M/S. Mallikarjuna Rice ... vs The Employees State Insurance ...
2021 Latest Caselaw 3500 Tel

     THE HONOURABLE SMT. JUSTICE P. MADHAVI DEVI


     CIVIL MISCELLANEOUS APPEAL NO.620 OF 2012


                          JUDGMENT

This is an Appeal filed by the appellant against the order

dt.15.11.2010 made in E.I.C.No.18 of 2006 on the file of the

Employees Insurance Court and Chairman, Industrial Tribunal-1,

Hyderabad.

2. Brief facts leading to filing of this case are that the

appellant/petitioner is an industry situated at Lingojiguda, Choutuppal

Mandal, Nalgonda District. The Inspector of the respondent

Corporation visited the industry premises on 23.10.2003 and found 10

employees working in the industry for wages. The Managing Partner

of the petitioner confirmed that 10 persons are working in their

establishment and on the basis of the same, the respondent

Corporation came to the conclusion that the petitioner is covered by

ESI Act and accordingly a letter allotting code No.52-22723-05

dt.12.11.2003 was issued to the petitioner requiring it to make

compliance of the provisions of the ESI Act by registering/insuring

their employees. The petitioner failed to comply with the provisions

of Section 44 of the ESI Act by filing necessary returns and therefore

it was issued notice in Form C-18 dt.01.03.2006 informing it of its

failure to pay the contributions and submit returns. However, there

was no response from the petitioner and therefore an order under

Section 45-A was passed directing the petitioner to pay a sum of

Rs.30,724/- for the period from 01.10.2003 to 31.03.2005 within a

period of 15 days from the date of the order, failing which the amount

shall be caused to be recovered under Sections 45-C to 45-I of the

EST Act. Against this order, the petitioner has filed the present

Appeal.

3. It is submitted that the petitioner was not granted any time by

the respondent before issuing the order under Section 45-A of the ESI

Act and therefore it is in violation of the principles of the natural

justice. It is further submitted that the petitioner unit was mainly

seasonal and was having only 8 workers and therefore it was not

covered under the provisions of the ESI Act. As regards the statement

given by the Managing Partner to the Inspector of the ESI stating that

there were 10 people working in the factory, the petitioner submitted

that the said statement was given by its Managing Partner under a

misconception and therefore the same should not have been

considered.

4. Heard Sri Raj Kumar Rudra, learned counsel for the appellant

who relied upon the following decisions seeking remand of the issue:

(1) M/s. Srinivasa Rice Mill Vs. Employee State Insurance

Corporation1

(2) Amar Service Station Vs. The Assistant Regional Director2

5. Sri Venkateswarlu Gummadaveli, learned counsel for the

respondent was also heard.

6. This Court finds that the Managing Partner of the petitioner

himself has given the statement before the Inspector that 10 persons

were working in their establishment at the time of the inspection and

therefore ESI Act was applicable. It is also recorded by the officer

who passed the order under Section 45-A of the ESI Act that in spite

of the show-cause notice being given to the petitioner, the petitioner

has failed to respond to it and has not given any details much less

raised any objections on the applicability of the ESI Act to their

industry. Except for stating that the petitioner is not covered by ESI

Act as it was having only 8 persons working under it, the petitioner

has not been able to produce any evidence to support this contention

of the respondent. The learned counsel for the appellant now seeks

another opportunity to represent and prove that ESI Act was not

applicable to the appellant.

7. The Employees' State Insurance Act is an Act promulgated to

benefit the employees of an establishment and in the absence of any

(2007) 1 SCC 705

Judgment in CMA No.898 of 2006 dt.27.07.2007 of A.P. High Court

evidence that the ESI Act is not applicable to the petitioner industry at

the relevant point of time, it cannot be excluded from the applicability

of the Act. However, the Hon'ble Supreme Court and also the

Hon'ble A.P. High Court in the cases referred above (1 and 2 supra)

in similar circumstances have remanded the issue to the ESI

Authorities to reconsider the applicability of the provisions of the Act

to the appellants therein. Therefore, this Court also sets aside the order

passed under Section 45-A of the ESI Act dt.06.07.2006 and directs

the respondent to reconsider the applicability of the provisions of the

Act to the appellant. The appellant shall appear before the respondent

and produce the necessary evidence on or before 30 days from the

date of receipt of this order and thereafter, the respondent shall

reconsider the issue in accordance with law within a period of 90 days

thereafter.

8. The Civil Miscellaneous Appeal is accordingly disposed of. No

order as to costs.

9. Pending miscellaneous petitions, if any, in this CMA shall stand

closed.

___________________________ JUSTICE P. MADHAVI DEVI

Date: 16.11.2021 Svv