Telangana High Court
Employees State Insurance Corporation vs M/S Lumbini Filling Station on 17 September, 2020
Author: M.S.Ramachandra Rao
Bench: M.S.Ramachandra Rao
1
HON'BLE SRI JUSTICE M.S.RAMACHANDRA RAO
AND
HON'BLE SRI JUSTICE T. AMARNATH GOUD
C.M.A.No.307 OF 2020
ORDER:(Per Hon'ble Sri Justice T.Amarnath Goud) 1 This Civil Miscellaneous Appeal, under Section 82 of the Employees State Insurance Act, 1948, is directed against the order dated 10.02.2020 passed in E.I.C.No.16 of 2015 on the file of the Employees Insurance Court And Chairman, Industrial Tribunal-I at Hyderabad, wherein and whereby the petition filed by the respondent herein under Section 75 (1) (g) of the Employees State Insurance Act, 1948, was allowed.
2 For the sake of convenience, parties to this Civil Miscellaneous Appeal, will, hereinafter be referred to as they are arrayed before the Industrial Tribunal. 3 The facts that are germane for filing of the present Civil Miscellaneous Appeal are as follows:
4 The petitioner is running petrol pump and having about 7 to 8 employees on its rolls. The inspector of the 1st respondent Corporation visited the petitioner establishment on 17.12.2008 and found 4 to 6 employees working in it. It appeared that basing on Form IV, Registration Renewal Certificate, issued by the Inspector under the A.P.Shops and Establishment Act, 1988, the establishment can engage 12 2 employees, for coverage of petitioner establishment and recommended for coverage under the Act of 1948. The first respondent, without verifying records, issued Form C-18 notice on (adhoc) basis by determining contributions of Rs.75,075/- for the period from 01.7.2009 to 30.9.2010 and as per Section 45-A orders dated 20.8.2014. 4 The respondents filed their written statement stating that the petitioner unit was covered under Section 2 (12) of the ESI Act with effect from 17.12.2008 and the same was renewed for the period 01.01.2009 to 31.12.2009 and basing on the said licence, the Inspector recommended the petitioner establishment for coverage under Act 1948 and the said coverage was intimated to the petitioner establishment in Form C-11 dated 16.01.2009. As the petitioner failed to pay contributions, a notice in Form C-18 (adhoc) dated 06.12.2010 was issued for the period from 17.12.2008 to 03.9.2010 proposing to determine an amount of Rs.1,02,960/- by affording an opportunity of personal hearing on 23.02.2011. As the petitioner failed to appear on the said date, the Corporation issued another letter dated 20.6.2014 to the petitioner and fixed the date for personal hearing on 14.7.2014 on which date the representative of the petitioner appeared and sought one month time to produce records and as such the next date of hearing was fixed on 21.7.2014. However, as the petitioner did not 3 appear on the said date, the respondent passed orders under Section 45-A of the ESI Act on 20.8.2014 for the period 01.7.2009 to 30.9.2010 by omitting the period from 17.12.2008 to 30.6.2010 as time barred for Rs.75,075/-. 5 Basing on the above pleadings, the Tribunal settled four issues viz.,
a) Whether the petitioner is covered under the provisions of the ESI Act?
b) Whether order under Section 45 -A of the Act passed by the second respondent is legal and valid?
c) Whether the petitioner is not liable to make payment of the contributions demanded by the respondent?
d) To what relief? 6 During the Course of trial, on behalf of the petitioner
P.Ws.1 and 2 were examined and Exs.P.1 to P.4 were marked. On behalf of the respondents the Social Security Officer was examined as R.W.1 and Exs.R.1 to R.10 were marked.
7 Having heard the learned counsel on both sides and having perused the material available on record, the Tribunal disbelieved Exs.R.1 and R.2 as they are created and they are not genuine documents since the registration number of petitioner establishment and survey numbers mentioned in Exs.R.1 and R.2 are different. Taking aid of the decision of the erstwhile common High Court for the State of Telangana and the State of Andhra Pradesh rendered in Nagarjuna Health Care Centre v. Employees 4 State Insurance Corporation Hyderabad and Anr.1, the Tribunal held that the petitioner establishment was not properly covered under the Act of 1948 and there is no proper verification of records by the Survey Inspector for the purpose of coverage and once the petitioner establishment cannot be covered basing on a vague report of Survey Inspector dated 17.12.2008, and without proper verification of records, so the Section 45-A order is also illegal and that they are not speaking orders. Having observed so, the Tribunal, on issue Nos.1 and 2, held that the respondent Corporation is not entitled to claim contributions and accordingly set aside the Section 45-A orders. 8 On issue No.3 the Tribunal held that the petitioner is not liable to pay contributions under Act of 1948 as per the orders dated 20.8.2014 of the respondent. 9 Accordingly the Tribunal allowed the petition with costs by setting aside Section 45-A orders dated 20.8.2014 and permitted the petitioner to withdraw an amount of Rs.22,523/- deposited by it under I.A.No.49 of 2015 in SR.No.354 of 2015. However, the Tribunal left open to the respondent Corporation to conduct fresh survey of the petitioner establishment for the purpose of Act 1948 in future.
1 2018 (4) ALD 24 5 10 As stated supra, aggrieved by the order dated 10.02.2020 passed in E.I.C.No.16 of 2015 passed by the Tribunal, the respondent Corporation preferred this Civil Miscellaneous Appeal.
11 Heard Sri G.Venkateshwarlu, the learned counsel for the appellant.
12 For better appreciation of the case, this Court feels it apposite to extract Section 45 of The Employees' State Insurance Act, 1948, which reads as under:
Inspectors, their functions and duties:-
(1) The Corporation may appoint such persons as [Social Security Officers], as it thinks fit, for the purposes of this Act, within such local limits as it may assign to them.
