Madras High Court
Thrirumurugan Matriculation School vs The Deputy Director on 12 April, 2022
Author: P.T.Asha
Bench: P.T.Asha
C.M.A.No.72 of 2022
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 12.04.2022
CORAM
THE HONOURABLE MS. JUSTICE P.T.ASHA
C.M.A. No.72 of 2022 and
C.M.P.No.516 of 2022
1.Thrirumurugan Matriculation School
No.7/567, G.N.Garden
Neruperichal, Pooluvapatti,
Tirupur-641602
Represented by its Correspondent
Mrs.M.Sutha
... Appellant/ Petitioner
Vs
1. The Deputy Director,
The Employee's State Insurance Corporation,
Sub Regional Office
No.1897, Trichy Road, Ramanathapuram,
Coimbatore - 641045. ... Respondent/Respondent.
PRAYER: Petition filed under Section 82 of the Employees State Insurance
Act, 1982, to set aside the order dated 13.10.2021 passed in ESI OP No.9 of
2020 on the file of the Employees State Insurance Court (Principal Labour
Court Coimbatore)
For Petitioner : M/s.C.Manohar Gopta
For Respondent : Mr.S.P.Srinivasan
1/14
https://www.mhc.tn.gov.in/judis
C.M.A.No.72 of 2022
JUDGEMENT
Aggrieved by the award passed by the Principal Labour Court, Coimbatore in ESI OP No.9 of 2020, the establishment/petitioner is before this Court. The facts in brief which are necessary for disposing of the above appeal are as follows:
2. The appellant/establishment is a higher secondary school which is registered under the Employee State Insurance Act, 1948, for the sake of brevity it is herein after referred to as the ESI Act. With effect from 29.12.2010, the Employees Provident Funds Act is also applicable to the school and contributions are periodically remitted.
3. It is the case of the appellant/establishment that on 30.01.2018, they had received a demand by way of C-18 (Adhoc basis) notice calling upon the appellant to pay a sum of Rs.20,07,720/- as contribution for the period 01.01.2011 to 31.12.2016. Though the appellant establishment had received the said notice they had not come forward to make their payment or to file their objection to the aforesaid claim. The notice dated 2/14 https://www.mhc.tn.gov.in/judis C.M.A.No.72 of 2022 30.01.2018 had also informed the appellant that they could avail an opportunity of a personal hearing to represent their case with the relevant records on 06.03.2018.
4. Since the appellant had not appeared for the personal hearing on 06.03.2018, another notice dated 07.03.2018 was issued giving the appellant a final opportunity to appear for personal hearing on 08.05.2018 at 10.30 am along with the records. It appears that once again the employer had not replied nor submitted their explanation. In fact the letter dated 07.03.2018 which was sent to the principal employer was returned with an endorsement "addressee left". However, since the letter was served in the unit it was treated as proper service and thereafter the respondent had proceeded to pass orders under Section 45A of the ESI Act. The order dated 29.05.2015 determined the contributions on adhoc basis. As no statements, returns registers or records had been produced by the establishment in accordance with the provisions of Section 44 of the ESI Act, for determining the contribution payable, the respondent had assumed the notional wage to be a sum of Rs.8250/- per month per 3/14 https://www.mhc.tn.gov.in/judis C.M.A.No.72 of 2022 employee in respect of 52 employees for the period 01.05.2013 to 31.12.2016 although in the C.18 notice the period of demand was 01.01.2011 to 31.12.2016. The respondent had demanded that the appellant pay a sum of Rs.12,26,940/- constituting the contribution that was payable by the appellant for the period 01.05.2013 to 31.12.2013.
5. After the order was passed a letter dated 20.07.2018 was received from the appellant /establishment seeking another personal hearing. To this the respondent corporation had sent a letter dated 26.07.2018 and stated that the appellant/establishment had neither submitted the appeal with the mandatory amount to date nor have they made the payment. The request for another personal hearing was, therefore, turned down. After which a notice of demand under Section 45 C to 45(i) ESI Act dated 31.08.2018 was issued to the appellant demanding a sum of Rs.19,01,299/-,.
