Madras High Court
The Additional Commissioner vs Indo-Korea Sportswear(Eou) on 11 August, 2021
W.A.No.1753 of 2012
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 11.08.2021
CORAM :
The Hon'ble Mr.JUSTICE T. RAJA
AND
The Hon'ble Mr. JUSTICE V.SIVAGNANAM
W.A.No.1753 of 2012
1. The Additional Commissioner,
ESI Corporation, 143, Sterling Road,
Nungambakkam, Chennai - 600 034.
2. The Recovery Officer,
ESI Corporation, 143, Sterling Road,
Nungambakkam, Chennai - 600 034. ... Appellants
vs
1.Indo-Korea Sportswear(EOU),
26-27, Morrison I Street,
Alandur, Chennai - 600 016
Rep by its Partner Dr.S.K.Gupta
2. The Manager,
State Bank of India,
Nungambakkam, Chennai - 600 034. .... Respondents
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Writ Appeal filed under Clause 15 of Letters of Patent against
the order of the learned Single Judge passed in W.P.No.23108 of
2010 dated 09.04.2011.
For appellant :Mr.C.K.Chandrdasekar
for Mr.G.Bhardwaj
For 1st respondent:Mr.A.Paramasivam
For 2nd respondent:Ms.S.S.Jayanthi
JUDGMENT
(Judgment of the Court was pronounced by T.RAJA,J.,)
The present Writ Appeal is directed against the Order passed by
the learned Single Judge in W.P.No.23108 of 2010 dated 09.04.2011,
whereby, the learned Single Judge issued the following two
directions:-
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" i) The petitioner shall create a bank
guarantee in favour of the first respondent
ESI Corporation to a sum of Rs.1,93,699/-
and continue to renew the Bank guarantee
till the disposal of the Special Leave to
Appeal (Civil) No.7224/2008 pending before
the Supreme Court between the ESI
Corporation and Bethal Engineering.
ii) On such creation of Bank guarantee, the
first respondent shall refund the amount of
Rs.1,93,699/-within two weeks from the
date of bank guarantee stipulating that it
was refunded without prejudice to the
outcome of the case pending before the
Supreme Court.
Aggrieved by the same, the Additional Commissioner, ESI
Corporation has preferred the present writ appeal.
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2. Mr.C.K.Chandrasekar, learned counsel for the appellants,
assailing the impugned order on various grounds, has argued that
when the ESI Corporation had passed the order originally under
Section 45-A of the Employees' State Insurance Act, 1948
(hereinafter referred to as "Act") demanding contribution of
Rs.3,00,037/- from the first respondent on 16.12.2004, the first
respondent filed a writ petition in W.P.No.4212 of 2005, without even
taking the matter before Employees' State Insurance Court under
Section 75 of the Act which says that if any question or dispute arises
as to the person who is or was the principal employer in respect of
any employee, such question or dispute, subject to the provisions of
sub-section (2-A) shall be decided by the Employees' Insurance Court
in accordance with the provisions of the Act.
3. However, considering the violation of principles of natural
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justice, the said writ petition was taken up and disposed of on
31.03.2005 by setting aside the order dated 16.12.2004 passed
under Section 45-A of the Act and the matter was remanded to the
Employees State Insurance Authority for fresh consideration with a
condition that the first respondent/writ petitioner pays a sum of
Rs.1,15,000/- towards contribution.
4. Accordingly, the first respondent/writ petitioner paid a sum
of Rs.1,15,000/- by cheque dated 31.03.2005. On compliance of the
direction given by this Court, fresh opportunity of hearing was given
and a reasoned order was passed again under Section 45-A of the Act
on 22.07.2005 directing the first respondent to pay a sum of
Rs.1,93,699/- instead of Rs.3,00,037, which was originally demanded
by order dated 16.12.2004.
5. Learned counsel further pleaded that in compliance of the
order dated 22.07.2005, passed under Section 45-A of the Act, the
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first respondent paid the balance amount of Rs.78,699/- on
03.08.2005. As a result, the order passed under Section-45A of the
Act, pursuant to the direction given by this Court in
W.P.No.4212/2005 dated 11.03.2005, has become final.
