Gujarat High Court
Recovery Officer vs M/S. Narmada Industries on 28 March, 2025
NEUTRAL CITATION
C/FA/4078/2023 JUDGMENT DATED: 28/03/2025
undefined
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 4078 of 2023
FOR APPROVAL AND SIGNATURE:
HONOURABLE MS. JUSTICE NISHA M. THAKORE --Sd/-
======================================
Approved for Reporting No Yes
No
======================================
RECOVERY OFFICER & ANR.
Versus
M/S. NARMADA INDUSTRIES
======================================
Appearance:
VIVAN T SHAH(7947) for the Appellant Nos. 1,2
MR YOGI K GADHIA(5913) for the Defendant No. 1
======================================
CORAM: HONOURABLE MS. JUSTICE NISHA M. THAKORE
Date : 24/03/2025
ORAL JUDGMENT
1. The present appeal is filed at the instance of original respondent - Employee State Insurance Corporation through its Recovery Officer and Regional Director, being aggrieved by the judgment and award dated 6th April, 2023, passed by the learned Employee State Insurance Court, Vadodara (hereinafter referred to as 'the ESI Court') in ESI Application no.5 of 2019, under Section 82(2) of the Employees State Insurance Act, 1948 (hereinafter referred to as 'the ESI Act, Page 1 of 31 Uploaded by AMAR RATHOD(HC01074) on Fri Mar 28 2025 Downloaded on : Sat Mar 29 01:10:57 IST 2025 NEUTRAL CITATION C/FA/4078/2023 JUDGMENT DATED: 28/03/2025 undefined 1948). By the said impugned judgment and award the ESI Court has allowed the application of the present respondent - employer under Section 74 read with Section 75 of the ESI Act thereby quashing and setting aside the notice dated 28 th February, 2019 issued by Regional Director, ESIC as well as recovery notice dated 11th March, 2019 seeking recovery of the dependency benefit of an amount of Rs.21,39,752/- with interest of Rs.77,149/- total amount of Rs.22,16,951/-.
2. The brief facts as can be gathered from the record are as under:-
2.1 The respondent firm claims to be a running small scale industry of coating of powder and has engaged 8 to 9 workmen for this purpose. The company claims to be based at GIDC, Halol in Panchmahal District. The company had submitted its declaration under the ESI Act as was governed by the ESI Act and has also been registered with ESIC.
According to the respondent firm, they have been regularly depositing their contribution with ESIC.
2.2 On 16th March, 2018 one Pravin Mahijibhai Solanki, who was registered with the ESIC through the respondent firm, was engaged by the respondent firm. It is the case of the respondent firm that ESIC declaration was also submitted online for which identification card was also issued. However, in absence of relevant documents like Aadhar Card and the details of the family members, the submission of form as required under Regulation-12 could not be deposited with the Page 2 of 31 Uploaded by AMAR RATHOD(HC01074) on Fri Mar 28 2025 Downloaded on : Sat Mar 29 01:10:57 IST 2025 NEUTRAL CITATION C/FA/4078/2023 JUDGMENT DATED: 28/03/2025 undefined ESIC within a period of 10 days, as the documents were awaited from his native place. The aforesaid process was under way. Unfortunately, on 25 th March, 2018, accidently, the boiler blast, whereby the said workman sustained serious injuries. Initially, the workman was shifted to Halol Hospital and thereafter was taken to Vadodara. Considering the ID Card relevant benefits of medical treatement were extended to the workman by the ESIC. Unfortunately, on 15 th April, 2018, the said workman succumbed to the injuries. The aforesaid fact was immediately reported to the local office of ESIC at Halol, on 16th April, 2018.
2.3 The respondent firm had immediately submitted form-12 by tendering the accident report on 25 th March, 2018 online. Immediately, the necessary details of the heirs of the deceased were obtained and the IP card of ESIC was obtained online on 27th March, 2018. The contributions towards the aforesaid workman for the period starting from 16 th March, 2018 to 25th March, 2018 has been deposited. The ESI Corporation on the other hand had extended the amount of dependent benefit.
2.4 Despite the aforesaid procedure being duly complied, the appellant corporation vide letter dated 14 th August, 2018 had demanded the late registration and in-out register details of the deceased workman. Responding to the aforesaid letter, the reply was also submitted by the respondent firm on 14 th September, 2018. Noticing the explanation offered for late registration, the appellant corporation by show cause notice Page 3 of 31 Uploaded by AMAR RATHOD(HC01074) on Fri Mar 28 2025 Downloaded on : Sat Mar 29 01:10:57 IST 2025 NEUTRAL CITATION C/FA/4078/2023 JUDGMENT DATED: 28/03/2025 undefined dated 15th October, 2018 had sought detailed explanation for late registration. It is the case of the respondent firm before the ESI Court that despite sufficient explanation being offered, the original respondent corporation had straight way proceeded to issue show cause notice on 31 st January, 2019 under Section 68 of the ESI Act thereby seeking recovery of the amount of dependent benefit of deceased workman of Rs.21,39,651.53 ps. With 4% interest to be realised from the respondent firm. According to the respondent firm, the aforesaid show cause notice was also responded by a detailed reply dated 8th February, 2019. The respondent firm had objected to the stand taken by the ESI Corporation seeking demand of dependent benefit from the respondent firm. The appellant corporation however vide letter dated 28 th February, 2019 directed the recovery officer to immediately proceed for the recovery of the aforesaid amount from the respondent firm, whereby the recovery officer vide letter dated 11 th March, 2019 had issued recovery certificate of an amount of Rs.22,16,951/- with interest though the request was made to the ESI Corporation to provide details on the basis of which such contribution has been done in absence of same being provided. The cause of action had arose for the respondent firm to approach the court of Presiding Officer, ESI Court, Vadodara by preferring an application under Section 74 read with Section 75 of the ESI Act. Such appliction was preferred on 20th March, 2019, which was registered as ESI Application no.5 of 2019 along with the said application, the application seeking interim stay pending the proceedings has also been preferred by the respondent company.
