Karnataka High Court
M/S Mandovi Motors Pvt Ltd vs The Esi Corporation on 12 April, 2018
Author: L.Narayana Swamy
Bench: L. Narayana Swamy
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 12TH DAY OF APRIL, 2018
BEFORE
THE HON'BLE MR. JUSTICE L. NARAYANA SWAMY
MISCELLANEOUS FIRST APPEAL No.3636/2012 (ESI)
BETWEEN:
M/S. MANDOVI MOTORS PVT. LTD.,
ARAVIND BUILDING, BALMATTA ROAD,
HAMPANKATTA, MANGALORE - 575 001
REPTD. BY ITS ASST. GENERAL MANAGER ... APPELLANT
(BY SRI.C.K.SUBRAMANYA, ADV. FOR
SRI.B C PRABHAKAR, ADV. )
AND:
1. THE ESI CORPORATION
REGIONAL OFFICE, NO. 10, BINNY FIELDS,
BINNYPET, BANGALORE - 560 023
REPRESENTED BY ITS JOINT DIRECTOR
2. M/S FALCON SECURITY AGENCIES,
BALMATTA ROAD,
MANGALORE - 575 001 ... RESPONDENTS
(BY SRI.V NARASIMHA HOLLA, ADV. FOR R1
R-2 SERVED)
THIS MFA IS FILED U/S 82(2) OF EMPLOYEES STATE
INSURANCE ACT, AGAINST THE ORDER DT.31.01.12 PASSED
IN ESI APPLICATION NO.13/2010 ON THE FILE OF PRESIDING
OFFICER, LABOUR COURT-CUM-ESI COURT, MANGALORE,
DISMISSING THE APPLICATION FILED U/S 75 OF ESI ACT,
FOR SETTING ASIDE THE IMPUGNED ORDER PASSED UNDER
SEC 45-A OF THE ESI ACT.
2
THIS APPEAL COMING ON FOR ADMISSION THIS DAY,
THE COURT DELIVERED THE FOLLOWING:-
JUDGMENT
The order dated 31st January 2012 passed on ESI Application No.13 of 2010 passed by the Presiding Officer Labour Court is assailed in this Appeal and the prayer is to set aside the same.
2. The learned counsel for the appellant submits the appellant has engaged the services of the second respondent who is a Security Agency and the persons have been deployed for giving security services to the appellant. The appellant has made ESI contribution to the second respondent who is the employer for whom he has also contributed towards ESI contribution. Under these circumstances, the submission made by the learned counsel is that the order passed under Section 45-A of the Employees State Insurance Act, 1948 (for short hereinafter referred to as 'the Act') is bad in law. Hence, he seeks to set aside the order impugned.
3. The learned counsel further submits that the second respondent has been engaged and had admitted as to the fact that the appellant contributed to ESI to the first respondent. 3 When that is admitted and proved by producing recovery statement, the first respondent should not have been issued demand under Section 45 of the Act for making contribution. The Act does not provide for double contribution in respect of the same employers. The authority who has considered the case of both the parties considered the same without considering the stand taken by the second respondent that it had also contributed towards the ESI contribution. Even then, the appeal filed under Section 75 of the Act came to be dismissed.
4. The learned counsel for the first respondent-ESI Corporation submits that though the appellant has taken such ground as regards contribution made, but had not contributed and the same has not been proved. He further submits that the appellant is the principal employer and has to make ESI contribution. Under the circumstances, he supports the order of the Labour Court.
5. Heard both. The second respondent, on issuance of notice, entered appearance and it has contended that the appeal filed by the appellant is not maintainable. It is admitted that the second respondent is a Contractor and used 4 to deploy security services to the needy firms. It is further contended that the respondent is in the habit of recovering the Employees State Insurance and Provident Fund contributions and they use to recover some charges for having taken the services. The Labour Court, while dismissing the application, has recorded reasons. It has held that after service of notice, the second respondent, instead of filing counter-statement, had not taken any other steps to prove the stand taken in the counter-statement. Under the circumstances, the only option open to the Court was to infer whether the principal employer i.e. the second respondent who is the immediate employer has deducted the ESI contribution from the employees who have been deployed to the appellant. In this regard, the law is very clear. Whenever an independent agency or the contractors who have deployed their employees to the services of the principal employer, the law demand and require that initially the principal employer has to pay the contribution. Persons who have been deployed or haven been forwarded by the independent agency only have to contribute towards ESI. The principal employer will become an employee for them. The law further requires that 5 whether the independent agency or contractor, if a contribution is made or not, it is incumbent on the part of the principal employer to make ESI contribution initially. In the instant case, though the said ground has been taken, that has not been substantiated by making available the materials or by producing receipts for having made the contribution by the second respondent. The second respondent had only stated in the counter-statement but nothing had been proved. Under the circumstances, I am also of the opinion that the reasons assigned by the ESI Court is sound and proper but it is on the basis of law and fact or based on the judgment of this Court or of the Hon'ble Supreme Court. Hence, I am not inclined to interfere in the matter. Liberty, as observed by the ESI Court, is reserved to the appellant to avail of the remedy available. Appeal accordingly stands disposed of.
Sd/-
JUDGE lnn