M/S.Mayur Stones vs Employees State Insurance ...
2023 Latest Caselaw 7132 Mad

                                                                                    C.M.A.(MD)No.846 of 2021


                             BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT

                                                  DATED : 27.06.2023

                                                         CORAM:

                                  THE HONOURABLE MR.JUSTICE N.SATHISH KUMAR

                                               C.M.A.(MD)No.846 of 2021
                                                         and
                                               C.M.P.(MD)No.7858 of 2021

                M/s.Mayur Stones,
                (Formerly Known as Madura Stones),
                Rep.by its Proprietor S.Shailesh,
                118/2, Sivagangai Main Road,
                Varichiyur, Madurai District.                               ...Appellant/Petitioner

                                                          Vs.

                Employees State Insurance Corporation,
                Sub-Regional Office
                4th Main Road,
                K.K.Nagar, Madurai-625 020,
                represented by its Assistant Director.               ...Respondent/Respondent


                PRAYER: This Civil Miscellaneous Appeal is filed under Section 82 of the ESI
                Act, 1948, to set aside the order and decree dated 23.07.2021 made in
                E.S.I.O.P.No.75 of 2009 on the file of the ESI Court (Labour Court), Madurai.


                                        For Appellant    : Mr.M.Elanchezhian
                                        For Respondent   : Mr.I.Pinaygash



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https://www.mhc.tn.gov.in/judis
                                                                                        C.M.A.(MD)No.846 of 2021




                                                          JUDGMENT

Challenge has been made to the order passed by the ESI Court in

E.S.I.O.P.No.75 of 2009, dated 23.07.2021.

2.For the sake of convenience, the parties are referred to herein, as per

their rank before the Trial Court.

3.The brief facts, leading to the filing of this Civil Miscellaneous

Appeal, are as follows:-

(i)The appellant is the tiny unit manufacturing granites from raw stones

in the name and style of Madura Stones now changes as Mayur Stones. An order

under Section 45-A of the Employees State Insurance Act, 1948 (hereinafter

referred to as 'the Act' for the sake of brevity), has been passed fixing the

contribution value of Rs.1,38,164/- for the period from 12.06.2007 to 03.07. 2008

as per the Act. The said order has been challenged before the ESI Court, mainly

on the ground that the contribution is not payable to 11 employees, since they

come under the category of exempted employee. According to the petitioner,

https://www.mhc.tn.gov.in/judis C.M.A.(MD)No.846 of 2021

those employees have been receiving more than Rs.10,000/- as salary. Therefore,

they will not come under the purview of the Act. However, the ESI Court did not

agree with the appellant's submission and rejected the petition. Challenging the

same, the present appeal is filed.

4.The learned counsel for the appellant contended that as per Section

2 (9)(iii)(b) of the Act, any person so employed, whose wages exceed Rs.10,000/-

at the relevant point time, may not come within the definition of the employee.

According to him, as per the Central Rule, 1950 for the period of 2006-2008, the

amount of Rs.10,000/- per month has been fixed as wage to the employees.

Therefore, any amount paid over the said amount, cannot be brought under the

purview of the Act to seek contribution.

5.He further contended that during inspection, the Inspector had verified

all the documents and found that 11 employees were receiving the salary of more

than Rs.10,000/-. When the inspection report indicates that all the documents

have been verified, the question of directing the petitioner to produce the salary

register and other documents once again, does not arise at all. The original

authority ignored the inspection report and passed the order on the basis of total

https://www.mhc.tn.gov.in/judis C.M.A.(MD)No.846 of 2021

wages that has been paid to the employees. Even assuming that the salary register

has not been established, the contribution at the most would be calculated only to

a sum of Rs.9,90,000/-, whereas, towards the total salary of Rs.21,25,600/- the

contribution amount is calculated.

6.The learned counsel for the respondent submitted that the petitioner

has failed to prove that the employees were paid a sum of Rs.11,000/- by

producing relevant materials. The petitioner paid the said salary only through

vouchers in order to evade from contribution under the Act. Hence, the

assessment and the order of the ESI Court is valid and legally sustainable.

7.In view of the above submission, now the points arise for consideration

in this appeal are:

(1) Whether the findings of the Court below is sustainable in law by

affirming the order passed by the respondent under Section 45A of the ESI Act,

1948 when the employees have been exempted as per Section 2(9)(iii)(b) of the

ESI Act?

https://www.mhc.tn.gov.in/judis C.M.A.(MD)No.846 of 2021

(2)Whether the findings of the Court below is sustainable in law

holding that the appellant is liable to pay to its 11 employees whose wages /

salary are more than Rs.10,000/- per month when the same falls under the

exempted wages category as per Rule 50 of Employees' State Insurance

(Central) Rules, 1950?

(3)Whether the act of the respondent herein in determining the

contribution of the employees' wages /salaries which were more than

Rs.10,000/- per month at the relevant point of time is correct when the Act

debars the same?