Page 4 of 31 Uploaded by AMAR RATHOD(HC01074) on Fri Mar 28 2025 Downloaded on : Sat Mar 29 01:10:57 IST 2025NEUTRAL CITATION C/FA/4078/2023 JUDGMENT DATED: 28/03/2025 undefined Considering the aforesaid facts of the case as pleaded in the application, the learned ESI Court, by interim order dated 20th March 2019, directed the respondent firm to deposit 50% of the recovery certificate issued by the Recovery Officer to the tune of Rs.11,08,476/- to be deposited with the concerned Court, thereby granted stay against the enforcement of the recovery initiated by the appellant corporation against the respondent firm.
2.5 Before the learned Judge, ESI Court, the appellant corporation being duly served with the notice, has appeared and submitted written statement which has been produced on record at Exh.15. Apart from denial of the case pleaded by the respondent firm, the appellant corporation had invited attention of the ESI Court to the relevant dates to point-out the late registration and the breach of the Regulation no. 12 to contend that the employer was in fact required to register the deceased workman before taking him into the employment. The copy of the wage register of March, 2018 and the attendant register of the deceased workman of March, 2018 suggest that the employer had paid the salary for month of March. However the employer has obtained the signature of one Dakshaben, who is the daughter of the deceased. It was further pointed out that as per wage register, five employees who have not been registered with the ESI corporation were working with the respondent firm from the month of March, 2017 to February, 2018. Whereas the C6 online record indicates that the employer had filed contribution only for three employees from March, 2017 to Page 5 of 31 Uploaded by AMAR RATHOD(HC01074) on Fri Mar 28 2025 Downloaded on : Sat Mar 29 01:10:57 IST 2025 NEUTRAL CITATION C/FA/4078/2023 JUDGMENT DATED: 28/03/2025 undefined July, 2017 despite the fact that all the five employees were under the wage ceiling. It was therefore submitted that there was clear non-compliance of the provisions of Section 38 to Section 40 of the ESI Act, 1948 and the Regulation 12, read with 110.
2.6 It was also pointed out that the employer has registered the IP only after the death of the workman so as to shift the liabilities upon the ESI Corporation. It was therefore submitted that there is no error on part of the ESI Corporation to have determined the amount of dependent benefit of Rs.21,39,751.53 ps. to be recovered with interest under Section 68 of the ESI Act, for violation of Regulation No. 12, read with 110 of the ESI regulations. Along with the aforesaid affidavit-in-reply, the appellant corporation has produced various documentary evidence which includes the branch letter dated 20th February, 2019, where the Deputy Director had directed the Recovery Officer to proceed with the recovery against the respondent firm (Exh.17), the accident report dated 25th March 2018 (Exh.18), the show cause notice dated 15th November, 2018 (Exh.19), the acknowledgement slip of the aforesaid show cause notice dated 15th November, 2018 (Exh.20), the reply of the employer received on 19th December 2018 (Exh.21), the show cause notice dated 31st January 2019, (Exh.22), the acknowledgement slip of the show cause notice dated 1 st February, 2019 (Exh.23), the reply of the employer received on 12th February, 2019 (Exh.24).
Page 6 of 31 Uploaded by AMAR RATHOD(HC01074) on Fri Mar 28 2025 Downloaded on : Sat Mar 29 01:10:57 IST 2025NEUTRAL CITATION C/FA/4078/2023 JUDGMENT DATED: 28/03/2025 undefined 2.7 Before the ESI Court, the respondent firm has also brought on record various documentary evidence vide list at Exh.5 and Exh. 28. Though the said documents have not been separately given exhibit numbers, the same has been read by ESI Court as relied and referred in the evidence of one Bipin Barnibhai - the proprietor of the respondent firm. The details of the aforesaid documentary evidence produced by the respondent firm are as under:
~:: Documentary Evidence ::~ Vide List Exh.5 Sr. Particular no.
1 The recovery certificate dated 11 th March 2019 issued by the recovery officer.
2 The letter addressed by the director of ESI corporation to the recovery officer dated 20th February 2019.
3 The attendance sheet of the deceased workmen from January 2018 to April 2018 4 The wage register of the deceased workmen from January 2018 to March 2018.
5 The copy of MLC card dated 25th March 2018. 6 The details of the hospitalization of the deceased workmen with ESI hospital Halol.
7 The permission letter issued by the ESI hospital to the deceased.
8 The copy of DHLL card issued by the ESI hospital, Varadara dated 2nd April 2018 9 The copy of death certificate of the deceased workmen dated 31st May 2018 10 The accident report form no.12 dated 25th March 2018, Page 7 of 31 Uploaded by AMAR RATHOD(HC01074) on Fri Mar 28 2025 Downloaded on : Sat Mar 29 01:10:57 IST 2025 NEUTRAL CITATION C/FA/4078/2023 JUDGMENT DATED: 28/03/2025 undefined 11 The e-pehchan card of the deceased workmen dated 27th March 2018, 12 The copy of the receipt towards the contribution of the deceased workman from March 2018 to May 2018 and the copy of the history.
13 The letter dated 16th April 2018 addressed by the respondent firm to the local office of ESI corporation. 14 The letter issued by ESI corporation approving the dependent benefit of the deceased workmen. 15 The copy of the notice dated 14 th August 2018 issued by the local office ESIC Halol.
