Gujarat High Court
Trasnport Corporation Of Indialtd vs Employees State Insurance Corporation ... on 5 December, 2017
Author: Rajesh H.Shukla
Bench: Rajesh H.Shukla
C/SCA/1259/2007 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 1259 of 2007
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE RAJESH H.SHUKLA
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1 Whether Reporters of Local Papers may be allowed
to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of
the judgment ?
4 Whether this case involves a substantial question of
law as to the interpretation of the Constitution of
India or any order made thereunder ?
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TRASNPORT CORPORATION OF INDIALTD.....Petitioner(s)
Versus
EMPLOYEES STATE INSURANCE CORPORATION & 2....Respondent(s)
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Appearance:
MR RITURAJ M MEENA, ADVOCATE for the Petitioner(s) No. 1
MR SACHIN D VASAVADA, ADVOCATE for the Respondent(s) No. 1
RULE SERVED for the Respondent(s) No. 2 - 3
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CORAM: HONOURABLE MR.JUSTICE RAJESH H.SHUKLA
Date : 4/12/2017
ORAL JUDGMENT
Page 1 of 10
HC-NIC Page 1 of 10 Created On Tue Dec 05 23:18:41 IST 2017 C/SCA/1259/2007 JUDGMENT
1. The present petition is filed by the Petitioner under Article 226 of the Constitution of India as well as under the Employees State Insurance Act, 1948 for the prayer inter alia that appropriate writ, order or direction may be issued quashing and setting aside the impugned order passed by Respondent No.1 dated 8.12.2006 at Annexure-A directing the petitioner to pay damages as stated therein on the ground stated in the memo of petition and also for stay of the operation of the order.
2. The facts of the case briefly summarized are as follows;
3. The petitioner is a Company incorporated under the Companies Act 1956 engaged in the business of public carrier and transportation having branches in different States of India. The Petitioner Company had the business operation in various parts of India as well as in the State of Gujarat. The Respondent No.1 - Employees State Insurance Corporation is constituted under the Employees State Insurance Act and is a statutory corporation obliged to discharge the statutory duties. The Petitioner having the branches contended that the provisions of the ESI Act did not apply to the business establishment of the Petitioner Company from 30.3.1975 to 31.3.1988. Thus the dispute arose between the Petitioner and the Respondent No.1 regarding the date from which the Employees State Insurance Act would be applicable to the Page 2 of 10 HC-NIC Page 2 of 10 Created On Tue Dec 05 23:18:41 IST 2017 C/SCA/1259/2007 JUDGMENT business establishments of the Petitioner in the State of Gujarat. Therefore, a demand notice was issued at Annexure-B, Annexure- C and Annexure-D. However, the petitioner challenged the same. It is also contended that the dues of the ESI were made payable and the Petitioner preferred an Application being ESI Application No. 66/1990 before the Employees Insurance Court, Ahmedabad. The ESI Court, Ahmedabad by judgment and order dated 17.8.1993 upheld the contentions raised by the petitioner regarding applicability of the said Act to the establishment of the Petitioner Company up to 31.3.1988. Therefore First Appeal No. 1302 of 1996 was preferred before the High Court and it was decided finally by the High Court (K.S.Jhaveri,J) by judgment and order observing that it would be applicable. Therefore, the recovery proceedings were initiated against the petitioner which were also challenged by way of Special Civil Application No. 15457 of 2006 and the High Court (Coram: Ravi R. Tripathi,J) vide order dated 31.7.2006 at Annexure-G granted a conditional stay. However, pending the aforesaid petition, show-cause notice dated 26.7.2006 was issued by which the petitioner was asked to pay an amount of Rs.710339/- for non-payment of the contribution in time. The representation made by the petitioner was also rejected. Therefore, another petition being Special Civil Application No. 25273 of 2006 Page 3 of 10 HC-NIC Page 3 of 10 Created On Tue Dec 05 23:18:41 IST 2017 C/SCA/1259/2007 JUDGMENT was preferred and the petitioner was required to pay an amount of Rs,710339 by way of damages within 30 days and therefore the present petition has been filed again.
