Madras High Court

M/S. Welcord Component ... vs The Regional Director on 26 October, 2021

                                                                           C.M.A.No.2144 of 2021

                                   IN THE HIGH COURT OF JUDICATURE AT MADRAS

                                                DATED : 26.10.2021

                                                      CORAM:

                                   THE HONOURABLE MR.JUSTICE ABDUL QUDDHOSE

                                             C.M.A. No. 2144 of 2021 and
                                              C.M.P. No. 11827 of 2021

                     1. M/s. Welcord Component Industries
                        Rep by its Partner: Prasanna Bhutoria
                        B-8, PIPDIC Industrial Estate,
                        Mettupalayam,
                        Puducherry - 9.

                     2. Prasanna Bhutoria
                                                                                  ... Appellants
                                                         Vs
                     1. The Regional Director,
                        Employees' State Insurance Corporation,
                        Puducherry.                                              ... Respondent

                     Prayer: Civil Miscellaneous Appeal filed under Section 82 (2) of the E.S.I.
                     Act, 1948, to answer the “substantial questions of law” in favour of the
                     appellant and consequently allow the present Civil Miscellaneous Appeals
                     by setting aside the Order made in E.S.I.O.P.No.02/2016 dated 30.03.2021
                     passed by the Court of the Employees State Insurance (Industrial Tribunal
                     cum Labour Court), Puducherry.

                     1/11



https://www.mhc.tn.gov.in/judis/
                                                                           C.M.A.No.2144 of 2021



                                   For Appellants           : Mr. M.A.Mudimannan
                                   For Respondent           : Mr. T.N.C. Kausik,
                                                              ESIC

                                                    JUDGMENT

The appeal has been filed by the appellant, challenging the

impugned order dated 30.03.2021 passed by the Employees State Insurance

(Industrial Tribunal cum Labour Court), Puducherry in E.S.I.O.P.

No.02/2016 on the primary ground that the appellant was not given

sufficient opportunity to produce all the records/documents to prove that

they are not liable to pay the ESI contribution as demanded by the

respondent Corporation under Section 45- A of the Employees State

Insurance Act, 1948.

2. According to them, without any basis and purely on

presumption, the appellant has been directed to pay a sum of Rs.31,51,932/-

(Rupees Thirty One Lakh Fifty One Thousand Nine Hundred and Thirty

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Two only) as ESI contribution for their employees under the Order dated

30.10.2015, passed by the respondent Corporation under Section 45-A of

the E.S.I. Act, 1948.

3. According to them, under Section 45-A of the E.S.I. Act,

1948 proceedings were not in progress, the relevant documents in support

of their case were not in their possession as the same was seized by the

Central Excise Authorities and therefore they could not produce the same to

the respondent. The learned Counsel for the appellant would submit that all

the relevant documents are now available with the appellant and if the

matter is remanded back to the Original Authority, the appellant will be able

to prove their case that they are not liable to pay the ESI contribution as

demanded under the order dated 30.10.2015 passed by the Original

Authority under Section 45-A of the E.S.I. Act, 1948.

4. Learned counsel for the appellant also drew the attention of

this Court to the order darted 30.10.2015 passed by the Original Authority

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under Section 45-A of the E.S.I. Act, 1948 and would submit that only

based on the presumptions and conjecture, the Original Authority has passed

the said order, demanding a sum of Rs.31,51,932/- from the appellant

towards ESI contribution.

5. This appeal is admitted on the following substantial

questions of law:

a) Whether in the facts and circumstances of the case, the Tribunal is right in accepting the evidence given by the witness at the time of cross examination which is contrary to real facts and opposed to the details culled out by the officers at the time of inspection as mentioned in the Visit Note dated 26.11.2014 in the annexure?

b) Whether determination of ESI contribution can be made without any positive documentary evidence like seizure of Attendance Register, wage register or any other document to prove suppression of the details by the appellant?

c) Whether the lower authority or the Tribunal can

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determine the liability merely based on assumptions and surmises without concrete proof?”