16 The reply dated 14th September 2018 addressed by the respondent firm.
17 The copy of the visit note of the Manager of the respondent firm dated 11th September, 2018. 18 The show cause notice dated 15 th October, 2018,which was received by the respondent firm on 7 th December, 2018.
19 The copy of the reply tenderd by the respondent firm to the aforesaid show cause notice on 14 th December 2018.
20 The copy of the show cause notice issued by the respondent firm on 31st January 2019. 21 The copy of the reply given to the aforesaid show cause notice on 8th February 2019 by the respondent firm.
22 The extract of the copy of RC showing the entry of contribution of half year from April 2018 to September 2018, dated 18th March 2019. 23 The copy of the visit note of the social security officer of the month of June 2019, dated 13th June 2016.Page 8 of 31 Uploaded by AMAR RATHOD(HC01074) on Fri Mar 28 2025 Downloaded on : Sat Mar 29 01:10:57 IST 2025
NEUTRAL CITATION C/FA/4078/2023 JUDGMENT DATED: 28/03/2025 undefined Vide List Exh.28 Sr. Particular no.
1 Attendence sheet from August, 2012 to December, 2014.
2 Attendance sheet from January, 2015 to February, 2017.
3 Form no.15 Register.
4 Form no.29 Register 2.8 The learned Judge, ESI Court has proceeded to frame issues at Exhibit 34 which reads as under :
1. Whether the application preferred by the applicant firm is within period of limitation ?
2. Whether the application preferred by the applicant firm is maintainable under the provisions of ESI Act?
3. Whether the applicant is liable to pay the amount towards dependent benefit with interest as determined by the opponent ESI corporation by order dated 11th March 2019?
4. Whether the opponent ESI corporation is legally entitled to recover the amount of dependent benefit as sought to be recovered by order dated 11th March 2019 from the applicant firm?Page 9 of 31 Uploaded by AMAR RATHOD(HC01074) on Fri Mar 28 2025 Downloaded on : Sat Mar 29 01:10:57 IST 2025
NEUTRAL CITATION C/FA/4078/2023 JUDGMENT DATED: 28/03/2025 undefined
5. What order?
2.9 During the course of hearing of the application, the ESI corporation has vide list of documents produced at Exhibit 35 brought on record further documents which includes the copy of headquarters office letter dated 16 th February 2016 and the calculation for the capitalised value.
2.10 Considering the overall evidence brought on record as well as oral and the written submissions made by the respective parties, the learned Judge, ESI Court has noticed that the the show cause notice under Section 68 of the ESI Act was issued by the opponent corporation on 20 th February 2019 followed by the recovery certificate issued by the ESI corporation on 11th March 2019. Whereas the present application was filed on 20th March 2019. The learned Judge has therefore taking into consideration the provisions of Section 77 of the ESI Act has answered the issue no.1 in favour of the applicant firm.
2.11 As regards the maintainability of the application, the learned Judge noticed that essentially the challenge is made to the notice issued under Section 68 of the ESI Act and considering the provisions of Section 75(1)(g) of the ESI Act, the Court was competent to entertain such application and has therefore answered issue no.2 in favour of the applicant firm.
Page 10 of 31 Uploaded by AMAR RATHOD(HC01074) on Fri Mar 28 2025 Downloaded on : Sat Mar 29 01:10:57 IST 2025NEUTRAL CITATION C/FA/4078/2023 JUDGMENT DATED: 28/03/2025 undefined 2.12 The learned Judge has thereafter proceeded to decide issue no.4 being connected with issue no.2 in priority. The learned Judge has taken into consideration Section 68 of the ESI Act in light of Regulation 12 of the regulations framed thereunder and has arrived at a finding that the applicant firm has produced on record the declaration form and the chalans acknowledging the contribution deposited by the applicant firm towards the deceased workmen against which the insurance number has also been allotted to the deceased workmen by the ESI Corporation.
2.13 In view of Regulation 15, the learned Judge ESI Court has thereafter taken into consideration the order passed in ESI Application no.7 of 2019 which was in respect of the same accident involving the applicant firm in case of other deceased employee, which has been dismissed. However, the learned Judge has held that the aforesaid order would not govern the present case inasmuch as in the said case the deceased had expired when the declaration form and contributions were submitted before the ESI Corporation. Whereas in the present case the workmen was alive when the declaration form and the contributions were paid by the applicant firm.
2.14 Considering the aforesaid distinguishing facts, the learned Judge taking note of the insurance number being allotted to the deceased workmen by ESI Corporation has held that there is no breach of Section 68 of the ESI Act taking into consideration the fact that the contributions has been deposited and the insurance number has also been allotted, Page 11 of 31 Uploaded by AMAR RATHOD(HC01074) on Fri Mar 28 2025 Downloaded on : Sat Mar 29 01:10:57 IST 2025 NEUTRAL CITATION C/FA/4078/2023 JUDGMENT DATED: 28/03/2025 undefined the respondent corporation was under obligation to extend statutory benefit to the heirs of deceased workman.
2.15 With the aforesaid findings and reasons assigned the learend Judge ESI Court has allowed the application preferred by the applicant firm only thereby holding against the opponent - corporation.
3. Noticing the grounds raised in the appeal, this Court by order dated 14th September, 2023 had issued notice. The R. & P. were also called for from the concerned Court. The matter was heard at length at admission stage. The arguments were concluded and the matter was kept for orders.