4. The affidavit-in-reply has been filed by the Respondent Corporation raising the preliminary objection regarding the maintainability of the petition itself. It has been contended that there is already an alternative remedy provided under Section 75 (1) (g) of the ESI Act and therefore the petition would not be maintainable. Moreover, it has been contended that the petition is not maintainable and may not be entertained because the reliefs prayed are barred by principle / rule of existence of statutory alternative remedy and to run away with the liability to deposit 50% of the dues as provided in Section 75(2)(B) in the Respondent Corporation and the present petition has been filed. The other contention has also been raised referring to ESI (General) Regulations, 1950 contending inter alia that the order has been passed in exercise of statutory power under the benevolent legislature and therefore the award of damage for the delayed payment for the amount of contribution is justified. It is also specifically contended that the Head Office of the present petitioner has been covered from 1975 and therefore as laid down by the Hon'ble Apex Court under the sweep of provisions of ESI Page 4 of 10 HC-NIC Page 4 of 10 Created On Tue Dec 05 23:18:41 IST 2017 C/SCA/1259/2007 JUDGMENT Act, the Corporation and its branches would be covered and they would have started depositing the amount of contribution. It is specifically contended that since the petitioner did not follow the provisions of law and correspondence notices, the Respondent Corporation is bound to recover the amount of contribution with interest. As per Section 40 read with Regulation 39 of the ESI Act, the petitioner has failed to comply with the necessary statutory provisions even after the judgment of the Hon'ble Apex Court and therefore the present petition may not be entertained. It is contended that the liability of damages is admittedly statutory liability as per Section 85(B) read with Regulation 31(C) of ESI Act. It is contended that the Respondent Corporation is justified in issuing a prohibitory order to recover the amount of contribution which is required to to be deposited with interest thereon.
5. Heard learned Advocate Shri Rituraj M. Meena for the petitioner and learned Advocate Shri Sachin D. Vasavada for the Respondent.
6. Learned Advocate Shri Rikturaj M. Meena has referred to Clause 4 to support his contention that the liability to pay between March 1975 to March 1988 would not arise and therefore the notices as well as the demand made is unjustified. Learned Advocate Shri Meena has also referred to the background of the facts and submitted that it is required to be considered when the damages can Page 5 of 10 HC-NIC Page 5 of 10 Created On Tue Dec 05 23:18:41 IST 2017 C/SCA/1259/2007 JUDGMENT be levied on the basis of the demand. He referred to the judgment of the Hon'ble Apex Court reported in (2008) 3 SCC 35 in case of Employees' State Insurance Corporation v. HMT Ltd. and referred to the observations made in paragraph 25. He emphasized that as observed, it cannot be said that the proceedings for recovery as an arrear of amount of revenue could be equated to such proceedings and recovery cannot be made straightway. Learned Advocate Shri Meena tried to submit that since the matter was pending for consideration before the court and it was pending in the litigation, imposition of the interest and / or the damages is not justified. He referred to the background and submitted that in 1990 it was challenged before the court and thereafter in 1996 the decision came which was the subject matter of further appeal which came to be decided in 2006. He therefore submitted that the present petition may be allowed.
7. Learned Advocate Shri Sachin D. Vasavada however referred to the affidavit-in-reply with the chequerred history of litigation pursued by the petitioner. He submitted that by pursuing the litigation, the petitioner has avoided the payment of legitimate statutory dues of the benevolent Act. He submitted that in fact the Hon'ble Apex Court in a judgment in case of Transport Corporation of India v. ESIC reported in AIR 2000 SC 238 has Page 6 of 10 HC-NIC Page 6 of 10 Created On Tue Dec 05 23:18:41 IST 2017 C/SCA/1259/2007 JUDGMENT clearly decided in the case of the petitioner itself, and therefore, when the main office of the petitioner is made liable, there is no justification to raise any such contention.
