Delhi District Court
M/S. Nxp India Pvt. Ltd vs Employees' State Insurance ... on 27 August, 2022
IN THE COURT OF MS. NEHA GUPTA SINGH SENIOR CIVIL
JUDGE-CUM-RENT CONTROLLER, NEW DELHI DISTRICT,
PATIALA HOUSE COURTS, NEW DELHI
ESIC-1/2017
M/s. NXP India Pvt. Ltd.,
Formerly M/s. Freescale Semiconductor
India Pvt. Ltd. Having Registered Office
at: 13, Abul Fazal Road,
Bengali Market, New Delhi-110001.
Now at:
Ground Floor, Manyata Tech Park,
Greenheart Phase-III,
Nagawara, Bengaluru,
Bangalore-560045 ....Petitioner
Versus
Employees' State Insurance Corporation,
Through its Director General/Insurance
Commissioner, Panchdeep Bhawan,
Kotla Road, CIG Marg, New Delhi.
AND
Employees' State Insurance Corporation,
Sub Regional Office-Noida,
Through its Additional Commissioner/Regional
Director, B-64, Sector-57,
Noida. ..... Respondents
Date of institution : 24.11.2017
Date of final arguments : 16.07.2022
Date of judgment : 27.08.2022
ESIC No.1/17 M/s. NXP India Pvt. Ltd. Vs ESIC & ANR. Page 1 of 13
JUDGMENT
1. The present petition has been filed by M/s. NXP India Pvt.
Ltd. (formerly known as Freescale Semiconductor India Pvt. Ltd.) against the Regional Director, Employee State Insurance Corporation (herein-after referred to as "ESIC") through its AR Sh. Ashish Chattoraj, who was authorized to file the present petition by way of Board resolution at the meeting held on 31.05.2016.
2. Brief facts as stated by the petitioner are that the assessment order dt. 01.09.2017 under section 45A ESIC Act was passed without following the principles of natural justice and without giving any notice to the petitioner for an opportunity to appear before the respondent to produce relevant documents. Petitioner is engaged in the business of semiconductor hardware and software designs for the embedded market in various application segments. That the petitioner has received an ex-parte order dated 31.03.2016 passed by the respondent under section 45 A of ESI Act on 22.04.2016 against which an appeal was preferred by the petitioner under Section 45 AA of ESI Act. The said assessment order related to the period 2011-2012.
3. During pendency of the said appeal, the petitioner received a second ex-parte order dt. 01.09.2017 for the assessment period 07/2012 to 10/2013. However, till this time neither any inspection of the petitioner's unit was carried out by any inspector of the respondent nor any notice calling for the ESIC No.1/17 M/s. NXP India Pvt. Ltd. Vs ESIC & ANR. Page 2 of 13 records of the petitioner was served upon the petitioner. Section 45 A of ESI Act imposes an obligation on the respondent to comply with the principles of natural justice and to provide a reasonable opportunity of being heard to the employer before passing any order under Section 45 A of ESI Act.
4. The impugned order records the date of notice issued in form C-18. However, when the same was actually issued and served upon the petitioner is nowhere to be found. That the C-6 Register for the period 01.01.2009 to 01.06.2016 records generation of two C-18 Ad-hoc notices dt. 27.07.2012 & 25.11.2013 which according to the reply received under RTI were actually never sent to the petitioner. As per the petitioner, the respondent in response to the RTI dt. 22.09.2017 revealed that no notice under section 45 A in form C-18 was ever issued to the petitioner and no notice was received even in the dispatch branch of the respondent for serving it upon the petitioner. Thus, a prayer is made that the impugned order dated 01.09.2017 passed by the Regional Director, ESIC be set aside.
5. Notice of petition was served on the respondent and they put an appearance.
6. Reply filed by the respondent denying the contentions made by the petitioner. It is stated on behalf of respondent that petition is not maintainable for non joinder of necessary parties, C-18 adhoc notice dated 6.02.2014 for period 07/2012 to 10/2013 for Rs. 3,68,940 was issued online to ESIC No.1/17 M/s. NXP India Pvt. Ltd. Vs ESIC & ANR. Page 3 of 13 the petitioner giving an opportunity to appear before the authorized officer on 12.02.2014. It was sent on email id of petitioner. another opportunity was given for personal hearing on 14.07.2016 which was attended by one Mr. Ashvani Kumar on 29.07.2016. He sought time to produce record and next date of hearing was fixed as 12.08.2016. On 12.08.2016, he did not produce any record pertaining to period 7/12 to 10/2013. He was further allowed to produce record on 28.07.2017. On 28.07.2017 Mr. Ashwani Kumar appeared again and did not produced record. No further date to produce record was sought by him. After a month, since no submission was received despite lapse of sufficient time, an order under section 45A dated 1.09.2017 was passed for sum of Rs. 19,22,773.