4. I have heard Mr. Vivan T. Shah learned advocate for the appellant corporation at length.
4.1 Mr. Shah, learned advocate for the appellant has at the outset invited my attention to the relevant dates to point-out that the impugned award is palpably erroneous and contrary to the provisions of the ESI Act. He had submitted that indisputably as evident from the record, the employee had joined service on 16th March, 2018 and the accident had occurred on 25th March, 2018, whereas the Form no.12 as per Regulation no.68 of the ESI Regulation was submitted by the respondent firm on 25th March, 2018, thereby reporting about the occurrence of the accident of the blast in the factory premises. The name of the insured person i.e. the injured workman - Solanki Pravinbhai was reported to the Page 12 of 31 Uploaded by AMAR RATHOD(HC01074) on Fri Mar 28 2025 Downloaded on : Sat Mar 29 01:10:57 IST 2025 NEUTRAL CITATION C/FA/4078/2023 JUDGMENT DATED: 28/03/2025 undefined corporation. On bare comparison of the record submitted by the respondent firm, it has transpired that the date of appointment of the aforesaid injured workman is shown as 16th March, 2018, whereas the date of registration was shown as 27th March, 2018 and from the online records of contribution, it has transpired that for the month of March, 2018 he had worked at the factory premises for 9 days i.e. from 16th March, 2018 to 25th March, 2018 whereby wages of an amount of Rs.2,826/- was paid. Whereas, as per the witness statement, he was engaged by the respondent firm since last eight years. Apart from the aforesaid injured workman, four other employees have also sustained serious / fatal injuries whose names appear in the wage register starting from the month of March, 2018. As against that statement of the witnesses suggests that all the five employees have been working for quite long period. Thus, the cause of action has arose for the appellant corporation as the employer had failed to comply with the Section 38 to 40 of ESI Act, 1948 and Regulation 12 read with Regulation 110 of the Regulations framed thereunder.
4.2 Learned advocate had further submitted that the bare comparison of the aforesaid dates leads to the conclusion that the employer had failed to make contribution towards the aforesaid period of their engagement as transpired from the statement of witnesses and therefore, the appellant corporation was within its authority to issue show cause notice under Regulation 68 of the ESI Regulations. He has further submitted that the employer has also admitted in his Page 13 of 31 Uploaded by AMAR RATHOD(HC01074) on Fri Mar 28 2025 Downloaded on : Sat Mar 29 01:10:57 IST 2025 NEUTRAL CITATION C/FA/4078/2023 JUDGMENT DATED: 28/03/2025 undefined evidence that he had made contribution only after the order was passed in ESI Application no.7 of 2019. According to the learned advocate, since the ESI Corporation was under
obligation to extend the dependent benefits under the Act to the heirs of the deceased employee, merely because the corporation has proceeded to extend such dependent benefits to the heirs of the deceased employee, would not prohibit the corporation to proceed with the recovery of the amount, which otherwise was the liability of the employer. He had further submitted that Section 68 of the ESI Act, 1948 provides that if any principal employer fails or negligent to pay any contribution under the Act, which he is otherwise liable to pay in respect of any employee and by reason thereof such person becomes disentitle to any benefit or if the entitlement to the benefits is on the lower scale, the corporation being satisfied about the same, has the authority to initiate appropriate proceedings for recovery from the principal employer.
4.3 Learned advocate had also invited my attention to the Regulation-12 to point-out that it is incumbent upon the employer to register any employee engaged by him prior to his employment. Thus, the injured workman being registered with the Corporation only on 27th March, 2018 i.e. after his engagement at the factory premises on 16 th March, 2018 and the occurrence of accident on 25th March, 2018, which clearly amounts to breach of Regulation no.12 of the Regulations framed thereunder. According to the learned advocate by virtue of late registration of the employee, the principal Page 14 of 31 Uploaded by AMAR RATHOD(HC01074) on Fri Mar 28 2025 Downloaded on : Sat Mar 29 01:10:57 IST 2025 NEUTRAL CITATION C/FA/4078/2023 JUDGMENT DATED: 28/03/2025 undefined employer has failed as well as neglected in making contribution, which otherwise he was required once the injured workman was registered with the ESI Corporation.
He had further submitted that mere registration of an employer under the Act would not amount to ipso facto registration of the employees engaged by the employer inasmuch as registration is applicable only for specific employees on specified number of employees as the employer is expected to make contribution as per the wages paid to the respective employees. He had further submitted that in view of Sections 39 and 40 of the ESI Act, the duty is cast upon the employer to pay contribution in respect of all the employees employed by him. Learned advocate had further submitted to take into consideration the gravity of the incident inasmuch as because of the accident blast, which has occurred in the factory premises, five lives have been affected. He had further pointed-out that it is not in the case of one employee, but in case of all the aforesaid injured workmen, the respondent firm had failed to get registered them with the ESI Corporation. The attention of this Court was invited to the ESI Application no.7 of 2019 filed in case of the deceased workman, who had succumbed to the same incident, wherein the ESI Court had in fact rejected the application preferred by the present respondent firm. He had further submitted that though the attention of the learned Judge, ESI Court was invited to the aforesaid fact, the learned Judge on erroneous premises by noting that in the present case the injured workman has lost his life when the contributions were made, has allowed the application. He has therefore urged this Page 15 of 31 Uploaded by AMAR RATHOD(HC01074) on Fri Mar 28 2025 Downloaded on : Sat Mar 29 01:10:57 IST 2025 NEUTRAL CITATION C/FA/4078/2023 JUDGMENT DATED: 28/03/2025 undefined Court that substantial questions of law are required to be decided in the present appeal.
4.4 Learned advocate while referring to the aforesaid substantial questions of law framed by him has urged this Court to allow the present appeal and to quash and set aside the impugned judgment and order.
