Madras High Court
Employees State Insurance Corporation vs M/S.J.J.Traders on 4 June, 2024
Author: G.Ilangovan
Bench: G.Ilangovan
CMA.(MD)No.423 of 2021
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
Dated: 04/06/2024
CORAM
The Hon'ble Mr.Justice G.ILANGOVAN
CMA(MD)No.423 of 2021
Employees State Insurance Corporation,
Sub Regional Office,
4th Main Road, K.K.Nagar,
Madurai-20
Rep. by its Assistant Director : Appellant/Respondent
Vs.
M/s.J.J.Traders,
7, Parayan Malai Road,
Tirupparankundram,
Madurai-625 005 : Respondent/Petitioner
PRAYER:- Civil Miscellaneous Appeal is filed under
section 82(2) of the ESI Act, 1948 to set aside the order
passed in ESIOP No.87 of 2009, dated 10/11/2020 on the
file of the ESI Court (Labour Court), Madurai.
For Appellant : Mr.R.Ravikumar
For Respondent : Mr.K.Hema Karthikeyan
J U D G M E N T
This Civil Miscellaneous Appeal is filed seeking an
order to set aside the order passed in ESIOP No.87 of
2009, dated 10/11/2020 by the ESI Court (Labour Court),
Madurai.
https://www.mhc.tn.gov.in/judis
2.The facts in brief:-
The respondent Company is a Factory covered under
the provisions of the ESI Corporation Act. It was
inspected by the Inspector of Corporation to verify the
compliance of the provisions. Records were verified and
found that a sum of Rs.7,38,738/- shown as excess wages
paid during the year 2004 to 2006. It was noted that
those persons are coming under the category of 'exempted
employees'. On suspicion, notice was issued in Form C-18,
dated 20/08/2009. Hearing was held on 04/09/2009.
Documents were produced by the respondent's Company.
Finding that those documents are not reliable, the
objections were negatived and by order, dated 18/11/2009
under section 45(A) of the Act directed the respondent
herein to pay the contribution amount of Rs.48,018/- from
the year 2004 to 2008.
3.Aggrieved over the order, the subject petition was
filed by the respondent Company before the Labour Court,
Madurai in ESIOP No.87 of 2009 stating that the order was
passed by the present appellant Corporation without
making proper verification of the records. Copy of the
report, dated 20/07/2004 was furnished to the respondent,
inspection report dated 24/07/2019 is not relied on, but
the report dated 20/07/2004. In the factory, two
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employees were working as permanent employees. Other
employees are only doing supporting work. In the report
itself, it is admitted by the Inspecting official that
the respondent Factory is having exempted employees. On
these grounds, the petition was filed seeking an order to
set aside the order passed under section 45(A) of the
Act.
4.Before the Labour Court, on the side of the
petitioner, their official was examined as PW1 12
documents marked. On the side of the respondent namely
the appellant herein, one witness was examined and 4
documents were marked.
5.After hearing both sides, at the conclusion of the
enquiry, an order was passed setting aside the order of
the ESI Corporation, dated 18/01/2009.
6.Against which, this Civil Miscellaneous Appeal is
preferred by the appellant Corporation,
7.Heard both sides.
8.The learned counsel appearing for the appellant
would submit that TDS amount was not deducted; and the IT
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ceiling slab of the relevant period was not considered.
According to him, without examining the documents and
evidence properly, ESI Court has allowed the petition.
9.Per contra, the learned counsel appearing for the
respondent would submit that the Factory accounts were
properly audited and the auditing reports were submitted;
the beneficiaries were not examined on the side of the
appellant before the Labour Court. So according to him,
without examining the beneficiaries, the order passed by
the appellant is not legal. On that ground only, the
Labour Court allowed the petition, which requires no
interference at the hands of this court.
10.Now let us go to the order passed by the Sub
Regional Officer (Madurai), ESI Corporation under section
45(A) of the ESI Act, 1948.
