Employees' State Insurance ... vs M/S.Drilcos (India) Pvt Ltd
2021 Latest Caselaw 5466 Mad

                                                                               C.M.A.No. 1676 of 2018


                                    IN THE HIGH COURT OF JUDICATURE AT MADRAS

                                                 DATED : 02.03.2021

                                                           CORAM

                                   THE HONOURABLE MR.JUSTICE S.M.SUBRAMANIAM

                                                C.M.A.No. 1676 of 2018


                     Employees' State Insurance Corporation,
                     Rep. By its Deputy Director,
                     “PanchdeepBhavan”,
                     No.143, Sterling Road,
                     Chennai – 34.                                                  ..Appellant

                                                            Vs


                     M/s.Drilcos (India) Pvt Ltd.,
                     Rep. By its Director,
                     267, Sidco Industrial Estate,
                     Ambattur,
                     Chennai – 600 098.                                             ..Respondent


                                   Appeal filed under Section 82 of the Employees Insurance

                     Act, 1948 against the fair order and decree dated 13.07.2015 in

                     EIOP No. 30 of 2005, on the file of the Employees Insurance Court

                     (Principal Labour Court), Chennai.



                                      For Appellant    :         Mr.SP.Srinivasan

                                      For Respondents :          No appearance




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                                                                        C.M.A.No. 1676 of 2018


                                                   JUDGMENT

Statutory orders are expected to be speaking orders. Non-

speaking order cannot be construed as an acceptable or a valid

order within the provisions of the ESI Act. The statute contemplates

various procedures as well as the factual and other issues. While so,

the authorities exercising the powers under the statute are expected

to adjudicate the issues with reference to the documents and

materials available on record and pass appropriate speaking orders

enabling the public to understand that the orders are passed based

on merits as well as by considering the available evidences. It is not

as if the statutory authority can pass an order that he has applied

his mind. Mere application of mind is insufficient. The application of

mind must be in consonance with the materials available on record.

In the absence of any materials, the authorities cannot pass such an

order based on presumptions and assumptions or the unknown

information which was not recorded in the order. Thus, merely

stating that the statutory order is passed by application of mind or

based on the information is absolutely untenable and such an

application of mind based on the information must be substantiated

with reference to the materials available on record otherwise such

orders are to be treated as opposed to the provisions of the statute.

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C.M.A.No. 1676 of 2018

2. The order dated 13.07.2015 passed in EIOP No. 30 of 2005

is under challenge in the present civil miscellaneous appeal on hand.

3. The substantial questions of law raised by the appellant

read as under:

“(a)Whether the employees engaged by the Respondent under various head fall within the definition of “employees” as defined under Section 2(9) of the ESI Act?

(b)Whether the Hon'ble EI Court is justified in setting aside the impugned order passed under Section 45A of the ESI Act dated 13.07.2015 on the premise of absence of documentary evidence produced by the Appellant herein before the Hon'ble EI Court, when the Respondents have not produced the contract agreement and salary register, attendance register, TDS deduction for proof of payment made to outside agency and other individuals as and when there is necessity for their services?

(c)Whether the Hon'ble EI Court is justified in placing the burden on the Appellant, when the Respondent has approached the Court and also challenged the Section 45A Order https://www.mhc.tn.gov.in/judis/

C.M.A.No. 1676 of 2018

which was passed in accordance with the ESI Act?”

4. These substantial questions of law raised are relatable to

the facts and circumstances of the case which were already

adjudicated. However, the learned counsel appearing on behalf of

the appellant reiterated that the authorities competent based on the

information collected passed an order under Section 45-A of the Act.

Thus, such an order passed under Section 45-A of the Act based on

certain informations cannot be nullified by the ESI Court by stating

that the authorities have not produced any documents. Admittedly,

no documents were available in the present case to establish the

case of the Employees' State Insurance Corporation. However, it is

contended that the authorities are well within their powers to collect

the information and passed an order under Section 45-A of the Act.

5. The ESI Court also arrived at a conclusion that Section 45-

A order was passed. The order was challenged under Section 75-A

of the Act before the Court. However, the applicant could not be

able to produce documents and they may not be able to

substantiate their contentions so as to justify the contributions.

Based on such factors, the ESI Court dismissed the claim of the

Corporation. Challenging the said order, the present appeal is filed.

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C.M.A.No. 1676 of 2018

6. Let us now consider the scope of Section 45-A of the Act,

which deals with determination of contribution in certain cases.

Section 45-A(1) of the Act reads as under:

"Section 45-A(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 Inspector 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 information available to it, by order, determine the amount of contributions payable in respect of the employees that factory or established."

7. Thus, it is clear that on the basis of information available to

it by order determining the amount of contribution payable in

respect of employees that factory or establishment, the ESI officials

are empowered to collect the information and based on the

collected informations, arrive at a conclusion and determine the

amount of contribution payable in respect of the employees of the

factory.

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C.M.A.No. 1676 of 2018

8. The question of law raised would amount to an information.

Whether every information collected can be construed as acceptable

information? Undoubtedly, the statutory authorities are empowered

to collect information from any source and such informations must

be based on certain relatable materials or from reliable documents,

which is to be substantiated and to be established before the Court

of law, if an appeal is filed. Thus, mere information is insufficient.