5. Mr. Yogi Gadhia, learned advocate has appeared on behalf of the respondent firm and submitted that the issue involved, more particularly the substantial questions of law proposed by the appellant corporation are no more res integra in view of the judgments, which he intends to rely upon. While inviting my attention to the Regulation-12 of the Employees State Insurance (General) Regulation, 1950, learned advocate had further referred to and relied upon the Regulation-14 of the aforesaid Regulations to contend that the legislation has provided extended period of 10 days for registration of the employee. He has further pointed-out that the aforesaid period would start from the date of the receipt of the information along with necessary documents and details of the family, which may be provided by the employee. Thus, according to him, in view of the Regulation - 14, declaration form can be submitted within 10 days of details being furnished. He has therefore submitted that conjoint reading of the aforesaid Regulation 12 with Regulation 14, it is crystal clear that there was no delay on the part of the opponent, which would give any reason for the Corporation to initiate proceedings of recovery under Section 68 of the ESI Page 16 of 31 Uploaded by AMAR RATHOD(HC01074) on Fri Mar 28 2025 Downloaded on : Sat Mar 29 01:10:57 IST 2025 NEUTRAL CITATION C/FA/4078/2023 JUDGMENT DATED: 28/03/2025 undefined Act. Learned advocate had further referred to Section 68 of the ESI Act to point-out that the aforesaid section can be invoked by the corporation only in case of failure to make contribution or less payment of contribution. He had further submitted that it is an admitted fact that the employee was engaged on 16th March, 2018 whereas the declaration form was submitted to the corporation by the respondent firm on 27th March, 2018. He had invited my attention to the relevant documents more particularly the IP Card issued by the corporation whereby the employee was registered with the corporation and was also allotted insurance code number. Thus, according to the learned advocate, he was an insured person under the provisions of the ESI Act and therefore, the corporation had rightly extended the dependency benefit to the heirs of the deceased employee.
5.1 As regards the alleged failure on the part of the respondent - employer towards the contribution is concerned, learned advocate had invited my attention to the fact that the chalans have been issued by the corporation acknowledging the fact of receipt of the amount of contribution which was paid on 12th April, 2018, whereas the first show cause notice under Section 68 of the ESI Act, for breach of Regulation 12 read with 110 of the ESI (General) Regulations, 1950 was issued on 15th October, 2018. He has therefore, submitted that prior to the issuance of show cause notice, the employee was not only accepted as an insured person by the corporation, but even contributions were also accepted by the ESI Corporation. As regards the allegations of late Page 17 of 31 Uploaded by AMAR RATHOD(HC01074) on Fri Mar 28 2025 Downloaded on : Sat Mar 29 01:10:57 IST 2025 NEUTRAL CITATION C/FA/4078/2023 JUDGMENT DATED: 28/03/2025 undefined registration, which has ultimately affected the employee or deprived the employee from the benefits under the Act is concerned, learned advocate had pointed-out that looking to the aforesaid dates, it cannot be said that the employee was deprived of any benefits because of the late registration.
5.2 On the contrary, reading of Section 68 of the ESI Act does not confer any authority upon the corporation to proceed for recovery of the dependency benefits in view of alleged breach of Regulation 12 read with Regulation 110.
5.3 As against the breach of the provisions of Act or Regulation is concerned, learned advocate had referred to Section 85 more particularly Clause-G of the ESI Act, 1948 which entails the corporation to initiate prosecution against the defaulting employer. He has further submitted that indisputably, no prosecution has been lodged against the respondent firm till date at the instance of ESI Corporation. He had also referred to and relied upon Regulation 31 of the ESI Regulations to contend that the payment of contribution for the injured employee is required to be done on or before 21st day of succeeding month. He had therefore submitted that the employee having been engaged on 16 th March, 2018, the contributions were to be made in the succeeding month prior to 21st day. Whereas, in the present case, the contributions have been made on 12 th April, 2018, however, the employee had passed away on 15 th April, 2018. He had therefore submitted that there was no failure or less payment of contribution on the part of the respondent - employer.
Page 18 of 31 Uploaded by AMAR RATHOD(HC01074) on Fri Mar 28 2025 Downloaded on : Sat Mar 29 01:10:57 IST 2025NEUTRAL CITATION C/FA/4078/2023 JUDGMENT DATED: 28/03/2025 undefined Hence, the appellant corporation had no occasion to initiate any proceedings of recovery under Section 68 of the ESI Act.
5.4 In support of his aforesaid submissions, learned advocate has relied upon the judgment of Madras High Court in case of ESI Corporation Vs. Arul Industries, order dated 13th March, 2023 passed in C.M.A. (MD) no.68 of 2017, wherein in similar set of facts, the learned Judge after considering the provisions more particularly Section 68 and Regulation 14, the Court opined that though Regulation 12 mandates the employee to collect all particulars from the employee for filling-up declaration form however, unless the correct details are furnished by the employee, the employer would not be in a position to fill-up the declaration Form and remit the same to the corporation. In such case Regulation 14, was applied whereby period of 10 days was calculated not from the date of joining the service but from the date on which the employee has provided the details of his family members, which are relevant for filling-up the declaration form.
5.5 Having noted so, the learned Judge has further taken into consideration sub-section 4 of Section 39 and had arrived at finding that the contributions reached to the office of the corporation prior to the last date envisaged under the Act. In such cases, the Court held that there was no failure or negligence on the part of the employer in making payment of contribution and therefore the question of invoking Section 68 of the Act for recovering capitalized value would not arise.
Page 19 of 31 Uploaded by AMAR RATHOD(HC01074) on Fri Mar 28 2025 Downloaded on : Sat Mar 29 01:10:57 IST 2025NEUTRAL CITATION C/FA/4078/2023 JUDGMENT DATED: 28/03/2025 undefined The reliance was also placed on the decision of this Court in case of Deputy Director, Employees State Insurance Corporation Ltd., & Anr. Vs. M/s. Associated Dyestuff Pvt. Ltd., oral order dated 17th February, 2025 passed in First Appeal no.1534 of 2024, wherein in similar set of facts, this Court has refused to entertain the appeal preferred by the appellant corporation by holding that no substantial questions of law were raised for consideration.
