Kerala High Court
M/S. Sujeerkar Trading Co vs The Regional Director on 21 November, 2006
Author: K.Hema
Bench: K.Hema
IN THE HIGH COURT OF KERALA AT ERNAKULAM
Ins.APP.No. 6 of 2005()
1. M/S. SUJEERKAR TRADING CO.,
... Petitioner
Vs
1. THE REGIONAL DIRECTOR,
... Respondent
For Petitioner :SRI.B.S.KRISHNAN (SR.)
For Respondent :SRI.P.SANKARANKUTTY NAIR
The Hon'ble MRS. Justice K.HEMA
Dated :21/11/2006
O R D E R
K. HEMA, J.
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INS. APP. NO. 6 OF 2005
&
CROSS OBJECTION NO. 96/2005
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Dated this the 21st day of November, 2006.
J U D G M E N T
This is the second round of litigation. The appellant is before this Court for the second time by filing an appeal. The challenge is on the order passed by the Employees Insurance Court (E.I Court, for short) in an application filed by the appellant under Sections 75, 76 and 77 of the Employees State Insurance Act (Act, for short).
2. The appellant sought for a declaration that the appellant- establishment is not liable to be covered under the ESI and that the appellant is not liable to pay any amount towards contribution under the Act and that the assessment and demand of contribution by the Corporation-respondent against the appellant is illegal and unsustainable. The respondent-Corporation filed a written statement and contended that the appellant-establishment is a factory covered under Section 2(12) of the Act and hence they are bound to pay the contribution as per the provisions of the Act and the petition is to be dismissed.
3. Evidence was adduced on both sides. PW1 was examined and Exhibits P1 to P7 were marked on the side of the appellant. DW1 Ins.A.No.6/05 & C.O.96/05 2 was examined and Exhibits D1 and D2 were marked on the side of the respondent-Corporation. On an evaluation of the evidence on record, the E.I Court found that the applicant is liable to pay contribution in respect of the employees etc. Since the entire assessment was made by including the remuneration received by the partners also, it was held to be not sustainable. A re-assessment is required in this case and therefore, a direction was given by this court to the Corporation to revise the assessment, by keeping out three partners. But, it was ordered that the contribution shall be assessed with reference to the actual payments received by other employees during the period in question.
4. The above order was passed on 09.09.1994 in I.C. 48/1991 and it was challenged before this Court in appeal. In M.F.A No. 1053/1994, Division Bench of this Court, on consideration of the appeal, set aside the said order as per judgment dated 02.08.2000 and the E.I Court was directed to reconsider several questions as framed in the order. It was also directed that, additional evidence can be allowed in support of the contentions raised by both sides. The E.I Court thereafter allowed the parties to adduce additional evidence. Additional documents were marked. Exhibits P8 (series) to P16 were marked on the side of the appellant as additional documents. The E.I Ins.A.No.6/05 & C.O.96/05 3 Court after consideration of the additional evidence, disposed of the application afresh.
5. As per judgment dated 07.10.2004, which is challenged in this appeal, a direction was given to the opposite party to revise the assessment by limiting assessment only for two years from 01.08.1987 to 28.02.1989. It was also ordered that after 28.02.1989, respondent shall hear the applicant on the matters relating to the leaving of some of the employees and joining of few others. It was also ordered that, if it is found that the appellant establishment was coverable even after 28.02.1989 also, the respondent can demand the contribution separately. The said order is under challenge in this appeal.
6. Learned counsel appearing for the appellant vehemently contended that, the court below has gone wrong in holding that the three partners can be counted for the purpose of calculating the number of employees for fixing the coverability under the Act. As per the decision reported in Regional director, Employees State Insurance Corporation, Thrissur vs. Ramanuja Match Industries [(1985) 1 SCC 218] the partners cannot be treated as employees and hence they could not have been reckoned as the employees of the establishment. If they are excluded, the establishment will not be covered under the Ins.A.No.6/05 & C.O.96/05 4 provisions of the Act, it is submitted.
7. On going through the records and on hearing both sides, I find that the application filed by the appellant itself was not maintainable. The application is too premature. The reasons are as follows:- The application is filed under Section 75 of the ESI Act. As per Section 75(1)(g) of the Act, if any question or dispute arises as to any matter which is in dispute between a principal employer and the Corporation, in respect of any contribution payable or recoverable under the Act, such question shall be decided by the E.I Court in accordance with the provisions of the Act.