6. Thereafter, the appellant/establishment had filed a petition under Section 75 of the ESI Act, before the Principal Labour Court, 4/14 https://www.mhc.tn.gov.in/judis C.M.A.No.72 of 2022 Coimbatore. By an order dated 13.10.2021, the Principal Labour Court, Coimbatore. was pleased to dismiss the petition filed by the appellant herein. Challenging the said order the appellant is before this Court.
7. Mr.Manohar Gupta, learned counsel appearing on behalf of the appellant/establishment would submit that the very claim is barred by limitation. He would submit that as per the 2nd proviso to Section 45(A) a time frame of 5 years is provided for recovering the contribution. In the instant case, the claim is for the period 01.05.2013 to 31.12.2016 which clearly exceeds the period of 5 years, considering the fact that the order has passed on 29.05.2018. He would argue that for the period 01.05.2013 to 31.12.2016, the order should have been passed on 30.04.2018, however, the order has been passed only on 29.05.2018. Therefore, it is barred by limitation. He would rely upon the judgment of this Court reported in 2011 2 LLJ 620; 2010 0 Supreme (Mad) 5551 M/s India Pistons Ltd., rep. by its Director Huzur Garden Vs. The Deputy Director, The Employees State Insurance Corporation Regional Officer (Tamil Nadu), Chennai where this Court has held that the Parliament had 5/14 https://www.mhc.tn.gov.in/judis C.M.A.No.72 of 2022 directed that no order could be passed by the respondent corporation in respect of period beyond 5 years from the date on which the contribution becomes payable. Since the demand therein was made on 28.06.2010 covering the period from 2004 to 2005 the contention of the establishment was upheld. He would submit that the facts of that case would apply to the facts of the present case. That apart, he would submit that the word date fixed does not necessarily referred to a calendar date but to a time fixed with reference to the ascertained event where the happening of which is certain. Therefore, he would submit that the provisions of Section 39(4) has to be read along with the Regulation 31 of the Employee State Insurance (General Reguation) 1950. He would ultimately contend that the appeal has to be allowed.
8. Per contra, Mr.S.P.Srinivasan, appearing on behalf of the respondent would submit that the wage period for the contribution becomes payable at the end of the month. Therefore, the demand on 29.05.2018 for the period 01.05.2013 to 31.12.2014 definitely comes within the period as prescribed in the 2nd proviso to Section 45 (A). He 6/14 https://www.mhc.tn.gov.in/judis C.M.A.No.72 of 2022 would, therefore, submit that the order of the Principal Labour Court has to be sustained.
9. Heard the learned counsels and perused the records.
10. This appeal brings to the fore the following prvisions namely Section 39(4), the 2nd proviso to Section 45(A) and Regulation 31, all of which are extracted herein below:
Section 39(4) - The Contribution payable in respect of each [wage period] shall ordinarily fall due on the last day of the [wage period], and where an employee is employed for part of the [wage period], or is employed under two or more employees during the same [wage period], the contributions shall fall due on such days as may be specified in the regulations.
2nd proviso to Section 45(A) [ 45A Determination of contributions in certain cases. ?- (1)Where in respect of a factory or establishment no returns, particulars, 7/14 https://www.mhc.tn.gov.in/judis C.M.A.No.72 of 2022 registers or records are submitted, furnished or maintained in accordance with the provisions of section 44 or any[Social Security Officer] or other official of the Corporation referred to in sub-section (2) of section 45 is[prevented in any manner] by the principal or immediate employer or any other person, in exercising his functions or discharging his duties under section 45, the Corporation may, on the basis of information available to it, by order, determine the amount of contributions payable in respect of the employees of that factory or establishment:[Provided that no such order shall be passed by the Corporation unless the principal or immediate employer or the person in charge of the factory or establishment has been given a reasonable opportunity of being heard:][Provided further that no such order shall be passed by the Corporation in respect of the period beyond five years from the date on which the contribution shall become payable.] 8/14 https://www.mhc.tn.gov.in/judis C.M.A.No.72 of 2022 (2)An order made by the Corporation under sub-section (1) shall be sufficient proof of the claim of the Corporation under section 75 or for recovery of the amount determined by such order as an arrear of land revenue under section 45B[or the recovery under sections 45C to 45-I].
