Gujarat High Court
Deputy Director, Employees State ... vs M/S. Associated Dyestuff Pvt. Ltd on 17 February, 2025
NEUTRAL CITATION
C/FA/1534/2024 ORDER DATED: 17/02/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 1534 of 2024
With
CIVIL APPLICATION (FOR STAY) NO. 1 of 2023
In R/FIRST APPEAL NO. 1534 of 2024
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DEPUTY DIRECTOR, EMPLOYEES STATE INSURANCE CORPORATION & ANR.
Versus
M/S. ASSOCIATED DYESTUFF PVT. LTD.
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Appearance:
SHIVANG P JANI(8285) for the Appellant(s) No. 1,2
MR PRIYAM M SHAH(12095) for the Defendant(s) No. 1
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CORAM:HONOURABLE MS. JUSTICE NISHA M. THAKORE
Date : 17/02/2025
ORAL ORDER
[1.] By way of this appeal under Section 82 of the Employees State Insurance Act, 1948, (hereinafter be referred to as "the Act of 1948"), the appellant- ESI Corporation challenges the judgment and order dated 18.05.2022 passed by the learned Employees Insurance Court at Ahmedabad in E.S.I. Application No.7 of 2019 (henceforth, "impugned judgment and order"), whereby the application preferred by the respondent-employer under Section 75 of the Act of 1948 came to be allowed.
[1.1] By the said impugned judgment and order, the learned ESI Court has been pleased to hold the appellant-Corporation not entitled Page 1 of 27 Uploaded by SUYASH KUMAR SRIVASTVA(HC01570) on Mon Feb 17 2025 Downloaded on : Tue Feb 18 00:51:47 IST 2025 NEUTRAL CITATION C/FA/1534/2024 ORDER DATED: 17/02/2025 undefined to recover the amount of dependent benefit from the respondent under Section 68 of the Act, 1948. The learned ESI Court has further been pleased to hold that the respondent-employer is not liable to pay the amount as sought to be recovered by the appellant as per the letter dated 08.08.2018 issued by the appellant-Corporation. [2.] In order to appreciate the controversy in the present appeal, the relevant facts as borne out from the record, are briefly summarized as under:
[2.1] The respondent- company is covered under the provisions of Employees State Insurance Corporation. The person named Satyaprakash Ramganesh Mishra was appointed by the respondent-
company and he joined as an employee in respondent-company on 20.06.2016. On 28.06.2016, when the said employee was working at the respondent- plant and while he turned on the switch, it caused an electric shock and he expired on the spot around 9:30 p.m. [2.2] On 29.06.2016, the ESI form of the said deceased employee was submitted to the branch office of the appellant-
Corporation. The appellant-Corporation proceeded to issue show cause notice dated 13.10.2016 to the respondent-company on the Page 2 of 27 Uploaded by SUYASH KUMAR SRIVASTVA(HC01570) on Mon Feb 17 2025 Downloaded on : Tue Feb 18 00:51:47 IST 2025 NEUTRAL CITATION C/FA/1534/2024 ORDER DATED: 17/02/2025 undefined ground that particulars and the signature of the above said employee were not obtained before taking him into employment on 20.06.2016 as required under the Regulation 12 and Regulation 110 of the Employees' State Insurance (General) Regulations, 1950. The company was, therefore, called upon to respond as to why the company should not be prosecuted for the offence under Section 85(g) of the ESI Act, 1948. On the same date, a second show cause notice was also addressed to the respondent company by pointing out that the particulars and the signature of the deceased employee were not obtained in the declaration form before taking him into the employment on 20.06.2016 as required under the Regulation 12 of the ESI (General) Regulations, 1950. It was noticed by the Corporation that the employee was registered only after he met with an accident while working in the respondent-factory. Thus, the Corporation had noted that the employee was not registered in time and his dependents were likely to be deprived of the benefits provided under the ESI Act. The show cause notice was, therefore, issued for non-compliance of the aforesaid regulation as well as to render the company liable to bear the entire amount of dependent benefits payable to the heirs of the deceased. The show cause notice was issued seeking response of the respondent company as to why the entire amount of accident benefit should not be recovered under Section 68 of the Act.