8. It is clear from Section 75(1)(g) that, there has to be a "dispute" between the principal employer and the Corporation in respect of any contribution "payable or recoverable" under the Act, for the E.I Court to decide. It is only a "dispute" arises in this regard that the Court gets jurisdiction to decide the question. As per the provisions of the Act, a dispute arises when there is an assertion and a denial. A dispute to fall under Section 75(1)(g), it must be in respect of any contribution payable or recoverable under the Act.
9. According to the appellant, the establishment is not covered under the Act. The Corporation had made an attempt to make it coverable and the appellant was directed to make the payments in Ins.A.No.6/05 & C.O.96/05 5 accordance with the provisions of the Act. Though the appellant would claim that a direction was given by the Corporation to pay the contribution etc., none of the documents or letters issued from the Corporation to the appellant are produced and marked on the side of the appellant, at least to find out whether there was any demand made by the Corporation to the appellant to make contribution. The appellant has miserably failed to establish that the Corporation has made any demand for paying the contribution.
10. A mere allegation is not sufficient to prove a particular fact. It is also not a mere demand which would be relevant under the provisions of the Act. But, there must be a dispute regarding payability of the contribution. No document is produced by the appellant to disclose that any amount has become payable by the establishment, as contribution or that the Corporation made any assertion in this regard. Therefore, in the absence of any assertion, there is no question of denial and no dispute arises. It also follows that the appellant failed to establish that there is "dispute" in respect of contribution payable or recoverable under the Act, between the appellant and the Corporation.
11. In the absence of any dispute between the principal employer and the Corporation in respect of any contribution payable Ins.A.No.6/05 & C.O.96/05 6 under the Act, the E.I Court has no jurisdiction to consider the question under Section 75(1)(g) of the Act. The court will have no jurisdiction to decide this issue. It is the appellant's duty to assert and establish by satisfactory evidence that there was a dispute in respect of the contribution payable under the Act between the principal employer and the Corporation. Evidence is lacking on this aspect.
12. However, learned counsel appearing for the respondent pointed out that, in fact the Corporation has taken steps to determine the contribution payable by the establishment under the Act, steps were initiated under the provisions of the Act. Ext. D1 is a preliminary inspection report and Ext. D2 is a copy of the letter sent by the Corporation to the appellant dated 04.03.1991. As per the said letter, appellant is informed that unless compliance under the Act is not forthcoming from the appellant's side within ten days, the office will have no other option than to initiate prosecution against the appellant for non-compliance under the Act.
13. Till the date of filing of the appeal, both sides would agree that no order was passed by the Corporation determining the amount of contribution, which is allegedly payable by the establishment under the Act. This petition was filed on 28.05.1991. Till that date no order was passed by the Corporation under Section 45A of the Act. Ins.A.No.6/05 & C.O.96/05 7 Therefore, the Corporation has not determined the amount of contribution payable under the Act. A reading of Section 45A of the Act shows that, the Corporation can determine the contribution payable by the establishment based on certain records, documents etc. Such determination of amount of contribution payable in respect of the employees of the establishment can be made by way of an order passed in accordance with the provisions under Section 45A of the Act, after giving reasonable opportunity to the establishment of being heard.
14. It is only when an order is passed determining the amount of contribution payable, such amount becomes payable under the Act. The recovery of contribution can be made only if the amount is determined under Section 45A of the Act. Till such order is passed, it cannot be said that contribution under the Act has become payable or recoverable under the Act. Since in this case, no order is passed under Section 45A of the Act until the application is filed. Application filed by the appellant was premature and it cannot be said that any dispute arose on the date of filing of the application between the principal employer and the Corporation in respect of any contribution payable or recoverable under the Act.
15. In the absence of any dispute, the question regarding Ins.A.No.6/05 & C.O.96/05 8 recoverability cannot be decided by the E.I Court under Section 75 of the Act. The decision taken by the court is therefore without jurisdiction and premature. It is liable to be set aside and I do so. However, on considering the long pendency of the issue and also the fact that order was passed subsequently during the pendency of the case on 06.07.1991 under Section 45A of the Act by the Corporation, I find that an opportunity is to be given to the appellant to challenge the order, if so advised. But, there is no reason to entertain the application filed under Section 75 etc of ESI Act and hence it is only to be dismissed and I do so.
The order under challenge is set aside and the I.C. 48/1991 is dismissed. However, it is made clear that in case of any dispute between the parties in respect of any contribution payable or recoverable under the Act, as per Section 75(1)(g) of the Act, the appellant will be at liberty to challenge the same.
This appeal and cross objection are dismissed.
K. HEMA, JUDGE smp