Regulation 31. Time for payment of contribution.- An employer who is liable to pay contributions in respect of any employee shall pay those contributions within[15 days]of the last day of the calendar month in which the contributions fall due];
[provided that where a factory/establishment is permanently closed, the employer shall pay contribution on the last day of its closure:] [Provided that an employer may opt, in such manner as may be prescribed, by the Director-General, for payment of amount in advance towards contibution to be adjusted against contributions payable by him (including 9/14 https://www.mhc.tn.gov.in/judis C.M.A.No.72 of 2022 employees' contribution) for a wage period so that the balance of advance amount continues to be more than the contributions due and payable at the end of the concerned wage period. Such employer shall furnish in the prescribed pro forma[(Form 5-A)][a six monthly statement of contributions payable and paid in advance with the balance left at the end of each month alongwith return of contibutions to the appropriate Regional Office of the Corporation.]
11. The demand made by the respondent/ corporation is for the period 01.05.2013 till 31.12.2016. The Corporation had initially demanded the contributions for the period 01.01.2011 till 31.12.2016 but have suo motu reduced the demand to cover the period 01.05.2013 to 31.12.2016. The demand has not crossed the period as provided in the C- 18, initial notice dated 30.01.2018. The language of Section 39(4) is that the contribution would be payable on the last day of the wage period. 10/14 https://www.mhc.tn.gov.in/judis C.M.A.No.72 of 2022 Regulation 31 provides for the time for the payment of contributions by the employer. As per the said provision the amounts would be payable in respect of any employee within 15 days of the next calendar month in which these contributions fall due.
12. Therefore, a reading of the above regulation along with Section 39(4) would indicate that the contributions every month falls due on the last day of the wage period namely month end and Regulation 31 provides that the contribution can be paid within 15 days from the last day of the calendar month, therefore, on or before the 15th day of the next succeeding month. Looked in the background of these provisions the wage period for which contribution is sought for is from 01.05.2013 till 31.12.2016. The wage for the period May 2013 falls due on 31st of May. The five year period has to therefore be reckoned from that day. Therefore, the demand for the contribution has to be made on or before 31.05.2018. In the instant case, the demand has been made on 29.05.2018 which is well within the period of limitation. 11/14 https://www.mhc.tn.gov.in/judis C.M.A.No.72 of 2022
13. The next argument which has been put forward by the counsel was that there was no material to show there were 52 employees. However in this regard there has been no clarification or any doubt entertained by the petitioners. Though they have contended that they do not employee 52 employees, they have not responded to the show cause notice or made their representation before the Authority. In fact this plea has not even be raised in their representation before the respondent or as grounds of appeal in the ESI OP No.9 of 2019. The said argument appears to be an afterthought. Therefore, in the above circumstances, I see no reason to interfere with the order passed by the learned Principal Labour Court, Coimbatore and accordingly, the Civil Miscellaneous Appeal stands dismissed. No costs. Consequently, the connected Miscellaneous Petition is closed.
12.04.2022 Index : Yes/No Internet: Yes/No Speaking / Non-Speaking shr 12/14 https://www.mhc.tn.gov.in/judis C.M.A.No.72 of 2022 To
1. Employees State Insurance Court (Principal Labour Court, Coimbatore).
2.The Section Office, V.R.Section, High Court, Madras.
13/14 https://www.mhc.tn.gov.in/judis C.M.A.No.72 of 2022 P.T. ASHA, J, shr C.M.A. No.72 of 2022 C.M.P.No.516 of 2022 12.04.2022 14/14 https://www.mhc.tn.gov.in/judis