Delhi District Court
M/S Usha Exports vs Employee State Insurance Corporation on 7 November, 2019
IN THE COURT OF SH. RAJINDER SINGH
SCJ/RC(WEST), TIS HAZARI COURTS, DELHI
RC/ARC No. 02/18
In the matter of:
M/s Usha Exports,
WZM31, Hari Nagar,
New Delhi110064. .......Petitioner
Vs.
Employee State Insurance Corporation
Rajender Place, Rajender Bhawan,
New Delhi110008. .......Respondent
Date of filing of the petition : 25.04.2018
Date of reserving order : 24.09.2019
Date of pronouncement : 07.11.2019
JUDGMENT
1. Petitioner has filed the present petition seeking following reliefs:
(a) Setting aside order dated 25.06.2009 under Section 45A of the ESIC Act demanding recovery of ESI contribution from the petitioner for the period from 01.07.1993 to 31.03.2006 and also recovery certificate dated 10.06.2016.
(b) Refund of Rs.11,77,839/ alongwith interest @ 18% (it is not specified whether the interest is claimed per month or per annum), which was attached by the respondent towards recovery of said arrears of contribution.
ESIC No. 02/18 M/s Usha Exports Vs. ESIC Page..... 1/12 2. PETITIONER'S CASE: 2.1 The present petition is filed under the name of M/s Usha
Exports. It is not clarified whether the petitioner is a legal entity or not. In para2 of the petition, it is stated Ms. Usha Chopra is the exproprietor of the petitioner. Still, it is not clarified whether she was the sole proprietor of the petitioner. There is nothing on record to suggest that any other person was the proprietor or partner of the petitioner alongwith Ms. Usha Chopra. In such circumstances, it appears that Ms. Usha Chopra is the sole proprietor of the petitioner. The affidavit in support of the petition is sworn by Ms. Usha Chopra only.
2.2 The petitioner was registered by Apparel Export Promotion Council on 05.10.1990 with validity upto 21.06.1994. Petitioner was having office at J12/15, Rajouri Garden, New Delhi. Vide employer code no.112054318, petitioner was covered under the ESI Act w.e.f. 15.02.1993.
2.3 The petitioner regularly deposited ESIC contribution from 15.02.1993 till the date of closure i.e. 31.07.1995. It is stated that intimation of closure was sent to the respondent.
2.4 Despite receiving the intimation of closure, the officer concerned passed order dated 25.06.2009 under Section 45A of the ESI Act (hereinafter referred to as 'impugned order') directing the petitioner to pay ESI contribution of Rs.3,71,910/ for the period from 01.07.1993 ESIC No. 02/18 M/s Usha Exports Vs. ESIC Page..... 2/12 to 31.03.2006.
2.5 This exparte order was received by the petitioner on 25.08.2009. Again, it was brought to the notice of the officer concerned of the respondent that the establishment has already been closed since 01.07.1993 (SIC) and the contribution has been paid on actual basis till 31.07.1995.
2.6 Vide letter dated 12.03.2010, the Assistant Director concerned directed the inspector to visit the petitioner's premises and file report, so that order dated 25.06.2009 i.e. the impugned order may be determined. Till 21.07.2010, inspector concerned did not visit. Vide letter dated 21.07.2010, it was intimated to the Assistant Director that the inspector concerned has not visited.
2.7 Vide notice dated 03.08.2010 under Section 45(2) of ESI Act, petitioner was directed to produce record regarding closure of the unit on 20.08.2010. On 20.08.2010, the establishment's representative appeared before the Regional Director concerned but he was not present. In this regard, letter dated 30.08.2010 was sent by the petitioner to the respondent. Respondent never replied to the letter dated 30.08.2010 and sent notice C19 dated 17.05.2016. The demand letter dated 10.06.2016 was also sent. The summons were sent to the petitioner vide letter dated 09.09.2016. Vide letter dated 28.09.2016, petitioner intimated the respondent about closure of the establishment. Respondent never replied ESIC No. 02/18 M/s Usha Exports Vs. ESIC Page..... 3/12 to this letter. Petitioner appeared before the recovery officer on 17.01.2018 and submitted reply. Despite submission, without considering the same, attachment order dated 22.01.2017 was issued.