6. Thereafter, sleeping over the same for about five long years,
the first respondent again filed a writ petition in W.P.No.23108 of
2018 on 29.09.2010, seeking for issuance of a writ of mandamus
directing the appellants to permit him to withdraw the amount lying
in the ESI Fund Account No.1 of the ESI Corporation in State Bank of
India, Nungambakkam High Road Branch, Chennai.
7. Secondly, Mr.C.K.Chandrasekar, learned counsel pleaded
that whether the first respondent/writ petitioner can be construed as
an outside establishment and not immediate employer as per Section
2(13) of the Act is to be decided by adducing oral and documentary
evidence before the ESI Court. Section 75 (1)(d) of the Act clearly
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says that if any question or dispute arises as to the person who is or
was the principal employer in respect of any employee, such question
or dispute shall be decided by the Employees Insurance Court.
8. Now, when the writ petitions in W.P.Nos.4325 and 4334 of
2007 (M/s Tamil Nadu Petro Products Limited vs Employees' State
Insurance Corporation) have been filed, overlooking the statutory
remedy available under Section 75 of the Act, the very same learned
Single Judge by order dated 22.12.2010 has held that "if the
provisions of Section 45-A are read with Section 45-B of the Act, then
the determination made by the Corporation is concerned and it may
not be final so far as the employer is concerned, if he chooses to
challenge it by filing an application under Section 75 of the Act. If the
employer fails to challenge the said determination under Section 75 of
the Act before the Court, then the determination under Section 45-A
becomes final against the authorities."
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9. Therefore, the learned Single Judge, who has passed the
impugned order dated 09.04.2011, contrary to his own order dated
22.12.2010, has committed an error and has passed two diametric
opposite orders that will lead to multiplicity of proceedings which
have to be kicked out.
10. Learned Counsel further argued that the learned Single
Judge by order dated 11.03.2005 in W.P.No.4212 of 2005, remanded
the matter for fresh consideration and if the writ petitioner is
aggrieved, he has to go only before the ESI Court under Section 75 of
the Act.
11. Finally, the issue raised by the writ petitioner is that he is
not an immediate employer because of the outside establishment as
contemplated under Section 2(13) of the Act. When the Apex Court in
the case of ESI Corporation represented by its Regional Director vs
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Bethal Engineering Company, has left the case open, the writ
petitioner/first respondent has wrongly approached this Court under
Article 226 of the Constitution of India seeking a direction to permit
him to withdraw the amount lying in the ESI Fund.
12. Learned counsel submitted that neither the Full Bench in
the Case of ESI Corporation represented by its Regional Director vs
Bethal Engineering Company reported in 2007(4) CTC 529 (FB) has
decided the issue nor the Apex Court has given any authoritative
finding. Since the Apex Court has left the issue open, the disputed
question of fact has to be decided by the ESI Court under Section 75
of the Act and hence the impugned order is liable to be set aside.
13. In support of his submission, the learned counsel heavily
relied on the judgment of the Division Bench of this Court in the case
of The Tuticorin Thermal Power Station Industrial Co-op Society Ltd
vs The Deputy Regional Director, Sub Regional Office, ESI
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Corporation and others (W.A.No.828 of 2005) reported in (2005) Writ
LR 332 and submitted that in an identical situation, a writ petition
was filed challenging the demand notice issued under Section 45(B)of
the Act. The writ petition was allowed. Aggrieved by the same, writ
appeal was filed. In the appeal, the Division Bench has held that
when the writ petitioner has a clear alternative remedy of filing an
application under Section 75 of the Employees State Insurance Act
before the Employees State Insurance Court, the action of the writ
petitioner by filing the writ petition cannot be approved for the
simple reason because it is a settled legal principle that when an
alternative remedy is available the same must be availed first.
