Delhi District Court
Dinesh Kumar vs Employee'S State Insurance on 8 May, 2017
IN THE COURT OF SHRI DEEPAK WASON:
SCJ-CUM-RC: CENTRAL DISTRICT: TIS HAZARI COURTS: DELHI
Old ESIC No. : 58/05
CIS No. : 78/16
Dinesh Kumar
Sole Proprietor of M/s. Bengal Sweet Corner
R/o J-137, Kirti Nagar, Industrial Area,
New Delhi-110064. .....Petitioner
Versus
Employee's State Insurance
Corporation Regional Office,
DDA Office-cum-Shopping Complex
Rajendra Bhawan,
Rajendra Place, New Delhi.
(Service to be effected through
its Regional Director). .....Respondent
Date of institution of petition : 11.07.2005
Date on which judgment was reserved : 08.05.2017
Date on which judgment was pronounced : 08.05.2017
JUDGMENT
1. This is a petition under section 75 of the Employees State Insurance Act, 1948 (hereinafter referred to as 'Act') for declaring that petitioner firm was not liable to be covered under the provisions of ESI Act for the period in dispute i.e from 03.02.1993 to March, 2004. It is further prayed in the petition that the petitioner firm is not legally liable to pay the contribution of Rs.3,18,138/- under the ESI Act for the period in dispute as claimed by the respondent vide impugned order of 07.06.2005 and cost of the petition be granted to the petitioner.
2. It is further stated in the petition that petitioner firm is a sole proprietor firm carrying on its business under the name and style of M/s. Bengal Sweet Corner at J-137, Kirti Nagar Industrial Area, New Delhi since 1980 and he is therefore, competent and authorized to sign and verify the petition and to institute the same on behalf of the CIS No 78/16 Dinesh Kumar Vs. ESIC Page 1 of 9 petitioner firm. It is further stated in the petition that petitioner never had any branch or office anywhere since its inception. It is further stated in the petition that initially the petitioner firm was a partnership firm and subsequently, it became a Sole Proprietor firm, after the death / retirement of certain partners.
3. It is further stated in the petition that the petitioner is also a principal employed within the meaning of Section-2(17) of the Act and is engaged in the business of sale of sweets. It is further stated in the petition that petitioner firm has been maintaining all records / books of accounts during the routine course of its business including cash books, ledger, wages and attendance register etc. and the petitioner firm is also assessed to sales tax and income tax and the records have been checked and signed by various government authorities from time to time.
4. It is further stated in the petition that the petitioner firm never employed more than 7-8 persons for wages directly or indirectly, in connection with its business purpose and as such it was never conversable under the provisions of the ESI Act. It is further stated in the petition that in the year 1999, an Inspector of the respondent visited the petitioner establishment at J-137, Kirti Nagar, New Delhi and personally served the notice upon the petitioner regarding the production of record for inspection. It is further stated in the petition that the petitioner replied that the said notice was addressed at J-113, Bengali Sweet Corner and the petitioner has no connection whatsoever, with that firm and in fact, no such firm / restaurant / shop was running at this given address at any time which is purely a residential premises owned by some one. It is further stated in the petition that however, the Inspector had personally given the notice to the petitioner in this shop running name and style of M/s. Bengali Sweet Corner at J-137, Kirti Nagar, New Delhi. It is further stated in the petition that the petitioner also stated that he or his firm had never received any letter from the respondent at any time before the receipt of the present CIS No 78/16 Dinesh Kumar Vs. ESIC Page 2 of 9 notice received by the hand from the Inspector. It is further stated in the petition that the petitioner was never running any business or Restaurant in the premises at J-113, Kirti Nagar, New Delhi which is also evident from the fact that the petitioner is running his restaurant / shop only at J-137, Kirti Nagar, New Delhi since its inception in the year 1980 and this firm is duly registered with the Registrar of firms, Deputy Commissioner of Police, Sales Tax & Income Tax Authorities, Delhi etc.