2.8 No recovery could have been effected after lapse of 5 years from the date of claim.
3. WRITTEN STATEMENT: 3.1 It is stated that petitioner never informed the respondent about closure of petitioner's unit. It was the duty of the petitioner to comply with ESI Act provisions by sending the intimation of closure and surrendering the ESI code. There is reference to regulation 26 of ESI (General) Regulation 1950. It is stated that within 21 days of permanent closure of the factory or establishment, petitioner was required to file return of contribution. For the purpose of Section 77 ESI Act, the intimation regarding contribution shall reach within time as specified in Section 77 of ESI Act.
3.2 The impugned order is dated 25.06.2009, the limitation for 5 years for preservation of record was notified w.e.f. 01.06.2010. As such, the period of limitation under Section 45A of ESI Act will not apply in the case of the petitioner.
3.3 Petitioner did not appear on 17.07.2006 when the case was fixed for personal hearing. Notice dated 22.07.2008 was issued in the ESIC No. 02/18 M/s Usha Exports Vs. ESIC Page..... 4/12 newspaper 'Nav Bharat Times'; directing the petitioner to appear for personal hearing on 27.07.2008. Despite notice, none appeared on behalf of the petitioner.
3.4 The inspector concerned visited the unit on 17.02.2006. One Mrs. Anand informed that unit does not exist at the spot. Due to this reason, no record could be inspected. The petitioner submitted report regarding closure of the unit. The same was not supported by any documents.
3.5 As per C19, the actual amount of contribution was Rs.3,71,910/. On this amount, interest at the rate of Rs.12 % per annum was charged, which amounted to Rs.7,20,168/.
4. ISSUES: 4.1 Vide order dated 29.10.2018, following issue were framed:
1. Whether the petitioner close down its business permanently w.e.f. 03.07.1995 and informed the respondent about the same as per procedure? OPP
2. Whether the order dated 25.06.2009 under Section 45-A of the ESIC Act and recovery notice/certificate dated 10.06.2016 are liable to be set aside? OPP
3. Relief.
5. EVIDENCE: 5.1 EVIDENCE OF THE PETITIONER: 5.2 Ms. Usha Chopra, proprietor of the petitioner examined ESIC No. 02/18 M/s Usha Exports Vs. ESIC Page..... 5/12 herself, as PW1. She tendered her evidence by way of affidavit Ex.PW1/A. She relied upon the following documents:
(a) Photocopy of Registration cum Membership Certificate Ex. PW1/1 (running into one page).
(b) Photocopy of Implementation Letter dt. 15.02.1993 Ex.PW1/ 2 (Running into two pages).
(c ) Photocopy of letter dt. 26.09.1994 is Ex.PW1/3 (running into one page). Objected to by Ld. Counsel for the respondent as original of same has not produced.
(d) Photocopies of return of contribution form (Regulation 26/form 6) (running into five pages) and copies of payinslips for contribution from period 20.03.1993 till 04.08.1995 (running into 29 pages) Ex. PW1/4 (colly).
(e) Photocopy of Form 6 Ex.PW1/5 (running into one page)
(f) Photocopy of relevant pages of wage payment register maintained by the petitioner Ex.PW1/6 (colly) (running into three pages)
(g) Photocopy of order dt. 25.06.2009 passed by the Assistant Director Ex. PW1/ 7 (running into one page)
(h) Photocopy of letter dt. 31.08.2009 Ex. PW1/8 (running into one page)
(i) Photocopy of letter dt.12.03.2010 Ex. PW1/9 (running into one page).
(j) Photocopy of letter dt. 21.07.2010 Ex. PW1/10 (running into one page).
