Delhi District Court
M/S Sandhya Auto Enterprises vs The Regional Director on 5 January, 2016
IN THE COURT OF MS. SHIVALI SHARMA: ASCJ:
CENTRAL DISTRICT: TIS HAZARI COURTS: DELHI
ESIC No. 03/13
Unique ID No. 02401C0414452013
In the matter of :-
M/s Sandhya Auto Enterprises
Through its Proprietor
Smt. Sandhya Devi
W/o Sh. Sita Ram
R/o H. No. 679, Military Road,
Punjabi Basti, Karol Bagh, New Delhi-5. ......Petitioner
VERSUS
1. The Regional Director,
E.S.I. Corporation
Regional Office, Rajendra Bhawan,
Rajendra Place, New Delhi-110008.
2. Recovery Officer
ESI Corporation,
Sub-Regional Office,
Rohini, Sector-7, Delhi-85.
3. The Joint Director,
Sub-Divisional Office (North)
ESI Corporation, D-11,
Sector-7, Rohini, Delhi-85. ......Respondents
Date of institution : 22.08.2013
Reserved for Judgment : 16.12.2015
Date of decision : 05.01.2016
PETITION UNDER SECTION 75 OF ESI ACT 1948
JUDGMENT
ESIC-03/13 M/s Sandhya Auto Enterprises Vs. ESIC Page 1 of 18
1. This is the petition u/s 75 of Employees State Insurance Act, 1948 (hereinafter referred as "ESI Act") challenging the order dt. 10.07.2013 for demand of Rs.3,33,412/-. It is prayed that the said order be quashed being illegal, null and void.
Petitioner's case:
2. As per the case of the petitioner, she is a proprietor of M/s Sandhya Auto Enterprises situated at Plot no.6, Amar Colony near Pipe factory, Kammuruddin Nagar, Nangloi, Delhi-41. The said firm has been closed w.e.f 31.1.2001. Petitioner is an illiterate lady and has studied upto only 4 th standard. She started a factory on 1.4.2000 for manufacturing Oil Seal Rings. She employed six person for wages in her factory and one power press was installed. In the month of November, 2000 one ESI consultant namely Mr. Kamal approached the petitioner and advised her to get her factory registered under the provisions of ESI Act. This advise was despite the fact that only 4 to 6 persons were employed by her in her factory. The consultant got the signature of the petitioner with her official seal on few papers and a blank form. Due to losses on manufacturing and slump in the market, the petitioner was forced to close down her factory on 31.1.2001.
3. The ESI consultant Sh. Kamal committed mischief and filled the blank form signed by the petitioner showing that 10 persons were employed by the petitioner for wages on ESIC-03/13 M/s Sandhya Auto Enterprises Vs. ESIC Page 2 of 18 26.2.2001. He also wrote a letter to ESI Corporation and submitted the form alongwith fictitious list of names of employees allegedly employed by the petitioner. The four additional persons were shown as the employee of the petitioner @Rs.100 and Rs.150 per day.
4. The respondents sent a letter to the petitioner where the factory was declared covered under the provisions of ESI Act w.e.f 26.2.2001 provisionally. After the said declaration none of the official of the corporation visited the place where the petitioner's factory was situated or at her residence. Instead they started sending demand notices of huge amounts despite the fact that the petitioner has already closed down her factory on 31.1.2001. C-18 claiming Rs.1,50,578/- from the petitioner for the period from 26.2.2001 to March, 2006 was sent to the petitioner on a wrong address. Petitioner was asked to appear before the corporation on 6.10.2006 whereas the letter was received by the petitioner sometimes in the month of November, 2006. Petitioner again received C-19/recovery notice claiming Rs.2,18,324/- from her. Thereafter, on 26.2.2007, the petitioner received a recovery notice from the recovery officer/respondent no.2 for a sum of Rs.2,18,374/-. On 25.10.2010 another recovery notice for a sum of Rs.2,83,866/- was received by the petitioner.
5. After the receipt of notice dt. 25.10.2010 the petitioner ESIC-03/13 M/s Sandhya Auto Enterprises Vs. ESIC Page 3 of 18 made a representation to the Director General, ESI Corporation where she explained the whole position and also sent an affidavit from the landlord of her factory wherein the landlord had admitted that the petitioner was her tenant from 1.4.200 to 31.1.2001. Till date, neither the petitioner has received any reply from the Corporation nor any official of the Corporation visited the residence or factory of the petitioner. A vigilance team of the ESI Corporation visited the site of the factory and found the factory closed. They also inquired from certain neighbors and recorded the statement of the petitioner. However, another recovery notice dt. 10.7.2013 for a sum of Rs.3,33,412/- was sent to the petitioner.