8.Heard the learned counsel appearing on either side and perused the

materials placed on record.

9.Challenge has been made as against the order passed under Section

45-A of the Act directing the appellant to pay the contribution on 11 employees.

The main contention of the learned counsel for the appellant is that the said 11

employees fall under the category of exempted employee and they will not fall

within the ambit definition of employee as per Section 2(9)(iii)(b) of the Act, since

https://www.mhc.tn.gov.in/judis C.M.A.(MD)No.846 of 2021

their wages exceed Rs.10,000/-. According to the appellant, the inspection report

also clearly shows that 11 employees are receiving more than Rs.10,000/- per

month as salary.

10.Perusal of the entire inspection report shows that though the Inspector

had verified certain documents i.e., ledgers and vouchers, and recorded as if 11

employees were receiving more than Rs.10,000/- as wage at the relevant point of

time, the fact remains that the Inspecting Authority has not accepted the same as

final. In fact, he had raised a doubt regarding payment of wages to the employees,

as there was no pan cards of the said employees whatsoever available. Even

though the appellant was given an opportunity of personal hearing to produce

documents to substantiate the claim that 11 employees come under the exempted

category, the appellant has not produced any documents. Hence, the Original

Authority has passed the order under Section 45-A of the Act directing the

appellant to pay the contribution of Rs.1,38,164/-, which was arrived on the basis

of the total salary of Rs.21,25,600/- paid by the appellant. The said order was

confirmed by the ESI Court.

https://www.mhc.tn.gov.in/judis C.M.A.(MD)No.846 of 2021

11.It is relevant to note that the person seeking specific exemption or the

benefit of legislation, has to show that proper salary has been paid and relevant

records have been maintained. Despite an opportunity of personal hearing was

given to the appellant by the Original Authority, no documents, particularly wage

register, whatsoever were seen the light of the day. Even before the ESI Court, no

documents have been produced. Therefore, merely on the basis of the voucher and

certain some other documents said to have been verified by the Inspecting

Authorities, it cannot be concluded that the employees have actually received

more than Rs.10,000/- as wages at the relevant point of time.

12.The person seeking exemption provided under law, has to satisfy the

Court by producing relevant records. Without producing any relevant materials,

merely on the basis of the inspection report, the appellant as a matter of right,

cannot seek exemption. When the legislature grants exemption, to avail such

exemption proper records should be maintained and produced. Being a factory, it

is incumbent upon the appellant to maintain wage register. But, the wage register

has not been produced before the ESI Court or the original authorities to

substantiate the submission of the appellant. Therefore, merely on the basis of the

https://www.mhc.tn.gov.in/judis C.M.A.(MD)No.846 of 2021

inspection report, this Court is unable to countenance the contentions of the

appellant.

13.At this juncture, the learned counsel for the appellant submitted that

contribution has been calculated on the basis of the total salary of Rs.21,25,600/-,

which is not valid in the eye of law. Even assuming that the appellant is not

entitled to seek exemption, the contribution has to be paid only to a sum of

Rs.10,000/- and not beyond that. But the contribution amount has been calculated

to the entire salary.

14.With regard to the above submission, the learned counsel for the

respondent fairly submitted that there is some differences in the calculation.

According to the learned counsel for the respondent, only a sum of Rs.1,14,400/-

alone would be the contribution, whereas the order of the original authority

reflects that a sum of Rs.1,38,164/- has to be paid by the appellant as contribution.

15.Recording the submission made by the learned counsel on either side,

the appellant is directed to pay a sum of Rs.1,14,400/- (Rupees One Lakh Fourteen

Thousand and Four Hundred only) as contribution with applicable interest as per

https://www.mhc.tn.gov.in/judis C.M.A.(MD)No.846 of 2021

law within a period of fifteen days from the date of receipt of a copy of this

judgment. If the contribution amount has already been deposited by the appellant,

that would be adjusted and the remaining amount should be paid either to the

appellant or by the appellant within a period of one month from the date of receipt

of a copy of this judgment.

16.In the result, the Civil Miscellaneous Appeal is partly allowed. No

costs. Consequently, connected miscellaneous petition is closed.

27.06.2023 NCC : Yes/No Index : Yes/No Internet : Yes/No ta To

1.The ESI Court (Labour Court), Madurai.

2.The Assistant Director, The Employees State Insurance Corporation, Sub-Regional Office 4th Main Road, K.K.Nagar, Madurai-625 020,

3.The Section Officer, Vernacular Records, Madurai Bench of Madras High Court, Madurai.

https://www.mhc.tn.gov.in/judis C.M.A.(MD)No.846 of 2021

N.SATHISH KUMAR, J.

ta

C.M.A.(MD)No.846 of 2021

27.06.2023

https://www.mhc.tn.gov.in/judis