M/S. Hotel Sagar vs Dy. Director
2023 Latest Caselaw 2361 Ori

     IN THE HIGH COURT OF ORISSA AT CUTTACK

                    WP(C) No.14216 of 2022


M/s. Hotel Sagar, Cuttack                        ....                 Petitioner

                                  -Versus-

Dy. Director, ESI Corporation,                   ....          Opposite Party
Bhubaneswar

Advocates appeared in this case:

For Petitioner            : Mr. Sarat Kumar Behera, Advocate
For Opposite Party : Mr. Amarendra Prasad Ray, Advocate


         CORAM: JUSTICE ARINDAM SINHA

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Date of hearing and Judgment: 23.03.2023

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1. Petitioner has challenged judgment dated 14th February, 2022 made by the Employees' Insurance Court-Cum-District Judge in ESI Misc. Case no.4 of 2017. By the judgment issues framed in the proceeding have been answered against petitioner.

2. Mr. Behera, learned advocate appears on behalf of petitioner and submits, his client runs a small hotel. It was wrongly said to be covered under Employees' State Insurance Act, 1948. He submits, the application made under section 75

has been disclosed in the writ petition. Prayers were, inter alia, to set aside certificate dated 2nd March, 2017 for recovery of Rs.1,26,165/- along with interest, pursuant to order made under section 45-A. He submits, contentions of his client were not considered by the Court. Hence, there was violation of principles of natural justice. There should be interference.

3. Mr. Ray, learned advocate appears on behalf of the Corporation and relies on judgment dated 21st August, 2006 delivered by a learned Single Judge in the High Court of Bombay in C.A.J.W.P. no.3934 of 2006 (Kariya Builders v. Employees' State Insurance Corporation). He also relies on an earlier decision dated 8th February, 2001 by another learned Single Judge of said Court in Writ Petition no.1173 of 1998 (Rainbow Industries v. Regional Director, E.S.I. Corporation). In the latter case view taken was, the writ petition was not maintainable on finding that impugned judgment was well reasoned and could not be interfered with under article 226 of the Constitution. He submits, impugned judgment is well reasoned. There should not be interference.

4. Perused impugned judgment. Issues framed by the Court are reproduced below.

"1. Is the case maintainable?

2. Has the petitioner any cause of action to file this case?

3. Is the case barred by Limitation?

4. Whether the case of the petitioner is maintainable for non-joinder of necessary parties?

5. Whether the order dated 2.3.2017 passed u/s 45-G of the ESI Act is sustainable?

6. Whether the petitioner is liable to pay the certificate dues with further interest?

7. Whether other relief/reliefs the parties are entitled to?"

5. The Court found as would appear, inter alia, from paragraph-10, reproduced below.

"10. Ext.3 is the letter dated 14.10.1991 issued by the Deputy Regional Director, ESIC in favour of the Managing Director, M/s Hotel Sagar intimating the coverage of the Hotel under the ESI Act. Ext.5 is the representation made by the petitioner before the Regional Director, ESIC, Bhubaneswar admitting that the letter dated 20.6.1991 was received by him that the hotel was covered provisionally under the Act from 10/85 to 9/86. In paragraph-2 of Ext.5 it is mentioned that the contribution is being paid to the Corporation since 1989. Therefore, it is quite clear that the petitioner has been brought into coverage of the ESI Act from October, 1985 and the petitioner had been paying the contribution for different periods. It is also clear that the petitioner has defaulted in making payment of contribution for the periods 85-86, 89-91 and 91-93. Since the petitioner admits that it comes under the coverage of the ESI Act it is incumbent upon him to deposit

the contribution as assessed by the ESI Authority, but instead of doing so, it has challenged the coverage letter as well as the garnishee order passed for recovery of the dues. It is found that the petitioner has not specifically pleaded in its pleading that when the cause of action arose for presentation of the present application."

(emphasis supplied) There was reference to section 77 (1-A) for finding that petitioner's cause was barred by limitation. Accompanying reason given was that petitioner had not challenged the determination order under section 45-A earlier, implying acceptance thereof. An incidental fact found is petitioner paid some contributions.

6. The Court went on to further find as in paragraph 12, reproduced below.

are concerned, this Court is of the view that the case is not maintainable, the petitioner has no cause of action to bring the application before this Court, the application is not bad for non- joinder of necessary parties and consequently, the petitioner is not entitled to any relief, as prayed for."

