Madras High Court
Tamil Nadu State Marketing Corporation ... vs Employee State Insurance Corporation on 18 October, 2024
Author: S.S.Sundar
Bench: S.S. Sundar
WA.No.1906/2010
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 18.10.2024
CORAM :
THE HONOURABLE MR. JUSTICE S.S. SUNDAR
AND
THE HONOURABLE DR. JUSTICE A.D.MARIA CLETE
WA.No.1906/2010
Tamil Nadu State Marketing Corporation Ltd
rep.by its Managing Director, CMDA Towers,
IV Floor, Gandhi Irwin Bridge Road
Egmore, Chennai 600 008. ... Appellant
Vs.
1.Employee State Insurance Corporation
rep.by its Regional Director, Tamil Nadu Region
No.143, Sterling Road, Chennai 600 034.
2.The Recovery Officer
Employee State Insurance Corporation
Tamil Nadu Region
No.143, Sterling Road, Chennai 600 034.
3.Vijaya Bank
Egmore Branch
rep.by Assistant General Manager
No.123, Marshalls Road
Egmore, Chennai 600 008.
1
https://www.mhc.tn.gov.in/judis
WA.No.1906/2010
4.TASMAC Employees Union
rep.by P.S.Soundarapandian
Roo, No.204, Madurai Mansion
Masoodhi Street, Chepauk,
Chennai 600 005. ... Respondents
**R4 impleaded vide order dated 30.03.2011
made in MP.No.1/2022 in WA.No.1906/2010
Prayer : Writ Appeal filed under Clause 15 of Letters Patent against the
order dated 02.07.2010 made in WP.No.4510/2006.
For Appellant : Mr.J.Ravindran, AAG assisted by
Mr.K.Sathishkumar
For RR1&2 : M/s.G.Narmadha for
Mr.G.Bharadwaj
For R3 : No appearance
For R4 : Mr.M.Padmanabhan
JUDGMENT
[Judgment of the Court was delivered by S.S.SUNDAR, J.,]
(1)This appeal is directed against the order of the learned Single Judge dated
02.07.2010 made in WP.No.4510/2006, filed by the 3rd respondent herein
for issuance of a writ of certiorari to quash the order passed by the 2 nd
respondent/Recovery Officer dated 13.02.2006.
(2)The order impugned in the writ petition is in the nature of a garnishee
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order passed under Section 45-G of the Employees' State Insurance Act,
1948. The appellant herein, namely, M/s.TASMAC, is the 3 rd respondent
in the writ petition.
(3)Even though respondents 1 and 2 in the writ petition filed a counter
affidavit contending that the State Government has granted exemption
under Section 91 of the ESI Act, to the 3rd respondent, namely the
appellant herein, the learned Single Judge disposed of the writ petition
after holding that G.O.[D].No.9, Labour and Employment Department
dated 09.01.2006 is not valid as the consent of the ESI Corporation was
not obtained before granting any exemption which is a statutory
requirement before granting exemption. Considering the objection raised
by respondents 1 and 2 in the counter affidavit, the writ petition was
disposed of with liberty given to the appellant herein to approach the 1 st
respondent for exemption. A further direction was issued to the writ
petitioner to remit the amount payable by the appellant herein with
interest accrued thereon to the 2nd respondent herein. Challenging the
order of the learned Single Judge, the above writ appeal is preferred by the
3rd respondent in the writ petition/TASMAC.
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(4)Mr.J.Ravindran, learned Additional Advocate General appearing for the
appellant submitted that the issue has already been decided earlier by a
learned Single Judge of this Court in a batch of appeals in CMA.No.790
to 795/2008 dated 06.08.2008 [TASMAC Limited rep.by its General
Manager [Finance], Egmore, Chennai-8 Vs. The Regional Director,
ESI Corporation, 143, Sterling Road, Nungambakkam, Chennai and
Another] . It is now admitted that for the period from 25.11.2003 to
30.09.2006, the 2nd respondent herein issued individual show cause
notices under ESI Act under Form C-18 to the appellant demanding the
amount due from the appellant towards ESI contribution for different
periods. Challenging the independent show cause notices, applications
were filed before the ESI Court [Labour Court]. An interim direction was
issued by the ESI Court for depositing 50% of the dues. It is seen that
during pendency of the proceedings, 50% of the amount was directed to
be deposited by way of pre-deposit pending adjudication before ESI
Court. The appellant complied with the requirement of Section 75 [2-B]
of the Act by depositing 50% of the amount demanded.
