Delhi District Court
M/S. Dcm Shriram Limited vs Employees State Insurance Corporation on 9 May, 2017
IN THE COURT OF SHRI DEEPAK WASON:
SCJ-CUM-RC: CENTRAL DISTRICT: TIS HAZARI COURTS:
DELHI
Old ESIC No. : 1/06
CIS No. : 32/16
M/s. DCM Shriram Limited
Registered Office :
6th Floor, Kanchanjunga Building,
18-Bara Khamba Road,
New Delhi - 110001
(unit M/s. DCM Silk Mills)
Project Office :
Shivaji Marg, New Delhi - 110015 ..... Petitioner
Versus
1. Employees State Insurance Corporation,
Rajendra Place, Rajendra Bhawan,
New Delhi - 110008.
2. Sh. P. N. Ghai,
Deputy Director,
Employees State Insurance Corporation,
Rajendra Place, Rajendra Bhawan,
New Delhi - 110008. ... Respondents
Date of institution of petition : 02.01.2006
Date on which judgment was reserved : 09.05.2017
Date on which judgment was pronounced : 09.05.2017
JUDGMENT
1. This is a petition under section 75 of the ESI Act, 1948 for quashing and setting aside the order dated 06.12.2005 passed by the respondent no.2 under section 45-A of the Act determining contribution totaling Rs. 19,988/- as being payable by the applicant for the period 04.11.1991 to 31.07.1992.
ESIC - 32/16 M/s DCM Shriram Consolidated Ltd Vs. ESIC Page 1 of 102. It is stated in the petition that petitioner firm is a Public Limited company incorporated under the Companies Act, having its registered office at 6th Floor, Kanchanjunga Building, 18, Barakhamba Road, New Delhi. It is further stated in the petition that it, inter alia, owned by a factory known as DCM Silk Mills situated at Shivaji Marg, New Delhi (hereinafter referred as the factory) which had to be closed down in Delhi w.e.f 30.11.1996 as per the order of Hon'ble Supreme Court of India dated 08.07.1996 directing the heavy and large industries to stop operations in Delhi. It is further stated in the petition that this factory was covered under the ESIC Act (hereinafter referred as the Corporation) and was allotted Code No. 11-40-692. It is further stated in the petition that Sh. N. K. Garg is the Sr. Vice President (Legal & Admn.) of the applicant and duly constituted Attorney, authorized to sign and file this application on behalf of the applicant.
3. It is further stated in the petition that the factory had been submitting, furnishing or maintaining, in accordance with the provisions of Section 44 of the Act, the necessary returns, particulars, registers, and records and no Inspector or other official of the Corporation, referred to in sub-section (2) of section 45 of the Act, was prevented in any manner by any official of the factory in exercising his functions or discharging the duties under section 45 of the Act. It is further stated in the petition that the due contribution with regard to the employees, employed in the factory, had been duly deposited with the Corporation at the rates, prescribed by the Central Government. It is further stated in the petition that inspite of that the corporation through its then ESIC - 32/16 M/s DCM Shriram Consolidated Ltd Vs. ESIC Page 2 of 10 Deputy Director Sh. T. K. Ghosal had passed an order dated 08.04.1996 under section 45-A of the Act determining a sum of Rs. 19,987.95 as contribution due from the factory for the period 11/91 to 7/92 and subsequently the Recovery Officer of the Corporation vide his notice of demand dated 24.06.1996 had demanded a sum of Rs. 29396.80.
4. It is further stated in the petition that order dated 08.04.1996 had been passed without giving due opportunity of representation to the applicant / petitioner. It is further stated in the petition that applicant / petitioner had filed an application under section 75 of the Act against the order as well as the notice of the demand of Recovery officer before the ESI Court and after adjudication, the ESI Court vide judgment dated 01.10.2004 quashed and set aside the order of the Corporation dated 08.04.1996 determining the sum of Rs. 19987.95 as contribution due for the period from 11/91 to 7/92 as well as certificate, issued to the Recovery Officer dated 04.06.1996 for recovery of Rs. 29376.80, as well as the consequential notice of demand of Recovery Officer dated 24.06.1996 for a total sum of Rs. 29396.80 and amount deposited by the applicant in pursuance to the interim order dated 30.07.1996 of Rs. 12,000/- was ordered to be refunded to the applicant and petition of applicant was allowed. It is further stated in the petition that corporation has not filed any appeal against the judgment and the said order has become final. It is further stated in the petition that no liberty was given to the Corporation to again hold any determination for any contribution for the period 11/91 to 7/92, the corporation was not legally entitled to again initiate any fresh determination under section 45-A of the Act for the same demand of contribution for ESIC - 32/16 M/s DCM Shriram Consolidated Ltd Vs. ESIC Page 3 of 10 the period 11/91 to 7/92.