(emphasis supplied)

7. On query from Court Mr. Behera draws attention to letter dated 14th October, 1991, sent by the Corporation to his client. Text of the letter is reproduced below.

"Kindly refer to this office notice dt.20.6.91 and your representation submitted on 8.8.91, 13.8.91 and 16.8.91 on the above subject. On examination it is observed that M/s. Sagar Kanya functions in the premises of M/s. Hotel Sagar and furniture, utensils fixtures of M/s. Sagar Kanya is owned by M/s. Hotel Sagar. Further, the water and electric charges in respect of M/s. Sagar Kanya is also paid by M/s. Hotel Sagar, which is included in the rent.

Both the establishment M/s. Hotel Sagar and M/s. Hotel Sagar Kanya are clubbed together which qualifies for coverage definitely with effect from 20.10.89, for which you are requested to pay the contribution as demanded vide our letter dt.24.6.91. Further, you are requested to produce the attendance and wage register in respect of M/s. Hotel Sagar Kanya since its operation to decide the coverage finally against our notice dt.24.6.91.

This may be treated as urgent."

(emphasis supplied)

On further query from Court Mr. Behera submits, Sagar Kanya is a restaurant being run by a person, who took the part of the premises on lease from his client. His client has no connection with running of the restaurant.

8. In context of dispute raised by petitioner before the Insurance Court, regarding coverage, there does not appear to have been any adjudication by impugned judgment. Two

things were said. Firstly, petitioner had omitted to challenge the order of determination and paid some contribution. Secondly, the contentions, including of not being covered, stood barred by limitation.

9. It would appear from text of the Corporation's said letter dated 14th October, 1991 that three representations made by petitioner stood mentioned therein. Petitioner's contentions in those representations were answered by observations made that M/s. Sagar Kanya functions in premises of M/s. Hotel Sagar and furniture, utensils fixtures of M/s. Sagar Kanya are owned by M/s. Hotel Sagar, water and electricity charges in respect of M/s Sagar Kanya are also paid by M/s. Hotel Sagar, which is included in the rent. In those circumstances, the Corporation inferred that both the establishments are to be clubbed and qualify for coverage with effect from 20th October, 1989. When there is payment of rent by one to another, a landlord- tenant relationship is indicated. That both landlord and tenant can be clubbed together to make them one establishment and thereby the employees counted in aggregate for imposing coverage of the Act, ought to have been considered for adjudication by the Insurance Court. Instead, inspite of there having been an issue framed on the garnishee order, the Court threw out the contention on ground of limitation for not having challenged the earlier order of determination and having paid some contributions. Coverage is under the Act. The provisions on coverage are clear.

Petitioner had disputed the claim as made on lack of coverage. Estoppel by conduct, of paying some contributions, cannot operate against the law. Adjudication on facts was necessary for application of the law by the Act of 1948.

10. Section 77 in the Act, being a special statute, provides for limitation in respect of application to be made to the Insurance Court. Inserted by amendment sub-section (1-A) originally had explanation regarding cause of action in respect of claims for benefit. By subsequent amendment, clauses (b) and (c) were added, respectively regarding claims by the Corporation and claims by principal employer for recovery of contribution from immediate employer. There is no provision, in the explanation under the section, regarding cause of action of an establishment in disputing a claim made by the Corporation. Section 29 in Limitation Act, 1963 saves special periods of limitation provided by, inter alia, special statutes. In the circumstances and where the Supreme Court in Employees' State Insurance Corporation v. F. Fibre Bangalore (P) Ltd., reported in 1997 (1) SCC 625 had said that dispute in respect of demand made by the Corporation has to be asserted by the establishment in the Insurance Court, petitioner having been turned away by the Court, has been rendered remediless. More so because the appeal provision in the Act would only allow appeal on a substantial question of law and, therefore, cannot be said to be continuation of the suit as in a first appeal. There is necessity for finding on facts

regarding clubbing of petitioner and his tenant, for imposing coverage.

11. Impugned judgment is set aside and quashed. The application is restored to the Insurance Court. It is expected, there will be expeditious hearing and disposal on remand.

12. The writ petition is disposed of.

(Arindam Sinha) Judge

R.K.Sethi