Employees State Insurance Corporation vs M/S New Forge Company on 13 August, 2010

[Cites 5, Cited by 2]

Karnataka High Court

Employees State Insurance Corporation vs M/S New Forge Company on 13 August, 2010

Equivalent citations: 2010 (4) AIR KAR R 789

Bench: Aravind Kumar

  V

IN THE HIGH COURT OF KARNATAKA. BANGALORE

DATED THIS Tm: 13"! DAY 02+' AUGUST 2<)"1§'¢'jLTl 

BEFORE

THE HON'BLE MR. JUSTICE:  

MISCELLANEOUS FIRST APPEAL 'i%1o.*§é6*23 'OF 2§0;V§ .

c/Sw.

MISCELLANEOUS FIRST APPSAL%No.SS177_VO§«f2:96-SIEST1 'V V L'

M.F.A. N0. 4623 OF 2003

BETWEEN:

EMPLOYEES» STA3'E'ibisUR{xjN_Cﬁ:'. T 1 " "

CORPORA'fTQN. 

NO. 10.; BINi.\fIYE<'IELAD1&3._ BI:§J1==si«af§1«:9£:*;""'"

   
E33333"??? BY "  
THE D'EPUT'Y;DIREC_TOR.. 

V . (By S ﬁit,_V'Gaeth2ideifi"M.P. AdV.,)

V _  Mxfs.-N'EW. FORGE COMPANY,
" .  N093.  NELAYAM,
 COLLEGE ROAD, MATHIKERE,
'-- EANGALORE560 084,
'REPRESENTED BY ITS PARTNER

 ..  SR1. A.K. GOSWAMY.

. ..APPELLANT

. . .RESPONDENT

(By Sr1.J .Aravind Babu for Sri. A.Y.N. Gupta, AdvS.,) This MFA is ﬁled under Section 82(2) of Act, against the Order dated 28-O5-~2003 passed iI_1"»ESI Application No.22/2002 on the ﬁle of the Add}. .I'nd_u--st17ia1 Tribunal, Bangalore, partly allowing the appHeat1foru1o' ﬂied, under Section 7'5 of ES} Act, challenging the--'Orde'1'fd--at'e«d 25-03-~ 1999 passed under Section 45-A of the_E_SI.Ac_t;~ ' M.F.A. NO. 6677 OF 2003 BETWEEN:

M/S. NEW FORGE CO1\/EPANY, No.93, RAVI NILAYAM, COLLEGE ROAD;

BANGAI,oRE--56o._of84, ; " _ REPRESENTED BY o'NEe-CEITS .. " .

PARTNERS MR. A,K._ C~OSWAMY;. I, ~ _ ' ...APPELLAN'I' {By S-11'. ;3.g_A1<av;§nd«.Bab11 VfC*I" S_ri.A.Y.N. Gupta, AdvS.,) AND:

1 ENI1?LOYN£ENTA'STA7I'E' INSURANCE COR§P.QRA'1'ION;._NQ..~~10, . 'BINNYFE.ELDS, BINNYPET, BAPJGALOREe:5.6O 023, E " REPRESENTED BY ITS " ~ REGI'QN;'\_L DIRECTOR.

R2. RECCVERY OFFICER.

V ~ BANGALORE-560 023.

(By Smt. M.P. Geethadevi, Adv. for R-- 1 4 EMPLOYMENT STATE INSURANCE " CORPORATION.

BINNYPIELDS, BINNYPET.

...RESPONDE_NTS R-2 served} dated 28-5»-2003 whereunder order passed by the competent authority under the E.S.I. Act in e.x_erc_ise'--Vof Powers under Section 45--A dated 25--3--i99:§-3 partiaily modified by substitutingtlie A it to be taken into account for of _ Employees Contribution. H

3. M.F.A.No.667..?i/2903:. Ma'/s"~Ne§w Forge Company (hereinafter"re.ferr'ed' to .A7fe,rriployer" for the sake of and legaiity of the aboye whereunder the employer's the order dated 25-3-1999 passed iindeyr of the E.S.I Act by the Corhpetent Authority! has been rejected and said order ' been fuipheld.