7. Replication was not filed by the petitioner.
8. From the pleadings of the parties, following issues were framed vide order dated 8.01.2019 :-
1. Whether the petitioner is entitled to setting aside and quashing the order dated 15.10.2017 and order dated 31.03.2016 passed by the Appellant authority and Assessing Officer? OPP.
2. Whether the above stated orders were passed without complying with the principles of natural justice and in violation of the provisio of the Section 45A of the ESI Act? OPP.
3. Whether the petitioner is entitled to setting aside of recovery notice dated 13.11.2017 in the form CP2? OPP ESIC No.1/17 M/s. NXP India Pvt. Ltd. Vs ESIC & ANR. Page 4 of 13
4. Whether the petitioner is not liable to pay any contribution or interest as demanded by the respondent? OPP.
5. Whether the petitioner is liable to refund of amount already deposited upon the upon the order of the court? OPP
6. Whether the petitioner has failed to comply with the mandatory provision of Section 75(2) of ESI Act? OPD
7. Whether the petition is bad for non-
joinder of necessary parties? OPD
8. Relief.
9. During evidence, Sh. Ashwani Kumar entered into the witness box on behalf of the petitioner and deposed on the lines of petition. He further relied upon the following documents :-
a) Copy of Power of Attorney is Ex.PW1/1.
b) Copy of Board Resolution dated 31.5.2016 as Ex.PW1/2.
c) Copy of ESI Revenue Manual as Ex.PW1/3.
d) Copy of order dated 01.09.2017 as Ex.PW1/5.
e) Copy of C-6 register as Ex.PW1/6.
f) Copy of notice dated 06.2.2014 as Ex.PW1/7.
g) Certificate of incorporation as Ex.PW1/4.
h) Copy of representation dated 01.8.2017 as
Ex.PW1/8.
I) Copy of letter dated 14.09.2017 as Ex.PW1/9.
j) Copy of response to RTI as Ex.PW1/10.
k) Copy of letter dated 16.10.17 as Ex.PW1/11.
l) Copy of letter dated 27.11.17 as Ex.Pw1/12.
m) Copy of C-19 dated 07.12.17 as Ex.PW1/13.
n) Copy of Challan dated 13.09.17 as Ex.PW1/14.
o) Copy of letter dated 12.12.2017 as Ex.PW1/15.
p) Copy of letter dated 14.12.2017 as Ex.PW1/16.
10. Sh. Rajender Prasad Singh, entered into the witness box as RW1 and has relied upon following documents:ESIC No.1/17 M/s. NXP India Pvt. Ltd. Vs ESIC & ANR. Page 5 of 13
1. Copy of C-18 Adhoc dated 06.02.2014 already Ex.PW1/7.
2. Copy of order U/s 45 A dated 01.9.2017 already Ex.PW1/5.
3. Copy of C-19 dated 07.12.2017 already Ex.PW1/3.
11. I have heard the contentions of both the parties and have gone through the record.
12. Before giving issue wise finding, it is deem correct to review issues as dates are inadvertently, mentioned wrongly in issue no. 1 and 3 although evidence was lead as per dates mentioned in petition. same be read as follows:
1. Whether the petitioner is entitled to setting aside and quashing the order dated 1.09.2017 passed by Assessing Officer? OPP.
3. Whether the petitioner is entitled to setting aside of recovery notice dated 07.12.2017 in the form CP2?
OPP ISSUE Nos. 1,2 & 3
1. Whether the petitioner is entitled to setting aside and quashing the order dated 1.09.2017 passed by Assessing Officer? OPP.
2. Whether the above stated orders were passed without complying with the principles of natural justice and in violation of the provisio of the Section 45A of the ESI Act? OPP.
3. Whether the petitioner is entitled to setting aside of recovery notice dated 7.12.2017 in the form CP2? OPP ESIC No.1/17 M/s. NXP India Pvt. Ltd. Vs ESIC & ANR. Page 6 of 13
13. The onus to prove this issue was upon the petitioner. It is averred by the petitioner that the petitioner company never received any notice for hearing in present matter as per mandate of section 45 A of ESIC Act. Per contra it is stated by the respondent that a C-18 notice dated 25.11.2013 bear- ing date 6.02.2014 was given to the petitioner through mail and later on 12.08.2016 during the hearing of other C-18 no- tice dated 27.07.2012. AR of the petitioner during cross ex- amination has stated that email id was updated in 2016 and it was provided as [email protected]. It is accepted that notice was received during hearing in 2016. He has denied paying contribution on behalf of 43 employees. It is further proved by way of information received through RTI to respondent, that no notice was dispatched to the petitioner. During cross examination RW1 accepted the seal of respondent on Ex. RW1/P1 whereby email address was provided by the respon- dent company in form 01 in 2016. Respondent has not braught on record any email confirmation or any other postal receipt to show that notice was ever issued to the petitioner.