11.In pursuance of the notice issued by the
competent authority, the representative of the respondent
enterprises was present, produced the wage register from
July 2004 to August 2006, wages records in the form of
computer sheet from September 2006 to May 2009, Income
Tax Assessment order and balance sheet, ledger and cash
book, returns in Form No.22, Form A, Form No.21 and Wages
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records for the month of July 2004; Apart from that
licence was also produced.
12.The main defects pointed by the Authority are,
not producing Income Tax PAN of exempted employees. It
was submitted by the Company that two employees were
drawn salary upto Rs.500/- per day. There was no income
tax assessment and PAN for them. After perusing the
records, the competent authority recorded a finding that
the Inspector noticed the employment of 10 employees
drawn salary of less than Rs.7,500/- per month. Very low
amount was paid towards contribution viz., Rs.35/- per
day. So the competent authority doubted the correct
contribution stating that it is highly improper and
practically not possible to get the workers at such a low
rate of wages considering the activity undertaken in the
company. So it doubted the genuineness of the documents
produced. The documents produced were also defective. It
is also recorded a finding that the Register was
maintained only for the purpose of avoiding contribution.
Apart from that, various reasons were also mentioned in
the order. The competent authority decided that to avoid
the contribution only, such defective records were
maintained or unwanted records were produced.
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13.The Labour Court also recorded a finding that the
doubt raised by the competent authority is not well
founded. In the absence of examination of the
beneficiaries, the conclusion reached by the competent
authority is not legal. If really the records were not
genuine, the competent authority would have proceeded
against the Company under section 84 of the Act.
14.From the above said narration of factual grounds,
now the question, which arises for consideration is
whether the record of finding by the competent authority
is legally sustainable.
15.How the assessment must be made, we can make a
reference to the judgment of the Hon'ble Supreme Court in
E.S.I.C vs C.C. Santhakumar (2007(1)SCC 584). Wherein, it
has been held that best assessment method can be adopted
by the competent authority, when there is non-cooperation
from the establishment. But here, nothing has been stated
by the appellant that there was no cooperation on the
side of the respondent herein. So, it is not a case of
non cooperation.
16.Reading of the order of the competent authority
shows that it is only a subjective satisfaction of the
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authority not based upon the objective reasonings.
Doubting the records produced by the Establishment
without proper reason, may not be proper. That is why,
the Labour Judge has made a comment that there was no
reason for the competent authority to doubt the
documents. They ought to have undertaken the exercise of
summoning the beneficiaries and examine them. Without the
possible direct evidence, mere subjective satisfaction is
not enough to discard the documents produced. More
importantly, as pointed out by the Labour court, absence
of steps taken by the appellant Corporation under section
84 of the ESI Act also renders the subjective
satisfaction recorded by the competent authority,
invalid.
17.No doubt that it is an administrative order. Even
though, the Labour Court order is not subjected to
judicial review, but the process of reasoning is subject
to judicial review and anything from found fault, then
the ultimate order itself is liable to be interfered.
That is why, it has been pointed out by the Hon'ble
Supreme Court in the above said judgment that only in
case of non-cooperation of the Establishment, best
assessment method can be adopted.
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18.Here, it is not the case of non cooperation. But
the competent authority has adopted the best assessment
method, in spite of the fact that the documents were
produced. It is very easy to doubt the genuineness of the
documents. But it must be supported by reasoning and
evidence. Absolutely, nothing is available like that in
that matter.
19.For all the reasons, I find that the order passed
by the Labour Court requires no interference.
20.In the result, this Civil Miscellaneous Appeal is
dismissed. No costs.
04/06/2024
Index:Yes/No
Internet:Yes/No
er
To,
1.The ESI Court (Labour Court),
Madurai.
2.The Section Officer,
VR/ER Section,
Madurai Bench of Madras High Court,
Madurai.
https://www.mhc.tn.gov.in/judis
G.ILANGOVAN, J
er
04/06/2024
https://www.mhc.tn.gov.in/judis
