Madras High Court
The Recovery Officer vs E.Subbaian on 24 April, 2018
Author: J.Nisha Banu
Bench: J.Nisha Banu
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED : 24.04.2018 CORAM THE HONOURABLE MRS.JUSTICE J.NISHA BANU C.M.A(MD).No.949 of 2012 The Recovery Officer, Sub Regional Office, ESI Corporation, 4th Main Road, K.K.Nagar, Madurai - 625 020. ... Appellant/ Respondent Vs. 1.E.Subbaian 2.S.Balakrishnan 3.K.Govindan ... Respondents/ Petitioners PRAYER:- Appeal filed under Section 82(2) of the Employees State Insurance Act, 1948, against the judgment and decree dated 06.07.2011, passed in E.S.I.O.P.No.92 of 2008 on the file of the Employees' State Insurance Cum Labour Court, Madurai. !For Appellant : Mr.K.C.Ramalingam ^For Respondents : Mr.Mahaboob Athiff, for Ajmal Associates :JUDGMENT
This civil miscellaneous appeal has been filed challenging the judgment and decree dated 06.07.2011, passed by the Employees' State Insurance Cum Labour Court, Madurai, in E.S.I.O.P.No.92 of 2008.
2. The case of the respondents is that they are doing real estate business. One M/s.Ravi Sankar Fire Works, Sivakasi has obtained loan from Indian Overseas Bank, Sivakasi and committed default in repayment of loan amount. The Bank proceeded to recover the outstanding balance under the SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSESTS AND ENFORCEMENT OF SECURITY INTEREST ACT, 2002 (hereinafter referred to as "SARFAESI Act") and subsequently, auction was conduced on 27.10.2005. The respondents had participated in the auction and they were declared as highest bidders in the auction and they had paid a sum of Rs.60.25 lakhs towards sale consideration. The sale confirmation letter was issued in favour of the respondents and document was registered on 29.03.2007. Thus, the respondents became the absolute owner of the properties.
3. Thereafter, the appellant had chosen to issue notice dated 06.03.2008 to the respondents herein demanding a sum of Rs.21,02,573/- as arrears of Employees' State Insurance contribution to be paid by the erstwhile owners of the said M/s.Ravi Sankar Fire Works, Sivakasi, for which, the respondents have sent a reply dated 10.03.2008. The appellant had chosen to issue notice dated 16.05.2008 once again demanding a sum of Rs.21,02,573/- as Employees' State Insurance contribution. Thereafter, the respondents/employees filed a petition under section 75(1) (g) of the Employees' State Insurance Act, 1948, (hereinafter referred to as "Act") praying to quash the notice of the appellant herein dated 16.05.2008. The Labour Court, Madurai, vide order dated 06.07.2011, quashed the notice dated 16.05.2008, issued by the Appellant/Employees' State Insurance Corporation. Questioning the validity and correctness of the above order, the appellant is before this Court with the present civil miscellaneous appeal.
4. Mr.K.C.Ramalingam, learned Counsel for the appellant submits that M/s.Ravi Sankar Fire Works, Sivakasi was covered under the Act and the contribution has not been regularly paid and thus, the provision of the Act was not complied with by the said M/s.Ravi Sankar Fire Works. The appellant issued several notices on several occasions claiming the contribution for various periods, however, there was no response from the said M/s.Ravi Sankar Fire Works, Sivakasi. In the meantime, due to default in repayment of loan, recovery action has been initiated by the Indian Overseas Bank, Sivakasi against M/s.Ravi Sankar Fire Works, Sivakasi. The property of M/s.Ravi Sankar Fire Works, Sivakasi had been sold in auction conducted by Indian Overseas Bank on 20.07.2005 and the respondents herein had purchased the properties of M/s.Ravi Sankar Fire Works, Sivakasi in the public auction.
5. The learned Counsel, inviting the attention of this Court to Section 93A of the Act, submits that in a case where the employer transfers the factory or establishment by way of sale, gift, lease or licence or in any other manner, the employer and the person to whom the factory or establishment is so transferred shall jointly or severally be liable to pay the amount due in respect of any contribution. Thus, according to the learned counsel, the tribunal has erred in quashing the said notice.
