Kerala High Court
Employees State Insurance Corporation vs M/S.Kairali Apparel Exports on 17 September, 2012
Author: P.N.Ravindran
Bench: P.N.Ravindran
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR.JUSTICE P.N.RAVINDRAN
MONDAY, THE 17TH DAY OF SEPTEMBER 2012/26TH BHADRA 1934
Ins.APP.No. 29 of 2009 ( )
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IC.76/2006 of ESI COURT, PALAKKAD
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APPELLANT/RESPONDENT:
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EMPLOYEES STATE INSURANCE CORPORATION,
(REP.BY ITS REGIONAL DIRECTOR), NORTH SWARAJ ROUND
THRISSUR.
BY ADV. SRI.T.V.AJAYAKUMAR
RESPONDENT(S)/APPLICANT:
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M/S.KAIRALI APPAREL EXPORTS,
(REPRESENTED BY ITS MANAGING PARTNER
SMT.T.M.MUMTAZ), TEAK KNIT INDUSTRIAL COMPLEX
KANJIKODE, PALAKKAD.
R1 BY ADV. SRI.RAJESH SIVARAMANKUTTY
THIS INSURANCE APPEALS HAVING BEEN FINALLY HEARD ON
17-09-2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
SD
"CR"
P.N.RAVINDRAN, J.
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Ins. Appeal No.29 of 2009
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Dated this the 17thday of September , 2012
J U D G M E N T
The Employees State Insurance Corporation represented by its Regional Director at Thrissur has filed this appeal, challenging the order dated 27.1.2009 passed by the Employees Insurance Court, Palakkad in I.C. No.76 of 2006. The brief facts of the case are as follows:
2. The respondent herein filed I.C.No.76 of 2006 in the Employees Insurance Court, Palakkad canvassing the correctness of Exts.A2 and A6 orders, both dated 2.2.2006, issued under section 45-
A of the Employees State Insurance Act, 1948, hereinafter referred to as "the Act" for short. By those orders, the competent authority under the Act determined the amount of contribution payable by the respondent in respect of its factory/establishment at Kanjikode in Palakkad district for the years 1998-99, 1999-00 and 2000-01. The respondent contended that under section 45-A of the Act, the Assessing Officer is not empowered to determine the contribution payable by the employer, that he does not possess the power to enforce appearance of parties and witnesses before him and that the Ins. Appeal No.29 of 2009 -2- power conferred on the Assessing Officer under section 45-A of the Act is to determine the contribution payable in respect of employees of the factory or establishment on the basis of the information available with him. The respondent also contended that the claim is barred by limitation in view of the stipulations in section 77(1A)(b)of the Act. Reliance was placed on the decision of the Full Bench of this Court in E.S.I. Corporation v. Excel Glasses Ltd. [2003 (3) KLT 42 (F.B.)] in support of the said contention.