6. Hence, the present petition has been filed challenging the demand and recovery notice dt. 10.7.2013 for a sum of Rs.3,33,412/- on the ground that the same is illegal and without any basis; barred by limitation as the factory of the petitioner had already closed down on 31.1.2001, the petitioner is not liable to pay as factory never employed more than six persons from the date of its opening till the closure of the factory. It is also alleged that the demand has been raised without making any investigation or any verification by the officials of the corporation. Petitioner is not liable to pay any contribution and the demand raised is illegal, arbitrary and unjustified.
Respondents' case:-
ESIC-03/13 M/s Sandhya Auto Enterprises Vs. ESIC Page 4 of 187. In their reply, the respondents, being the Regional Director, Recovery Officer as well as Joint Director of ESI Corporation have preliminarily objected to the petition on the ground that the petitioner has not approached the Court with clean hands and has concealed material facts therefrom. The present petition is also not maintainable for non compliance of provision of Section 75(2B) of the ESI Act. It is also alleged that the petition is bad for mis joinder of necessary parties as the workmen of the petitioner have not been made a party to the petition. Reliance in this regard has been placed on the decision of the Apex Court in Fertilisers and Chemical Travancore Ltd Vs Regional Director, ESIC and Ors, Civil Appeal no. 917-918 of 2004. It is also alleged that the petition is liable to be dismissed on the ground of delay and latches as the petitioner has received a notice u/s 45A of ESI Act in Form C-18 way back in 2006, however, the petitioner chose not to either reply to the same or make any representation against the same. By the present petition, the petitioner is infact challenging the order passed u/s 45A way back in 2006 which is barred by the provisions of Section 77 of ESI Act.
8. On merits, it is denied that the factory of the petitioner was closed w.e.f 31.1.2001 or that she had employed only six persons in her factory. It is stated that the plaintiff had herself supplied the list dated 26.02.2001 of 10 employees employed ESIC-03/13 M/s Sandhya Auto Enterprises Vs. ESIC Page 5 of 18 by her. It is also stated that the matter was investigated by the vigilance branch of ESI Corporation during which the landlord of the premises from which factory was being run by the petitioner, clearly made a statement on oath that at least 10 to 12 persons were employed by the petitioner in her factory and the husband of the petitioner was running a factory in the name of his wife and was a tenant in the premises since 1994 to 2004. The petitioner had duly received the letters and demand sent to it by the corporation but had never made any representation against the same thereby indirectly admitting the contents thereof.
9. A rejoinder was filed by the petitioner wherein she reiterated the contents of her petition and denied the allegations made in the written statement.
Issues:
10. From the pleadings of the parties, following issues were framed by Ld. Predecessor of this court on 09.09.2014 for trial, namely:-
1. Whether the impugned demands of Rs.3,33,412/-
as raised by the respondent is illegal and
unjustified?OPP
2. Whether the present petition is not maintainable for non compliance of provisions of Section 75 (2B) of ESI Act?OPR ESIC-03/13 M/s Sandhya Auto Enterprises Vs. ESIC Page 6 of 18
3. Whether the petition is not maintainable for non joinder of necessary party?OPR
4. Whether the petition is barred by law of limitation?
OPR
5. Relief.
Evidence:-
11. The petitioner has examined herself as PW1 in support of her petition and has stated and reiterated on oath the contents of her petition in her evidence affidavit Ex PW1/A. She has relied upon certain documents which are as under:-
(i) Ex PW1/1 is a C-18 dt. 21.9.2006 raising the demand of Rs.1,50,578/-
(ii) Ex PW1/2 is C-19 dt. 22.2.2007 being recovery notice for
an amount of RS.218224/-
(iii) Ex PW1/3 is a recovery notice dt. 26.2.2007 for a sum of
Rs.2,18,324/-
(iv) Ex PW1/4 is another recovery notice dt. 7.6.2007 for a
sum of Rs.2,18,374/-
(v) Ex PW1/5 is the affidavit of the landlord of the petitioner
dt.20.11.2011
(vi) Ex PW1/6 is the representation made the petitioner to
the corporation on 21.3.2012.