5. It is further stated in the petition that the applicant vide its letter dated 31.01.2005 requested to return the amount of Rs. 12,000 but the corporation sent a letter dated 27.06.2005 claiming that earlier order under section 45-A had been held by the Court to be wrong due to technical short-comings and accordingly, the applicant was called upon to again show cause regarding the earlier C-18 notice dated 18.04.1994 claiming the sum of Rs. 19987.85 as contribution due for the period 11/91 to 7/92. It is further stated in the petition that applicant protested against issuance of such letter vide its response dated July 9/11, 2005, on the ground that the earlier order has been quashed and set aside by the ESI Court vide judgment dated 01.10.2004, no fresh 45-A proceedings on the same C-18 notice could be legally initiated by the corporation.
6. It is further stated in the petition that corporation thereafter issued a fresh C-18 notice dated 31.08.2005 claiming that sum of Rs. 19988/- was due as contribution from the factory for the period 11/91 to 7/92 on account of unaccounted wages paid under the head "reward" during the period 04.11.1991 to 31.03.1992 and under the head "MFG Wages" during the period 01.04.1992 to 31.07.1992. It is further stated in the petition that applicant opposed the issuance of fresh C-18 notice on various grounds mentioned in the response dated 27.09.2005. It is further stated in the petition that it was pointed out in the response that the show cause notice for the period 11/91 to 7/92, issued much after five years of the period, to which the claim related, was time barred as per proviso to clause (b) of sub-section (1-A) of section ESIC - 32/16 M/s DCM Shriram Consolidated Ltd Vs. ESIC Page 4 of 10 77 of the Act, as held by the full bench of the Karnataka High Court in its judgments reported in 2003 (99) FLR 480 and 2003 (99) FLR 1015. It is further stated in the petition that on receipt of the response of the applicant, the respondent no.2 told the representative of the applicant that he would examine the objections mentioned in the response dated 27.09.2005 and would, thereafter, get back to the applicant.
7. It is further stated in the petition that to the shock and surprise of the applicant, it received a copy of the impugned order dated 06.12.2005 passed by respondent no.2 without considering the objections mentioned in the response dated 27.09.2005 and passing any reasoned order on the same, as in the previous determination dated 08.04.1996 which was quashed and set aside vide judgment dated 01.10.2004, held that contributions totaling Rs. 19988/- for the period 04.11.1991 to 31.07.1992 are payable. Hence, the present petition.
8. Respondents were served and contested the present petition by filing written statement of its defence contending wherein that present petition is not maintainable in the eyes of law as C-18 was issued to the petitioner for payment of contribution of Rs. 2,43,980.27 and Rs.53,987.60 requiring the petitioner to represent his case on 25.04.1994 at 11.00 AM and requested for another date which was fixed on 16.05.1994. It is further stated in the written statement that opportunities were given to the petitioner before exercising power under section 45-A of the Act. It is further stated in the WS that the claim was first sent to petitioner on 18.11.1992 and final orders were issued on 08.04.1996. It is further stated in the WS that ESI Court has ESIC - 32/16 M/s DCM Shriram Consolidated Ltd Vs. ESIC Page 5 of 10 earlier quashed the orders on technical grounds that proper S.O was not passed and the court has not mentioned that the contribution are not due. It is further stated in the petition that again the due contribution claimed in C-18 form and after giving personal hearing in C-18, S. O. u/s. 45-A passed. It is further stated in the WS that the petitioner requested on 31.08.2005 to submit the pre-receipted acknowledgment for Rs. 12,000/- for further action to refund the amount.
9. 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.
10. From the pleadings of the parties, following issues were framed on 04.01.2007 :-
1. Whether the recovery sought by the corporation vide its letter dated 06.12.2005 for Rs. 19,988/- is liable to be set-aside/quashed ? OPP
2. Relief.
11. The petitioner has examined only one witness Sh. Sunil Kumar Srivastava as PW1 who has reiterated the contents of the petition and relied upon documents Ex. PW-1/1 to Ex. PW-1/12, which are part of record and PE was closed on the same day i.e. 13.08.2009 on statement of ld counsel for the petitioner and matter was fixed for RE.
12. It is a matter of record that an application u/s. 151 CPC was filed by respondent for recalling order dated 13.08.2009 which was allowed vide order dated 12.11.2009 and one ESIC - 32/16 M/s DCM Shriram Consolidated Ltd Vs. ESIC Page 6 of 10 opportunity was granted to cross-examine PW-1 and PW-1 was cross-examined by ld counsel for the respondents.