(2) Any [Social Security Officer] appointed by the Corporation under sub-section (1) (hereinafter referred to as [Social Security Officer]), or other official of the Corporation authorised in this behalf by it, may, for the purposes of enquiring into the correctness of any of the particulars stated in any return referred to in section 44 or for the purpose of ascertaining whether any of the provisions of this Act has been complied with.
(a) require any principal or immediate employer to furnish to him such information as he may consider necessary for the purposes of this Act; or
(b) at any reasonable time enter any office, establishment, factory or other premises occupied by such principal or immediate employer and require any person found in charge thereof to produce to such [Social Security Officer] or other official and allow him to examine such accounts, books and other documents relating to the employment of persons and payment of wages or to furnish to him such information as he may consider necessary; or
(c) examine, with respect to any matter relevant to the purposes aforesaid, the principal or immediate employer, his agent or servant, or any person found in such factory, establishment, office or other premises, or any person whom the said [Social Security Officer] or other official has reasonable cause to believe to be or to have been an employee;
[(d) make copies of, or take extracts from, any register, account book or other document maintained in such factory, establishment, office or other premises;]
(e) exercise such other powers as may be prescribed.] (3) An [Social Security Officer] shall exercise such functions and perform such duties as may be authorised by the Corporation or as may be specified in the regulations.
6[(4) Any officer of the Corporation authorised in this behalf by it may, carry out re-inspection or test inspection of the records and returns submitted under section 44 for the purpose of verifying the correctness and quality of the inspection carried out by a Social Security Officer.] 13 The learned counsel for the appellant submitted that the burden of proof regarding the number of employees in the establishment is on the petitioner as it would be within his knowledge and since the authorized representative of the petitioner establishment has stated the number of employees in his establishment as 12, the petitioner establishment would be covered by Act of 1948 and hence he has to make contributions.
14 It is significant to note that the respondent Corporation has not examined the Survey Inspector, who is alleged to have visited the petitioner establishment, as a witness before the Court. As seen from the evidence of R.W.1-the Social Security Officer, he admitted that he has no personal knowledge and basing on records he gave evidence. He further admitted that the Inspector had not taken list of employees as no registers were produced before him though he has power to collect the names of employees and their salary particulars. He further admitted that the Corporation had not sent Form 01 along with C-11 notice to the petitioner to submit the same. He further admitted that they have not filed proof of service of notice of C-11 and C-18 (adhoc) notice dated 06.12.2010. He also admitted that the 7 petitioner raised objection for coverage of petitioner establishment under Act of 1948 under Ex.P.4. 15 Admittedly registration number of the petitioner establishment under Exs.R.1 and R.2 are different and survey numbers are also different. Once any establishment is registered, it shall have same number even for further renewal and it may not be changed. Further, the Inspector has to verify number of employees physically and record their statements in the presence of two witnesses and in the presence of the authorized employer of the petitioner establishment, in accordance with Section 45 (2) (a) and (b) of the Act. In the present case, there is no material to show that the Inspector has verified the number of employees present on the date of his visit nor recorded statement of any employee. Therefore, it can be presumed that without proper verification of Exs.R.1 and R.2, the Inspector simply forwarded his report to the Corporation.
16 Further, it is an admitted fact that P.W.2 received 2nd date of personal hearing letter dated 20.6.2014 and appeared before the respondent along with his counsel on 14.7.2014 and sought one month time for producing records by raising objection stating that they never employed more than 10 employees for wages. As seen from the record, the same objection was raised under Ex.R.4 and there is no endorsement that next date of personal hearing was 8 communicated on the date of his visit itself. The respondent passed Section 45-A orders on 20.8.2014 admitting about the objection raised by the petitioner but not giving any reasonable answer for not considering it and how the petitioner is covered under Act of 1948. Therefore, the order passed by the respondent Corporation is without application of mind and without proper verification of records. Moreover, no sanctity can be given to Exs.R.1 and R.2, since on receipt of the report from the Inspector, it is the duty of the Corporation to verify the correctness of coverage of establishment and the contents of Exs.R.1 and R.2, without blindly accepting the same. But no notice was issued to the petitioner before issuance of Ex.C.11 dated 16.01.2009, calling for an explanation from the petitioner in that regard. Moreover, the learned counsel for the appellant argued that the staff / employees of the petitioner establishment were not made party to the Petition. However, we find no mention of that point raised before the Tribunal and it is made for the first time before this Court and the same cannot be entertained at this juncture.
17 Taking the totality of the events and circumstances of the case, we are of the opinion that there are laches on the part of the respondent Corporation and they have not approached this Court with clean hands. The respondent has not followed principles of natural justice by giving due 9 opportunity to the petitioner. The respondent Corporation has not followed the procedure contemplated in Section 45 of the Act, extracted above.
18. However, as seen from the impugned order, the Tribunal left open to the respondent Corporation to conduct fresh survey of the petitioner establishment for the purpose of Act 1948 in future. Therefore, it is for the respondent Corporation to pursue the same in future if it so desires. But for the present, the Section 45-A order passed by the respondent is violative of principles of natural justice and it suffers from material irregularities and illegalities.
19. The Tribunal has taken all these facts into consideration and passed a reasoned order, which in our considered opinion, does not call for any interference as we see no question of law much less substantive question of law involved in the case.
20. In the result, the Civil Miscellaneous Appeal is dismissed. No order as to costs. Miscellaneous petitions, if any, pending in this Civil Miscellaneous Appeal shall also stand dismissed.
_____________________________________ JUSTICE M.S.RAMACHANDRA RAO ________________________________ JUSTICE T. AMARNATH GOUD Date: .9.2010.
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