Page 3 of 27 Uploaded by SUYASH KUMAR SRIVASTVA(HC01570) on Mon Feb 17 2025 Downloaded on : Tue Feb 18 00:51:47 IST 2025 NEUTRAL CITATION C/FA/1534/2024 ORDER DATED: 17/02/2025 undefined [2.3] The aforesaid show cause notices were responded by the
respondent-company on 19.07.2016 thereby inviting attention of the appellant-Corporation of the fact that though the deceased employee had joined on 20.06.2016, the necessary details with regard to the family and the bank accounts were sought for online registration. Before such details could have been furnished by way of declaration by submitting form as prescribed under the ESI Act, the deceased had met with an accident on 20.06.2016. The appellant-Corporation without considering the aforesaid submissions, on 08.08.2018, addressed a letter seeking recovery of capitalized value of dependent benefit to the tune of Rs.5,78,300/- within period of 15 days, failing which, it was stated that recovery shall be proceeded under Section 45 (C) to 45(I) of the Act.
[2.4] Being aggrieved and dissatisfied with the aforesaid action of the appellant-Corporation, the respondent-company had preferred application under Section 75 of the Act, 1948, by approaching the learned ESI Court, Ahmedabad, which was registered as ESI Application No.7 of 2019, thereby praying for declaration that the letter dated 08.08.2018 seeking recovery of the amount towards contribution, is illegal and to declare that no such recovery is permissible, in light of the provisions of the Act, from the applicant-
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company. Before the learned ESI Court, the appellant-Corporation has appeared and was heard. After considering the submissions of the respective parties, the learned Judge, ESI Court, by impugned judgment and order dated 18.05.2022, was pleased to allow the application preferred by the respondent-company, by holding that the respondent-Corporation was not entitled to recover the amount of contribution towards the dependency benefits of heirs of the deceased- Satyaprakash Ramganesh Mishra. At the same time, the learned Judge has also quashed and set aside the letter dated 08.08.2018 issued by the appellant-Corporation to the respondent- company, directing to payment of the aforesaid amount. The learned Judge has issued appropriate directions with regard to refund the amount of Rs.1,50,000/- deposited on 28.07.2021, pursuant to the order dated 27.02.2020 passed below Exh.2 in the aforesaid proceedings. Hence, the present appeal at the instance of the ESI Corporation under Section 82 of the Act, 1948.
[3.] The present appeal was preferred by the appellant- Corporation along with delay condonation application, which was registered as Civil Application(For Condonation of Delay) No.1089 of 2023 in F/First Appeal No.19802 of 2023. After hearing the learned advocates for the respective parties, this Court vide order dated Page 5 of 27 Uploaded by SUYASH KUMAR SRIVASTVA(HC01570) on Mon Feb 17 2025 Downloaded on : Tue Feb 18 00:51:47 IST 2025 NEUTRAL CITATION C/FA/1534/2024 ORDER DATED: 17/02/2025 undefined 27.03.2024, was pleased to condone the delay of 359 days in preferring the captioned appeal.
[4.] Learned advocate Mr. Shivang Jani has appeared for the appellant-Corporation and learned advocate Mr. Priyam M. Shah has entered the appearance on behalf of the respondent-company, having entered his appearance at delay condontaion stage. [5.] The learned advocates for the respective parties have made extensive submissions. The paper book of relevant documents has also been placed on record for consideration of this court by the respondent-company. The judgments relied upon during the course of hearing, have also been placed on recod by the learned advocate for the respondent.
[6.] Mr. Shivang Jani, learned advocate for the appellant- Corporation, at the outset, has drawn my attention to the relevant dates. While inviting the attention two show cause notices issued by the respondent-company, learned advocate has submitted that mainly on the ground of non-compliance of Regulation 12 of ESI (General) Regulations, 1950, the proceedings were initiated against the respondent-company. The scheme of the Act places primary obligation Page 6 of 27 Uploaded by SUYASH KUMAR SRIVASTVA(HC01570) on Mon Feb 17 2025 Downloaded on : Tue Feb 18 00:51:47 IST 2025 NEUTRAL CITATION C/FA/1534/2024 ORDER DATED: 17/02/2025 undefined on the employer to take insurance of all its employees and to pay contribution. Since, the respondent-company being a principal employer, failed to make any payment and discharged his liability. The cause of action arose for the Corporation to issue show cause notices. [6.1] Learned advocate has referred to Regulation 12 of ESI (General) Regulations, 1950, which mandates the employer before taking the person into employment in establishment after the appointed date, to furnish as well as to demand particulars required for the declaration form including the temporary identification certificate. It is mandatory upon the employer to enter the particulars in the declaration form including the temporary identification certificate and obtain the signature or thumb impression of such employee and also complete the form as indicated thereon. The prescribed form in this regard is appended at the end of the regulations. The learned advocate has further referred to the Form-1. He has further pointed out that at the stage of registration of the employee with the Corporation, the employer is directed under the statute to submit two declaration forms as prescribed under Form-1, which is required to be counter signed by the principal employer.
