Delhi District Court
M/S. Saya Automobile Ltd vs Employees State Insurance Corporation on 13 January, 2017
IN THE COURT OF MS. SHUCHI LALER, SCJ: RC:
(SHAHDARA),
KARKARDOOMA COURTS, DELHI.
Suit No. 11091/16
In the matter of:
M/s. Saya Automobile Ltd.
Through its Director
Situated at A-21-22,
G.T. Karnal Road,
Industrial Area,
Azad Pur, Delhi- 110033 .........Petitioner
Versus
Employees State Insurance Corporation
Through its Deputy Director
(Insurance-I) Divisional Office,
Parsvnath Metro Tower,
Second Floor, Near Metro Station,
Shahdara, Delhi- 110032 .........Respondent
O R D E R:
1. Vide this common order, the court shall dispose off the following three applications moved by the petitioner:
i) Application for stay of notice under Section 45-A dt.
30.09.2016 of Rs. 1,40,89,120/- till final disposal of the present petition.
ii) Application under Section 75 (2B) for exemption from depositing 50% of the impugned demand amount.
iii) Application for desealing the bank accounts of the petitioner CS No. 11091/16 M/s. Saya Automobile Ltd. v Employees State Insurance Corporation Page 1 of 7 pages company.
2. Briefly stated facts relevant for the disposal of the present applications are as under:
The petitioner has filed the present petition under Section 75 of ESI Act, 1948 challenging the impugned notice dt. 30.09.2016 issued by the respondent corporation for recovery of adhoc demand of Rs. 1,40,89,120/-. The case of the petitioner company is that it is regularly making the payment of the contributions to ESIC and the records of the petitioner company are regularly being inspected by the respondent. It has been stated that the petitioner company vide letter dt. 27.06.2016 was called upon by the respondent to produce its records. The records were not available, therefore, the petitioner company sought time for the same. The SSO visited the petitioner company and requested for submission of audited income tax balance sheets for the period of 2011 to 2015 which were furnished by the petitioner company.
Thereafter, the petitioner company received a C-18 adhoc notice dt. 18.09.2016 whereby a demand of Rs. 1,40,89,120/- has been calculated by the respondent on the basis of the income tax balance sheets. It has been alleged that the entire amount shown in the balance sheet on account of workshop expenses, provident fund, staff welfare funds, gratuity leave, service maintenance charges, etc. has not been CS No. 11091/16 M/s. Saya Automobile Ltd. v Employees State Insurance Corporation Page 2 of 7 pages exempted. Accordingly, it has been alleged that the policy adopted by the respondent is arbitrary and unjustified. Hence, the present petition.
3. The respondent has contested the present petition by filing detailed written statement wherein it is stated that on the complaint of Sh. Rajesh Kumar Rana, the data of employees of petitioner company was examined and it was found that the petitioner company has gradually decreased compliance as against 129 employees in December 2010 to 69 employees only in January 2016. Accordingly, a surprise visit of following three offices of petitioner company was conducted:
i) Khasra No. 290/2, Siraspur Badli Opp. Siraspur Gurudwara GT Karnal Road, Delhi;
ii) A- 21-22, GT Karnal Road Industrial Area, Azadpur, Delhi- 110033;
iii) 153-154, Gurmandi, GT Karnal Road, Delhi.
During the visit of SSO on 06.06.2016, it was found that 55 employees were working and were coverable under Section 2(9) of ESI Act but were not covered under ESI scheme. Ample time was granted to the petitioner company to produce relevant records from 27.06.2016 to 30.09.2016, and due to their failure, a speaking order under Section 45-A for the period October 2011 to June 2016 was passed. It has been alleged that the petitioner company is evading compliance w.r.t.
CS No. 11091/16 M/s. Saya Automobile Ltd. v Employees State Insurance Corporation Page 3 of 7 pages many employees who are engaged through contractors and sister companies of the unit, namely, M/s Valo Automotive, M/s Sayaj Solar India Private Limited, M/s APS Agencies Private Limited and M/s Sava Leasing Private Limited. Accordingly, dismissal of the present petition with exemplary cost has been prayed for.