5.6 Lastly, learned advocate had placed reliance upon the judgment of Hon'ble Supreme Court in case of Fulmati Dharmdev Yadav & anr. Vs. New India Assurance Company Ltd., & Anr. reported in 2023 Lawsuit (SC) 880 to contend that the ESI Court is the last Court for fact finding which cannot be revisited by this Court at the appellate stage.
6. Disputing the aforesaid submissions of the learned advocate for the respondent, learned advocate for the appellant corporation has placed on record the copy of the order dated 18th September, 2021 passed by ESI Court in ESI Application no. 7 of 2019, wherein in case of the said accident, the respondent firm had approached under Section 74 read with Section 75 of the Act challenging the show cause notice issued by the corporation on 8 th March, 2019, pursuant to which the recovery notice dated 19 th March, 2019 for recovery towards the dependent benefits of an amount of Rs.3,31,066/- was sought for. Learned advocate had further pointed-out that the aforesaid recovery certificate was issued towards the dependent benefits paid to the heirs and legal Page 20 of 31 Uploaded by AMAR RATHOD(HC01074) on Fri Mar 28 2025 Downloaded on : Sat Mar 29 01:10:57 IST 2025 NEUTRAL CITATION C/FA/4078/2023 JUDGMENT DATED: 28/03/2025 undefined representatives of another workman named Satishbhai Rathod who had expired on the same day of accident i.e. on 25 th March, 2018 when the boiler had blasted. While inviting my attention to the findings and reason assigned by the ESI Court in the aforesaid application, learned advocate had pointed-out that when the respondent firm had reported about the accident in which 6 of his employees have sustained injuries, the details of their engagement was also submitted which goes to suggest that in case of the present deceased employee i.e. Pravinbhai Solanki, it was reported that he was engaged since last 8 years.
6.1 Learned advocate had further invited my attention to the statement of the witnesses in this regard. Considering the aforesaid facts, the ESI Court had arrived at a conclusion that the respondent firm had committed breach of Regulation 12 of ESI General regulations, 1950. It was also noticed by ESI Court that the respondent firm had admitted that the aforesaid employees were not registered prior to accident with the corporation.
6.2 The ESI Court has taken note of the reply given to the show cause notice by the respondent firm, wherein they have admitted about the aforesaid facts of the employees being engaged much prior in point of time. Thus, the ESI Court had arrived at the conclusion that the explanation offered for late registration is not palatable and the respondent firm has intentionally committed breach of Regulation 12 and has thereby held the respondent firm liable to make payment of the dependency benefits to the heirs and even representatives Page 21 of 31 Uploaded by AMAR RATHOD(HC01074) on Fri Mar 28 2025 Downloaded on : Sat Mar 29 01:10:57 IST 2025 NEUTRAL CITATION C/FA/4078/2023 JUDGMENT DATED: 28/03/2025 undefined of the deceased employee and at the same time has upheld the action of the corporation for recovery of the dependency benefits which may have been paid to the heirs of deceased employee.
6.3 Mr. Shah, learned advocate by referring to the aforesaid findings and reasons assigned has submitted that in case of M/s. Associated Dyestuff Pvt. Ltd., (supra) , though this Court has relied upon the judgment of Hon'ble Supreme Court in case of Bharaqgath Engineering Vs. R. Ranganayaki, reported in 2003 (2) SCC 138. However, the same would not be applicable in such kind of cases where the employer has committed intentional breach of the mandatory provision i.e. Regulation 12 of the ESI General Regulations, 1950. The learned advocate has distinguished the aforesaid decision of this Court by relying upon the judgment of the Delhi High Court in the case of Sushil Goyal Vs. Luckson Siddique and others reported in 2014 SCC online Delhi 396. The learned advocate has pointed-out that while inviting my attention to the observations of the learned Judge, it is held that it is not the law as read by referring to the judgment of the Hon'ble Supreme Court in case of Bharagath Engineering (supra) that even if a person is not shown in the register of employees and is not an employee on the date of the accident, even then ESIC still incurs liability for an employee who is not in the register and who is not registered with the ESIC as per the returns filed by the employer.
Page 22 of 31 Uploaded by AMAR RATHOD(HC01074) on Fri Mar 28 2025 Downloaded on : Sat Mar 29 01:10:57 IST 2025NEUTRAL CITATION C/FA/4078/2023 JUDGMENT DATED: 28/03/2025 undefined 6.4 In this regard reliance was placed on Section 44 of the ESIC Act which talks of filing of returns with the ESIC and maintenance of the register of employees by the employer. He has therefore re-emphasized on the fact that mere registration of an employer under ESI Act cannot and does not mean that such registration applies with respect to unspecified number of employees inasmuch as registration is applicable only for specific employees and specified number of employees. By referring to the aforesaid decision of Delhi High Court, learned advocate has submitted that once the employee is not shown in the register maintained by the employer on the date of the accident, the subsequent registration with the ESIC is nothing but a fraud played upon ESIC only with a view to obtain the benefit covered under ESI Act and to shift the liability upon the corporation as transpired on record, the corporation can always initiate appropriate proceedings to recover the amount paid towards dependent benefits to the heirs of the deceased employee by resorting to provisions of section 68 of the ESI Act. He has therefore urged to allow the present appeal and to quash and set aside impugned judgment and order and to permit the corporation to proceed with the recovery of the amount paid towards dependent benefits by the corporation.