[6.2] The learned advocate has also referred to the show cause
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notice, at this stage, to point out that the deceased was appointed on 20.06.2016 and the accident took place on 28.06.2016, whereas the aforesaid declaration forms were submitted by the respondent- company with the branch office of ESI Corporation on 29.06.2016. He has, therefore, submitted that as per Regulation 12, the aforesaid declaration form was required to be furnished prior to or on the date of joining of the deceased as an employee. Thus, it is evident that the requisite form was furnished after the occurrence of the accident and the death of the employee. Therefore, there was clear violation of Regulation 12 of ESI (General) Regulations, 1950. He has, therefore, submitted that substantial question of law, which falls for consideration of this Court is that, the learned ESI Court failed to appreciate that under Section 68 of Act, 1948, the Corporation has right to recover the amount of contribution from the principal employer. Since respondent-company had failed to make any payment, the appellant-Corporation was entitled to recover the dependent benefit amount, which was already paid to the heirs of the deceased employee. The primary duty of the employer to take insurance of all the employees to pay the contribution, being not discharged by the respondent-employer, the learned ESI Court gravely erred in holding that the Corporation was not liable to recover the amount of Rs.5,78,300/-.
Page 8 of 27 Uploaded by SUYASH KUMAR SRIVASTVA(HC01570) on Mon Feb 17 2025 Downloaded on : Tue Feb 18 00:51:47 IST 2025 NEUTRAL CITATION C/FA/1534/2024 ORDER DATED: 17/02/2025 undefined [6.3] By making the aforesaid submissions, learned advocate
for the appellant has urged this Court to admit the appeal. [7.] Per contra, Mr. Priyam M. Shah, learned advocate on record for the respondent-company, has vehemently objected to the aforesaid submissions made by learned advocate for the appellant- Corporation. Learned advocate for the respondent, at the outset, has raised preliminary objection with regard to entertaining the appeal at the instance of the appellant-Corporation by contending that no substantial question of law arises for consideration of this Court, in view of Section 82 of the Act, 1948. To substantiate his submissions, learned advocate has placed reliance upon the various authorities of the Hon'ble Supreme Court, of this Court and other High Courts. The list of authorities as relied upon by learned advocate for the respondent on the issue of substantial question of law, are as under:
Sr. Particulars Para Page
No. Nos. Nos.
1. Bhanubhai Govnindbhai v. 7.5, 1 to
7.6 15
Employees State Insuarnce Corp.
and 8
Judgment dt. 05.10.2018 passed by
Hon'ble Gujarat High Court in First
Appeal No.2328 of 2000
2. Abdul Shakur Umar Sahigara and 24,25 16 to
and 23
Co.V. Regional Director, Employees
26
State Insurance Corporation
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[2004(2) Mh. L.J. 441]
3. Regional Director/
Recovery 6 24 to
and7 25
Officer v. Nitinbhai Vallabhbhai
Panchasara
[2022 SCC OnLine Guj 2534]
4. Dnyanoba Bhaurao Shemade v. 10 26 to
33
Maroti Bhaurao Marnor
[(1999) 2 SCC 471]
5. Boodireddy Chandraiah& Ors. v. 4 and 34 to 5 39 Arigela Laxmi & Anr.
[(2007) 8 SCC 155]
6. Regional Director V. Shakeenabibi 12 40 to and 69 Munarashkan Pathan & Anr.
13Judgment dt. 04.02.2010 passed by the Hon'ble Gujarat High Court in FA 195 of No. 2010. [7.1] Learned advocate has further submitted that he may also be permitted to address the Court on merits of the case to support the impugned judgment and order passed by the learned ESI Court. To meet with the submissions of learned advocate for the appellant- Corporation with regard to the particulars and details being not furnished by submitting Form No.1, in view of Regulation 12, learned advocate has submitted that it is not in dispute that the forms were submitted on 29.06.2016, which is one day after the date of occurrence of the accident. He has further submitted that in fact, E-
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Pahchan Card was issued by the ESI Corporation in the name of employee on the same day on successful registration of employee. Thus, the employee was registered under the Act. [7.2] According to him, the only dispute which the respondent- company has raised by making submissions, which is otherwise not forming part of the grounds raised in the appeal is the non-compliance of Regulation 12. It is further submitted by learned advocate that only scope of Regulation 12 is to gather the requisite details of the employee at the time of his joining the service. The respondent- company had duly furnished the declaration forms within the extended period of 10 days as provided under Regulation 14 of the ESI (General) Regulations, 1950. Learned advocate has further referred to Regulation 14, which permits the employer to send the appropriate office by registered post or messenger, all declaration forms without detaching the temporary identification certificate prepared under these regulations together with a return in duplicate Form-3 within 10 days of the date on which the particulars for the declaration forms were furnished. He has, therefore, submitted that the provision itself permits the employer to furnish such declaration within the period of 10 days from the date when the particulars are furnished.