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(5)It was at that time, the State Government passed a Government Order
vide G.O.[D].No.9, Labour and Employment [L1] Department dated
09.01.2006 granting exemption to the appellant from the provisions of
ESI Act. On the basis of the Government Order, the EIOPs filed by the
appellants were dismissed as infructuous. However, the Labour Court
[Employees' Insurance Court Principal Labour Court] permitted the ESI
Corporation to withdraw the contribution already deposited by the
appellant herein before the Labour Court by way of pre-deposit [i.e., 50%
of the amount demanded by way of ESI contribution]. As against that
portion of the order permitting the ESI Corporation to withdraw the
amount deposited by the appellant before ESI Court, a batch of Civil
Miscellaneous Appeals in CMA.Nos.790 to 795/2008 were filed.
(6)A learned Single Judge of this Court, vide common judgment dated
06.08.2008, taking note of the exemption granted vide G.O.[D].No.9,
dated 09.01.2006, passed the following order:-
''9.The fact that the appellant Corporation has
been exempted from the payment of contribution to the
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ESI Court in terms of G.O.[D].No.9 of the ESI Act and
that too retrospectively in terms of Section 91-A is not
disputed. The fact that the deposit in this case has
been made in terms of Section 75[2B] is also not in
dispute. The amount was deposited before the
Employees' Insurance Court, Principal Labour Court,
and it remains as deposit as the case is not disposed
of finally till the G.O., as above was issued. It is
therefore apparent that the payment was not made to
the respondent Corporation but only to the Court.
The department did not take step for withdrawal of the
amount, prior to the issuance of the G.O. The deposit
remained with the Court and after the G.O. was issued
on 09.01.2006, the Court proceedings concluded
stating that the entire issue became infructuous
consequent to G.O.[D].No.9, Labour and Employment
[L1] Department dated 09.01.2006. In such a factual
situation, the Employees Insurance Court, Principal
Labour Court, is not entitled to treat the deposit made
in terms of Section 75[2-B] as a contribute, paid to
the Department. It remains only as a pre-deposit to
the Court and therefore, the question of allowing the
respondent Corporation to withdraw the amount does
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not arise.
10.The Courts including the Apex Court have
held in several cases that pre-deposit made as a pre-
condition for hearing an appeal or petition remain as
a deposit pending adjudication of the issue before the
Tribunal of Court as the case may be. It is in the
nature of a payment under protest and the Department
concerned cannot as a matter of right claim the
amount without a legal right to recover the amount.
The respondent Department in this case does not have
a legal basis for withdrawal of the pre-deposit as a
matter of right unless it is able to establish the legal
authority to claim the amount.
See:-[1]1996 [83] ELT 29 All[DB] – K.S.Steel
Works Vs. UOI.
[2]1996 [82] ELT 177 Bom[DB]-Suvidhe
Ltd Vs. UOI.
[3]1999 [112] ELT 34 Del[DB]- Voltan Ltd
Vs. UOI.
11.In the present case also it is not in dispute
that the deposit made is in the nature of Court deposit
in terms of Section 75[2-B] and after the issuance of
the G.O., which takes into effect retrospectively. The
respondent Corporation does not have the right to
claim any contribution from appellant Corporation.
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Therefore, the pre-deposit made is not a contribution
made to the Employees' Insurance Corporation and
the order of the Employees Insurance Court Principal
Labour Court directing the respondent Corporation to
withdraw such amount cannot be sustained. The order
of Employees Insurance Court Principal Labour
Court, Chennai, insofar as it permits the respondent to
withdraw the amount in deposit is set aside. The
appellant is entitled to withdraw the amount in Court
deposit.''
(7)The very issue whether the respondent / ESI Corporation is entitled to
collect the contribution for the period from 25.11.2003 to 30.09.2006 was
considered and the learned Single Judge of this Court passed an order
setting aside the order of the ESI Court [Labour Court, Chennai], insofar
as it permitted the ESI Corporation to withdraw the amount in deposit.
(8)In the light of the order passed by this Court earlier in the batch of cases
in CMA.Nos.790 to 795/2008 as against the order ESI Court, the learned
Additional Advocate General submitted that the learned Single Judge has
not even considered the judgment in CMA.Nos.790 to 795/2008. He also
submitted that the judgment in CMA.Nos.790 to 795/2008 operate as res
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judicata since the liability that was the subject matter of prior
proceedings is for the same period i.e, from25.11.2003 to 30.09.2006.
