Delhi High Court
Bombay Ammonia Pvt. Ltd. vs Employees State Insurance Corporation ... on 19 April, 1991
Equivalent citations: 44(1991)DLT481, [1991(63)FLR866], 1991LABLC1893, (1995)IIILLJ848DEL, 1991RLR437
JUDGMENT Santosh Duggal, J.
(1) In this appeal filed under Section 82 of the Employees State Insurance Act, 1948 (hereinafter referred to as "the Act"), the appellant has challenged the judgment passed on 2nd May, 1974 by the Employees State Insurance Judge, on a petition filed by them under Section 75 of the Act. The said petition was filed as a sequel to issuance of demand notice of 4th October, 1972 by the regional office of the Employees State Insurance Corporation, Kotla Road, New Delhi (for short "the Corporation"). The Collector of Delhi was requested to effect recovery of a sum of Rs. 13,711.00 plus Interest with effect from 1st October, 1972 from the appellant, M/s. Bombay Ammonia Pvt. Ltd., for the period 28th January, 1968 to 31st December. 1970. There was another recovery certificate issued to the Collector of Delhi by the aforesaid office on the same day, namely, 4th October, 1972, for recovery of Rs. 17,964.00 plus interest with effect from 1st October, 1972 for the period ending 31st March, 1968 to 31st December, 1970. The first demand was on account of employees' contribution under Section 45-B and the second demand was on account of employer's special contribution under Section 73-D of the aforesaid Act (as amended by Act of 1966).
(2) The appellant by means of the petition under Section 75 challenged the aforesaid recovery demand on the plea that these demands sought to be recovered through Collector of Delhi were not legal and enforceable, inter alia, for the reason that these also related to the employees of the head office at Bombay. It was pleaded that only factory of the petitioner was situated at Delhi, and that at the most the demand for contribution under the Act could be made in respect of employees working in the factory at Delhi or connected office there, and that in no case a demand could be made for employees in the bead office at Bombay.
(3) The plea was that there was a geographical distance between the two offices and the head office employees had no connection with the factory at Delhi and that in the absence of a notification under Section 1(5) of the Act, extending the said Act to the employees at Bombay head office, no recovery could be made or effected in respect to the contribution for those employees. Another contention raised was that the demand had been raised for the first time in October 1972 for the period from 1968 to 1970 and that the demand suffered from the vice of retrospectivity, and was not enforceable against the appellant for the reason that no contribution from the employees had been collected for the aforesaid period nor were the employees at Bombay head office brought under cover of the Act during the aforesaid period, with the result that the employees had not enjoyed benefit of the provisions of the Act, and consequently no demand could be enforced for the above period.
(4) The Judge by means of the impugned order rejected all the pleas raised on behalf of the petitioner, (appellant herein), and held that by virtue of the definition of the word "employee", as contained in Section 2(9) of the Act, the employees even working in a place other than the factory, be it branch office, zonal office or head office, if shown to be connected with the working of the factory will be covered by this Act.
(5) The learned Judge also found as a fact that employees at Bombay office, were connected with the working of the factory at Delhi. This finding was recorded on the basis of correspondence and certain documents annexed with the petition (Ex. RX-1 to Ex. RX-19, and also Annexure C) that the head office at Bombay was closely monitoring the working of the factory at Delhi, and the employees there were functioning in connection with the affairs of the factory, such as purchase of raw material, technical advice and other connected matters. The witness examined on behalf of the company, namely, Shri C.P. Dua, Executive Director (Public Witness 1) also admitted, during his examination in Court that Delhi office had correspondence with the head office in respect of the technical matters of the factory, such as engineering problems and also on certain other matters involving coordination required for the functioning of the business at Delhi and that there was a Technical Director at Bombay office who gave technical guidance to Delhi office whenever required. It was on the basis of this admission and also because of the correspondence referred to above that the learned Judge came to the conclusion that it has been-abundantly proved on record of the case that the employees at Bombay head office would be within the contemplation of the Act. An adverse inference was also drawn against the company for the reason that inspite of a clear direction given by the Court vide order dated 27th September, 1973 on an application of the respondents ordering production of relevant recordes, such as a letter of appointment of the employees at Bombay head office, record of manufacturing of goods, purchase of raw material, books of account and vouchers etc. pertaining to the period covered by the demand; no record was produced.
(6) The contention of the petitioners that the demand was bad, being related to the past period was also rejected, on the ground that once the employees are covered by the definition of the Act, then it is for the employer to comply with the requirements of the Act, and make contribution accordingly, and that it was not dependent upon the demand being made by the office of the respondents. It was, therefore, held that to extent the demands did not suffer from any illegality or irregularity. The plea that no demand could be made for the reason that the employees had not enjoyed the benefits of the Act was also rejected on the view that once the employees come under the coverage of the Act, then the fact as to whether they had availed of the benefit under the Act was not a relevant consideration, in so far as the demand against the employer on account of their own contribution as well as employees contribution was concerned.
(7) It was, however, held that the quantification of the demand was not sustainable because of non-compliance with procedural requirements of Seetion 45-A of the Act, for the reason that after calling upon the respondents to comply with the provisions of the Act, no further opportunity was given to them to show cause as to what amount was actually recoverable as their own special contribution or that of the employees contribution, and that straightway recovery demands were issued. As a result, whereas the pleas raised in the petition in regard to liability of the company for employees at Delhi as well as Bombay head office were dismissed, the demands raised by virtue of Ex. P. 8 and Ex. P. 9 and the recovery certificates issued vide Ex. P. 10 and P. Ii were held to be void, with the result that no recovery could be made on the basis of those documents. It was left open to the respondents to effect recovery about employees' contribution as well as employers' special contribution for the period covered by these demands after making proper assessment by following due procedure laid down by law.
