Madras High Court
The Employees State Insurance ... vs Tuticorin Permanent Fund Ltd on 24 April, 2023
C.M.A.(MD).No.200 of 2009
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED : 24.04.2023
CORAM:
THE HONOURABLE MR.JUSTICE R.VIJAYAKUMAR
C.M.A(MD)No.200 of 2009
The Employees State Insurance Corporation,
Represented by the Joint Director,
Sub Regional Office,
Madurai – 20. .....Appellant/ Respondent
-vs-
Tuticorin Permanent Fund Ltd.,
Through its Manager,
Having Office at
160, Sivankoil Street,
Tuticorin – 628 002. .... Respondent /Petitioner
PRAYER: Civil Miscellaneous Appeal filed under Section 82 of the
E.S.I.Act, 1948, against the Fair order and Ex-order, dated 18.08.2008 on the
file of the Labour Court (Employees' Insurance Court) Tirunelveli made in
M.C.O.P.No.11 of 2005.
For Appellant : Mr.R.Ravindran
For Respondent : Mr.M.P.Senthil
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C.M.A.(MD).No.200 of 2009
JUDGMENT
The present Civil Miscellaneous Appeal has been filed by the
Employees' State Insurance Corporation challenging the order passed by the
Employees' State Insurance Court (E.S.I.Court), Tirunelveli, wherein a show
cause notice issued by the E.S.I. Corporation for initiating proceedings under
Section 45-A of the E.S.I.Act was set aside.
2. According to the respondent, they are running a Nidhi Company,
which is not covered under the Notification issued by the Government of
Tamil Nadu in G.O.M.S.No.287, (Labour and Employment), dated
03.04.1976. Since the Nidhi Company is not a shop, the show cause notice
issued under Section 45-A of the E.S.I.Act, is without jurisdiction.
3. The learned counsel appearing for the Appellant/E.S.I. Corporation
had contended that where an ordinary occupation was carried on in a
systematic economic and commercial activity, that will be sufficient to bring
the place within the sphere of E.S.I.Act. However, the E.S.I Court, had
proceeded to hold that the Nidhi Company is not covered under the order
issued by the Government of Tamil Nadu and allowed the E.S.I.O.P.No.11 of
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C.M.A.(MD).No.200 of 2009
2005 filed by the respondent herein. Challenging the same, the E.S.I.
Corporation has filed by the present appeal.
4. The learned counsel appearing for the appellant contended that any
financial intuition, which is carrying on any commercial activity considered
to be a shop or establishment under the Act and E.S.I Act is applicable to the
said institution. The E.S.I. Court had erroneously allowed the appeal without
properly appreciating the object of the E.S.I.Act. The learned counsel
appearing for the appellant had also relied upon the judgment of the Hon'ble
Division Bench of our High Court reported in 1996 (2) LLN 1216 (Mad)
(Madras Government Servant Co-operative Society Ltd., Madras Vs.
Employees' State Insurance Corporation, Madras) and judgment of the
Hon'ble Supreme Court reported in 2001 (1) LLN 55 (SC) (Kirloskar
Consultants Ltd., Vs. Employees State Insurance Corporation) to contend
that the Nidhi Company can also be considered as shop for the purpose of
coverage under the E.S.I. Act. He further contended that no orders have been
passed under Section 45-A of the Act. Therefore the present petition filed
before the E.S.I Court, for declaring that the Act is not applicable to the
petitioner Nidhi Company is not at all maintainable and such a petition ought
not to have been entertained by the E.S.I. Court.
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C.M.A.(MD).No.200 of 2009
5. Per contra, the learned counsel appearing for the appellant had
contended that the factories and the industries are directly covered under the
E.S.I.Act. As far as the shops and establishments are concerned, a separate
notification is required under Section 1(5) of the E.S.I. Act. The Government
of Tamil Nadu has issued such a notification, on 03.04.1976. On a perusal of
the said notification, only Hotels, Restaurants, Shops, Cinemas, including
theatres, Motor Transport undertakings, and Newspaper establishments are
covered under the E.S.I.Act. Therefore, Nidhi Company having not been
specifically mentioned in the said Government Order, it should have been
treated as excluded. Therefore, the prayer sought for in the E.S.I.O.P is legally
maintainable and the order passed by the E.S.I. Court may be sustainable.
6. I have carefully considered the submissions made by the learned
counsel on either side.
7. The E.S.I. Corporation has conducted an inspection, on 20.08.1999
and thereafter, had issued a notice on 06.09.1999. When the reply issued by
the respondent Nidhi Company was not satisfactory, a show cause notice was
issued by the Corporation on 10.11.2000 calling upon the respondent to show
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C.M.A.(MD).No.200 of 2009
cause as to why the proceedings under Section 45-A of the Act cannot be
invoked. Thereafter, the present E.S.I.O.P.No.11 of 2005 has been filed by the
Nidhi Company for a declaration that the Act is not applicable. Without filing
any reply or any explanation to the notice issued by the E.S.I. Corporation,
straight away E.S.I.O.P No.11 of 2005 has been filed by the respondent
herein.
8. It is the contention of the Corporation that the Nidhi Company would
also fall within the definition of “shop”. On the other hand, it is the
contention of the Nidhi Company that the financial institution can never be
considered as the shop. Therefore, this issue has to be raised first before the
Corporation and in case, if any, adverse orders are passed by the Corporation,
the respondent Nidhi Company is entitled to approach the E.S.I. Court, under
Section 75 (1)(g) of the ESI Act. In the present case, without filing any reply
or offering any explanation, straight away petition has been filed before the
ESI Court seeking for declaration, that this Act is not applicable.
9. In view of the above said facts, this Court is of the view that the
prayer sought for in the petition before the Labour Court, Tirunelveli is not
maintainable. Therefore, the order passed by the labour Court in E.S.I.O.P.No.
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C.M.A.(MD).No.200 of 2009
11 of 2005 is hereby set aside. The respondent Nidhi Company is at liberty to
file an explanation before the ESI Corporation within a period of four weeks
from the date of receipt of a copy of this order. After receiving the
explanation and after affording personal hearing to the Nidhi Company, the
ESI Corporation is at liberty to proceed further and pass orders on merits and
in accordance with law. Since the matter is being remitted back to the E.S.I.
Corporation, the questions of law are left open.
10. With the above said observations, this Civil Miscellaneous Appeal
stands allowed. There shall be no order as to costs.
24.04.2023
NCC : Yes/No
Index : Yes / No
Internet : Yes / No
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C.M.A.(MD).No.200 of 2009
To
1. The Labour Court,
(Employees' Insurance Court),
Tirunelveli.
2. Tuticorin Permanent Fund Ltd.,
Through its Manager,
Having Office at
160, Sivankoil Street,
Tuticorin – 628 002.
3. The Section Officer,
Vernacular Records,
Madurai Bench of Madras High Court,
Madurai.
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C.M.A.(MD).No.200 of 2009
R.VIJAYAKUMAR,J.
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C.M.A.(MD)No.200 of 2009
24.04.2023
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