(k) Photocopy of notice u/s 45(2) dt. 03.08.2010 issued by the Assistant Director, ESIC Ex. PW1/11 (running into one page)
(l) Photocopy of letter dt. 30.08.2010 Ex. PW1/12 (running into ESIC No. 02/18 M/s Usha Exports Vs. ESIC Page..... 6/12 one page)
(m) Photocopy of notice of demand of defaulter dt. 10.06.2016 and photocopy of summons dt. 09.09.2016 issued to the petitioner Ex.PW1/13 (colly) (running into two pages).
(n) Photocopy of letter dt. 28.09.2016 Ex PW1/14 (running into one page).
(o) Photocopy of letter dt. 17.01.2018 Ex PW1/15 (running into one page).
5.3 PW1 was duly crossexamined by Ld. Counsel for the respondent.
5.4 Vide statement dated 09.01.2019, Ld. Counsel for the petitioner closed PE.
6. EVIDENCE OF THE RESPONDENT: 6.1 Respondent examined its employee Sh. Prakash Chand, as RW1. He tendered his evidence by way of affidavit Ex.RW1/A. He relied upon the following documents:
(a) Public notice Ex.RW1/1 (OSR);
(b) Production of record dated 09.10.2019 Ex. RW1/2 (OSR);
(c) C18 dated 29.06.2006 Ex. RW1/3 (OSR);
(d) Show cause notice dated 29.06.2006 Ex. RW1/4 (OSR);
(e) Order under Section 45A of ESI Act 1948 dated 25.06.2009 already Ex. PW1/7.
6.2 RW1 was duly crossexamined by Ld. Counsel for the ESIC No. 02/18 M/s Usha Exports Vs. ESIC Page..... 7/12 petitioner. 6.3 Vide statement dated 23.03.2019, Sh. Arvind Bansal, SSO of the respondent closed RE. 7. ARGUMENTS OF THE PARTIES 7.1 It was submitted on behalf of the petitioner that form6
Ex.PW1/5 was sent to intimate the respondent regarding closure of the unit. This is the return of contribution under regulation 26 of ESI Act. The inspector concerned visited the unit on 17.02.2006. Ex. RW1/P1 is the record regarding visit of inspector concerned on 17.02.2006. In the judgment ESIC Vs. C.C. Santha Kumar, JT 2006 (10) SC 459, it was held that employer is required to maintain record only for a period of 5 years. Reliance was also placed on Section 77 (b) of ESI Act. This amendment in Section 77 (b) ESI Act was carried out w.e.f. 20.06.1989.
7.2 Written submissions and additional written submissions filed by the petitioner perused.
7.3 It was submitted on behalf of the respondent that despite proper intimation and public notice, petitioner did not appear for hearing and the impugned order dated 25.10.2009 under Section 45A of the ESI Act was passed. The same is Ex. PW1/7. The amendment in Section 45A was effective from 01.06.2010, whereas the impugned order was passed on 25.06.2009.
ESIC No. 02/18 M/s Usha Exports Vs. ESIC Page..... 8/12 7.4 Written submissions filed by the respondent perused.
8. COURT'S FINDING AND REASONING: Now, my issuewise findings are as under: ISSUE NO.1: Whether the petitioner close down its business permanently w.e.f. 03.07.1995 and informed the respondent about the same as per procedure? OPP 8.1 The onus to prove this issue is upon the petitioner. 8.2 The coverage of the petitioner unit under the ESI is not disputed. The main contention of the petitioner is that business establishment was permanently closed w.e.f. 03.07.1995. It is claimed that in this regard intimation was sent by the petitioner to the respondent. In the petition, it is not clearly specified in what manner and through which letters/documents, intimation regarding permanent closure of the establishment was sent. In response to a court query, Ld. Counsel for the petitioner submitted that intimation was sent to the respondent through Form6 Ex.PW1/5.
