Bombay High Court
Employees State Insurance Corporation vs Western Maharashtra Development ... on 9 February, 2026
2026:BHC-AS:6726
12-FA-402-21.doc
rsk
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
FIRST APPEAL NO.402 OF 2021
Employees State Insurance Corporation ... Appellant
Versus
Western Maharashtra Development
Corporation Ltd. ...Respondent
_____________________________________________________
Mr. Shailesh S. Pathak for the Appellant.
None for the Respondent.
_____________________________________________________
CORAM : JITENDRA JAIN, J.
DATED : 09 FEBRUARY 2026
P. C.:
1. Admit. Though respondent waives service and name of the advocate is shown on the cause list, there is no appearance. Since the issue involved is very narrow and the order which I propose to pass, the Court is not adjourning the matter for non-appearance of the respondent.
2. The present appeal filed by the ESI Corporation challenges an order dated 26 March 2019 passed by the ESI Court at Pune whereby Digitally signed by RAJESHWARI RAJESHWARI SUBODH SUBODH KARVE KARVE the Court has quashed prohibitory order dated 10 May 2012, demand Date:
2026.02.10 10:39:10 +0530 notice dated 28 July 2011 and notice in Form-C-18 dated 31 July 2009 and further directed the ESI Corporation to refund the amount recovered from the respondent Western Maharashtra Development Corporation (WMDC) 1 of 4 ::: Uploaded on - 10/02/2026 ::: Downloaded on - 10/02/2026 20:32:25 ::: 12-FA-402-21.doc
3. The Court has given its reasoning in paragraph 34 of the impugned order. With respect to the application made by WMDC to the Government for exemption, it is stated that Government of Maharashtra has not disposed of this application till date when the impugned order was passed. The Court further held that in the absence of any order under Section 45A of Employees State Insurance Act, 1948 the Corporation cannot recover the contribution. The Court further held that WMDC is exempt under Section 1(4) of ESI Act.
4. The following substantial questions of law arises from this order:
"Whether the ESI Court was justified in quashing prohibitory order and demand notices on the ground that there is no order under Section 45A of ESI Act and further WMDC is exempted from the application of the Act as per Section 1(4) of ESI Act ?"
5. Proviso to Section 1(4) of ESI Act exempts factory or establishment belonging to or under the control of the Government whose employees are otherwise in receipt of benefits similar or superior to the benefits provided under the ESI Act. There is no dispute that WMDC is under the control of the Government. In paragraph 3 of the impugned order, Court record that WMDC have 2 of 4 ::: Uploaded on - 10/02/2026 ::: Downloaded on - 10/02/2026 20:32:25 ::: 12-FA-402-21.doc stated various benefits given to their employees. However, the ESI Court has not given any finding as to whether the benefits given by WMDC is substantially similar or superior to the benefits provided under this Act. In my view this finding is necessary before the Court comes to a conclusion that WMDC is exempted under proviso to Section 1(4) of the Act. Without there being any such finding , the ESI Court could not have come to a conclusion that WMDC is exempted under Section 1(4) of the said Act. Therefore, the impugned order is remanded back to the ESI Court to give its findings on satisfaction of pre-conditions required under the proviso to Section 1(4) of the Act.
6. WMDC made application for exemption on 25 May 2009 to the Government of Maharashtra. The impugned order was pronounced on 26 March 2019. Till then, the Government of Maharashtra has not taken any decision on the application made by the WMDC. Mr. Pathak states that the demand is made for the period from 1 April 2007 till 31 June 2008 and from 1 July 2008 to 30 September 2008 but same was made on 31 July 2009. In my view, the Government of Maharashtra should have processed and taken some decision on the exemption. The Government of Maharashtra cannot sit on application made by the Company in which they have control for a period of almost 10 years. Therefore, 3 of 4 ::: Uploaded on - 10/02/2026 ::: Downloaded on - 10/02/2026 20:32:25 ::: 12-FA-402-21.doc if said application is not decided till today, then the Government of Maharashtra though not a party to the proceeding is directed to process the application as soon as possible and in any case on or before 30 May 2026. The copy of this order should be forwarded to the relevant department of the Government of Maharashtra by the appellant- ESI Court as well as by the WMDC.
7. Since I have remanded the matter on other issue, the ESI Court will also decide the issue of exemption application and fall out of the decision to be taken by the Government of Maharashtra . Therefore even on this issue the impugned order is remanded back.
8. On remand all the issues are kept open including the issue of retrospective or prospective aspects of the exemption notification.
9. It is made clear that I have not expressed any opinion on the merits of the case and all contentions of both the parties are kept open to be adjudicated afresh on remand. The ESI Court is requested to re-frame the issues as per the pleadings of the parties. The impugned order is set aside and remanded back to the ESI Court on all the issues.
10. Appeal is disposed of in the above terms. Interim/Civil Application, if any, does not survive.
[ JITENDRA JAIN, J. ] 4 of 4 ::: Uploaded on - 10/02/2026 ::: Downloaded on - 10/02/2026 20:32:25 :::