An information must be based on certain acceptable materials and

such materials collected to gather the information must be produced

to establish that the information is genuine and sufficient to

determine the contributions payable.

9. The arguments advanced by the learned counsel appearing

for the appellant is that it is sufficient, if an information is collected

by the authorities. This Court is of the opinion that the informations

are sufficient to determine the contributions. However, the

acceptability and unacceptability of the informations are to be

substantiated by the Department officials. In the event of such an

unguided discretion, the same will lead to so many complications

and further will pave the way for corrupt activities.

10. The power of discretion is to be exercised with due

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C.M.A.No. 1676 of 2018

diligence and by recording the reasons. The power of discretion can

never be absolute. Any discretionary power exercised must be in

consonance with the established principles of law and therefore,

merely by stating that the officer collected the information and

determined the contribution is insufficient to meet out the

requirements of the established principles of law. Thus, every

information collected by the statutory authorities must be based on

some materials or the informations are to be substantiated with

acceptable reasons. All such materials or the acceptability of the

informations are bound to be decided before the Court of law. Thus,

it is not as if the ESI Corporation made a claim that they can collect

the information and determine the compensation in a day light

cannot be the intention as well as the idea of the statute itself.

Unguided discretionary powers cannot be provided to any authority

as it is directly opposed to the constitutional principles. However,

the power under the statute is to be guided with the principles and,

therefore, the order passed by the authorities by merely stating that

they are determining the contribution based on the informations

cannot be accepted as an order passed within the provisions of

Section 45 of the ESI Act.

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C.M.A.No. 1676 of 2018

11. In the present case, Section 45A order reveals that the

authority, who passed an order by applying his mind to all relevant

facts of the case and gone into objections. The mere finding, as

stated above, is insufficient to arrive at a conclusion that the

authority competent has passed an order based on any

unacceptable evidence or information in order to meet out the

requirements of Section 45-A of the Act. Every word in a statute is

to be interpreted progressively to understand that such words are

employed with a specified idea and in the present case, the statute

contemplates "on the basis of information". Thus, on the basis of

the information available indicates that such an information must be

based on certain materials or based on any acceptable evidence,

and those materials or documents or sources must be substantiated

or produced before the Court of law in order to arrive a conclusion

that the authorities passed an order under Section 45A of the Act,

considered all those materials to reasonably arrive a conclusion and

determine the contribution payable. In the absence of any such

evidence or records, the Courts have no option to arrive at a

conclusion that the order is non-speaking and the informations are

not substantiated and, therefore, the contribution is unsustainable.

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C.M.A.No. 1676 of 2018

12. While dealing with many such cases before this Court, this

Court consistently finds it difficult to accept the orders passed under

Section 45A of the Act in view of the fact that no reasons or

evidences are recorded in such orders. Such irresponsibility on the

part of the competent authority in passing orders under Section 45A

is to be taken note of by the higher officials and such orders, if

passed, must be treated as an order passed without any application

of mind and in violation of Section 45A of the Act; and if there is

any lapses on the part of the authorities then the higher officials are

bound to conduct an enquiry against such officials and record their

negligence, lapses, dereliction of duty or corrupt practices and

initiate appropriate disciplinary action. If such stringent measures

are not taken it will become habitual to all the officials to pass such

non-speaking orders which would defeat the purpose and object of

the ESI Act. The very object of the ESI Act is to provide decent

medical facilities to the workmen which is a right to life enunciated

under Article 21 of the Constitution of India. The decent medical

facilities provided is an integral part of Article 21 of the Constitution

and, therefore, the authorities dealing with the welfare legislation

are responsible and accountable for their functioning and activities.

The lapses, negligence and dereliction of duty are to be viewed

seriously and all suitable disciplinary actions and prosecutions are to

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C.M.A.No. 1676 of 2018

be initiated against those officials, who are passing such orders

without application of mind or without collecting reliable

informations based on certain materials. An order must be self-

speaking; that an order passed by the authority is with some

deliberations and with some sincerity. If the order passed is not

self-speaking, irresponsible or in a lackadaisical manner, then the

higher authorities are bound to look into the issues and initiate

appropriate actions.

13. In the present case, the ESI Court has not completely set

aside the order passed under Section 45A of the Act. Contrarily, the

ESI Court factually considered the materials available on record and

granted exclusion in respect of Service Engineers and thereafter

imposed a contribution payable as Rs.7,566/- and allowed the

appeal in-part. Therefore, the facts and circumstances were

completely taken care of and the ESI Court adjudicated the issues in

right perspective and there is no infirmity as such.

14. In view of the above, this Court is not inclined to interfere

with the order impugned and, accordingly, the order dated

13.07.2015 passed in E.I.O.P.No. 30 of 2005 stands confirmed and

the Civil Miscellaneous Appeal is dismissed. No costs. Consequently,

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C.M.A.No. 1676 of 2018

connected C.M.P.Nos. 9445 and 13160 of 2018 are closed.

02.03.2021

Index: Yes ssm

Copy to:

(1) The Regional Director, ESI Corporation, No.134, Sterling Road, Nungambakkam, Chennai - 600 034.

(2) The Presiding Officer, Principal Labour Court, Chennai.

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C.M.A.No. 1676 of 2018

S.M.SUBRAMANIAM, J.

(ssm)

C.M.A.No. 1676 of 2018

02.03.2021

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