5. It is further stated in the petition that thereafter, the respondent kept silent for about 5 years and then served a show cause notice dated 31.10.2004 regarding the proposed assessment of contribution of Rs. 3,18,138/- for the period from 03.02.1993 to March 2004 on adhoc basis under Section 45 A of the ESI Act. It is further stated in the petition that in response to the said show cause notice, the petitioner replied vide his letter dated 24.11.2004 and stated that no establishment in the name of Bengali Sweet Corner ever existed in the premises no. J-137, Kirti Nagar, Indl. Area, New Delhi and that the petitioner had never received any letter from the respondent earlier to the show cause notice, except a letter given by the Inspector to the petitioner by hand in the year 1999, which too was bearing a wrong name and address of the firm / shop / restaurant is M/s. Bengali Sweet Corner, J-113, instead of M/s. Bengal Sweet Corner, J-137, Kirti Nagar Industrial Area, New Delhi. It is further stated in the petition that the petitioner also stated in that letter that his establishment was never inspected by any Inspector, before receiving the said show cause notice dated 31.10.2004. It is further stated in the petition that petitioner also sought an opportunity in the matter in support of his contentions.
6. It is further stated in the petition that without granting any opportunity to the petitioner, the respondent passed a final order on 07.06.2005 under Section 45A of the ESI Act whereby, the respondent determined the contribution of Rs. 3,18,183/- against the petitioner for the period from 03.02.1993 to March 2004. It is further stated in the CIS No 78/16 Dinesh Kumar Vs. ESIC Page 3 of 9 petition that vide this order, the petitioner was directed to make the payment, failing which it was threatened that the same would be recovered as arrears of land revenue under Section 45-C to 45-I of the ESI Act. It is further stated in the petition that the coverage of the petitioner firm and the impugned deman as raised under the ESI Act, is illegal, arbitrary and unjustified and the same is challenged inter-alia.
7. In petition, various grounds have been mentioned i.e respondent did not grant any opportunity whatsoever, before determining and demanding the contribution in dispute, the petitioner firm is not a factory within the meaning of Section 2(12) of the ESI Act, under which the respondent has covered the petitioner firm, petitioner never employed more than 7-8 persons for wages in connection with its business activities during the period in dispute, respondent failed to furnish the copy of the inspection report material on the basis of which the petitioner firm was covered and the contribution in dispute has been claimed by the respondent, the petitioner firm though falls under the category of 'Restaurants' as mentioned in the notification dated 28.03.1975 issued under Section 1 (5) of ESI Act, but still it is not coverable under the ESI Act, the corporation did not consider at all, at the time of determining the alleged contribution on adhoc basis under Section 45-A of the ESI Act vide impugned orders, the information / particulars available with it and as furnished by the petitioner from time to time, the petitioner never failed / refused to show its records for inspection whatever and whenever asked by the respondent, the petitioner never prevented or obstructed any Inspector or other official of the corporation / respondent in any manner, in exercising his functions or discharging his duties under Section 45-A of the ESI Act, the petitioner is not liable to pay any interest since no principal amount towards contribution, was ever due to the respondent.
8. Respondent was served and contested the present petition by filing written statement of his defence contending wherein that the contents of para 1, 4 of the present petition lies on the petitioner. It is CIS No 78/16 Dinesh Kumar Vs. ESIC Page 4 of 9 further stated in the WS that para no. 2 & 3 of the petition are matter of record. It is further stated in the WS that as far as para 5 of the petition are concerned, the unit was covered under the ESI Act on the basis of survey conducted by the team of Inspector on 03.02.1993 when 13 employees were found working in the unit with the aid of power. It is further stated in the WS that as para no. 6 of the petition is concerned, the Inspector of the respondent personally handed over the notice received by Sh. Dinesh Kumar at the unit and inspite of receipt of notice, the petitioner had not produced any records and as a result on non cooperative attitude of the petitioner in production of records, C-18 (adhoc basis) was issued to the petitioner as per the provisions of the ESI Act. It is further stated in the WS that as far as para 7 of the petition is concerned, it is submitted that the contention of the petitioner that the respondent kept silent for 5 years is not true because the Inspector of the respondent visited the unit on different dates for inspection of records but petitioner had avoided to produce the records on one pretext or the other and after completing the drill action as per practice a C-18 (Ad-hoc basis) amounting to Rs. 3,18,138/- was issued for the period 03.02.1993 to March 2004 with the date of personal hearing on 24.11.1994.