éi'. Facts in brief are that employer is a partnership .yconce'rn" engaged in the manufacture and sale of gears 9 'g_and"A gear units. Provisions of E.S.I.Act was extended to " -"the employer with effect from 1~"/-1997 and since then W contributions are being paid in accordance law. For the period July 1997 to September 1998 em'pIo3?erVvis said to have failed to pay the contrii-autions-.92 accordance with Section 39 and_4~O{.1) of ':E1n'p}oyeesV"AVV State insurance Corporation g't..j't'z1.xe; prescribed under Rule 51 ofL:E,S.IA(Ce_n'tra1}.:Ru1es; '195o' A and in the manner prescribed.' Reﬁgu}-atioins 29 of the E.S.I.{G) Regulations', time limit prescribed such a show-

cause and a personal hearing'iivas.:V5aiso;'fs to udtheﬂjempioyer by fixing the date 26-2-1999 at 2 pm. The said notice" v_tras..vdu}y served on the employer and no .2 it repéjt was ﬁled. competent authority passed an order 45-A of the Act on 25-3-1999 holding' thuatdicontribution amounting to Rs.38,443/- is p=;1ya1z>1e:by Employer as the principai employerts) and 2' 'directed them to pay the same within a period of 15

-»-days from the date of order along with interest at 15% 43/ per annum. It was akso notiﬁed failure to remit the amount would result in recovery of the same through the Recovery Officer. Since the amount _cwa's_4l_l'not remitted recovery certiﬁcate came to be'-.issue;d----t 28-5-1999.

4.1. The employer filedl-ra1i'.A_Alapplicatiorr itinjder Section 75 of the E.s.1,;Ae: in eepp1;eiauonl»i No.22/2002 before ,---tlt1e E31npl_oyees' State lrisurance Court and Additional' at Bangalore praying for, dated 25-8-1999 the 13.8.1. Act by the competent said application came to be resisted fiiingl statement of objection by the .C'orpoErati'"on_. Thlewllnsurance Court on considering the A 'rival cofntenuons framed the following issues:

{__i']' :'Whether the applicant proves that impugned order passed by respondent determining the contribution on the assumed wages is bad in ' law'?

(ii) If so, what relief the applicant is entitled?

CR"

(iii) What order?

4.2. The employer in support of its claim exarnined one of the partners of the ﬁrm as P.W.1 and got Ex.A--1 to A--14. On behalf of the Corporatioii was examined as R.W.1 and got~--rm;arked'_4l llto.l_R--E-,'---.p V The E.S.I. Court on considering the cont.er1tviun's;"'and, evidence on record by its order'».dated lallowedll the application in part orderaivhich is assailed by both the well as the Employer in twp appeal«sl.l"l .. V Devi Papanna, learned counselappearingAl.1"or:}.bhe appellant--Corporation and I:3aI*,>_ii.1ea1'r1ed Counsel appearing for the ' errtploywerl reepondent/ appellant. 6__;' It contended by Smt.Geethadevi that Tribunal erred. applying Wages ﬁxed under the Minimum Act for determination of Contribution payable '*'-tinder E.S.I Act and would contend that when the cl?

contends that the adoptation of principle of Minimum Wages Act would defeat the Very purpose of.jthe..l_:'Avct since the employer who finds that Minimum Wages Act is beneﬁcial withho1'd the records from the authoritiesnlltor authorityl Court to adopt of Wages thereby defeatirig yeryVV"p_1.irpose'-roflithe Act. On these grounds she' of the appeal M.F.A.4682/:2(3t);3._ that appeal namely iiled by the employer deserxfeswto _sheVyvou1d support the order passed"by"the' whereunder it has rejected the gclajpm employer to rely upon the exhibits proidiiced and accordingiy she prays for appeal M.F.A.No.6677/2003 also. In support' ofher submission she relies upon the following ll" 4" ' = judglrieritsz (I) 1994 Supp (3) sec 530.

4/ 10 Modella woollens Ltd. Vs. Employees' State Insurance Corporation and another (11) An order dated 14-1-2003 passed-.»_:"'-in 1VI.F.A.No.2777/2001 . o M.F.A.no.2776/2001 by this .. Thel 'A V' A Regional Director ESIlAAlCo'rporation " Vs ._' / Balki data Forms Pvt.bi';rVtC1:;.,,l A': T A V (111) Order dated V' r 14g--2~éeo3 epeesee in"

M.F.A.Nov.3{}22[.26£.iV1~ the «ease of E.S.I.Corporationo-\,.:'3st:' Ksheera Sagar. l5e'1'-- Babu, learned counsel appearing «for -- would submit that E.S.I Court _ erred ...not'*. relying upon the Wage Register 'l"r.prc}dli1eed by theeppeuam of the years 1997»~98 and is at Ex.A--9 and A~»10 and Attendance Regf1_eter- by the appellant for the period April a March 1999 at 191-11 on the ground that A 'endorsement dated 24--1l--l999 in Ex.A--1O and A»~l2 by ..,.tli1e E.S.I. Inspector was subsequent to the order of «Iv ll determination under Section 45--A i.e., dated 25-3-1999 since it has no relevance. He would also submit that wage registers and attendance registers prescribed format and was being produced sought for by the Officers at the.:timegof.'_:the4i'reit it and many a time it came inspecting officers. He wou_ld~~..subrr1it that C:'ourt"l erred in taking the vfigure of"'R.sg;2l§'0QO/«lp;m.»-as wages for the purposes of contribution which re1atesjot_2.1y ito labourer and it wou1dlllno't ltollvllthe employees of the appellant in /2003 as they are not highly ski1]iedp}aboa_rers..'* Heytrould also submit that employer . it had€'té.nde'zted evidence to demonstrate as to how many lljp.erso'ns have been employed by producing relvevantlregisters and actual Wages paid as to the .e§{eInpted employees and wages paid to the Workers who it come within the purview of the Act had also been " --produced and the rejection of the same is improper. He div l2 would submit that when all the registers are_.__' read together no doubt arises about its genuineness and as such H the rejection registers by the E.S.I Court is for allowing of the appeal '~ . «. it