7. I have extensively heard the learned advocates appearing for the respective parties on the controversy raised and I have given thoughtful consideration to their arguments in light of the record and proceedings of the ESI Court. I have Page 23 of 31 Uploaded by AMAR RATHOD(HC01074) on Fri Mar 28 2025 Downloaded on : Sat Mar 29 01:10:57 IST 2025 NEUTRAL CITATION C/FA/4078/2023 JUDGMENT DATED: 28/03/2025 undefined also closely perused the legal position as pointed-out by learned advocates appearing for the respective parties.
8. At the outset it would be appropriate to note the substantial questions of law proposed by the learned advocate for the appellant corporation. The learned advocate for the appellant has raised following substantial questions of law for consideration in the present appeal.
(1) Whether the late registration of the deceased employee by the employer is in violation of Regulation 12 of the Employee State Insurance (General) Regulations, 1950?
(2) Whether the learned Court was correct in interfering with the right of the appellant corporation in recovering the dues under section 68 of the ESI Act from the employer?
(3) Whether the finding of the learned Court that the employee was alive at the time of registration under the ESI Act and therefore, the employer is not liable to pay the dependent benefits is just and proper?
9. Having noted the aforesaid substantial questions of law, the indisputed facts as can be gathered from the pleadings of the respective parties before the ESI Court and the evidence led before the ESI Court, it is not in dispute that on 25 th March, 2018 the accident had taken place in the factory premises of the respondent firm in which 5 workmen engaged Page 24 of 31 Uploaded by AMAR RATHOD(HC01074) on Fri Mar 28 2025 Downloaded on : Sat Mar 29 01:10:57 IST 2025 NEUTRAL CITATION C/FA/4078/2023 JUDGMENT DATED: 28/03/2025 undefined by the respondent firm at relevant point of time had sustained serious / fatal injuries, which include the present employee named Pravinbhai Solanki. It is an undisputed fact that on the same day that is on 25th March, 2018 the respondent firm had submitted online Form no.12 as prescribed under Regulation 68 of the ESI Act with the local office of the ESI Corporation.
10. The very reading of the content of the aforesaid Form which is produced on record at Exh.18 goes to suggest that the respondent firm had declared in the said Form that the injured person was on the day of accident an employee as defined under Section 2 (9) of the Act. The respondent firm had also declared in the Form that contribution was payable by the employer for the day on which the accident had occurred. It is also an undisputed fact that the injured workmen were extended medical treatment by the ESIC Hospital at Halol. The injured workmen Pravinbhai Solanki was thereafter referred to the hospital at Vadodara. All throughout his treatment the injured workman had been given extended medical facilities as prescribed under the ESI Act. It is also an undisputed fact that the workmen had succumbed to the injuries on 15th April, 2018. It is an undisputed fact that the claim of the dependency benefit was entertained by the ESI Corporation and the amount towards such dependency benefits was paid to the heirs and legal representatives of the deceased employee. The deceased employee was registered by the ESI Corporation on 27th March, 2018. Upon perusal of the contribution history, as per online record, according to the respondent firm for the month of March 2018, for a period of Page 25 of 31 Uploaded by AMAR RATHOD(HC01074) on Fri Mar 28 2025 Downloaded on : Sat Mar 29 01:10:57 IST 2025 NEUTRAL CITATION C/FA/4078/2023 JUDGMENT DATED: 28/03/2025 undefined 9 days, wages of Rs.2,826/- has also been received by the ESI Corporation on 12th April, 2018. Thus, having accepted the deceased employee, who was alive at relevant point of time to be an 'insured person' as defined under Section 2(14) of the ESI Act, the Corporation has rightly entertained the claim of the heirs of the deceased employee by extending dependent benefits.
11. As against the aforesaid facts, the Corporation deemed it fit to issue show cause notice on 31 st January, 2019, i.e. almost after period of 8 months, under Section 68 of the ESI Act, on the respondent seeking recovery of capitalized value payable to the dependents of deceased Pravinbhai Solanki, on the ground that the respondent firm had failed to abide by the mandatory provision to register the employee immediately before taking him into the employment under Regulation 12, read with Regulation 110 of the ESI (General) Regulations, 1950.
12. The question therefore arises for consideration of this Court is whether non-compliance of registration of employee before their employment under Regulation 12, read with Regulation 110 of the ESI (General) Regulations 1950, confers authority upon the corporation to proceed for recovery of the dependency benefits by invoking Section 68 of the ESI Act.
13. Considering the argument canvassed by the learned advocates appearing for the respective parties, the core contention which has been raised by learned advocate for the Page 26 of 31 Uploaded by AMAR RATHOD(HC01074) on Fri Mar 28 2025 Downloaded on : Sat Mar 29 01:10:57 IST 2025 NEUTRAL CITATION C/FA/4078/2023 JUDGMENT DATED: 28/03/2025 undefined corporation is the breach of Regulation 12 of the Regulations 1950, by submitting that the respondent firm had not adhered to the mandatory provision by not tendering Form no.1 with necessary details with the ESI Corporation prior to the engagement of the deceased employee.
