Madras High Court
St.Joseph'S College Of Engineering vs The Employees' State Insurance on 19 September, 2024
2024:MHC:3399
W.P.No.21471 of 2024
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved on 07.08.2024
Pronounced on 19.09.2024
CORAM:
THE HON'BLE Ms.JUSTICE R.N.MANJULA
W.P.No.21471 of 2024
and
WMP.No.23432 & 23434 of 2024
St.Joseph's College of Engineering
rep.by its Chairman,
Dr.B.Babu Manoharan ... Petitioner
Vs.
The Employees' State Insurance
Corporation (Tamil Nadu),
Rep. by its Additional Commissioner
& Regional Director,
143, Sterling Road, Nungambakkam,
Chennai 600 034. ... Respondent
Prayer: Writ Petition is filed under Article 226 of the Constitution of
India, to issue a Writ of CERTIORARI, calling for the records pertaining
to the impugned order passed by the respondent in No.TN/INS.VI/51-00-
106414-000-1304 dated 19.04.2024 and quash the same.
For Petitioner : Mr.S.Rajasekar
Page No.1 of 12
https://www.mhc.tn.gov.in/judis
W.P.No.21471 of 2024
For Respondent : Mr.C.V.Ramachandramoorthy
ORDER
Heard Mr.S.Rajasekar, learned Counsel for the petitioner and
Mr.C.V.Ramachandramoorthy, learned counsel for the sole respondent
and perused the materials available on records.
2. This Writ Petition has been filed challenging the impugned order
passed by the respondent in No.TN/INS.VI/51-00-106414-000-1304
dated 19.04.2024.
3. The petitioner is a minority, self-financing and private
educational institution and the ESI Act was not applicable to the private
educational institution until the year-2010. Subsequently,
G.O.Ms.No.237, dated 26.11.2010 has been issued by the Government
of Tamil Nadu for extending the coverage of the ESI Act to the self-
financing private educational institutions. Therefore, the above said
Government order was challenged by various institutions by way of filing
various litigations and it resulted in conflicting decisions. Later, a Full
Bench was constituted to decide on the validity of G.O.Ms. 237 dated
26.11.2010. A batch of Writ Petitions in W.P.No.34236 of 2019 batch
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which raised the question of validity and the legality of the above
government order were placed before the Full Bench. After hearing the
parties elaborately, on 29.07.2020, the Full Bench has rendered its
judgement by upholding the validity of the above government order.
Hence, there cannot be any quarrel on the above point. Consequent to the
above decision, the petitioner's institution was directed by the respondent
vide order dated 25.01.2023 passed under Section 45(A) of the ESI Act,
to pay a sum of Rs. 3,21,38,191/- towards ESI corporation for the period
from 29.12.2010 to 31.03.2020. A further demand was raised by issuing
C-18 Notice dated 18.10.2023, claiming interest for the delayed payment
amounting to a sum of Rs.2,25,29,814/- and the petitioner had paid the
above demands; however, he also paid the ESI dues for the period from
01.04.2020 to 30.6.2023 which was calculated at Rs.1,23,38,857/-. But
the petitioner is aggrieved by the further demand raised by the respondent
under D-18 Notice dated 18.10.2023 by claiming Rs.2,02,00,750/-
towards damages.
4.The learned counsel for the petitioner submitted that the damages
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have been calculated with a whooping interest at the rate of 25% which is
highly unreasonable and arbitrary. It is submitted by the petitioner that
while disposing the batch of writ petitions challenging the validity of the
Government Order issued to cover the educational institutions under the
Employers State Insurance Scheme, directions have been given to the
respondent authority to consider the then prevailing pandemic situation
and resultant economic crisis faced by the institutions and give suitable
waiver by invoking Sec.91(c) ESI Act. The petitioner has also
approached the respondent authority to consider his poor economical
condition and to waive the damages imposed on him. But the respondent
authority has passed an order rejecting the petitioner's claim and hence,
the petitioner has challenged the above order by way of preferring this
Writ Petition.
5. Mr.S.Rajasekar, learned counsel for the petitioner submitted
that the orders passed by the Full Bench of this Court has not been
applied by the respondent authority in its letter and spirit and he did not
have the intention to consider the difficulties of the petitioners and just
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confirmed his earlier order passed for claiming damages.
6. Per contra, Mr.C.V.Ramachandramoorthy, learned counsel for
the respondent submitted that even though the waiver has to be
considered under Sec.91(c) of the ESI Act, that has to be read along with
Rule 53 of the Employee's State Insurance (C) Rules 1950 which
prescribes certain conditions for waiver. The conditions laid down under
Rule 53 the Employee's State Insurance Rules 1950 has been referred in
the impugned order, which are extracted hereunder for the sake of
convenience:
"53. Writing off of losses. - (1) Where the Corporation is of the
opinion that the amount of contribution, interest and damages due to
the Corporation has become irrecoverable, the Corporation or any
other officer authorised by it in this behalf may sanction the writing off
of the said amount, subject to the following conditions, namely:-
(i)establishment or factory has been closed for more than five years
and the whereabouts of the employer cannot be ascertained, despite all
possible efforts;
(ii)decree obtained by the Corporation could not be executed
successfully for want of sufficient assets of the defaulting employer; or
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(iii)claim for contribution is not fully met by-
(a)the Official Liquidator in the event of factories/establishments
having gone into liquidation; or
(b)the Commissioner of payments in the event of unit being
nationalized or taken over by the Government. "
7. Having found that the petitioner 's institution did not fall under
the above three conditions, the petitioner's request for waiver has been
rejected.