(vii) Ex PW1/7 are certain documents received from the Corporation under RTI ESIC-03/13 M/s Sandhya Auto Enterprises Vs. ESIC Page 7 of 18
12. In her cross examination, the petitioner stated that she cannot read the contents of her affidavit. She testified that her factory was closed in the year 2000 but she could not tell the date and month of the closure. She also admitted that she had not replied to the letter received from ESIC in November, 2006.
She again said that her husband had visited the ESIC office after 5 to 10 days of receiving the said letter. She also admitted that she had not given any written reply to the letter received by her in the year 2007.
13. The respondents did not lead any evidence and their evidence was closed by the statement of their counsel given on 22.10.2015.
14. Final arguments have been heard. Record has been carefully perused.
Findings:
15. Now, I shall proceed to give my issue wise findings:-
Issue no.2 Whether the present petition is not maintainable for non compliance of provisions of Section 75 (2B) of ESI Act?OPR
16. Section 75 (2B) of ESI Act, 1948 provides that no matter which is in dispute between a principal employer and a corporation in respect of any contribution or any other dues ESIC-03/13 M/s Sandhya Auto Enterprises Vs. ESIC Page 8 of 18 shall be raised by the principal employer in the Employees Insurance Court unless he has deposited with the Court 50% of the amount due from him as claimed by the Corporation. The proviso to the said sub section provides that the Court may, for reasons to be recorded in writing, waive or reduce the amount to be deposited under this sub section.
17. Admittedly, in the present case, the petitioner had not deposited any portion of the demand raised by the Corporation. However, still the entire case has been tried, evidence has been led by the parties and now the matter is at the stage of final decision. Neither any request was made by the petitioner to waive the amount to be deposited under Section 75 (2B) of the ESI Act nor any request was made on behalf of the respondent to direct the petitioner to deposit the said amount. Although, section 75(2B) makes it mandatory for a petitioner to deposit 50% of the amount being claimed before raising any dispute before an Employees Insurance Court. However, proviso to the said sub section also gives power to the Court to waive or reduce the amount to be deposited. In the present case, neither any amount has been deposited nor any request for waiver or reduction has been made nor the raising of the dispute has been objected to by the respondent on account of non deposition of 50% of the demand amount. Since the trial of the petition has already been completed, I do not deem it appropriate to reject the petition merely on the ground of non ESIC-03/13 M/s Sandhya Auto Enterprises Vs. ESIC Page 9 of 18 deposition of 50% of the amount of demand. This is specially when this deposition of 50% can be waived or reduced by an order of the Court. In these circumstances, in my opinion to hold that the present petition in not maintainable for non compliance of provision of Section 75 (2B) of ESI Act at this stage when the trial has already ended would be highly prejudicial to the interest of the petitioner. It would be appropriate in the facts and circumstances of the case that the petition is decided on merits on the basis of evidence led rather than dismissed being not maintainable for technical reasons. This issue is, accordingly, decided in favour of the petitioner and against the respondents.
Issue no.3 Whether the petition is not maintainable for non joinder of necessary party?OPR
18. The onus to prove this issue was on the respondent. The respondent has relied upon the decision Fertilisers and Chemical Travancore Ltd Vs Regional Director, ESIC and Ors, Civil Appeal no. 917-918 of 2004. I have carefully perused the said decision.
19. The relevant paragraphs of the said judgment are reproduced hereinunder for the sake of clarity:-
"6. Labour Statutes are meant for the benefit of the workmen. Hence, ordinarily in all cases under ESIC-03/13 M/s Sandhya Auto Enterprises Vs. ESIC Page 10 of 18 labour statutes the workmen, or at lease some of them in a representative capacity, or the trade-union representing the concerned workmen must be made a party. Hence, in our opinion the appellant (petitioner before the Employees Insurance Court) should have impleaded atleast some of the persons concerned, as respondents.
11. In our opinion, wherever any petition is filed by an employer under Section 75 of the Act, the employer has not only to implead the ESIC but has also to implead atleast some of the workers concerned (in a representative capacity if there are a large number of workers) or the trade-union representing the said workers. If that is not done, and a decision is given in favour of the employer, the same will be in violation of the rules of natural justice. After all, the real concerned parties in labour matters are the employer and the workers. The ESI Corporation will not be in any way affected if the demand notice sent by it under Section 45A/45B is quashed.