Page 11 of 27 Uploaded by SUYASH KUMAR SRIVASTVA(HC01570) on Mon Feb 17 2025 Downloaded on : Tue Feb 18 00:51:47 IST 2025 NEUTRAL CITATION C/FA/1534/2024 ORDER DATED: 17/02/2025 undefined [7.3] In the peculiar facts of the case, the date of joining of the
employee is indisputably 20.06.2016, whereas the accident took place on 28.06.2016 and the declaration form were furnished with the branch office of the appellant-Corporation on 29.06.2016, which according to him, was within the aforesaid prescribed period of 10 days under Regulation 14. He has, therefore, submitted that as such there is no breach of Regulation 12 of the ESI (General) Regulations, 1950, as raised by the appellant-Corporation by issuing show cause notice. Learned advocate has further submitted that looking to the claim of the Act itself, the submission of the declaration forms, registration of employee, etc., are mere formalities and would have no bearing on so far as extending the dependency benefit under the Act to the heirs of the deceased employee is concerned. In support of his contention, the learned advocate for the respondent has placed reliance upon the decision of Hon'ble High Court of Madras in case of Chennai Radha Engineering Works (P) Ltd. and another vs. Employees' State Insurance Corporation reported in 2023 SCC OnLine Mad 4146.
[7.4] Learned advocate for the respondent has placed reliance upon the judgment of the Hon'ble Supreme Court in the case of Bharagath Engineering vs. R. Ranganayaki and Another reported in Page 12 of 27 Uploaded by SUYASH KUMAR SRIVASTVA(HC01570) on Mon Feb 17 2025 Downloaded on : Tue Feb 18 00:51:47 IST 2025 NEUTRAL CITATION C/FA/1534/2024 ORDER DATED: 17/02/2025 undefined (2003) 2 SCC 138. The Hon'ble Supreme Court, after considering the dependent benefits, as provided under Section 58 of the Act, 1948, has noted that the payment or non-payment of contributions and action or non-action prior to or subsequent to the date of accident is really inconsequential. Once the deceased employee is an "insured person" as defined in the Act, and he sustains an employment injury as defined under Section 2(8) of the Act and there being no dispute that he was in employment of the employer, by operation of Section 53 of the Act, the proceedings under the Compensation Act were excluded statutorily.
[7.5] Lastly, learned advocate has submitted that even if for a moment it is to be accepted that the employer was not registered on the date of the accident and the contribution towards the dependency benefits as provided under the Act, was not paid by the employer and even the employee had expired during the course of employment in an accident; if the company wanted to escape the recourse of the lawsuit, the company may not have reported about the accident. The respondent company on the very next date of the occurrence of the accident, which took place on 20.06.2016 at around 9:30 p.m., had reported to the concerned branch office of ESI Corporation on 29.06.2016. The requisite details of declaration form were also Page 13 of 27 Uploaded by SUYASH KUMAR SRIVASTVA(HC01570) on Mon Feb 17 2025 Downloaded on : Tue Feb 18 00:51:47 IST 2025 NEUTRAL CITATION C/FA/1534/2024 ORDER DATED: 17/02/2025 undefined submitted before the concerned branch office of the ESI Corporation. As regards the deposit of the contribution is concerned, the reliance was placed on the Regulation 31, which prescribes time for payment of contribution. It was submitted that the employer who is liable to pay contribution in respect of any employee, is required to make payment of such contributions within period of 15 days from last date of the calendar month in which the contribution falls due. Learned advocate has further submitted that the contributions with regard to the deceased employee along with other employees was submitted by the respondent-company prior to the period of 15 days of the next month of July-2016. The aforesaid documents were placed for consideration before the ESI Court at Exh.36. The Corporation had also issued challan acknowledging the deposit of the aforesaid contribution at Exh.37. The details of bank statement of respondent- company of the month of July-2016 has also been placed on record at Exh.38 whereby at entry no.157, the aforesaid amount towards contribution of the employees of the respondent-company has been realized by the appellant-Corporation.