4. In the application for stay, the petitioner has stated that there is every likelihood of the demand raised by the respondent being set aside and it has good prima facie case. Hence, stay against recovering adhoc demand through notice under Section 45-A dt. 30.09.2016 of Rs. 1,40,89,120/- till final disposal has been prayed. In the reply, the respondent has stated that the application for stay is sheer misuse and abuse of process of law and in case it is allowed, it would be against the interest and welfare of the employees of the petitioner company.
5. In the second application, the petitioner has sought exemption from depositing 50% of the impugned demand before this court. In reply, the respondent has averred that it is the mandate of Section 75 (2-B) of ESI Act that the petitioner company has to deposit 50% of the demand and only then the petition would be admitted.
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6. In the third application, the petitioner has averred that on 09.01.2017, it came to know that their two current accounts and one CC limited account has been seized by the respondent. The seizure of the bank accounts is not only affecting the day to day affairs of the company but even salaries of the employees of the period December 2016 could not be disbursed. The respondent, has stated that the bank accounts of the petitioner have been freezed so as to recover the amount of Rs. 1,40,89,120/-
7. Rival submissions advanced at bar have been heard and record perused.
8. By way of instant suit, the petitioner has challenged the impugned notice under Section 45-A dated 30.09.2016 for recovery of adhoc demand of Rs. 1,40,89,120/- for the period 10/11 to 6/16. The stand of petitioner's company is that the respondent has picked entire heads from its balance sheet and has raised the demand arbitrarily. It has also been stated that staff of petitioner company visited the office of respondent on 28.09.2016 but respondent did not verify the record.
9. On the contrary, the respondent has alleged that on 06.06.2016, during visit of Social Security Officer, 55 employees were found coverable under ESI Scheme but the CS No. 11091/16 M/s. Saya Automobile Ltd. v Employees State Insurance Corporation Page 5 of 7 pages petitioner company had not covered them. It has further been alleged that the petitioner company did not produce relevant record despite several opportunities, thereafter, speaking order was issued.
10. Both the parties have filed plethora of documents in support of their respective contentions. At this ad interim stage, giving preference to one set of documents over the other would lead to prejudging the matter in controversy. The operation of the impugned notice under Section 45-A dated 30.09.2016 of an amount of Rs. 1,40,89,120/- for the period 10/11 to 6/16 needs to be stayed for according an opportunity to the parties to adduce evidence in support of their pleas.
11. Section 75(2-B) of ESI Act mandates deposit of 50% of amount due by the Principal Employer with the court, however, proviso to said section confers discretion upon the court, for reasons to be recorded in writing, to waive or reduce the amount.
12. In the proceedings dated 30.09.2016, it is recorded that the employee of petitioner company had raised an objection that he had produced the record but the respondent is not willing to check / verify its records. In these circumstances, it is a matter of trial whether the record was not submitted by CS No. 11091/16 M/s. Saya Automobile Ltd. v Employees State Insurance Corporation Page 6 of 7 pages petitioner company or the respondent did not verify the record despite its production by petitioner company. The specific objection recorded in proceedings dated 30.09.2016 does entail the petitioner company to reduction in recovery amount.
13. Accordingly, the operation of notice dated 30.09.2016 of an amount of Rs. 1,40,89,120/- for the period 10/11 to 6/16 is stayed subject to deposit of 35% of the said amount by way of FDR/s in the name of court in two equal installments within 2 months from today. The amount so deposited in the court shall be liable to adjustment subject to final outcome of present petition. The bank accounts of petitioner company such as - (i) Saya Automobiles Ltd.; Bank:-
Canara Bank, Branch:- H- 54, Connaught Circus, New Delhi; (ii) Saya Automobiles Ltd., Bank:- HDFC Bank Ltd., Branch:- B- 10, Gujranwala Town, Part-I, Delhi-110033 and (iii) Saya Automobiles Ltd., Bank:- ICICI Bank Ltd., Branch:- Model Town- III, Delhi be desealed. The applications in hand are accordingly disposed off. Nothing stated hereinabove shall tantamount to expression of opinion on the merits of the case. Copy of order be given dasti.
Announced in the open court (SHUCHI LALER)
Dated: 13.01.2017 SCJ/RC (SHAHDARA)
Karkardooma Courts, Delhi
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