13. In the present case the workmen concerned were not made parties before the Employees Insurance Court, nor was noticed issue to them by the said Court.ESIC-03/13 M/s Sandhya Auto Enterprises Vs. ESIC Page 11 of 18
14. Also, the order of the Employees Insurance Court dated 04.02.1993, relevant portion of which we have quoted, is not a very happy one as no proper determination has been made therein as to whether the workmen concerned are the employees of the appellant and whether they are entitled to the benefit of the Act. No doubt some observations have been made that some labourers come on one day but they may not come on the next day. Having said so, a direction has been given that the ESI Corporation will after making inquiries about the identities of the said workers will register them and then extended the benefit of the Act.
15. In our opinion, the Employees Insurance Court should have itself made a proper investigation of the facts after getting evidence from the parties, including the workmen concerned, and after impleading them as party in the petition, it should have determined the question as to whether the persons concerned were the employees of the appellant or not."
20. A careful perusal of the said judgment shows that the issue before Employees Insurance Court in the said petition was whether certain persons shown as workmen of the concerned firm /petitioner were actually its employees. In the said case, the employer/petitioner had disputed the fact that the said ESIC-03/13 M/s Sandhya Auto Enterprises Vs. ESIC Page 12 of 18 persons were employees of the petitioner. In these circumstances, Hon'ble Supreme Court of India had opined that the petitioner before Employees Insurance Court should have impleaded some of the persons concerned as respondents.
21. Even in the present case, the petitioner is disputing the fact that she had ever employed 10 workers. It is her case that he names of 4 out of 10 workers furnished before the Corporation were false and fabricated names as submitted by the ESI consultant Kamal. However, interestingly neither the names of the said 4 workers who were not the employees of the petitioner have been specified nor they have been made a party to the present petition to explain their stand. In addition to this, no evidence has been led by plaintiff on this aspect.
22. Considering the overall facts of the case, the evidence led and decision of the Apex Court in Fertilisers and Chemical Ltd case (cited supra), I am of the opinion that at least the said four employees as mentioned in the list of employees furnished before ESI Corporation, whose employment is being disputed by the petitioner were necessary party for proper adjudication of the present petition. Accordingly, the present petition is bad for non joinder of necessary parties. This issue is accordingly, decided in favour of the respondents and against the petitioner.
Issue no. 4 Whether the petition is barred by law of ESIC-03/13 M/s Sandhya Auto Enterprises Vs. ESIC Page 13 of 18 limitation?OPR
23. The petitioner has filed the present petition challenging the demand notice dt. 10.7.2013 for a sum of Rs.3,33,412/-. Interestingly, the said notice has not been proved by the petitioner and the notices which were produced in the court are prior in date pertaining to the years 2006 & 2007. This gives an indication that the petitioner has been aggrieved from the previous notices issued in the year 2006 & 2007 as well. However, only the last notice dt. 10.7.2013 has been challenged by her.
24. A copy of recovery notice dt. 10.7.2013 is on record. Perusal of the said notice shows that no new demand has been raised by the corporation from the petitioner vide the said notice. It is only a notice for recovery of earlier dues of Rs.2,18,374 for the period from 26.2.2001 till March, 2006 alongwith further interest w.e.f 1.3.2007 till 10.7.2013. This also indicates that the petitioner is basically challenging the demand raised vide C-18 dt. 21.9.2006 (Ex PW1/1).
25. The petitioner has nowhere disputed having received the demand raised vide C-18 dt. 21.9.2006 or C-19 dt. 22.2.2007 or the demand notices dt. 28.2.2007 as well as 07.6.2007. Infact she has proved on record the originals of the said notices which clearly shows that the said notices were duly received by ESIC-03/13 M/s Sandhya Auto Enterprises Vs. ESIC Page 14 of 18 her. She has simply stated that C-18 dt. 21.9.2006 was sent to a wrong address i.e. 679, Military Road, Pubjabi Bagh, Karol Bagh, New Delhi. However, she never disclosed as to how and when she had received the copy of said C-18 if it was sent to a wrong address. Considering the manner in which the petitioner had mentioned the said notices without disclosing when and in what manner the same were received by her, I have no hesitation in holding that the said notices were received by the petitioner shortly after their issuance.
26. In addition to this, the petitioner has also admitted in her cross examination that she had not replied to the letter received from ESIC in November, 2006. This also shows that she was in knowledge of demand notices being issued by ESIC since atleast November, 2006.