8. It is noticed from recordsli,Vl:thiatliVVfboth the appeals have been V ._Cou:rt. However substantial questions" in the appeal formulated while admitting' '*~ 5;; learned advocates appearing would fairly admit and concedetlhat" of law formulated in Mv..Fﬁ.A.vNo.46§§3'--Vat____paragraph V(a) and (b) along with question of law formulated in appeal H n{enm§~ai¥ia1u'::i"V6677/2003 at paragraph 10 would arise forfconsideration in these appeals. Accordingly the A if same are formulated as follows:

(1) Whether the Industrial Tribunal was justified in adopting the minimum wages ﬁxed under ch', 13 the Minimum Wages Act in determining the contribution, payable by the resvpoia_de_nt under the E.S.I. Act, when the who is bound to produce the K V' establish his case as-to the e-xaetfttmeuttt wages which it had pajad had failed to do " A p (2) Whether the applieation "or 'lithe dlitflinimum Wages forth" of the eontributiolrifll the Employees State'--Insuran'e-e:;'A Act; defeat the Very (3) made the provisions of """ '-'.Vapplie'abEe§ to the exempted Z A u wages alone Will Come to it Appiication of provisions of to the exempted employees V._eonstit1;i*tes substantial question of law within 'the meaning of Section 82 of the E381 Act.

9__.* '§'3te':AlQuestion 1 and 2: These two questions formnlated herein above being inter~linked are taken up 'tttogetther for consideration by this Court. The coverage of p ° ~~-the estabiishment with effect from 1-7-1997 is not in W 15

10. In so far as the -contentions of the learned advocates appearing for the Corporation and the employer regarding the method adopted by ESI determine the wages of Employees is to be _ this Court on the basis of the ma_te1*ial~.. ievidenctpie tendered before the E.S.I Court.:'.__It me 'be' nlotieled-ei..tlie;s1;teé after issuance of show--ca-'1se_Vnoti'e.e' empl;oyer../_hVa.d to,:* appear before the authorities"-a_nd_p_ demonstrate as to what was the aCtuaI'*--vva.ges vvhat was the contribution reqtiiredit'o"be"mad.e.b3t'it.t.u'nder the Act. In the competent authority has used "best _ili.'tI:§gz'1p1.le11t_'."' arrived at the wages for purposes tvorltingouts the contribution payable under . "'Ar_:t. another undisputed fact which benoticed is that for the relevant period i.e., Jeiy ieyvvleelseptember 1998 a sum of Rs.6,931/-- has um'---lVlp"'been zrerliitted by the employer under EX.A--3 A-4 and haif yearly returns have been filed as per A~6, and A--8 on 18«8--1999 wherein the details of the W 17 not do so. On the other hand having received the show- cause notice Ex.Al on 17 -2- 1999 as per acknowledgment Ex.R--4 it did not choose to rep:1y';:h:"p:'It."is only after having received the order of dated 25-3-1999 on 1-4,;1'99~9. p_ acknowledgement] these registers have i.etropped=:4'. A ~, before the E.S.I. Court and itsiought. to Vclaim. V This cannot be couhtenanceditié also inasmuch as on the date~lo_f 'i'ssuVanet:e" ﬁiae show-cause notice these 3i"et:ords iwere-:.v~aVai:l'a--ble.'__Vidth the employer and th_ea"i1eg£gaa saidhtouhave been made under Ex.A--3;7AV----4 that payments have been made on subsequent to the issuance of

- -.,1ShowA7~C€{'t1s'e..pnotice?' Even when the order dated 'tévfas.i~~passed these records were said to be aVai.1abie* the employer but were not produced.