14. Section 45A ESIC Act read as follows:
45A Determination of contributions in certain cases.
(1) Where in respect of a factory or establishment no returns, particulars, registers or records are submitted, furnished or maintained in accordance with the provisions of section 44 or anySocial Security Officer or other official of the Corporation referred to in sub-section (2) of section 45 is prevented in any manner by the principal or immediate employer or any other person, in exercising his functions or discharging his duties ESIC No.1/17 M/s. NXP India Pvt. Ltd. Vs ESIC & ANR. Page 7 of 13 under section 45, the Corporation may, on the basis of information available to it, by order, determine the amount of contributions payable in respect of the employees of that factory or establishment:
Provided that no such order shall be passed by the Corporation unless the principal or immediate employer or the person in charge of the factory or establishment has been given a reasonable opportunity of being heard. Provided further that no such order shall be passed by the Corporation in respect of the period beyond five years from the date on which the contribution shall become payable.
(2) An order made by the Corporation under sub-section (1) shall be sufficient proof of the claim of the Corporation under section 75 or for recovery of the amount determined by such order as an arrear of land revenue under section 45B or the recovery under sections 45C to 45-I.
15. As per the act corporation can act under section 45A only in situation where Social Security Officer or other official of the Corporation referred to in sub-section (2) of section 45 is prevented in any manner by the principal or immediate employer or any other person, in exercising his functions or discharging his duties under section 45, that too after giving reasonable opportunity of hearing.
16. It was laid down in Optical Instrument Company vs Employees State Insurance Corporation 30 (1986) DLT 389:
"(7) Before any action is taken under Section 45(A), or 73(A), it is necessary to ascertain with the help of proper evidence the exact number of workers working in the ESIC No.1/17 M/s. NXP India Pvt. Ltd. Vs ESIC & ANR. Page 8 of 13 establishment at the relevant time. In the plaint, the appellant has alleged that no notice under Section 44 was served on them. This was also a specific ground taken by them in reply to the show cause notice. The fact that no show cause notice was issued under Section 44 has not been denied by the respondent Corporation in their written statement. However, it is simply asserted that since the requirement of Section 44 was not complied with by the appellant, action under Section 45A was taken. In other words, the respondent Corporation subscribed to the position that action under section 45(A) can be followed only after compliance of Section 44, Section 44 of the Act states, "Where in respect of any factory or establishment the Corporation has reason to believe that a return should have been submitted under sub-section (1) but has not been so submitted, the Corporation may require any person in charge of the factory or establishment to furnish such particulars as it may consider necessary for the purpose of enabling the Corporation to decide whether the factory or establishment is a factory or establishment to which this Act applies." Section 45(A) enables the corporation to proceed on the basis of the "information available to it", when the information as required by section 44 is not furnished. If an establishment is not called upon to produce the records and particulars as envisaged by Section 44(2) by a notice, no action can be taken under section 45(A) of the Act. This is so on a plain reading of Section 45(8) where Section 44 is specifically mentioned. Sections 44 and 45(a) together incorporate the sound principle of natural justice that no adverse or pre-judicial action should be taken unless the person has been given an opportunity and is beard. Breach of these provisions is another reason why the impugned orders are invalid in law."
17. In present case, claim is made on notional basis, but it is nowhere stated or proved by the respondent that officials were prevented on any date by the petitioner from making enquiries and inspection under section 44 or any notice was given to petitioner for furnishing the information necessary for assessment. C-18 Adhoc notice was sent on email, which ESIC No.1/17 M/s. NXP India Pvt. Ltd. Vs ESIC & ANR. Page 9 of 13 respondent cannot prove to be of petitioner, further, it is averred by the respondent that they provided the copy of notice during hearing of appeal of other recovery notice. There also respondent failed to provide explanation as to why present recovery was again sought without enquiry. Further there is no document to show that notice was ever served on the petitioner.
18. Respondent has failed to prove on record documents to show that procedure provided in Act was duly complied by the respondent. Accordingly, order dated 1.09.2017 passed by Assessing Officer and recovery notice dated 7.12.2017 in the form CP2 are liable to be set aside and quashed. These issues are decided in favor of petitioner. Issue no. 4 :
Whether the petitioner is not liable to pay any contribution or interest as demanded by the respondent? OPP.