14. The learned Counsel also relied on the judgment of the
Apex Court in the case of ESIC vs C.C.Santhakumar reported in
(2007) 1 SCC 584, wherein, the Apex Court has held that if the
employer disputes the correctness of the order under Section 45-A,
he could challenge the same under Section 75 of the Act before the
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ESI Court.
15. On the contrary, the learned counsel for the first
respondent submits that the ESI Corporation has passed an order
under Section 45-A of the Act demanding contribution of
Rs.3,00,037/- from the first respondent on 16.12.2004 without giving
any reasonable opportunity of being heard. The first respondent filed
the writ petition in W.P.No.4212 of 2005. The learned Single Judge by
order dated 11.03.2005 remanded the matter to ESI authorities for
fresh consideration. The first respondent complied with the condition
and again has taken up the issue and a detailed order was passed on
22.07.2005. The first respondent paid a sum of Rs.78,699/- on
03.08.2005 for the period from 1996-97 to 1997-98, in compliance of
the order dated 22.07.2005.
16. The issue involved in the present case is that outside
establishments are not immediate employer as per Section 2(13) of
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ESI Act. Learned counsel submits that they are not liable to pay any
ESI contribution since they are covered under Section 2(13) of the
ESI Act. However, the issue has not been properly dealt with by ESI
authorities while passing the order under Section 45-A of the Act on
16.12.2004, and also subsequently on 22.07.2005.
17. Similar issue was pending before the Full Bench and SLP is
also pending. In the meanwhile, Employees' State Insurance Court
vide letter dated 30.10.2007 has stated that since the Single Bench
had referred the case to larger Bench vide order dated 05.01.2007
and now the larger Bench had directed the Registry to place the
papers before Single Judge vide order dated 24.07.2007, the refund
of payment made will be considered after the outcome of the case.
18. The appellants filed a counter affidavit in W.P.No.23108 of
2010,. In the said counter, they have taken a stand that the refund of
payment to the writ petitioner will be considered after the outcome of
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the Special Leave to appeal (Civil) No.7224 of 2008 (ESI Corporation
and Bethal Engineering).
19. When the writ petition was taken up by the learned Single
Judge, taking note of the fact that the Full Bench has answered the
issue in favour of the first respondent, the learned Single Judge by
order dated 09.04.2011 allowed the writ petition directing the writ
petitioner to create a bank guarantee in favour of the appellant
Corporation to a sum of Rs.1,93,699/- and to continue to renew the
bank guarantee till the disposal of the Special Leave to Appeal
(Civil) No.7224/2008 pending before the Apex Court and on such
creation of Bank guarantee, the ESI authorities shall refund the
amount of Rs.1,93,699/-. Therefore, no error can be found with the
impugned order and accordingly, prayed for dismissal of the appeal.
20. We are not impressed by the submissions made by the
learned counsel for the first respondent. When an order which was
passed under Section 45-A of the Act directing the writ petitioner to
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pay a sum of Rs.3,00,037/- was challenged by way of writ petition in
W.P.No.4212 of 2005 on the ground that he was not heard before
passing the order, this Court, by order dated 11.03.2005, set aside
the order dated 16.12.2004 passed under Section 45-A of the Act and
remanded the matter for fresh consideration with a condition that the
first respondent/writ petitioner pays a sum of Rs.1,15,000/- towards
contribution. Accordingly, the first respondent/writ petitioner paid a
sum of Rs.1,15,000/- by cheque dated 31.03.2005. On compliance of
the direction given by this Court, fresh opportunity of hearing was
given and a reasoned order was passed again under Section 45-A of
the Act on 22.07.2005 directing the first respondent to pay a sum of
Rs.1,93,699/- instead of Rs.3,00,037, which was originally demanded
by order dated 16.12.2004.
21. If the respondent/writ petitioner is still aggrieved, the
remedy available to him is under Section 75 of the ESI Court which is
extracted herein under:-
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" 75. Matters to be decided by Employees'
Insurance Court
(1) If any question or dispute arises as to
(a) ....
(b)....