8.3 Photocopy of Form6 is Ex. PW1/5. No objection was taken with regard to production of photocopy of the same. With regard to Ex.PW1/5, it is pertinent to mention that on this photocopy, the stamp of receiving given by the department i.e. the respondent was not clear. As such, another dark photocopy was filed. The same is on record. No objection was taken in this regard. On this darker photocopy, the stamp of ESIC No. 02/18 M/s Usha Exports Vs. ESIC Page..... 9/12 the respondent department regarding receiving of Form6 is clearly visible. The date of receiving is 25.10.1995.
8.4 In Ex.PW1/5, it is mentioned that unit was closed w.e.f. 31.07.1995. In view of this fact, it can be clearly and safely concluded that Form6 Ex. PW1/5 is the earliest intimation given by the petitioner regarding closure of the business. As per rule 26 (b) ESI (General) Regulation 1950, this intimation/Form6 was required to be filed within 21 days from the date of permanent closure of the factory or establishment. Ex.PW1/5 was received in the office of the respondent on 25.10.1995. It is beyond the time of 21 days, as provided in the aforenoted regulation. On Ex. PW1/5 itself, in column 'date', the date is mentioned as 25.09.1995. Even this date is beyond the time of 21 days fixed for filing of return of contribution from the date of permanent closure of the business.
8.5 Further, it is to be seen whether the intimation has been sent as per the provisions, which implies that whether all the required documents for proper intimation of the closure were sent.
8.6 Petitioner also wrote letters Ex.PW1/8 and Ex.PW1/9; intimating the respondent regarding closure of the business. Vide letter dated 03.08.2010 Ex.PW1/11, the petitioner was asked to submit further documents as enumerated therein to show permanent closure of the business/establishment. During crossexamination dated 17.12.2018, ESIC No. 02/18 M/s Usha Exports Vs. ESIC Page..... 10/12 petitioner/PW1 admitted that she could not tell whether she had surrendered her sales tax registration number regarding the said business. In this letter Ex.PW1/11, apart from the other documents, petitioner was directed to produce sales tax surrender certificate, factory/establishment license surrender certificate, certificate issued by Labour Commissioner/labour officer regarding relieving of the labourers, industrial license issued from the Municipal Corporation, etc. Petitioner has nowhere specifically claimed to have obtained these documents. Petitioner has filed photocopies of 'relevant pages of wage payment register' Ex. PW1/6 (running into three pages). These pages are loose sheets, not in conformity with regulation 102 of the ESI (General) Regulation 1950 and Section 34 of the Indian Evidence Act.
8.7 Petitioner has argued that in terms of second proviso Section 45A of the ESI Act, no order could have been passed for recovery of amount beyond the time of 5 years when the contribution became payable. This amendment came into effect on 01.06.2010, whereas the impugned order is dated 25.06.2009. As such, the amended proviso would not apply in the present case.
8.8 In view of the above, petitioner has failed to prove that she closed down her business permanently w.e.f. 03.07.1995 and intimation regarding closure of the unit was given as per procedure.
8.9 Issue no.1 is accordingly decided in favour of the respondent ESIC No. 02/18 M/s Usha Exports Vs. ESIC Page..... 11/12 and against the petitioner. ISSUE NO.2: Whether the order dated 25.06.2009 under Section 45-A of
the ESIC Act and recovery notice/certificate dated 10.06.2016 are liable to be set aside? OPP
9. In view of the findings on issues no.1, issue no.2 is also decided in favour of the respondent and against the petitioner.
10. In view of the findings in issues no.1 and 2, the present petition stands dismissed.
11. File be consigned to record room after due compliance.
Digitally signed by RAJINDER RAJINDER SINGH
SINGH Date: 2019.11.11
12:54:02 +0530
PRONOUNCED IN THE OPEN (RAJINDER SINGH)
COURT ON 07.11.2019 SCJ/RC(WEST)/ DELHI
ESIC No. 02/18
M/s Usha Exports Vs. ESIC Page..... 12/12