9. It is further stated in the WS that as far as para 8 of the petition is concerned, it is submitted that Inspector of the respondent visited the petitioner for inspection of records but everytime he refused to produce the records on one pretext or the other. It is further stated in the WS that as far as para 8 of the petition is concerned, it is submitted that opportunity of personal hearing was afforded to the petitioner on 24.11.1994 but the petitioner did not appear for personal hearing and order under Section 45-A of the ESI Act was passed. It is further stated in the WS that as far as para 10 of the petition is concerned, it is submitted that the coverage of the unit is in order and as per provisions of the Act and demand raised by the respondent is justified and in order. Reply on grounds were denied in the written statement. It is prayed in the written statement that petition is liable to be dismissed CIS No 78/16 Dinesh Kumar Vs. ESIC Page 5 of 9 with cost.
10. The petitioner filed replication to the written statement of respondent and traversed all the contentions raised in the written statement and reaffirmed the allegations made in the petition.
11. From the pleadings of the parties, following issues were framed on 23.02.2006 :-
1. Whether the petitioner is entitled for declaration that the petition is not liable to recover under the provisions of ESI Act for the disputed period w.e.f 03.02.93 to March 2004? OPP
2. Recovery sought by the Corporation for Rs. 3,18,138/- vide impugned orer dated 07.06.2005 is liable to be set aside / quashed.
3. Relief.
12. The petitioner has examined himself as PW-1 and has reiterated the contents of the petition and relied upon various documents i.e. Ex. PW-1/1 to Ex. PW-1/17. This witness was cross-examined and discharged.
13. It is a matter of record that vide order dated 08.12.2015, PE was closed.
14. It is also a matter of record that despite giving various opportunities, respondent has also not led any evidence and vide order dated 19.07.2016, RE was closed and matter was adjourned for final arguments.
15. I have heard Ld. counsels for both the parties and I have also gone through the record. I have also gone through the written arguments filed by the respondent. As far as, one of the ground taken by the respondent that petition is bad for non-joinder of necessary CIS No 78/16 Dinesh Kumar Vs. ESIC Page 6 of 9 party, I am of the view that this ground cannot be taken at this stage as the said ground was not taken in written statement.
Issues no. 1 & 2 are taken together being interconnected to each other.
16. In nutshell, it is the case of the petitioner that petitioner has never employed more than 7-8 persons and petitioner's firm never functioned at J-113, Kirti Nagar, New Delhi.
17. To support his case, petitioner has examined himself. PW-1 has reiterated the averments of the petition. PW-1 has specifically deposed in his examination-in-chief by way of affidavit that he had never employed more than 7-8 persons for wages directly or indirectly and had no branch office anywhere since the inception of the firm. He has specifically deposed that his unit never functioned at J-113, Kirti Nagar, New Delhi. This witness was cross-examined by the respondent. No question was put with regard to the fact that petitioner's firm was not functioning at J-113, Kirti Nagar, New Delhi. Even, no suggestion was given that petitioner is deposing falsely on the above said fact. Petitioner has proved various documents on record to show that his firm was functioning from J-137, Kirti Nagar, New Delhi. It is clear from the documents i.e Ex. PW-1/4 i.e acknowledgement, Ex. PW-1/5 i.e self assessment tax, Ex. PW-1/6 i.e certificate issued by MCD, Ex. PW-1/7 & Ex.PW-1/10 i.e registration of eating house, Ex. PW-1/9 i.e acknowlegement of registration of firm and Ex. PW-1/10 i.e deed of partnership. All these documents are showing that petitioner firm was functioning from J-137, Kirti Nagar, New Delhi. From the beginning, petitioner is taking the stand that as per the respondent, inspection was carried out at J-113, Kirti Nagar, New Delhi. Respondent has nowhere disputed this fact in the entire written statement. Only, evasive reply was given by the respondent. Despite being given various opportunities, respondent has not proved on record the inspection report to show that inspection was conducted at J-137 i.e the place of the petitioner or at the time of inspection, Inspector found 13 CIS No 78/16 Dinesh Kumar Vs. ESIC Page 7 of 9 employees working there. In the above said scenario, respondent should have examined the witness. In the above said circumstances also, the petitioner did not get a chance to cross-examine the witness of the respondent on the above said aspects.