3. Before the Insurance Court, the respondent raised a further plea that the Employees State Insurance Corporation, ("the Corporation" for short) can make an order of assessment and determine the amount of contribution payable by an employer only in cases where records are not produced by the employer and where records are produced, the assessment has to be made by the Employees Insurance Court under section 75(2)(a) of the Act. The Employees Insurance Court accepted the said contention and held that the Corporation ought to have approached the Employees Insurance Court by filing an application under sections 75 and 76 of the Act within a period of five years as prescribed under section 77(1A)(b) of the Act. The Employees Insurance Court accordingly held that Exts.A2 and A6 orders are without jurisdiction. Hence this appeal. The substantial question of law that arises for consideration in this appeal Ins. Appeal No.29 of 2009 -3- is whether in a case where the employer disputes liability to pay contribution under the Act in the course of an enquiry under section 45-A thereof, the Employees Insurance Corporation is bound to move the Employees Insurance Court to have the dispute resolved within the period of limitation prescribed under section 77(1A) of the Act
4. I heard Sri.T.V.Ajayakumar, learned counsel appearing for the appellant and Sri.Rajesh Sivaramankutty, learned counsel appearing for the respondent. I have also gone through the pleadings and the materials on record. By the impugned judgment, the Employees Insurance Court held that when records are produced in an enquiry under section 45-A of the Act, the assessment can be made only by the Employees Insurance Court on an application filed by the Corporation. Such a finding was entered relying on the decision of the Apex Court in Employees State Insurance Corporation v. Santhakumar [2007 (1) KLT 133 SC]. In the said decision, the Apex Court held that when records are not produced by the establishment before the Corporation and when there is no co- operation, the Corporation has got the power to make the assessment and determine the amount of contribution under section 45-A of the Act and recover it as arrears of land revenue under section 45-B thereof. It was held that such an assessment is in the nature of a best judgment assessment, that when the Corporation passes an order Ins. Appeal No.29 of 2009 -4- under section 45-A of the Act, it is final as far as the Corporation is concerned and where records are produced and if there is co- operation, the assessment has to be made and it can be used as sufficient proof of the claim of the Corporation under section 75 of the Act before the Employees State Insurance Court. The Apex Court also held that when an order is passed under section 45-A of the Act, it is the duty of the employer and not of the Corporation to approach the Employees Insurance Court and that once an order is passed under section 45-A of the Act, the limitation prescribed under section 77(1A) of the Act will not be attracted. The Employees Insurance Court has proceeded on the erroneous assumption that the Apex Court has held that where the employer produces records pursuant to the notice issued by the competent authority under section 45-A of the Act and disputes its liability to pay contribution, the Assessing Officer has to stay his hands and move the Employees Insurance Court to have the dispute resolved.
5. The interpretation placed by the Apex Court on sections 45-A and 75 of the Act in Employees State Insurance Corporation v. Santhakumar [2007 (1) KLT 133 SC] does not in my opinion lend support to the said conclusion. The very same issue was considered by a learned single Judge of this Court in Ins. Appeal No.41 of 2009 wherein it was held that where documents are produced Ins. Appeal No.29 of 2009 -5- in an enquiry under section 45-A of the Act, the competent authority is not denuded of the power to pass an order and that if aggrieved, it is for the employer to move the Employees Insurance Court under section 75 of the Act. The Apex Court has in Employees State Insurance Corporation v. Santhakumar [2007 (1) KLT 133 SC] and Employees' State Insurance Corporation v. F.Fibre Bangalore (P) Ltd. [(1997) 1 Supreme Court Cases 625] held that when the employer disputes the applicability of the provisions of the Act or disputes the quantum of contribution to be remitted, it is for the employer to approach the Insurance Court and to seek an adjudication of the dispute. It was held that it is not for the Corporation in each case whenever there is a dispute to go to the Employees Insurance Court and to have the dispute adjudicated and that if such a view is taken, the Act would become unworkable. In the light of the binding decisions of the Apex Court in Insurance Corporation v. F.Fibre Bangalore (P) Ltd. [(1997) 1 Supreme Court Cases 625] and Employees State Insurance Corporation v. Santhakumar [2007 (1) KLT 133 SC] the order passed by the Employees Insurance Court cannot be sustained. In view of the fact that the Employees Insurance Court has set aside Exts.A2 and A6 orders issued under section 45-A of the Act on the short ground that the Corporation ought to have moved the Employees Insurance Court, Ins. Appeal No.29 of 2009 -6- I am of the opinion that even while interfering with the impugned order, the employer should be afforded an opportunity to have the dispute raised by it decided on the merits.
I accordingly allow the appeal, set aside the impugned judgment and remit I.C.No.76 of 2006 to the Employees Insurance Court, Palakkad for fresh disposal in accordance with law. Since the dispute relates to the years 1998-99, 1999-00 and 2000-01 the Employees Insurance Court shall endevour to dispose of the case afresh within six months from the date of receipt of a certified copy of this judgment. The contentions of both sides on the merits are kept open. The parties shall bear their respective costs.
P.N.RAVINDRAN, JUDGE.
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