8. Learned Advocate Shri Sachin Vasavada submitted that when the issue is decided by the Hon'ble Apex Court qua the same petitioner specifically deciding that the branch is also liable for such payment of the ESI contribution, the issue has been finally decided, and therefore, such contentions are not permissible in this litigation. He submitted that in fact the petitioner has deliberately not made the payment in the guise of pending petition though in 2000 in case of the Petitioner Company itself, the Hon'ble Apex Court has finally decided the issue. He therefore submitted that the payment of interest and damages for the delayed payment are the statutory regulations which have not been challenged and therefore the liability cannot be avoided in the name of the pendency of the proceedings or by pursuing the litigation. He submitted that though the alternative remedy is provided, the same has not been pursued as otherwise 50% of the amount would have been deposited. Therefore the present petition may not be entertained and may not be allowed.
9. In view of the rival submissions and having regard to the background of the facts it is not in dispute that the petitioner is Page 7 of 10 HC-NIC Page 7 of 10 Created On Tue Dec 05 23:18:41 IST 2017 C/SCA/1259/2007 JUDGMENT liable for contribution. It is not even the case of learned Advocate for the petitioner that they are not liable in light of the statutory provisions read with regulation. The only contention which has been sought to be raised at the initial stage was whether the branch would be liable to pay. This issue has also been covered by the judgment of the Hon'ble Apex Court in case of Transport Corporation of India v. ESIC (supra) in case of the petitioner and it clinches the issue. Therefore, now an issue is sought to be raised with regard to liability for payment of damages for such delayed payment. It is required to be noted that merely because the remedy is pursued would not absolve from the statutory liability particularly in case of such benevolent act. Therefore the Petitioner Company was required to make the payment of contribution which it avoided as recorded in detail from time to time by filing different petitions.
Though the statutory remedy could be pursued but it could not be a ground to avoid the liability or postpone the liability. In any case, if the Hon'ble Apex Court has decided the issue finally as per the judgment of the Hon'ble Apex Court in case of Transport Corporation of India v. ESIC (supra). Therefore there is no justification to join an issue. Therefore, the moot question is whether the petitioner which is liable to pay is required to pay the Page 8 of 10 HC-NIC Page 8 of 10 Created On Tue Dec 05 23:18:41 IST 2017 C/SCA/1259/2007 JUDGMENT damages and interest and the answer has to be affirmative emphatically. The person like the Petitioner Company having postponed the liability cannot seek any relief in the guise of pending proceedings contending that it was pursuing a litigation. It is required to be stated that the issue has been decided to the knowledge of the Petitioner Company in light of the judgment of the Hon'ble Apex court in case of Transport Corporation of India v. ESIC (supra) and still the present petition is pursued which is filed in 2007 and which is kept pending till 2017. This itself reflect the attitude of the Petitioner Company to postpone and / or avoid the statutory liability of the Benevolent Act which cannot be permitted.
The present petition therefore deserves to be dismissed and accordingly stands dismissed with cost of Rs.10,000/- with a clarification that it will be open for the Respondent Corporation to proceed in accordance with law for recovery of the amount if the said amount is not deposited within a period of four weeks. Rule is discharged.
(RAJESH H.SHUKLA, J.) Further Order:
10.After the judgment and order was pronounced, learned Advocate Page 9 of 10 HC-NIC Page 9 of 10 Created On Tue Dec 05 23:18:41 IST 2017 C/SCA/1259/2007 JUDGMENT Shri Rituraj M. Meena for the Petitioner has requested for stay of the operation of the order for four weeks to enable his client to approach the higher forum.
11.In view of the discussions made and the judgment of the Hon'ble Apex Court, the request is declined. Stay is refused.
(RAJESH H.SHUKLA, J.) jnw Page 10 of 10 HC-NIC Page 10 of 10 Created On Tue Dec 05 23:18:41 IST 2017