Karnataka High Court
M/S Dolphin Detective Agency vs The Assistant Director on 28 February, 2017
Author: S.N.Satyanarayana
Bench: S.N.Satyanarayana
IN THE HIGH COURT OF KARNA TAKA
DHARWAD BENCH
DATED TH IS THE 28 T H DAY OF FEBRUARY 2017
BEFORE
THE HON'BLE MR. JUS TICE S.N. SA TYANARAYANA
M.F.A.NO .21568/2010 ( ESI)
C/W.
M.F.A.NO .23313/2010 ( ESI)
IN MFA NO.21568/2010
BETWEEN:
M/S. DOLPHIN DETECTIVE AGENCY
VARSHA COMPLEX, BEHIND BHAVANI A RCADE,
OPP BASAVAVANA, NEAR OLD BUS S TAND
HUBLI, REP. BY ITS PROPRIETOR
SHRI VISHWESHWARAYYA S IDDHALINGASWAMY
HIREMATH
... APPELLANT.
(BY SRI RA VI HEGDE, ADVOCATE.)
AND
THE ASSIS TANT D IRECTO R
EMPLOYEES S TA TE INSURANCE CORPORA TION
SUB REGIONAL OFFICE
SARVODAYA CIRCLE, KESHVAPUR
HUBLI
... RESPONDENT
(BY SRI VINAY S. KOUJALAGI, ADVOCA TE, FOR SRI V M
SEELAVANT, ADVOCA TE.)
2
THIS MISCELLANEOUS F IRS T APPEAL IS FILED
UNDER SECTION 82(2) OF ESI ACT, PRAYING TO SET
ASIDE THE ORDER DA TED 23.12.2009, PASSED BY
THE ES I COURT, HUBLI, IN ESI/APPL/9/2009, ETC.,.
IN MFA NO.23313/2010
BETWEEN:
ESI CORPORA TION
REP. BY ITS ASSISTANT DIRECTOR,
SUB-REGIONAL OFFICE,
DOLLARS COLONY, HUBLI.
... APPELLANT.
(BY SRI VINAY S. KOUJALAGI, ADVOCA TE, FOR SRI V M
SEELAVANT, ADVOCA TE.)
AND:
M/S. DOLPHIN DETECTIVE AGENCY
VARSHA COMPLEX, BEHIND BHAVANI A RCADE,
OPP: BASAVA VANA, NEAR OLD BUS S TAND,
REP. BY ITS PROPRIETOR V.S.HIREMA TH.
... RESPONDENT
(BY SRI RA VI HEGDE, ADVOCATE.)
THIS MISCELLANEOUS F IRS T APPEAL IS FILED
UNDER SECTION 82(2) OF ESI ACT, 1948, PRAYING TO
SET ASIDE THE ORDER DATED 23.12.2009, PASSED IN
ESI APPLICA TION NO .09/2003, ON THE FILE OF ES I
COURT, HUBLI, ETC.,.
THESE APPEA LS COMING ON FOR ADMISSION
THIS DAY, THE COURT DELIVERED THE FOLLOWING:
3
JUDGMENT
These two appeals are by the applicant and respondent respectively in ESI Application No.9/2003, on the file of ESI Court, Hubballi.
2. The appeal in MFA No.21568/2010 is by the applicant in ESI Application No.9/2003 and the appeal in MFA No.23313/2010 is by the respondent corporation in ESI Application No.9/2003.
3. Admittedly, both the appeals are with reference to very same order rendered by the ESI Court on an application filed by the appellant herein in MFA No.21568/2010 under Section 75 of the ESI Act, 1948. The records would disclose that M/s.Dolphin Detective Agency, the applicant in ESI Application No.9/2003 on the file of ESI Court, Hubballi, is running an agency providing security service, for which they engage the service 4 of security guards and lending their service to their customers on prescribed fee.