[7.6] By making the aforesaid submissions, learned advocate for the respondent has submitted that learned ESI Court has rightly appreciated the case of the respondent company as per the provisions Page 14 of 27 Uploaded by SUYASH KUMAR SRIVASTVA(HC01570) on Mon Feb 17 2025 Downloaded on : Tue Feb 18 00:51:47 IST 2025 NEUTRAL CITATION C/FA/1534/2024 ORDER DATED: 17/02/2025 undefined of law, has arrived at the conclusion that the appellant-Corporation was not entitled to recover any amount under Section 68 of the Act towards the dependency benefit of the deceased employee, and has rightly, quashed and set aside the letter dated 08.08.2018 issued for recovery of the aforesaid alleged amount of contribution against the respondent-company. He has, therefore, submitted that merely because a second view can be taken on re-appreciation of the evidence, the same cannot be treated as substantial question of law, which calls for any interference in the appeal preferred under Section 82 of the Act.
[8.] Mr. Shivang P. Jani, learned advocate on record for the appellants, in re-joinder, has submitted that Section 68 of the Act permits recovery of amount of contribution, which has arisen for account of breach of Regulation 12 of ESI (General) Regulations, 1950. He has further submitted that the declaration Form No.1 submitted by the employer on 29.06.2016 does not bear the signature of the deceased employee, and therefore, the requisite declaration form has not been filed by the respondent-company. According to him, the respondent-employer had, therefore, not complied with the mandatory provisions of Regulation 12 of ESI (General) Regulations, 1950. Learned advocate has further referred to Regulation 110, and Page 15 of 27 Uploaded by SUYASH KUMAR SRIVASTVA(HC01570) on Mon Feb 17 2025 Downloaded on : Tue Feb 18 00:51:47 IST 2025 NEUTRAL CITATION C/FA/1534/2024 ORDER DATED: 17/02/2025 undefined has pointed out that E-Pahchan Card is issued by the ESI Corporation, in light of the aforesaid regulation, mere issuance of the E-Pahchan Card would not amount to the registration of the employee. While referring to Clause 1.12 of the Manual, learned advocate has submitted that it clearly indicates that the declaration form was required to be tendered before taking the employee into the employment. Though Regulation 14 provides that declaration form with complete requisite details along with return of declaration forms in duplicate has to be sent by the employer of the appropriate branch office within a period of 10 days, does not exempt the employer from complying with Regulation 12. According to the learned advocate, the time prescribed under the Regulation 14 would not be available at the stage of Regulation 12.
[9.] Considering the submissions made by learned advocates for the respective parties and in light of the documents placed on record, by way of paper-book and the procedure envisaged, in view of settled legal position that for considering admission of appeal under Section 82 of the Act of 1948, this Court is required to find out as to whether substantial question of law arises for consideration in the facts of the case to admit the appeal.
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show cause notice dated 13.10.2016 issued by the ESI Corporation by invoking the powers conferred under Section 68 of the Act of 1948. The contents of the aforesaid show cause notice deserves mentioned at this stage, which read as under:
GUJARAT REGIONAL OFFICE EMPLOYEES' STATE INSURANCE CORPORATION (MINISTRY OF LABOUR & EMPLOYMENT, GOVT. OF INDIA) (ISO 9001: 2008 Certified Organization) PANCHDEEP BHAVAN, ASHRAM ROAD, AHMEDABAD-380014 Telephone No. 079-27582400/450, Fax No.079-27540498 Web Site: www.esicgujarat.org, E-mall [email protected] No. G/CB/DB/477/VTV/2016 Date:13/10/2016 To,
1) M/s Associated Dyestuff Pvt. 2) Shri Viral Hemendrabhai Ltd. A-1/4, Phase1, GIDC, Shah 2, Jain nagar society, Opp.
Vatva, Ahmedabad - 382445. Sanjivani Hospital, New Sharda Mandir road, Paldi, Ahmedabad
- 380007.
3) Smt. Anujaben Viralbhai Shah 2, Jain nagar society, Opp.
Sanjivani Hospital, Now Sharda Mandir road, Paldi, Ahmedabad
- 380007.