(8) The appellants have challenged the findings as to the coverage of the employees of Bombay head office as also enforceability of the demand for the, past period on the same pleas as taken out in the petition. This appeal was filed through S/Shri KS. Bindra and J.L. Puri, Advocates and is now on the board, of this Court since the beginning of the week, but neither Mr. Bindra nor Mr. Puri has appeared though names of both of them are duly shown in the list.
(9) The matter has been heard being on the regular board of this Court and Mr. A.P. Gupta, Advocate was present although on behalf of the respondents. I proceed to dispose of the appeal after going through the record, the order under appeal, considering the submissions made by Mr. Gupta.
(10) The basic objection set forth in the appeal is as to the coverage of employees of the head office at Bombay vis-a-vis the factory at Delhi. It is contended that unless statutory notification under Section 1(5) of the Act had been issued to cover the employees of the head office at Bombay also under this Act, no demand for contribution in relation to those employees could be made.
(11) I find this plea to be not tenable at all for the short reason that the definition of "employee" under Section 2(9) as amended with effect from 28th January, 1968, encompasses all employees, employed by the principal employer : "on any work of, or incidental or preliminary to or connected with the work of, the factory or establishment, whether such work is done by the employee in the factory or establishment or elsewhere......"
(12) The finding of facts recorded by the learned Judge is unasailable to the effect that even employees in the head office at Bombay are connected with the working of the factory, because it was based on the material on record, and safe owing to the failure of the appellants to produce the record which was in their possession and which would have thrown light on the subject and which legitimately gave rise to adverse inference against them, that the employees of the head office at Bombay were closely connected with the functioning of the factory at Delhi, and would thus fall within the definition of "employees" under Section 2(9) of the Act, and that no separate notification under Section 1(5) of the Act was necessary. There is, thus, no merit in this contention raised by the appellants.
(13) It may be noted that this question now stands concluded by a decision of the Supreme Court in appeals disposed of by a common Judgment, reported as , Hyderabad Asbestos Cement Products ltd. v. Employees Insurance Court and another. The views propounded by the three High Courts of Andbra Pradesh, Madras and Calcutta were upheld, for the reason that under the extended definition of Section 2(9) of the amended Act the expression "employee", was no longer confined to those actually working in the factory. The judgment of the Andhra Pradesh High Court out of which one of the appeals had arisen, was by a Full Bench, as reported 1976 Labour & Industrial Cases 868. This view has been subsequently reiterated by the Supreme Court in the case reported as 1985 (1) Labour Law Journal I, Sri Narakesarl Prakashan Ltd. and others v. Employees State Insurance Corporation etc. etc. (14) The contention of the appellants that the demand could not be raised for the period prior to the date of its issuance is also devoid of any merit for the reason that Section 39 of the Act defines the contribution as to cover the contribution payable both by the employee as well as the employer, and under sub-Section (4) the contribution is payable by the end of each week. The liability of the employer has been made clear beyond doubt by Section 40 by laying down that the principal liability for contribution in the first instance shall be of the employer with the implication that whether the employee made his contribution or not, and whether the employer had called upon the employee to make that contribution or not; in so far as the Authorities under the Act are concerned; the principal employer is liable fur the entire contribution, once it is shown that the Act is applicable to that employer.
(15) In view of the finding that the employees at both Delhi and Bombay head office were covered by the Act, it was incumbent upon the appellants to pay up the contribution as covered by the Act, on their own, and their liability would not depend on the fact as to whether they had recovered this amount from the employees or not. This was more so, after notice had been served by the respondents that they are covered by the Act, and were .asked to submit themselves to the provisions of the Act. If, inspite of that, they had not effected any recoveries from their employees; they have themselves to blame and their liability will not be affected qua the department.
(16) It has also been rightly pointed out by Mr. Gupta that the liability to pay under the Act is not dependent on the enjoyment of the benefits under the Act by the employees and that this would be no consideration for the appellants to avoid their liability under the Act. This question has been well considered in the judgment of the Andhra Pradesh High Court, reported as 1973(27) Indian Factories & Labour Reports 49, M/s. Southern Roadways (Pvt.) Ltd. v. Employees State Insurance Corporation through its Regional Director, Hyderabad, where it was held that the obligation to make contribution is not dependent upon the fact whether or not the employers received any payment or employees any benefit; and it is peremptory on the part of the employer, when once the Act applies, to comply with the provisions thereof.
(17) No other point arises in this appeal.
(18) In view of the forgoing discussion, the appeal is dismissed. The result, however, is only that the liability of the appellants to pay contribution for the period covered by the demand notices, which were impugned in the petition under Section 75 of the Act, is maintained. So far as the actual quantification of the demand is concerned, the directions of the learned Judge aie upheld, with the result that the actual demand notice and the recovery notices which were Ex. P8,P 9, P 19 and P 11 are not enforceable and it is left open to the department to serve fresh notices on the respondents, raising the demands, and afford requisite opportunity of hearing to the respondents before demand is quantified in respect to the employees both at Bombay bead office as well as Delhi factory and office.
(19) The appeal stands disposed of in the above terms. No order as to costs.