowers the Corporation to

determine the amount of contribution payable in respect of

the employees of a factory or establishment. The proviso

contemplates an order under Section 45A to be passed by the

Corporation while determining the amount of contribution

payable in respect of the employees. Section 45A on

reproduction would read as under:

"45A. Determination of contributions in certain cases.--

(1) 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 Social Security Officer or other official of the Corporation referred to in sub-section (2) of section 45 is 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 infor-

mation available to it, by order, determine the amount of con- tributions payable in respect of the employees of that factory or establishment:

Provided that no such order shall be passed by the Corpora- tion unless the principal or immediate employer or the per- son in charge of the factory or establishment has been given a reasonable opportunity of being heard.

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. (2) An order made by the Corporation under sub-sec-

tion (1) shall be sufficient proof of the claim of the Corpora- tion under section 75 or for recovery of the amount deter- mined by such order as an arrear of land revenue under sec- tion 45B or the recovery under section 45C to section 45-I."

Therefore, a contribution payable has to be determined by an

order passed by the Corporation.

7. In the present case, it appears that the Corporation

has not passed an order under Section 45A, as required by the

Statute itself. Further, the order passed under Section 45A is

appealable under Section 45AA, which is a statutory right

conferred on the employer or employees to challenge before

the appellate authority if one of them is not satisfied with the

order passed under Section 45A.

7.1 On proper construction of Section 45A and 45AA, it

may be said that the payable contribution has to be determined

only by an order passed under Section 45A and the

Corporation cannot say that on the basis of the documents

submitted by the employer of a factory or establishment, the

amount has been arrived at for payable contribution.

7.2 Payable contribution would include short payment

of the contribution besides the non-payment of the

contribution. If there is short payment or non-payment of the

contribution, that amount has to be determined under Section

45A by an order passed by the Corporation/competent

authority. In the present case, as there has been no order

passed under Section 45A, the recovery action under Section

45B/45C is unsustainable.

7.3 Therefore, the writ petition is allowed. The matter

is remitted to the 1st respondent to pass orders under Section

45A for the alleged short payment of the contribution by the

petitioner. The petitioner shall appear before the 1st

respondent on 18.06.2024 along with all the records. No

further notice shall be issued to the petitioner by the 1st

respondent. The 1st respondent shall examine the record

submitted by the petitioner, if any, besides the audited balance

sheet and afford an opportunity of hearing to the petitioner

and then pass an order under Section 45A.

With the aforesaid direction, the present writ petition

stands allowed.

Sd/-

DINESH KUMAR SINGH JUDGE

jjj

APPENDIX OF WP(C) 4510/2018

PETITIONER EXHIBITS

EXHIBIT P1- THE TRUE COPY OF THE INSPECTION REPORT DATED 17.12.2012 ISSUED BY THE ESI INSPECTOR

EXHIBIT P2- THE TRUE COPY OF THE LETTER DATED 04/09/2015 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER

EXHIBIT P3- THE TRUE COPY OF THE APPLICATION DATED 14-11- 2016 FILED BY THE PETITIONER BEFORE THE 1ST RESPONDENT

EXHIBIT P4- THE TRUE COPY OF THE APPLICATION DATED 25-11- 2016 FILED BY THE PETITIONER BEFORE THE 1ST RESPONDENT

EXHIBIT P5- THE TRUE COPY OF THE REPLY SUBMITTED BY THE 1ST RESPONDENT DATED 05/01/2017

EXHIBIT P6- THE TRUE COPY OF THE ORDER DATED 29.01.2018 ISSUED BY THE 2ND RESPONDENT TO THE 3RD RESPONDENT