Delhi District Court
Radha Krishan Prakashan Pvt. Ltd vs Employees State Insurance Corporation on 8 December, 2016
IN THE COURT OF SH. TARUN YOGESH
SCJCUMRC (CENTRAL), TIS HAZARI COURTS, DELHI
Old ESIC No. : 45/05
New ESIC No. : 76/16
Radha Krishan Prakashan Pvt. Ltd.,
7/23, Ansari Road,
Darya Ganj,
New Delhi - 110 002.
Through its Director
Sh. Ashok Maheshwari. ............ Applicant.
Versus
Employees State Insurance Corporation,
Regional / Divisional Office,
Rajender Bhawan, Rajendra Place,
New Delhi - 110 008. ......... Respondent.
Date of institution of petition : 02.06.2005
Date on which judgment was reserved : 05.11.2016
Date on which judgment was pronounced : 08.12.2016
JUDGMENT
1. Present petition under section 75 (1) (g) of ESI Act has been filed by applicant Radha Krishan Prakashan Pvt. Ltd. through its Principal Officer / Director Sh. Ashok Maheshwari for assailing order dated 08.05.2003 passed by respondent under section 45A of ESI Act for recovery of Rs. 3,01,760/ towards contribution and interest.
1.1 Applicant company is stated to be engaged in the business of publication and sale of Hindi books which has never employed more than 12 14 employees at any point of time. Further, applicant has also mentioned about letter dated 04.12.1999 sent alongwith Form01 mentioning list of employees for voluntary coverage under ESI Act for extending its benefits to 12 employees on company's roll. Respondent's letters dated 11.01.2000 & Radha Krishan Prakashan Pvt. Ltd. Vs. ESIC. Page 1 of 7 29.08.2000 in response for seeking details of employees were duly replied by applicant vide letter dated 26.09.2000 by furnishing another copy of Form01 mentioning the list of twelve employees and subsequently, another form mentioning 20 employees for the month of December, 1994 was submitted by applicant upon respondent's advice to submit additional form showing 20 employees for atleast one month for coverage under the Act. 1.2 Though applicant had applied for voluntary coverage vide letter dated 04.12.1999 for extending benefits and facilities under ESI Act to its 12 employees, respondent however vide letter dated 20.03.2001 allotted one code number and informed about provisional coverage of establishment w.e.f. 08.12.1994. Thereafter, one Inspector from respondent's office visited the office of applicant on 08.12.2000 and made various inquiries to his satisfaction.
1.3 Applicant has referred to letter dated 26.03.2001 issued to respondent for protesting against coverage of establishment w.e.f. December 1994 and has also adverted to showcause notice dated 16.04.2002 issued by respondent demanding Rs, 2,82,034/ as adhoc contribution in respect of 20 employees besides informing about personal hearing scheduled on 10.05.2002. Applicant's representative thereafter visited respondent's office on 10.05.2002 and made his representation in response to showcause notice by asserting that applicant had never employed 20 employees as presumed by respondent and demand for Rs. 2,82,034/ as adhoc contribution was therefore uncalled. Respondent upon being satisfied by representation is stated to have assured that necessary action including withdrawal of demand would be taken at their end and also informed that its officer(s) will be visiting the establishment of applicant on 25.09.2002 for ascertaining about the date of final coverage.
1.4 Subsequently, after inspecting its records, respondent vide letter dated 25.09.2002 raised demand of Rs. 382/ upon labour charges for repair and maintenance which was deposited promptly by applicant in addition to Radha Krishan Prakashan Pvt. Ltd. Vs. ESIC. Page 2 of 7 deposit of contribution for the period w.e.f. 08.12.2000 and respondent was also informed vide letter dated 28.09.2002. Respondent was again requested to depute its Inspector for inspecting records and for clarification of doubts if any vide letter dated 31.10.2002.
1.5 Respondent, nonetheless, in utter disregard to its records and materials passed order dated 08.05.2003 under section 45A of ESI Act which was posted to applicant on 27.09.2003 demanding Rs. 2,82,034/ and subsequently served it a copy of application dated 16.05.2005 forwarded to Recovery Officer for recovery of Rs. 3,01,760/. Aggrieved by order dated 08.05.2003 passed under section 45A of ESI Act, applicant has therefore filed its petition for assailing respondent's order which is patently illegal and is liable to be quashed.
2. Respondent ESIC has filed written statement opposing petition on the ground of suppression of material facts which was filed without any cause of action. On merits, petitioner's averments were denied / disputed by respondent in corresponding paras of its written statement.
3. Following issues were settled on 20.01.2006 on the basis of their pleadings :
1.Whether the recovery sought by the corporation for Rs. 2,82,034 on the basis of letter dated 16.04.2002 is liable to be quashed / set aside? OPP.
2. Relief.
4. Sh. Ashok Maheshwari (Authorized Representative) has testified as AW1 by tendering his affidavit in evidence which is Ex. AW1/A and has relied upon documents exhibited as Ex. AW1/1 to Ex. AW1/18. He was crossexamined by ld. counsel for respondent and petitioner's evidence was closed on 08.09.2009.
5. Respondent on the other hand has examined Sh. Tarun Tandon, Social Security Assistant, Employees Provident Fund Organization, Delhi as RW1 who has referred to office copy of letter dated 29.03.95 sent to M/s Radha Krishan Prakashan Pvt. Ltd. Vs. ESIC. Page 3 of 7 Radha Krishna Prakashan Pvt. Ltd. as Ex. AW1/R2 and copy of Form No. 5 A submitted by petitioner after allotment of PF Code No. as Ex. RW1/R1. He was crossexamined by petitioner's counsel and respondent's evidence was closed on 26.11.2010.