6. As seen from the impugned order passed by the ESI Court on

30.03.2021 as well as by the Original Authority dated 31.10.2015 passed

under Section 45-A of the E.S.I. Act, 1948, the ESI contribution amounting

to Rs.31,51,932/- has been determined not based on any documentary

evidence, but based only on presumption. Since the appellant is now willing

to produce all the relevant documents in support of their contentions that

they are not liable to pay the determined ESI contribution, one more

opportunity must be given to them to produce all the relevant documents in

support of their contention that they are not liable to pay the demanded ESI

contribution as per the order dated 30.10.2015 passed under Section 45-A of

the ESI Act, 1948.

7. This Court also perused and examined the order dated

30.10.2015 passed under Section 45-A of the E.S.I. Act, 1948 and also the

impugned order dated 30.03.2021 passed by the ESI Court.

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As seen from the said orders, it is clear that the ESI

contribution has been determined based on presumption. The relevant

paragraphs of the order dated 30.10.2015 passed by the Original Authority

under Section 45-A of the E.S.I. Act, 1948 reads as follows:-

(h) This surprise inspection was followed by

detailed inspection on 18.11.2014, 19.11.2014 and

26.11.2014. On all these dates the employer failed

to produce general ledgers and connected

vouchers, connected records for the verification by

the Social Security Officers. Instead the employer

submitted audited balance sheet, profit and loss

accounts for the period 2009-10 to 2012-13. The

Social Security Officers computed the omissions

on account of difference in salary/wages as

mentioned below:

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Sl.No Year Amount 1 2010-11 4,61,220/-

                                              2           2011-12         3,07,266/-
                                              3           2012-13         1,26,807/-

8. The period upto 30.09.2010 is time barred under

the provision to Section 45-A of the ESI Act,

1948. The determination has given below:

                                           Period          Contribution          Basis for
                                                            determined          Calculation
                                   10/2010 to 08/2011    76,684.00          13x11x8250x6.5%
                                   09/2010 to 10/2014    31,17,758.00       153x38x8250x6.5
                                                                            %
                                   Total    Contribution 31,94,442.00
                                   Determined

8. The ESI Court under the impugned order dated 30.03.2021,

has also confirmed the order dated 30.10.2015 passed by the Original

Authority under Section 45-A of the E.S.I. Act, 1948. Admittedly, on the

date of the inspection as well as on the date of the order dated 30.10.2015

passed under Section 45-A of the E.S.I. Act, 1948, the appellant was not in

https://www.mhc.tn.gov.in/judis/ C.M.A.No.2144 of 2021

possession of the relevant documents as the same was seized by the Central

Excise Authorities.

9. As seen from the impugned orders, only based on the

presumption, the determination of ESI contribution, payable by the

appellant, has been done. Since the learned counsel for the appellant has

submitted before this Court that the appellant is now in possession of all the

relevant documents in support of their contention that they are not liable to

pay the determined ESI contribution, this Court is of the considered view

that the matter may be remitted back to the Original Authority for fresh

consideration on merits and in accordance with law after affording a fair

opportunity of hearing to both the parties and after permitting the appellant

to produce all the relevant records and documents in support of their

contention that they are not liable to pay ESI contribution as demanded by

the respondent Corporation.

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10. For the foregoing reasons, the substantial questions of law

formulated by this Court is answered in the following manner:-

a) The impugned order dated 30.10.2015 passed by

the Original Authority under Section 45-A of the

E.S.I. Act, 1948 as well as the impugned order

dated 30.03.2021 passed by the ESI Court in

E.S.I.O.P.No.02/2016 are hereby set aside and the

matter is remanded back to the Original Authority

viz., the Regional Director, Employees' State

Insurance Corporation, Puducherry for fresh

consideration on merits and in accordance with law.

(b) The Original Authority is directed to afford a

fair hearing to both the parties and also permit the

appellant to produce all the relevant

records/documents in support of their contention

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that they are not liable to pay the ESI contribution

and pass final orders on merits and in accordance

with law within a period of four months from the

date of receipt of a copy of this order.

12. With the above directions, this Civil Miscellaneous Appeal

is disposed of. No costs. Consequently, the connected miscellaneous

petition is closed.