SHOW CAUSE NOTICE Subject:- Show Cause Notice for violation of Regulation 12 (read with Regulation 110) of the ESI (General) Regulations, 1950.
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Reference: Death Case of Late Shri Satya Prakash, Insurance No. 3711515256.
Sir, I am directed to inform you that the factory known as M/s Associated Dyestuff Pvt. Ltd., Code No. 37000155170000304 has failed to comply with the provisions of the ESI Act, in respect of the following items.
The particulars and signature of the above said employee were not obtained before taking him into employment on 20/06/2016 as required Under Regulation 12 & Regulation 110 of the ESI (Gen.) Regulations, 1950.
I therefore, call upon you to show cause within 10 days from the date of receipt of this letter why you as one of the principal employers of the factory of M/s Associated Dyestuff Pvt. Ltd, should not be prosecuted for the said offense under Section 85(g) of the ESI Act, 1948.
In case, however, you were not holding the office mentioned above during the period in question, you are requested to intimate the exact date from which you ceased to hold such office and also the name and address of person who was holding the said office during that period.
Yours faithfully.
Sd/-
(Y K Vadsara)
Dy. Director
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[11.] The second show cause notice dated 13.10.2016 also
deserves to be considered. The contents of which, are reproduced hereunder:
GUJARAT REGIONAL OFFICE EMPLOYEES' STATE INSURANCE CORPORATION (MINISTRY OF LABOUR & EMPLOYMENT, GOVT. OF INDIA) (ISO 9001: 2008 Certified Organization) PANCHDEEP BHAVAN, ASHRAM ROAD, AHMEDABAD-380014, GUJARAT Telephone No. 079-27582400/450, Fax No. 079-27540498 Web Site: www.esicgujarat.org, E-mail [email protected] No. G/CB/DB/477/VTV/2016 Date: 13/10/16 To,
1) M/s Associated 2) Shri Viral Hemendrabhai Dyestuff Pvt. Ltd. A-1/4, Shah 2, Jain nagar society, Phase1, GIDC, Vatva, Opp. Sanjivani Hospital, New Ahmedabad-382445. Sharda Mandir road. Paldi, Ahmedabad - 380007.
3) Smt. Anujaben Viralbhai
Shah 2, Jain nagar society,
Opp. Sanjivani Hospital,
New Sharda Mandir road,
Paldi, Ahmedabad -
380007.
SHOW CAUSE NOTICE
Subject:- Show Cause Notice in the death case in respect of Late Shri Satya Prakash Insurance No. 3711515256 Under Section 68.Page 19 of 27 Uploaded by SUYASH KUMAR SRIVASTVA(HC01570) on Mon Feb 17 2025 Downloaded on : Tue Feb 18 00:51:47 IST 2025
NEUTRAL CITATION C/FA/1534/2024 ORDER DATED: 17/02/2025 undefined Sir, I am directed to inform you that the employer of the factory known as M/s Associated Dyestuff Pvt. Ltd., Code No. 37000 155170000304 has failed to comply with the provisions of the ESI Act, in respect of the following items.
The particulars and signature of the above said employee were not obtained in the Declaration Form before taking him in to employment on 20/06/2016 as required Under Regulation 12 of the ESI (Gen.) Regulations 1950. He was registered only after he met with accident while working in your factory. By not registering the employee in time, his dependents were likely to be deprived of the benefits provided under the E .S. I. Act. Now the benefit payable to the dependents is under consideration of this office.
The aforesaid non-compliance on your part has rendered yourself liable to bear the entire amount of the dependent benefits payable to deceased IP's widow & children.
You as one of the principal employers of M/s Associated Dyestuff Pvt . Ltd. are hereby called upon to show cause within 10 days from the date of receipt of this notice as to why the entire amount of accidental benefits should not be recovered from you under Section 68 of the E.SI. Act.