6. Mr.Mahaboob Athiff, learned Counsel for the respondents submits that M/s.Ravi Sankar Fire Works did not transfer the factory or establishment to the respondents, voluntarily and therefore, the respondents are not liable to pay any contribution to the appellant and therefore, the issuance of notice as against the respondents under Section 93A of the Act, cannot be sustained. There is no legal right vested on the appellant to call upon the respondents to settle the Employees' State Insurance contribution arrears, which were due from M/s.Ravi Sankar Fire Works, Sivakasi and therefore, the respondents are not liable to pay contribution and the Labour Court was correct in quashing the notice issued by the Employees' State Insurance Corporation.
7. I have considered the above submissions made by the learned counsel on either side and perused the materials available on record.
8. It is seen that the appellant Corporation has moved this appeal on the following substantial questions of law:-
1.When the legislature intent is specific and categorical, whether the lower Court could afford to interpret it in a way defeating the very purpose of the legislature and the purpose of the Act as well.
2. When the dispute before the lower Court suffers from non-joinder of parties, can it be said that the dispute between the parties before the Lower Court in ESIOP. No.92 of 2005 has been adjudicated under Section 75 of the Act in the way it is contemplated.
9. Perusal of record shows that the respondents had purchased the property only through public action conducted by Indian Overseas Bank, due to the default committed by M/s.Ravi Sankar Fire Works and the same was not disputed by any of the parties.
10. The main contention of the appellant is that Section 93A of the Act, empowers the appellant to claim arrears of contribution from the subsequent purchaser. Therefore, this Court feels it appropriate to extract Section 93A of the Employees' State Insurance Act, 1948, which reads thus:
93A. Liability in case of transfer of establishment Where an employer, in relation to a factory or establishment transfers that factory or establishment in whole or in part, by sale, gift, lease or licence or in any other manner whatsoever, the employer and the person to whom the factory or establishment is so transferred shall jointly and severally be liable to pay the amount due in respect of any contribution or any other amount payable under this Act in respect of the periods up to the date of such transfer:
PROVIDED that the liability of the transferee shall be limited to the value of the assets obtained by him by such transfer."
Though the transaction, in the case on hand, is not a voluntary transaction, the appellant, relying upon the words "or any other manner whatsoever", as stated in Section 93A of the Act, has issued the impugned notice. According to the appellant, the expression ?or in any other manner" means and includes all kind of sales irrespective of the fact whether it is voluntary or involuntary.
11. In my considered view and as rightly held by the Court below, Article 366(f) of the Indian Constitution is different from Section 93A of the Act. It is true that when the language of the statute is clear and unambiguous, the Court must give effect to the words used in the statute. The Court below has elaborately discussed Section 93A of the Act and its application in the present case and has allowed the claim of the respondents, which, in my considered opinion, does not warrant any interference at the hands of this Court. Accordingly, substantial questions of law raised by the appellant are answered in the negative.
12. The learned Counsel for the appellant, while concluding his argument, submits that atleast liberty may be given to the appellant to proceed against the Bank, as the amount due to the Bank is Rs.46,97,272/-, whereas the sale was made for Rs.60.25 lakhs.
13. Materials on record show that M/s.Ravi Sankar Fire Works was liable to pay a sum of Rs.46,97,272/- as on 01.01.2002 and the sale was conducted on 27.10.2005. The said fact is not in dispute between the parties and thus, the Employees' State Insurance Corporation does not have any dealing with the Bank to make the Bank responsible. Even if the sale amount is more, the Bank cannot be held responsible, as the respondents may not know that M/s.Ravi Sankar Fire Works is of any due to the Employees' State Insurance Corporation. Under such circumstances, this Court is not in a position to grant liberty, as sought for by the appellant and the contention of the learned counsel for the appellant in this regard is rejected.
14. In view of the foregoing discussions, this civil miscellaneous appeal is dismissed. No costs.
To
1.The Presiding Officer, Labour Court, Madurai.
2.The Record Keeper, Vernacular Records Section, Madurai Bench of Madras High Court, Madurai.
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