14. As against that, learned advocate for the respondent firm has argued that Regulation 12 has to be read in conjunction with Regulation 14, which permits the employer to submit the declaration form within period of 10 days from the date of receipt of the details of the particulars to be submitted by the employee. The aforesaid submission has been contradicted by learned advocate for the appellant corporation by impinging on the finding of the ESI Court that the ESI Court has arrived at incorrect finding that the injured workman was engaged from 16th March, 2018 and the respondent firm had reported about the accident immediately on its occurrence on 25th March, 2018 and the registration of the injured employee was confirmed on 27th March, 2018 and therefore, the contention of the corporation that the registration of the employee being done after his death was wrongly discarded. He has submitted that the statement of the witnesses were referred to and relied upon by the corporation in their written statement at Exh.15, wherein specific contention was raised that the employer has registered the IP after the death to pass on liability to the ESI Corporation. By raising such contention, this Court is called- upon to enter into a fact finding inquiry as to whether there was a contradictory material to suggest that the employee Page 27 of 31 Uploaded by AMAR RATHOD(HC01074) on Fri Mar 28 2025 Downloaded on : Sat Mar 29 01:10:57 IST 2025 NEUTRAL CITATION C/FA/4078/2023 JUDGMENT DATED: 28/03/2025 undefined was engaged much prior to the date mentioned in the application i.e. 16th March, 2018. It is evident from the contents of the written statement that the aforesaid contention of the corporation is based on the statement of witnesses. However, no such witnesses have been examined by the corporation before the ESI Court.
15. As against that, the respondent firm has produced on record the attendance-sheet (at Mark-5/3), which has been duly verified by the Assistant Director, Industrial Safety and Health, Godhara, as well as by Deputy Director, Industrial Safety and Health, Godhara, wherein the presence of the deceased employee i.e. Pravinbhai Solanki is indicated; on the date of the accident along with the other injured employees.
16. Apart from the aforesaid documents produced vide list at Exh.5 as well as Exh.28, more particularly, the muster roll, as well as wage register has also been produced on record for the month of January, 2018 and February, 2018 produced on record does not indicate that the aforesaid employee was engaged by the respondent firm during this period. As against that the wage register of March, 2018 suggests that wages for the number of days the employee was engaged, has been paid to the daughter of the said employee. The respondent firm has not been able to controvert the aforesaid material by bringing on record any contradictory evidence. In such circumstances, no error can be found with the findings and the reasons assigned by the ESI Court as questioned by the learned advocate for the appellant corporation. Even Page 28 of 31 Uploaded by AMAR RATHOD(HC01074) on Fri Mar 28 2025 Downloaded on : Sat Mar 29 01:10:57 IST 2025 NEUTRAL CITATION C/FA/4078/2023 JUDGMENT DATED: 28/03/2025 undefined otherwise as rightly pointed-out by the learned advocate for the respondent firm, the employee was registered with the ESI Corporation as evident from the record on 27 th March, 2018. In fact, the contents of the e-pehchan card issued to the employee i.e. Pravinbhai Solanki, suggests that he was accepted as an insured person in terms of Section 2(14) of the ESI Act by respondent firm on 27 th March, 2018 when he was alive. The medical case papers produced on record goes to suggest that the ESI Corporation had in fact extended medical treatment in view of the scheme of the Act of 1948. The letter issued by the ESI Corporation on 15th October, 2018 goes to suggest that the dependency benefits have also been approved by the ESI Corporation. On bare comparison of the relevant dates suggest that the employee was engaged on 16 th March, 2018 and the registration of the employee as insured person was accepted by the Corporation on 27 th March, 2018 pursuant to the declaration form submitted by the respondent employer on 25th March, 2018. Thus, the respondent employer had in fact not only reported about the occurrence of the accident to the ESI Corporation, but has also promptly reported about the engagement of the workmen as soon as the relevant details were furnished by the heirs of the injured employee within the stipulated time frame prescribed under Regulation 14 of the Regulations, 1950. In the opinion of this court, there is no breach of Regulation 12 as well as Regulation 110 of the Act as alleged to have been committed by the respondent firm. Having held so, as regards the issuance of show cause notice under Section 68 of the Act, 1950 is concerned, as held by this Court in the case of M/s.
Page 29 of 31 Uploaded by AMAR RATHOD(HC01074) on Fri Mar 28 2025 Downloaded on : Sat Mar 29 01:10:57 IST 2025NEUTRAL CITATION C/FA/4078/2023 JUDGMENT DATED: 28/03/2025 undefined Associated Dyestuff Private Ltd., (Supra) , once there is sufficient compliance of the regulations, the same cannot be a subject matter to initiate proceedings under Section 68 of the Act of 1948.
17. Considering the facts of the case, once the corporation had recognized the employee as insured person in terms of Section 2(14) of the Act, 1948 as held by the Hon'ble Supreme Court in the case of Bharaqgath Engineering (supra), the payment or non-payment of contribution or action or inaction prior to or subsequent to the date of accident would be inconsequential so far as the extension of dependency benefits to the employee is concerned. Once the deceased was treated as insured person as defined under Section 2(14) of the Act, 1948 and the deceased having sustained employment injury as defined under Section 2(5) of the Act and in absence of any dispute with regard to such injury sustained while he was in the employment of the employer, by operation of Section 63 of the ESI Act, 1948, the heirs and legal representatives of the deceased employee were entitled to the dependency benefits irrespective of the fact that the form prescribed as per Regulation 12 of the Regulations was not submitted prior to the date of joining the employment.
18. For the foregoing reasons, no substantial questions of law arise for consideration by this Court, which calls for admission of the present appeal. The present appeal being devoid of merits and in absence of any substantial questions Page 30 of 31 Uploaded by AMAR RATHOD(HC01074) on Fri Mar 28 2025 Downloaded on : Sat Mar 29 01:10:57 IST 2025 NEUTRAL CITATION C/FA/4078/2023 JUDGMENT DATED: 28/03/2025 undefined of law having been raised, is not entertained and is hereby fails.
19. With these observations, the present appeal stands dismissed. However, there shall be no orders as to costs. The R. & P. called for, is directed to be sent back forthwith to the concerned Court.
Sd/-
(NISHA M. THAKORE, J.) AMAR RATHOD...
Page 31 of 31 Uploaded by AMAR RATHOD(HC01074) on Fri Mar 28 2025 Downloaded on : Sat Mar 29 01:10:57 IST 2025