19. Petitioner has pressed the issues that assessment by respondent was arbitrary as principles of natural justice were not followed and opportunity was not granted to petitioner for hearing. In these circumstances, and in light of findings on issue no. 1, 2 and 3, petitioner is not liable to pay any contribution as per recovery notice dated 7.12.2017, however, respondent is at liberty to reassess the contribution of petitioner for the time period 07/12 to 10/2013 after granting petitioner fair opportunity of representation as per law.
ESIC No.1/17 M/s. NXP India Pvt. Ltd. Vs ESIC & ANR. Page 10 of 13Issue no. 5:
Whether the petitioner is liable to refund of amount already deposited upon the upon the order of the court? OPP
20. In light of finding in issue no. 1, 2 and 3 since recovery notice is set aside, petitioner is liable to refund of amount deposited in interin as per section 75(2) ESIC Act.
Issue no. 6 Whether the petitioner has failed to comply with the mandatory provision of Section 75(2) of ESI Act? OPD
21. In light of interim order where 50 % amount was deposited by the petitioner, this issues requires no specific finding of court.
Issue no. 7:
Whether the petition is bad for non-joinder of necessary parties? OPD
22. The onus to prove this issue was on the respondent. The respondent has relied upon the decision Fertilisers and ESIC No.1/17 M/s. NXP India Pvt. Ltd. Vs ESIC & ANR. Page 11 of 13 Chemical Travancore Ltd Vs Regional Director, ESIC and Ors, Civil Appeal no. 917-918 of 2004. I have carefully perused the said decision.
23. The relevant paragraphs of the said judgment are reproduced hereinunder for the sake of clarity:-
"6. Labour Statutes are meant for the benefit of the workmen. Hence, ordinarily in all cases under labour statutes the workmen, or at lease some of them in a representative capacity, or the trade-union representing the concerned workmen must be made a party. Hence, in our opinion the appellant (petitioner before the Employees Insurance Court) should have impleaded atleast some of the persons concerned, as respondents.
.........................
11. In our opinion, wherever any petition is filed by an employer under Section 75 of the Act, the employer has not only to implead the ESIC but has also to implead at least some of the workers concerned (in a representative capacity if there are a large number of workers) or the trade-union representing the said workers. If that is not done, and a decision is given in favour of the employer, the same will be in violation of the rules of natural justice. After all, the real concerned parties in labour matters are the employer and the workers. The ESI Corporation will not be in any way affected if the demand notice sent by it under Section 45A/45B is quashed.
..................
13. In the present case the workmen concerned were not made parties before the Employees Insurance Court, nor was noticed issue to them by the said Court.
14. Also, the order of the Employees Insurance Court dated 04.02.1993, relevant portion of which we have quoted, is not a very happy one as no proper determination has been made therein as to whether the workmen concerned are the employees of the appellant and whether they are entitled to the benefit of the Act. No doubt some observations have been made that some labourers come on one day but they may not come on the next day. Having said so, a direction has been given that the ESI Corporation will after making inquiries about the identities of the said ESIC No.1/17 M/s. NXP India Pvt. Ltd. Vs ESIC & ANR. Page 12 of 13 workers will register them and then extended the benefit of the Act.
15. In our opinion, the Employees Insurance Court should have itself made a proper investigation of the facts after getting evidence from the parties, including the workmen concerned, and after impleading them as party in the petition, it should have determined the question as to whether the persons concerned were the employees of the appellant or not."
24. In present case, demand notice is not disputed by the peti-
tioner on merits, he has disputed the notice on ground of nat- ural justice as same was issued on notional basis and demand is to be re-assessed by the respondent. Present petition therefore can not be said to be bad for mis-joinder of parties.
RELIEF.
25. In view of the above discussion, the petitioner is entitled to the relief as claimed by it. The impugned order dated 01.09.2017 passed by Assessing Officer and of recovery notice dated 07.12.2017 in the form CP2 are liable to be set aside and quashed. Respondent is at liberty to re-assess the contribution of petitioner after affording them an opportunity of hearing as per the Act. Respondent is directed to refund the amount deposited by the petitioner against the impugned notice within a month to the petitioner. No order as to cost.
Announced in the open (NEHA GUPTA SINGH) Court on 27.08.2022 SCJ-CUM-RC:PHC:NEW DELHI ESIC No.1/17 M/s. NXP India Pvt. Ltd. Vs ESIC & ANR. Page 13 of 13