Madras High Court
Regional Director, Employees' State ... vs Henry Wolsey And Company on 23 June, 1997
Equivalent citations: (2000)IIILLJ582MAD
Author: V. Kanagaraj
Bench: V. Kanagaraj
JUDGMENT V. Kanagaraj, J.
1. The respondent before us had fifed a petition before the Employees' State Insurance Court (in short, Insurance Court) seeking a declaration that the respondent company do not fall within the purview of the Employees' State Insurance Act, 1948 (hereinafter referred to as the Act), and that the order of the appellant under Section 45-A of the Act, dated October 27, 1982, cannot be enforced.
2. The respondent-company is engaged in the preparation of bakery products. After issuing notice to the respondent-company, the appellant had made an assessment under Section 45-A of the Act, on the basis of the verification made by the Inspector of the Department. The contention of the respondent-company before the Insurance Court was that the order, dated October 27, 1982, is illegal and unenforceable against the company. The appellant contended that for the period from March 31, 1968 to January 31, 1981, the sales offices are also covered under the Act and the respondent was required to pay the contribution in respect of such sales offices. The respondent-company was given full opportunity before passing the said order. It is significant to note that the appellant raised the contention that the application before the Insurance Court by the respondent-company was barred by limitation.
3. For the purpose of this appeal and to consider the arguments advanced by the learned counsel for the appellant and the respondent it is not necessary to go into the merits of the case. Suffice it to say that the records of the factory were scrutinized by the Inspector and the sales shops were only engaged in the selling of the products produced by the factory and, therefore, the sale shops were also covered under the Act. The claim of contribution was, therefore, justified by the appellant Corporation. The Court, therefore, found that the order under Section 45-A of the Act, dated October 27, 1982, was perfectly legal.
4. The next contention which was examined by the Insurance Court, was whether the Deputy Regional Director, who had passed an order under Section 45-A of the Act had jurisdiction to do so. On this issue also, the Court found against the respondent-company, because it was found that the resolution produced by the appellant-Corporation had authorised the Deputy Regional Directors to exercise the power under Section 45-A of the Act. On the question whether the sales shops were covered under the Act, the Insurance Court gave a finding in favour of the appellant-Corporation. We are not going into that question because the finding on that issue is not canvassed before us.
5. It was also found that the respondent-company had sufficient opportunity to putforth their case against the order under Section 45-A of the Act. It was found that the application filed under Section 77(1A) of the Act by the respondent-company was well within the period of limitation. Against the said order, the respondent-company filed an appeal before this Court in A.A.O.No. 91 of 1986. Learned Single Judge of this Court has allowed the appeal and reversed the finding of the Insurance Court on two crucial issues. It was, however, found that the sales shops were, in fact, covered by the Act and contribution was, in fact, payable by the respondent-company. Learned Singe Judge, however, held that the demand of the appellant-Corporation was barred by limitation. It was also held that the delegation in favour of the Deputy Regional Director had not been properly established.
6. Sri Desappan, learned counsel for the appellant, has produced before us the notification issued in the Gazette of India, dated May 2, 1981, wherein the following resolution is resolved:
"Resolved that the powers of the Corporation under Section 45-A to determine by order the amount of contributions payable shall be exercised;
(i) by the Director-General in respect of a factory/establishment situated anywhere in India.
(ii) by a Regional Director in respect of a factory/establishment situated within his region.
(iii) by Joint Regional Director/Deputy Regional Director and Assistant Regional Director in respect of a factory/ establishment situated within the area in his charge/in his region."
Authenticated under Section 7 of the E.S.I. Act. 1948 (as amended).
The fact that under this resolution the Deputy Regional Director had power to pass an order under Section 45-A of the Act cannot be disputed. But what Sri Raghavan, learned counsel for the respondent, argued before us is that this notification had not been produced before the learned Single Judge and under Order 41 Rule 27 C.P.C., the said document cannot be entertained by this Court. We have no hesitation in rejecting this argument because we find from the order of the learned District Judge (Insurance Court) that the resolution had been placed before him and under issue (3), the Insurance Court has given a categorical finding that the Deputy Regional Director had the necessary power. We do not think that Order 41, Rule 27, C.P.C., can come to the help of the respondent because the notification published in the gazette is not an additional document, but it is a statutory delegation and can be relied upon at any time by the parties. In fact, when the matter came up before on June 18 1997, we gave time till June 23, 1997 to enable the counsel for the respondent to look into the notification and make his submission. In this view of the matter, the notification has to be accepted and the delegation in favour of the Deputy Regional Director has to be upheld. We, therefore, reverse the finding of the learned Single Judge on this issue.
7. The second point on which the claim of the appellant was rejected by the learned Single Judge is the point of limitation. What was relied on by the learned Single Judge is the proviso to Sub-section (1A) of Section 77 of the Act. We are of the opinion that the proviso cannot independently give any meaning without reference to the main provision, Section 77 of the Act. Section 77 of the Act relates to commencement of proceedings before the Employees' Insurance Court, Sub-section (1A) prescribes the period of limitation, Cause, (b) of Sub-section(1A) of Section 77 of the Act says that in respect, of a claim by the Corporation for recovering contribution, the cause of action shall be deemed to have arisen on the date on which such claim is made by the Corporation for the first time. It is under this Clause (b), a proviso is added and the proviso is as follows:
"Provided that no claim shall be made by the Corporation after five years of the period to which the claim relates."
We have absolutely no hesitation in holding that the proviso will apply only in respect of a claim made by the Corporation before the Insurance Court. We are supported in our view by the decision of a Division Bench of this Court in A.A.O.No. 60 of 1980, dated February 13 1980 Pondicherry Co-operative Milk Producers Union Ltd. (represented by Managing Directors) v. Regional Director, Employees' State Insurance Corporation. The following passage is of considerable relevance:
"The fourth point urged before the lower Court was that the claim was barred by limitation. The Employees' State Insurance Act, 1948, does not provide for a period of limitation for recovery of the amount due from a defaulting employer, and the only period of limitation prescribed is in Section 77 and that applied only to the filing of an application before the Employees' State Insurance Court under Section 75, and in the present case, it was the appellant which had filed the application and if there is any question of bar of limitation then it was the appellant's application which was liable to be dismissed."
Therefore, the second point decided by the learned Single Judge against the appellant-Corporation is also reversed and it is held that the claim and demand under Section 45-A of the Act is not barred by limitation.
8. The result of our above discussion lead us to the inescapable conclusion that the petition filed by the respondent before the Insurance Court in E.S.I. O.P.No. 1 of 1984 deserves to be dismissed and the order of the Insurance Court, dated April 19, 1984, has to berestored. Accordingly, the L.P. A is allowed and the order of the Insurance Court in E.S.I.O.P., No. 1 of 1984 is restored. However, there will be no order as to costs. C.M.P. No. 10016 of 1995 is also disposed of.