6. Advocate Sh. Praveen Sharma for petitioner and Advocate Sh. Arun Gaur for respondent have addressed their arguments by adverting to their written submissions filed on judicial record.
7. I have heard their submissions and minutely perused the evidence led by parties on judicial record. My issuewise findings on the basis of testimonies of witnesses are recorded below :
8. Issue no.1. Whether the recovery sought by the corporation for Rs. 2,82,034 on the basis of letter dated 16.04.2002 is liable to be quashed / set aside? OPP.
8.1 Sh. Ashok Maheshwari (AW1) has reiterated his averments about applicant company being engaged in the business of publication and sale of Hindi books distinct from manufacturing activity with or without power which had never employed more than 1214 employees in his affidavit tendered in evidence. He has also deposed about applicant's letter dated 04.12.1999 sent to respondent alongwith Form No. 01 and list of 12 employees for voluntary coverage for extending benefits and facilities under ESI Act to its employees and subsequent letter dated 26.09.2000 for furnishing details to respondent. Copies of letters dated 04.12.1999 and 26.09.2000 have been proved on record as Ex. AW1/2 & Ex. AW1/3. Similarly, copy of letter dated 26.03.2001 protesting against coverage of establishment w.e.f. December 1994, copy of representation dated 10.05.2002 and copy of visitor slip dated 21.05.2002 of company's representative have been referred (proved) as Ex. AW1/4, Ex. AW1/5 & Ex. AW1/6 respectively.
8.2 AW1 during his crossexamination by respondent's counsel has admitted about inspection of establishment conducted on 30.10.2000 and has Radha Krishan Prakashan Pvt. Ltd. Vs. ESIC. Page 4 of 7 also identified his signature upon survey report dated 30.10.2000. He, nonetheless, has testified of having mentioned 20 employees upon the advice of Insurance Inspector for disputing recovery of contribution in respect of 20 employees.
8.3 Respondent's witness Sh. Tarun Tandon, per contra, during his crossexamination recorded on 12.08.2010 has deposed of having not brought 'Inspection Report' or any list containing names of employees of petitioner company. Significantly, he has testified of being not aware about existence of any such list in the official records.
8.4 Respondent's witness was reexamined on 26.11.2010 and has referred to copies of 'Inquiry Report' & petitioner's letter dated 08.12.1994 addressed to The Regional Provident Fund Commissioner as Ex. RW1/2 and Ex. RW1/3. Respondent's witness, nevertheless, upon being subjected to crossexamination by petitioner's counsel has deposed that Ms. Meena Sharma, Mrs. Rakhi Maheshwari & Sh. Sushil Chand Maheshwari mentioned in the list were Directors of the company who were drawing salary (remuneration) as employees of the company.
8.5 Ld. counsel for petitioner has disputed his testimony by referring to judgment of Hon'ble Delhi High Court in case titled "Employees State Insurance Corporation Vs. Navchetan Press Pvt. Ltd." 2004III LLJ 963 for asserting that Directors if not drawing any additional amount over and above the remuneration as Directors will not be covered under ESI Act. 8.6 At this stage, it would be apt to refer to para no. 14 of judgment of Hon'ble Delhi High Court reported in "Hindustan Times, Ltd. and Employees' State Insurance Corporation" II L.L.N. 1988 page 1082 wherein Hon'ble High Court has held that amount of contribution cannot be demanded merely to fill the coffers of the Employees' State Insurance Corporation. Relevant portion of judgment is reproduced below for reference : "The Act is a piece of social legislation and, as the preamble to the Act would show, it was meant to provide Radha Krishan Prakashan Pvt. Ltd. Vs. ESIC. Page 5 of 7 for certain benefits employees in case of sickness, maternity and employment injury. Detailed regulations have been framed under the Act to identify the employees who would be entitled to the benefits under the Act. They are to be registered and their contribution card and identity card are to be prepared. An employee has, therefore, to be identified in the records of the Employees' State Insurance Corporation so that he is entitled to claim various benefits. The amount of contribution is not demanded merely to fill the coffers of the Employees' State Insurance Corporation. From the record, I am unable to find the particulars of the employees on whom the benefits under the Act would be bestowed. There are no names and no amount of wages payable to them.."
8.7 Similar observations were returned 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 Radha Krishan Prakashan Pvt. Ltd. Vs. ESIC. Page 6 of 7 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...."
FINDING: It is significant to note that respondent ESIC has not examined concerned officer / Inspector for proving veracity of survey report and order dated 08.05.2003 passed under section 45A of ESI Act in respect of 20 employees. Since survey report and list of employees of company as required under law could not be proved by respondent, so, order dated 08.05.2003 passed under section 45A demanding Rs, 2,82,034/ as adhoc contribution and application dated 16.05.2005 forwarded to Recovery Officer for recovery of a sum of Rs. 3,01,760/ are patently illegal which are liable to be quahsed / set aside. Issue no. 1 is therefore decided in favour of petitioner. Relief: Petition filed under section 75 (1) (g) of ESI Act is accordingly allowed and order dated 08.05.2003 passed under section 45A of ESI Act and recovery proceedings vide application dated 16.05.2005 are declared null and void. Parties to bear their own costs.
Amount deposited by petitioner in court for stay of further recovery by respondent upon its application for interim injunction be returned to petitioner as per rules and file be consigned to record room after due compliance.
Announced in open court (Tarun Yogesh)
Dated 08th December, 2016 SCJCumRC (Central)
Tis Hazari Courts Delhi
Radha Krishan Prakashan Pvt. Ltd. Vs. ESIC. Page 7 of 7