(c)....
(d) the person who is or was the principal
employer in respect of any employee, or
such question or dispute (subject to the
provisions of sub-section (2-A) shall be
decided by the Employees" Insurance Court in
accordance with the provisions of this Act.
22. At this juncture, Mr.A.Paramasivam, learned counsel for the
first respondent also has drawn our attention to Section 45-AA of the
Act, that came into force w.e.f. 01.06.2010, to say that statutory
appeal provision is available. The above provision states that "if an
employer is not satisfied with the order referred to in section 45-A, he
may prefer an appeal to an appellate authority as may be provided by
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regulation within sixty days of the date of such order" .
23. Therefore, in the light of the above provision, the question
of approaching ESI Court would arise only after exhausting the
available remedy provided under Section 45-AA of the Act.
24. Section 75 (1)(a)(d) clearly says that " if any question or
dispute arises as to the person who is or was the principal employer
in respect of any employee, such question or dispute shall be decided
by the ESI Court in accordance with the provisions of the Act.
25. As rightly canvassed by the learned counsel for the
appellant, it is a vexatious and complex issue, therefore, we are of
the considered view that the matter needs to be decided by the
Appellate Authority but not under Article 226 of the Constitution of
India.
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26. We have reached this conclusion for the reason that the
learned Single Judge by order dated 22.12.2010 in WP Nos.4325 and
4334 of 2007 has held as follows:
" 30...... Therefore, it the provisions of
Section 45-A are read with Section 45-B of
the Act, then, the determination made by the
Corporation is concerned It may not be final
so far as the employer is concerned, if he
chooses to challenge it by filing an application
under Section 75 of the Act. If the employer
fails to challenge the said determination
under Section 75 of the Act before the Court,
then the determination under Section 45-A
becomes final against the employer as well.
As such, there is no hurdle for recovery of
the amount determined under section 45-B of
the Act, by invoking the mode of recovery, as
contemplated in Sections 45-C to 45-I.
27. The above observation shows that the learned single Judge
overlooked Section 45-AA which is statutory appellate authority.
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28. The learned counsel for the first respondent has also
justified his approaching this Court by way of writ petition on the
ground that since the appellants have also admitted the request of
the first respondent for refund of the amount after the result of the
SLP, the said writ petition is filed only after the result of SLP. But,
we are unable to find any merit in his submissions. The reason is that
whether the outside establishments are not immediate employers
under Section 2(13) of the Act has not reached any quietus.
29. In the earlier order dated 26.04.2005 in W.A.No.828 of
2005 (The Tuticorin Thermal Power Station vs The Deputy Regional
Director and three others), the Division Bench has held as follows:
" 4. If the appellant files an
application under Section 75 of
the Act within one month from
today, the same will be
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entertained by the ESI Court
without raising any objection as
to limitation and shall be
decided expeditiously thereafter
in accordance with law after
hearing the parties concerned
without being influenced by the
judgment of the learned Single
Judge. Consequently, WAMP
No.1570 of 2005 is also
dismissed."
30. Accordingly, the matter is remitted back to the appellate
authority under Section 45-AA of the Act.
31. Following the observations made by the Division Bench
extracted above in paragraph No.4, one month time is given to the
first respondent/writ petitioner to file an appeal under Section 45-AA
of the Act along with necessary documents. On receipt of the same,
as this matter is pending from 2005, the appellate authority is
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directed to take up the issue, after giving opportunity to both sides,
and decide the issue on merits and in accordance with law within a
period of one month from the date of receipt of a copy of this order.
32. With the above direction, the writ appeal is disposed of. No
costs.
(T.R., J.) (V.S.G., J.)
11.08.2021
Speaking Order/Non-Speaking Order
Index : Yes/No
sr
To
The Manager,
State Bank of India,
Nungambakkam, Chennai - 600 034.
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W.A.No.1753 of 2012
T.RAJA,J.,
and
V.SIVAGNANAN, J.
sr
W.A.No.1753 of 2012
11.08.2021
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