Madras High Court
K.Arumugasamy vs The Assistant Regional Director on 6 December, 2021
C.M.A.(MD)No.982 of 2021
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED : 06.12.2021
CORAM :
THE HONOURABLE MRS.JUSTICE S.ANANTHI
C.M.A.(MD)No.982 of 2021
and
C.M.P(MD)No.9266 of 2021
K.Arumugasamy ...Appellant/Petitioner
Vs.
The Assistant Regional Director,
Employees State Insurance Corporation,
Sub Regional Office, 4th Main Road,
K.K.Nagar,
Madurai – 625 020. ...Respondent/Respondent
PRAYER: Civil Miscellaneous Appeal filed under Section 82(2) of the
Employees State Insurance Act, 1948, to set aside the order, dated 02.08.2021
of the Employees State Insurance Court (Labour Court) Madurai passed in
E.S.I.O.P.No.44 of 2007, allow the appeal.
For Appellant :Mr.T.Ravichandran
For Respondent :Mr.C.Karthick
1/10
https://www.mhc.tn.gov.in/judis
C.M.A.(MD)No.982 of 2021
JUDGMENT
This Civil Miscellaneous Appeal has been filed to set aside the order,
dated 02.08.2021 of the Employees State Insurance Court (Labour Court)
Madurai.
2.The appellant herein, as petitioner, has filed a petition under Section
75(1) of the ESI Act, 1948 to set aside the impugned order under Section 68
of ESI Act in No.57-R/13/12(A)/Sec.68/2006-DB, dated 09.04.2007
directing the petitioner to pay Rs.2,07,245/- with future interest and to grant
stay order against the said order.
3. (i) It is mentioned in the petition that the petitioner was running a
fire works manufacturing unit manufacturing the crackers manually without
the aid of power. The Inspector of respondent ESI Corporation of Sivakasi
Taluk has visited the petitioner's unit on 14.07.2004 and found that there are
20 employees being employed from the month of April 2004. The petitioner
is prompt in remitting the contribution from the date of coverage i.e., from
4/2004. While so, the petitioner's unit met with an accident and one
employee namely V.Gurusamy died. In view of the coverage of the ESI Act,
the respondent commenced the payment of the dependent benefits to the legal
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C.M.A.(MD)No.982 of 2021
heirs of the deceased by its proceedings dated 10.01.2006 which was also
issued to the petitioner. The respondent continued to pay the dependent
benefits to the legal heirs of the deceased.
(ii) Meanwhile, the respondent has issued an order u/s.45(A) of the ESI
Act, dated 10.10.2005 claiming contribution of Rs.74,360/- for the period
from 12/2002 to 3/2004. The respondent has arrived the contribution on
adhoc basis taking average wage of Rs.3,575/- per month per employee for
the period from 12/2002 to 3/2004. As per the inspection report, the
respondent has taken a new stand as if the area is covered with effect from
1.12.2002 itself, there is collusion between some of the ESI Corporation
Officials. The petitioner's factory was functioning since 1988 and more than
23 employees are being employed as early as in the year 1993 and the
petitioner failed to produce muster role and the wages register from 12/2002
to 3/2004, the documents relating to cancellation of the registration of the
petitioner unit with effect from 10.03.2003 and opened only in the year 2004.
More so, the respondent has determined the contribution for the closure
period. Aggrieved by that, the petitioner has filed earlier ESIOP.No.79/2005
and obtained interim stay and the coverage of the ESI Act to the relevant
period is in dispute.
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C.M.A.(MD)No.982 of 2021
(iii)In such situation, the respondent has issued an order under Section
68 of the ESI Act 1948 wherein he took the stand that since the factory was
not registered under the ESI Act and the deceased worker is not covered
under the ESI Act, the petitioner in collusion with some ESIC officials
registered the factory thereafter under the Act after the occurrence of the
accident and obtained the code number for the coverage of the Act with effect
from 01.04.2004 and the records are created and produced and that the
factory should have been covered under the ESI Act with effect from
01.12.2002. As it was a Factory, as per the Factories Act and for the intention
to get the dependent benefits provided under the ESI Act in whatsoever
manner and hence directed to remit the entire amount of compensation of Rs.
2,07,245/- payable to the dependent of the deceased employee from the
petitioner. The respondent failed to consider the fact that it is the practise of
the respondent to inspect the units under the areas covered under the Act and
based on the inspection report of the Inspector of the ESIC and direct for the
coverage of the Act by allotting the code number and it is the routine
procedure adopted by the respondent and on the other hand only when
liability for payment of dependent benefit arose, in order to collect the entire
dependent benefits from the petitioner, the respondent come forward with the
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C.M.A.(MD)No.982 of 2021
false information to pass order u/s.68 of the ESI Act. The said order is
without any basis and illegal and hence the petitioner with no other option
has approached this Court for setting aside the impugned order, dated
09.04.2007 passed by the respondent under Section 68 of the ESI Act.