8. No doubt, in normal circumstances while considering the waiver
under Sec.91 (c) of the ESI Act, the essential conditions laid down under
Rule 53 have to be taken into account. Apart from the applicability of
the above conditions, an extraordinary circumstances like COVID
pandemic has also been mentioned in the Full Bench order and that
cannot be lost sight off by the respondent.
9. In fact there was confusion in the minds of the various
institutions as to the applicability of the very Government Order itself and
many of them have challenged the same stating that they cannot be
brought under the purview of the ESI Act. As several litigations were
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pending and uncertainties existed, the respondent could have shown a
better consideration while appreciating the claim of the petitioner for
waiver of damages.
10. Apart from the above extraordinary circumstances, another
unusual factor like COVID pandemic was also explicitly referred in the
order of the Full Bench. The pandemic and the resultant lock down had
an impact on every institution including the educational institutions. As
the respondent cannot find the above circumstances under Rule 53 of the
ESI Act, the Rule could be comprehensively read along with the spirit of
the judgment rendered by the Hon'ble Full Bench of this Court in
W.P.No.34236 of 2019 etc., batch, dated 29.07.2020 (All Indian
Private Educational Institutions Association Vs. The State of Tamil
Nadu).
11. To be noted that subsequent to the orders passed by this Court,
following the above order of Full Bench, in W.P.No.15405/2020 dated
29.10.2020 (M/s. Joshua Matriculation School Vs. The E.S.I.
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Corporation), the various types of financial crisis faced by the
educational institutions due to the extraordinary circumstances prevailed
during the pandemic and its consequences have been elaborated. The
above part of the order reads as under:
"16.In order to meet these situations, the Full Bench
in the Judgment cited supra, in Paragraph Nos.129 to 133,
has made out strong case on behalf of the educational
institutions and made a mandate, especially in Paragraph
No.133, with the strong words that, Section 91-C be applied
in letter and spirit by the Corporation in considering the
case for reduction/waiver of pending arrears, if and when
such a request is made by the Educational Institutions.
17.Though such mandate has been given by the Full
Bench of this Court, based on which, when a plea was raised
by the Petitioner Management in its detailed representation
dated 06.10.2020, in response to the notice, initially issued
by the Employees' State Insurance Corporation, such plea
has not at all been considered by the respondents /
Employees' State Insurance Corporation as the same is not
reflected in the impugned demand notice.
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18.The said position was fairly accepted by the
learned Standing Counsel appearing for the Employees'
State Insurance Corporation. However, he would only
submit that, the waiver / write-off has to be made
under Section 91-C of the Act, however, for such waiver or
write-off of arrears of due, the Employees' State Insurance
Corporation shall form an opinion within the meaning of
Rule 53 of the Employees' State Insurance Rules and
accordingly, on case to case basis, the decision would be
made by Employees' State Insurance Corporation.
19.The said stand taken by the learned Standing
Counsel appearing for the Employees' State Insurance
Corporation is taken note of by this Court.
20.No doubt under Section 91-C of the Act, opinion
should be formed by Employees' State Insurance
Corporation about the recoverability of the dues from any
employer or establishment and in forming such opinion,
what shall be the criteria should be taken into account,
which, according to the learned Standing Counsel
appearing for the Employees' State Insurance Corporation,
is only under Rule 53 of the said Rule. However, this Court
feels that, in addition to the situation mentioned under Rule
53 of the said Rule, the peculiar situation faced by the
Schools, due to Covid-19, also should be taken into account,
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as that has been the mandate given by the Full Bench of this
Court in the Judgment referred to above. Therefore, for
making such reconsideration under Section 91-C of the Act
on the plea raised by the Petitioner / institution to give write-
off or waiver, the matter can very well be remitted back to
the respondents as rightly pointed out by the learned
Standing Counsel appearing for the respondents /
Employees' State Insurance Corporation."
12. In the above part of the order, it is clarified that the Full Bench
had mandated the application of provisions of waiver by considering the
ground realities. But the impugned order would only show the pedantic
application of the conditions contemplated under Rule 53 of the ESI Act,
unmindful of the unusual circumstances which surrounded every business
including the educational institutions. It would have taken much time for
the institutions to recover from the desperation caused on them during the
pandemic and gain normalcy.
13. Since the pandemic situation is an extraordinary one, the
authorities can not expect that to be listed as one of the conditions
prescribed under Rule 53 of the ESI Act. The Court has mandated in its
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judgment to consider the claim of waiver in letter and spirit. Since the
impugned order has been passed, without having least regard to the spirit
in which the Full Bench had directed, I feel it appropriate to direct the
respondent to redo the exercise by following the spirit and object of the
directions/observations made in the orders of the Full Bench.
14. In the result, this Writ Petition is allowed. The impugned order
passed by the respondent in No. TN/INS.VI/51-00-106414-000-1304
dated 19.04.2024 is set aside and the matter is remitted back to the
respondents/Employees' State Insurance Corporation for reconsideration.
While considering the same, an opportunity for being heard shall also be
given to the petitioner by giving separate notice to that effect. No costs.
Consequently, the connected miscellaneous petitions are closed.
19.09.2024
Index : Yes
Internet : Yes
Speaking
Neutral Citation : Yes
jrs
https://www.mhc.tn.gov.in/judis
R.N.MANJULA, J.
jrs
To
The Additional Commissioner
& Regional Director,
Employees' State Insurance
Corporation (Tamil Nadu),
143, Sterling Road, Nungambakkam,
Chennai 600 034.
and
WMP.No.23432 & 23434 of 2024
19.09.2024
https://www.mhc.tn.gov.in/judis