18. Respondent is claiming that unit was covered under the ESI Act on the basis of survey conducted by the team of Inspector on 03.02.1993 when 13 employees were found working in the unit. At this stage, it would be relevant to refer a judgment by Hon'ble Karnataka High Court in "Employees' State Insurance Corporation and Karnataka Asbestos Cement Products"II L.L.N. 1991 page 519 by referring to its earlier decision in case titled "Employees' State Insurance Corporation Vs. Subbaraya Adiga" (1988 - II L.L.N. 452) :-
".....A list of employees prepared by the Employees' State Insurance Inspector in the course of his visit to an establishment, in order to find out whether the provisions of the Employees' State Insurance Act are attracted to it, must contain the name, father's name, place from which the employee hails, the designation, the length of service, emoluments and the signature or thumb impression of the employee, as the case may be. If at that time other persons other than the employees are present, the names and addresses of at least two of them with their signatures and also the signature of the proprietor or manager or the person in charge of the establishment should be obtained at the end of the list and a copy of which be furnished to the establishment...."
19. As stated above, it is significant to note that respondent ESIC has not examined concerned officer / Inspector for proving veracity of survey report and order dated 07.06.2005 passed under section 45-A of ESI Act in respect of 13 employees. Since survey report and list of employees of company as required under law could not be proved by respondent, so, order dated 07.06.2005 passed under section 45-A demanding Rs, 3,18,138/- is patently illegal which is liable to be quahsed / set aside. In these circumstances, that in the absence of any document i.e survey report, petitioner firm was not liable to be covered CIS No 78/16 Dinesh Kumar Vs. ESIC Page 8 of 9 under the provisions of ESI Act for period in dispute. Issue no. 1 & 2 are therefore decided in favour of petitioner.
20. Relief:
Petition filed under section 75 (1) of ESI Act is accordingly allowed and order dated 07.06.2005 passed under section 45-A of ESI Act is declared illegal. It is also declared that petitioner firm was not liable to be covered under the provisions of ESI Act for the period in dispute I.e 03.02.1993 to March, 2004. Parties to bear their own costs.
Amount deposited, if any by petitioner in court for stay of further recovery by respondent upon its application for interim injunction be returned to petitioner as per rules.
21. File be consigned to record room after due compliance. Announced in the Open Court today i.e 08th May, 2017.
(Deepak Wason) SCJ-cum-RC: Central District:
Tis Hazari Courts: Delhi CIS No 78/16 Dinesh Kumar Vs. ESIC Page 9 of 9 ESIC - 78/16 Dinesh Kumar Vs. ESIC 08.05.2017 Present: Sh. Gopi Chand, Ld. counsel for the petitioner with petitioner.
Sh. Arvind Bansal, SSO for respondent ESIC.
Arguments heard.
Written arguments filed by the respondent.
Copy supplied.
Put up for orders during the course of the day.
(Deepak Wason) SCJ-cum-RC: Central District:
Delhi: 08.05.2017 At 4:30 p.m Present: None.
Vide separate order dictated to the steno in the open court, petition filed under section 75 (1) of ESI Act is accordingly allowed and order dated 07.06.2005 passed under section 45-A of ESI Act is declared illegal. It is also declared that petitioner firm was not liable to be covered under the provisions of ESI Act for the period in dispute I.e 03.02.1993 to March, 2004. Parties to bear their own costs.
Amount deposited, if any by petitioner in court for stay of further recovery by respondent upon its application for interim injunction be returned to petitioner as per rules.
File be consigned to record room after due
compliance.
(Deepak Wason)
SCJ-cum-RC: Central District:
Delhi: 08.05.2017