4.On the basis of the available rival evidence on record, the court
below has allowed the petition and thereby set aside the impugned order
demand made by the respondents. Against the order passed by the court
below, the present civil miscellaneous appeal has been preferred at the
instance of the respondents as appellants.
5.Heard both sides and perused the materials available on record.
6.The learned counsel for the appellant contended that on 14.07.2004
the inspection was conducted by the ESI Corporation. Only after inspection
the factory came to know that the Factory covered under ESI Act. Even as
per the area notification in the year 2002, the factory has to pay contribution.
Since the factory was closed from 1/2/2002 to 3/2004, it need not pay
contribution.
https://www.mhc.tn.gov.in/judis
C.M.A.(MD)No.982 of 2021
7.The learned counsel appearing for the respondent/petitioner has
contended that court below after considering all the available evidence on
record and allowed the petition and therefore the order passed by the court
below is perfectly correct and the same does not require any interference.
8.According to the appellant, since the factory was closed from
1/2/2002 to 3/2004, it need not pay contribution. But from 01.04.2004 the
factory has to pay contribution voluntarily and regularly. The contribution
was paid only after the accident occurred on 28.06.2004. When contribution
was made after the accident, the corporation already paid contribution can
proceed under section 68 of ESI Act and recover the benefits given to the
deceased from the employer. As per judgment of this Court made in
C.M.A(MD)No.1156 of 2016 in the case of The Deputy Director,
Employees' State Insurance Company Vs. Hotel Gowri Ganga it has been
held as follows:-
''3.The appellant Corporation had filed a counter
affidavit agreeing to disburse the benefit to the dependants of
the deceased under the said Act. However, in paragraph 12 of
the counter, it was submitted that since only a posthumous
registration was done by the employer, the appellant sought
liberty to proceed under Section 68 of the ESI Act, to recover
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C.M.A.(MD)No.982 of 2021
the capitalized value of the benefit from the employer. But the
ESI Court merely allowed the petition by impugned order
dated 09.06.2015, without adverting to the implication of
Section 68 of the ESI Act. Aggrieved by the same, this appeal
has been filed by the Corporation.
4.This Court admitted this appeal on 09.11.2016. The
substantial questions of law that had arisen for determination
in this appeal is as to whether the ESI Court ought to have
permitted the ESI Corporation to proceed under Section 68 of
the ESI Act, against the employer for recovery of the
capitalized value.
5.It is not in dispute that the employer did not register
the name of the deceased employee originally. It is beyond
dispute that only postuhumous registration was made. When
the employer had not remitted any contribution under the ESI
Act, Section 68 of the Act will automatically come into play.
In this case, the Corporation was satisfied that contribution
ought to have been paid by the employer for the deceased
Duraipandi. The dependants of the deceased Duraipandi
cannot be made to suffer for the omission on the part of the
employer. In order to deal with such situation, Section 68 of
the Act has been incorporated. The ESI Court had remarked
that it is for the ESI Corporation to decide and if law permits
would be entitled to proceed against the employer.
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C.M.A.(MD)No.982 of 2021
6.I am of the view that the ESI Court ought to have
given a specific finding in this regard, by enabling the
Corporation to proceed under Section 68 of the ESI Act. Even
while confirming the other findings rendered by the ESI Court,
this Court answers the substantial questions of law framed in
this appeal in favour of the appellant. Therefore, the order
dated 09.06.2015, in E.S.I.P.No.61 of 2005 on the file of the
ESI Court, Madurai, is modified. The ESI Corporation is
permitted to proceed under Section 68 of the ESI Act, to
recover the capitalized value from the employer/respondent
herein.''
9. It is seen from the records that the employer had not remitted any
contribution under the ESI Act. When the employer had not remitted any
contribution under the ESI Act, Section 68 of the Act will automatically come
into play. In this case, the Corporation was satisfied that contribution ought
to have been paid by the employer for the deceased. The dependants of the
deceased cannot be made to suffer for the omission on the part of the
employer. In order to deal with such situation, Section 68 of the Act has been
incorporated. Therefore, the well considered order of the Court below needs
no interference by this Court.
https://www.mhc.tn.gov.in/judis
C.M.A.(MD)No.982 of 2021
10.In fine, this civil miscellaneous appeal is dismissed. The impugned
order passed in E.S.I.O.P.No.44 of 2007 by the Employees State Insurance
Court (Labour Court), Madurai, is confirmed. No costs. Consequently,
connected miscellaneous petition is closed.
06.12.2021
Index :Yes/No
Internet:Yes/No
vsd
Note:In view of the present lock down owing to COVID-19 pandemic, a web
copy of the order may be utilized for official purposes, but, ensuring that the
copy of the order that is presented is the correct copy, shall be the
responsibility of the Advocate/litigant concerned.
To
The Employees State Insurance Court (Labour Court),
Madurai.
https://www.mhc.tn.gov.in/judis
C.M.A.(MD)No.982 of 2021
S.ANANTHI, J.
vsd
C.M.A.(MD)No.982 of 2021
and
C.M.P(MD)No.9266 of 2021
06.12.2021
https://www.mhc.tn.gov.in/judis