The further submission made by the learned Additional Advocate General
is that the ESI Corporation has not provided any facility or the benefits
provided under ESI Act to any of the employees of TASMAC.
(9)Learned Additional Advocate General submitted that the ESI Corporation
cannot provide the facilities as the appellant has branches throughout the
State of Tamil Nadu. Since the employees of TASMAC shops are located
in almost every revenue village throughout the State, it is contended that
the Corporation is not in a position to provide any facility or medical
assistance to their employees throughout the State. It is in the said
circumstances, the appellant cannot be saddled with the liability to pay
the ESI contribution for the said period. Assuming for a moment that the
Government has not obtained consent before passing G.O.[D].No.9 dated
09.01.2006, till such time the Government passes an order granting
exemption under Section 91 read with Section 91A of the Act, the
respondents cannot be permitted to collect any amount due towards ESI
contribution.
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(10)This Court finds merit in the submission of the learned Additional
Advocate General. From the sequence of events and the orders passed in
the batch of Civil Miscellaneous Appeals, namely, CMA.Nos.790 to
795/2008 vide judgment dated 06.08.2008, this Court finds that
respondents 1 and 2 have not raised any argument as to the validity of
G.O.[D].No.9 dated 09.01.2006 granting exemption. Even though
consent is not obtained as required, the fact that the applicability of the
Government Order as regards the appellant/Corporation was
acknowledged till order was passed by this Court in CMA.Nos.790 to
795/2008 on 06.08.2008. It is a fact admitted before us that no facility or
service was provided by the ESI Corporation to any of the employees of
TASMAC / appellant Corporation for the same period. In the course of
argument, learned counsel appearing for ESI Corporation brought to the
notice of this Court that employees of TASMAC have filed a writ petition
questioning the Government Order on the ground that the services of ESI
should be extended to them as no medial aid or facility is provided by the
appellant to any of their employees.
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(11)It is now admitted that the writ petition was dismissed. The point to be
noted is that contribution collected by ESI Corporation is only for doing
service to the employees and the object of the Act was not to collect
contribution from all the Establishments irrespective of whether they give
the benefit to the employees in cases of sickness, maternity and other
facility as provided in the Act.
(12)The introduction of the statute is to provide facilities under ESI scheme
envisaging certain benefits in the event of sickness, maternity,
employment injury to workmen in connection with the work in the
factories and other benefits. When it is admitted that no little benefit is
extended by ESI Corporation to any of the employees of TASMAC, it may
not be proper to saddle the appellant the State owned Corporation with
financial commitment without corresponding obligation.
(13)In these circumstances, this Court finds that the writ petition was
disposed of without taking note of the relevant facts as indicated above.
Therefore, this Court finds that the order of the learned Single Judge
cannot be sustained.
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(14)Accordingly, the writ appeal stands allowed and the order of the learned
Single Judge dated 02.07.2010 made in WP.No.4510/2006 is set aside
and the matter is remitted back to the learned Single Judge for considering
the matter afresh after taking note of all the facts and issues highlighted in
this judgment. No costs.
[S.S.S.R., J.] [A.D.M.C., J.]
18.10.2024
AP
Internet : Yes
https://www.mhc.tn.gov.in/judis
To
1.The Managing Director,
Tamil Nadu State Marketing Corporation Ltd
CMDA Towers, IV Floor, Gandhi Irwin Bridge Road
Egmore, Chennai 600 008.
2.The Regional Director,
Employee State Insurance Corporation
Tamil Nadu Region
No.143, Sterling Road, Chennai 600 034.
3.The Recovery Officer
Employee State Insurance Corporation
Tamil Nadu Region
No.143, Sterling Road, Chennai 600 034.
4.Assistant General Manager
Vijaya Bank, Egmore Branch
No.123, Marshalls Road
Egmore, Chennai 600 008.
5.Mr.P.S.Soundarapandian
TASMAC Employees Union
Room, No.204, Madurai Mansion
Masoodhi Street, Chepauk,
Chennai 600 005.
https://www.mhc.tn.gov.in/judis
S.S. SUNDAR, J.,
and
A.D.MARIA CLETE, J.,
AP
18.10.2024
https://www.mhc.tn.gov.in/judis