27. Section 77(1A) of ESI Act, 1948, provides that every application for commencement of proceedings before an Employees Insurance Court shall be made within three years from the date on which the cause of action arose. Explanation
(b) to the sub section provides that the cause of action in respect of claim by the Corporation for recovering contributions (including interest and damages) from the principal employer shall be deemed to have arisen from the date on which the said claim has been made by the corporation for the first time.
ESIC-03/13 M/s Sandhya Auto Enterprises Vs. ESIC Page 15 of 1828. In the present case, admittedly, the claim has been made by the corporation for the first time when it issued C-18 dt. 21.9.2006. However, the present petition has been filed only on August, 2013 i.e. after about 7 years of the demand. No reason whatsoever has been given by the petitioner for delay in filing the petition. Accordingly, the present petition is clearly barred by Section 77 of ESI Act having been filed after the statutory period of limitation. This issue is accordingly, decided in favour of the respondents and against the petitioner.
Issue No.1 Whether the impugned demands of Rs.3,33,412/- as raised by the respondent is illegal and unjustified?OPP
29. The petitioner has challenged recovery notice dt. 10.7.2013 on two main grounds. The first ground is that the factory of the petitioner was closed on 31.1.2001 whereas the factory was registered under ESI only on 26.2.2001 and the demands have been raised thereafter. Interestingly, the petitioner has not led any evidence on this aspect. Not even a single document has been proved on record to show that the factory of the petitioner was closed on 31.1.2001. Accordingly, this issue being raised by the petitioner has remained unproved.
30. The second ground of challenge raised by the petitioner is that the petitioner had never employed more than six persons ESIC-03/13 M/s Sandhya Auto Enterprises Vs. ESIC Page 16 of 18 in her factory and accordingly, her factory could not be covered under the ESI Act. Again, the petitioner has not led any evidence to prove this fact. Neither any register or attendance sheet pertaining to the employees has been placed on record nor any other evidence on this aspect has been led by the petitioner. The petitioner has herself admitted that a list of 10 employees under her signatures was submitted with the Corporation as the list of employees working in her factory. It is her case that the said list was fabricated by an ESIC Consultant namely Kamal. However, she has not led any evidence to prove the said fact. In the absence of any evidence even this contention of the plaintiff that she was not employing more than six persons in her factory and thus was not covered under ESI Act is not acceptable.
31. Although not pleaded, other ground raised by the petitioner is to the effect that the demand raised by the Corporation is itself barred by limitation as specified u/s 77 of ESI Act which provides that the no claim shall be made by the Corporation after five years of the period to which the claim relates. I find no merit in this argument of Ld. counsel for the petitioner as in the instant case, the claim has been raised by the corporation for a period of five years i.e. from 26.2.2001 till March, 2006 vide C-18 dt. 21.9.2006 which is well within the period of limitation of five years. The recovery notice dt. 10.7.2013 is merely a reminder to earlier recovery notices after ESIC-03/13 M/s Sandhya Auto Enterprises Vs. ESIC Page 17 of 18 including the further interest accrued on the demand already raised.
32. Thus, the petitioner has miserably failed to prove that the demand of Rs.3,33,412/- as raised by the respondent is illegal and unjustified. No evidence has been led by the petitioner on the two grounds on the basis of which it was being alleged by her that the alleged demand was illegal and unjusitifed.
33. In view of the above discussions, this issue is decided in favour of the respondents and against the petitioner.
Relief
34. In the light of above discussion and my issue wise findings given above, the petition of the petitioner is dismissed. No order as to cost.
35. Decree sheet be prepared accordingly.
36. File be consigned to Record Room, after due compliance. Announced in the open Court today i.e. 05.01.2016 (Total pages 1 to 18) (Shivali Sharma) Additional Senior Civil Judge:
Central District: Tis Hazari Courts: Delhi ESIC-03/13 M/s Sandhya Auto Enterprises Vs. ESIC Page 18 of 18 ESIC no. 03/13 Sandhya Auto Enterprises Vs ESIC 05.01.2016 Present: None.
Vide separate order announced & dictated in the open court, the petition of the petitioner is dismissed. No order as to cost.
Decree sheet be prepared accordingly.
File be consigned to Record Room, after due compliance.
(Shivali Sharma) ASCJ/Central/Delhi 05.01.2016 ESIC-03/13 M/s Sandhya Auto Enterprises Vs. ESIC Page 19 of 18