"Tphereﬂare no reasons forthcoming in the grounds urged E.S.I Court by the employer as to why these ..vrecords were not produced before the authorities. 18

12. However, it is to be noticed that wherjrthe matter has been moved before the E.S.i of stay of the order dated 25-8-1999 a been made that the applicant before the concerned authority their not been noted, goes to said submission is'incorrec.t:>or "alternative that if the said submission V is reasons are forthcomingas _\,jvi1a't thestemployer to seek for extensions tithe objections to the show--cause notice alsodsedjekt"permission of the authorities to produce theseAregistierswsnamely Ex.A.9, 10, 11. This . . ,.a.gXe'f~.gi5'§"'was__not utndiertaken. It is only at the stage of Court these Registers have seen the"-«.__Iig1r__i't' it the day. Thus, authenticity or the Tcoijrectness of contents of these documents and its Jacceptabiiity or otherwise is to be looked into with it -circumspection. The said exercise has been done by the d§,/ 19 13.8.1. Court and for cogent reasons assigned in paragraph No.9 it has been held that same cannot__he accepted and said ﬁnding of E.S.I. Court accepted. On appreciation of evidence_~tend:e.red.: bei'o_:re'* it E.S.I. Court and on reconsideration~.ot" tie1esev'e:§hijbits::,it is to be held that time, the nitanner_ and 1nod.ev.invVWhich--.t"

these registers have been before Court does not inspire confidencle tiierr credibility of these Registers. Even. if it were hefsol thepllpendorseriient that has been thelnsurance Inspector on the period April 1998 to March issue in question is not concerned luabdout' alsolllrnade this Court to reject the 'C it E"uFux1"*-.he1' other two registers namely A-9, no such endorsement and as such the C__ourt'~~'\}iras justified in rejecting the contention of "the learned counsel for the empioyer and not accepting the.s.e registers. Non--productior1 of these registers at CV 20 appropriate time before the authorities, an adverse inference wili have to be drawn.

13. In so far as the appiicability of Wages Act which has been used as the arriving at the wages for the purposes of "

under the 13.8.1 Act is concernedeit E.S.I. Act contempiates theft' contributions are to, be 'recovered; Under Section 44 of the employer to furnish the returns 'i'naint.}:in register as required underfthe yffregfulfatiorisffmade thereunder. In the instant 'case «'that employer was brought within the E.S.I Act with effect from 15751997 aware about the contributions be-:"pajd. In fact on 13-8-1999 i.e., after issuance' o,f'show--cause notice and determination order, coyntributions have been remitted under Ex.A--3 A-4 and 'A-5.-79 This itself cleariy goes to show that employer was

-~-ayvare about the mandatory duty caste on it for payment M 21 of E.S.i Contributions to be remitted to the Corporation. In this background it is to be examined as to whether E.S.I Court was justiﬁed in adopting the Minimum Wages Act in the absence -. evidence available before it. In of benefit to extract the' of Supreme Court in the case Ltd.

Vs. Employees' State Corporation and another reported inHC199-a+_iettyysiipgtisd13) sec 530 whereunder. effect:

H-yoayable amount of payable whether the Insurance Courtmwhere ye the irnpugned the Corporations ad hoc A it himself stating the correct it -- "which according to him was payable V A andvdritheuquestion of law involved was answered x the employer, held, the Insurance Court cornmitted no wrong in accepting the Corporations assessment as correct without yet any further scrutiny.

14. Though in the instant case the employer has stated what was the amount payable by him,-- Court having examined the records produced' employer did not accept the said records K it have left the order dated However, a step forward been.:"taken:,'.by:'then Court by applying Wages the V notiﬁcations issued considered View that only AoptionAAthat.,yy*as E.S.I Court was to either th'e.:con'te;ntion urged by the _ tiheiidocuments produced by it to at «on the said basis either by accepting or reject-ing. it which would in effect mean ~' < tA1f1atf:'iti..,'c.arinot substiftute with a different View contrary ES} Act. This I say so because E.S.I Act is beiiefieial legislation enacted for the beneﬁt of the Vi employees and provisions thereunder have to be read in if vfavogtir of whom such enactment has been brought ~-about and it would not sub--serVe the purpose when W 23 interpretation and construction of said statute is sought to defeat the purpose and such plea when put~forward cannot be accepted, inasmuch guise of the applicability of Minimum and employer would take Shelt€1:"u1'1(Zlé}'__ the very purpose of the itself the' contention of the leajrnged the"ap"pEellant in M.F.A.6677/2003 cannot accordingly it is rejected.;_'' ._.___duestions of Law as follows.

.... _.

ta} are answered in Negative by holding V-Cponft waslnot right in adopting Minimum Wages"d:'Act__ in determining the minimum wages for of-..ascertaining contribution payable as it would.-__"b'e-contrary to provisions of P381 Act. {bl In the absence of establishing before the ".VCorporation by employer the authority was justified in l V' "applying "best judgment" method for arriving at wages W

Unlock Advanced Research with PRISMAI

Karnataka High Court