13. Respondents have also examined only one witness Sh. Ashok Kumar Vij as RW-1. He has deposed that he is working as Assistant in the R. O. Office of the respondent and has proved Form C-18 as Ex. RW-1/1, S. O. as Ex. RW-1/2 and Scrutiny Order as Ex. RW-1/3. This witness was cross-examined by ld counsel for the petitioner at length.
14. I have heard Ld. counsels for petitioner and respondents. I have also gone through the record.
15. My issue wise findings are as follows:-
Issue No. 116. Onus qua this issue was placed upon the petitioner.
17. It is the case of petitioner that the corporation through its then Deputy Director Sh. T. K. Ghosal had passed an order dated 08.04.1996 under section 45-A of the Act determining a sum of Rs. 19,987.95 as contribution due from the factory for the period 11/91 to 7/92 and subsequently the Recovery Officer of the Corporation vide his notice of demand dated 24.06.1996 had demanded a sum of Rs. 29396.80 which order had been quashed and set aside by ESI Court vide judgment dated 01.10.2004 and amount deposited by the applicant in pursuance to the interim order dated 30.07.1996 of Rs. 12,000/- was ordered to be refunded to the applicant and petition of applicant was allowed. It ESIC - 32/16 M/s DCM Shriram Consolidated Ltd Vs. ESIC Page 7 of 10 is further the case of the petitioner that the Corporation has not filed any appeal against the said judgment and same has become final. It is further the case of petitioner that no liberty was given to the Corporation to again hold any determination for any contribution for the period 11/91 to 7/92, the corporation was not legally entitled to again initiate any fresh determination under section 45-A of the Act for the same demand of contribution for the period 11/91 to 7/92. It is an admitted fact that earlier a petition u/s. 75 of ESI Act was filed by the petitioner against the respondents for the same period i.e. 11/91 to 7/92 and the said petition was allowed and the demand order was quashed and set aside. It is also an admitted fact that respondents have not challenged the said order and the said order became final. Perusal of abovesaid order shows that in earlier case, no permission was given to the respondents to re-initiate the proceedings. The present petition is also of the same period. It is a very surprising fact that no appeal was filed against the previous order and even no permission was given to reinitiate the proceedings, even then, respondents have again passed the demand order with regard to the same period, which is not sustainable in the eyes of law. It appears that by way of the impugned order in dispute i.e. 06.12.2005, respondents have indirectly challenged the previous order dated 01.10.2004. Even, RW-1 has admitted in his cross- examination this fact that earlier claim of contribution and 45-A order passed by Sh. T. K. Ghoshal was quashed and set aside by ESIC Court in October, 2004. RW-1 has further admitted that according to the rules of ESIC, the fresh determination of claim for contribution is legally not maintainable since the judgment Ex. PW-1/3 also does not say so. Hence, in these circumstances, order dated 06.12.2005 is liable to be quashed and set aside.
ESIC - 32/16 M/s DCM Shriram Consolidated Ltd Vs. ESIC Page 8 of 1018. Even though in view of the submissions made above, there is no need to discuss any other aspect but there is also one lacuna on behalf of the respondents. Perusal of cross-examination of RW-1 shows that he has admitted as correct that the inspection report did not mention the details of names of employees, their father's name, the place from which they belonged, designations, service details, signatures or thumb impression of employees and also did not contain signatures of employer or his representatives. Even inspection report was not proved as per law and even inspector has not been examined by the respondents to show that in what manners petitioner is liable to pay the demand as alleged by the respondents.
19. 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 ESIC - 32/16 M/s DCM Shriram Consolidated Ltd Vs. ESIC Page 9 of 10 at the end of the list and a copy of which be furnished to the establishment...."
20. 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 06.12.2005 passed under section 45-A of the ESI Act. Since survey report and list of employees of company as required under law could not be proved by respondents, so, on this ground also order dated 06.12.2005 demanding Rs. 19,988/- passed under section 45-A is liable to be quashed. In these circumstances, Issue no. 1 is therefore decided in favour of petitioner and against the respondents.
21. Relief:
In view of finding of issue no.1, petition filed under section 75 (1) of ESI Act is accordingly allowed and order dated 06.12.2005 passed under section 45-A of ESI Act is declared illegal. Parties to bear their own costs.
Amount deposited, if any by petitioner in court for stay of further recovery by respondents upon its application for interim injunction be returned to petitioner as per rules.
22. File be consigned to record room after due compliance.
Announced in the Open Court today i.e 09th May, 2017.
(Deepak Wason) SCJ-cum-RC: Central District:
Tis Hazari Courts: Delhi ESIC - 32/16 M/s DCM Shriram Consolidated Ltd Vs. ESIC Page 10 of 10