Yours faithfully, sd/-
(Y K Vadsara)
Dy. Director
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[12.] It is an undisputed fact that no prosecution has been
initiated by the ESI Corporation against the respondent-company for the offence under Section 85(g) of the Act, 1948, as against show cause notice dated 13.10.2016. However, in view of the show cause notice issued under Section 68 of the Act, produced at Page no.14 of the paper book, the same has culminated into the computation of recovery amount as recorded in the order dated 08.08.2018 produced at page no.16 of the paper book. Thus, the ESI Corporation by initiating the proceedings under Section 68 of the Act, has raised recovery of Rs.5,78,300/- on the ground of non-compliance of Regulation 12 of ESI (General) Regulations, 1950, as by not registering the employee in time, has left the dependents of the deceased deprived of the benefits provided under the Act, 1948. [13.] It would be appropriate to note, at this stage, that indisputably the ESI Corporation has sanctioned the dependency benefits of Rs.4,95,538/- in favour of the heirs and legal representatives of the deceased employee, even prior to the issuance of show cause notice. Against, the aforesaid capitalized value, the Corporation has raised interest at the rate of 8% from the date of such sanction till 30.07.2018 for an amount of Rs.82,762/-, and therefore, the recovery of Rs.5,89,176/- has been raised by the ESI Page 21 of 27 Uploaded by SUYASH KUMAR SRIVASTVA(HC01570) on Mon Feb 17 2025 Downloaded on : Tue Feb 18 00:51:47 IST 2025 NEUTRAL CITATION C/FA/1534/2024 ORDER DATED: 17/02/2025 undefined Corporation from the respondent-company as against the aforesaid recovery. It is the specific case of the respondent-company that within the period of 15 days of the next month, as required under Regulation 31 of the Regulations of 1950, the contributions of the deceased employee for the month of June-2016, had already been deposited with the ESI Corporation.
[14.] It is an undisputed fact that the such amount has also been realized by the ESI Corporation, in view of the Challan produced on record at Exh.36. Even the bank statement details of the month of June-2016 produced on record at Exh.37 confirms the above aspect as evident from entry. The Corporation has projected their case of recovery by referring to the letter dated 08.08.2018 whereby the amount of contribution with interest is sought to be recovered, by referring to the show cause notice issued under Section 68 of the Act. However, on perusal of the contents of the show cause notice under Section 68 of the Act, is confined to the non-compliance of Regulation 12 of the ESI (General) Regulations, 1950. The only ground which is raised for non-compliance of Regulation 12 of the ESI (General) Regulations, 1950, is the particulars and signatures of the deceased employee being not obtained in the declaration form before taking him in employment on 20.06.2016. The ESI Corporation has tried to Page 22 of 27 Uploaded by SUYASH KUMAR SRIVASTVA(HC01570) on Mon Feb 17 2025 Downloaded on : Tue Feb 18 00:51:47 IST 2025 NEUTRAL CITATION C/FA/1534/2024 ORDER DATED: 17/02/2025 undefined project that because of the breach of the aforesaid regulation, the respondent-company has created a situation where the dependents are likely to be deprived of the benefits provided under the Act, 1948. As recorded earlier, even prior to the issuance of the aforesaid show cause notice, it has transpired on record that the contribution towards the deceased employee was already deposited with the ESI Corporation as evident from the Challan produced on record at Exh.36, which is within the period of 15 days of the next month. [15.] In such circumstances, the main ground raised by the ESI Corporation about the consequence of the non-compliance of the Regulation 12 vis-a-vis dependency benefit of the heirs and legal representatives of the deceased employee is misconceived. On the contrary, the ESI Corporation has proceeded to sanction the dependency benefit in favour of the heirs and legal representatives of the deceased employee.
[16.] The question, therefore, arises as to whether mere breach of Regulation 12 of ESI (General) Regulations, 1950, would confer power upon the ESI Corporation to proceed for recovery under Section 68 of the Act, 1948. Section 68 of the Act, 1948, confers powers upon the Corporation in case where principal employer fails or Page 23 of 27 Uploaded by SUYASH KUMAR SRIVASTVA(HC01570) on Mon Feb 17 2025 Downloaded on : Tue Feb 18 00:51:47 IST 2025 NEUTRAL CITATION C/FA/1534/2024 ORDER DATED: 17/02/2025 undefined neglects to pay any contribution which under this Act he is liable to pay in respect of any employee and by reason thereof such person becomes dis-entitled to any benefit or entitled to any benefit. In my opinion, none of the above exigencies exist in the facts of the case inasmuch as it has clearly transpired on record that the principal employer had deposited the contributions within the prescribed period of 15 days as provided under Regulation 31 of the Regulations of 1950. On the other hand, the Corporation has also proceeded to sanction the dependency benefit in favour of the heirs and legal representatives of the deceased employee. The Corporation has failed to establish the nexus of breach of Regulation 12 at the instance of principal employer and its consequential effect on the dis-entitlement of the dependency benefit to the heirs and legal representatives of the deceased employee. Even otherwise, looking to Regulation 14 of the Regulations of 1950, provides the period of 10 days from the date of obtaining the requisite details of the employee, to be declared by way of Form No.1 before the ESI Corporation.