4. The case of the ESI corporation is that the applicant in the Court below had employed several persons whose total number would exceed more than 20 from 28.2.1986 itself and from which day the applicant in the Court below is required to cover the said persons for the benefit provided under the ESI Act. However it is the case of the applicant that though the applicant has employed several persons, none of them are provided to serve any companies and organizations which are situated within the limits of district where the said activity is required to be covered under ESI provision. Therefore as in 1986 the number of employees whose service was made available to different institutions were situated in non notified area and only those of the employees who were working within the notified area were 5 shown on the register and since their numbers were less than 20, coverage was not taken upto 1993.
5. In the year 1993, it is stated that voluntarily by filing Form No.01 they sought themselves to be registered under the provisions of ESI Act. However the ESI corporation did not accept this contention. Hence they raised arrears payable towards the ESI contribution for the period from 28.2.1986 to July 1993 and demanded the appellant agency to pay Rs.4,88,783/- as on 24.1.2003. Hence the said order was subject matter of challenge in ESI application No.9/2003. In the said proceedings ESI corporation was respondent represented by its Assistant Director.
6. Based on the material placed before the ESI Court, the ESI Court accepted coverage of appellant's unit for payment of contribution under ESI from January 1991. While doing so, by relying 6 upon Section 77(1)(a)(b) of ESI Act, 1948, exempted the payment of arrears for the period prior to five years from the date of issuance of notice and passed an order directing the applicant in the Court below to pay arrears of contribution for a period of two years commencing from January 1991 to July 1993.
7. The said order is not accepted by the applicant in the Court below. He has come up in appeal in MFA No.21568/2010 challenging the said order. In the meanwhile the corporation who has issued notice seeking recovery of contribution money from 1986 to July 1993 has come up in appeal in MFA No.23313/2010 seeking to set aside the order in ESI Application No.9/2003 and also to issue a direction to the applicant in the ESI Court, calling upon them to pay the arrears as demanded under Section 45-A of the ESI Act 7 which order dated 24.1.2003 was at Ex.A.22 in the Court below.
8. The trial Court after affording opportunity to both the parties and recording evidence, after hearing both the parties, proceeded to accept the contention of the applicant and held that the order regarding coverage shall come into force from 24.1.2003 and accordingly calculated contribution payable up to July 1993 which is subject matter of appeal by the applicant in the Court below and again in another appeal the ESI corporation has come up challenging the application of Section 77(1)(a)(b) in granting them exemption from filing the returns for five years on the basis that it is barred by limitation.
9. Heard the learned counsel for the appellants in both the appeals who are respectively respondents in the other appeal. On 8 going through the material available on record this Court would see that the grounds raised in challenging the order of ESI Court in ESI Application No.9/2003 is incorrect. Admittedly the establishment of applicant in the Court below is in place even prior to 1993. However it is from the year 1993, they have been paying contribution to PF with reference to employees more than 20 in numbers in the said organization.
10. When the officers of the ESI corporation went for inspection on 25.6.2002, they were able to look into the pay register maintained by the applicant in the Court below right from the year 1986 February and noticed that the applicant in the Court below has committed an error in seeking voluntary coverage by filing Form No.01 in the year 1993 restricting only from that day without seeking coverage for earlier period. Accordingly, the trial Court by recording evidence 9 proceeded to answer the points for consideration in holding that the applicant in the Court below is required to pay arrears of contribution for a period of 2½ years i.e., from January 1991 to July 1993. The challenge to that by the ESI cannot be accepted in as much as application of Section 77(1)(a)(b) would not be assailed by them in stating that the said exemption is not available to the case on hand.
11. In that view of the matter, the appeal filed by them challenging the order of ESI Court in Application No.9/2003 does not call for interference in these two appeals. In that view of the matter no substantial question of law arises for consideration in these two appeals. Accordingly both the appeals are dismissed. Order of ESI Court is confirmed.
12. While doing so, six months time is granted to the appellant agency to pay the entire 10 arrears as demanded in their notice dated 25.6.2002. However while making such demand and collecting the same, the amount deposited already should be taken into consideration for the purpose of receiving the balance.
Sd/-
JUDGE Mrk/-