[17.] In the facts of the case, the Form No.1 has not been placed for consideration before this Court, however, it is an undisputed fact that the deceased had joined the company on 20.06.2016 and the declaration form was submitted with the branch Page 24 of 27 Uploaded by SUYASH KUMAR SRIVASTVA(HC01570) on Mon Feb 17 2025 Downloaded on : Tue Feb 18 00:51:47 IST 2025 NEUTRAL CITATION C/FA/1534/2024 ORDER DATED: 17/02/2025 undefined office of the ESI Corporation on 29.06.2016. The copy of E-Pahchan Card has also been placed on record along with paper book, which is issued by the ESI Corporation on 29.06.2016. The occurrence of the accident on 28.06.2016 has been immediately reported by the respondent-company on 29.06.2016. The aforesaid formalities has led to recognition of the deceased employee as he is accepted as a registered member of the ESI Corporation by virtue of issuance of E- Pahchan Card.
[18.] The question arises as to whether the consequence of non-compliance of Regulation 12 would attract the provisions of Section 68 of the Act. As rightly pointed out by learned advocate for the respondent that Section 85 of the Act of 1948, prescribes the punishment for failure to pay contribution etc., whereby in Clause (g), if any person is guilty of any contravention or non-compliance with any of the requirements of this Act or the rules or the regulations in respect of which no special penalty is provided, then the appropriate prosecution may follow.
[19.] In the opinion of this Court, though the first show cause notice dated 13.10.2016 has been issued upon the respondent- company for initiation of prosecution under Section 85(g) of the Act, Page 25 of 27 Uploaded by SUYASH KUMAR SRIVASTVA(HC01570) on Mon Feb 17 2025 Downloaded on : Tue Feb 18 00:51:47 IST 2025 NEUTRAL CITATION C/FA/1534/2024 ORDER DATED: 17/02/2025 undefined 1948, no prosecution has been lodged thereafter, against the respondent-company. Learned advocate for the Corporation has fairly pointed out that other criminal complaints have been registered against the respondent company in case of the employees other than the deceased. This brings me to the issue of the period prescribed for the submission of declaration form by the respondent-employer. Admittedly, as per Regulation 14, the declaration form has been submitted with the branch office of ESI Corporation within period of 10 days from date of joining of employee. In view of the aforesaid fact, in my opinion, there is sufficient compliance of the Regulation, as rightly pointed out by learned advocate for the respondent, even if there is breach of the aforesaid regulations, however the same cannot be ground to initiate the proceedings under Section 68 of the Act, 1948.
[20.] As regards the entitlement of the dependency benefits is concerned, the deceased being recognized by virtue of Challan issued by the ESI Corporation in terms of Regulation 110 of the Act and considering the definition of term "insured person" as appearing in Section 2(14) of the Act, 1948,payment or non-payment of contributions and action or non-action prior to or subsequent to the date of accident as held by the Hon'ble Supreme Court in the case of Page 26 of 27 Uploaded by SUYASH KUMAR SRIVASTVA(HC01570) on Mon Feb 17 2025 Downloaded on : Tue Feb 18 00:51:47 IST 2025 NEUTRAL CITATION C/FA/1534/2024 ORDER DATED: 17/02/2025 undefined Chennai Radha Engineering Works (supra) is inconsequential. Once the deceased was treated as an insured person as defined under Section 2(14) of the Act, 1948, and indisputably, when the deceased- employee had suffered an employment injury as defined under Section 2(8) of the Act and in absence of any dispute with regard to such injury being sustained while he was in employment of the employer, by operation of Section 53 of the Act of 1948, the heirs and legal representatives of the deceased employed were entitled to the dependency benefit irrespective of the fact that the form prescribed in view of Regulation 12 of the Act was not submitted prior to his date of joining the employment.
[21.] For the aforesaid reasons, no substantial question of law arises for consideration of this Court, which calls for admission of the present appeal. The present appeal being devoid of any merits and no question of law being raised, is not entertained and is hereby dismissed. The civil application for stay also stands disposed of in view of dismissal of appeal. No order as to costs.
(NISHA M. THAKORE,J) SUYASH SRIVASTAVA Page 27 of 27 Uploaded by SUYASH KUMAR SRIVASTVA(HC01570) on Mon Feb 17 2025 Downloaded on : Tue Feb 18 00:51:47 IST 2025