Madras High Court
Employees State Insurance Corporation vs M/S.J.J.Traders on 4 June, 2024
Author: G.Ilangovan
Bench: G.Ilangovan
CMA.(MD)No.423 of 2021
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
Dated: 04/06/2024
CORAM
The Hon'ble Mr.Justice G.ILANGOVAN
CMA(MD)No.423 of 2021
Employees State Insurance Corporation,
Sub Regional Office,
4th Main Road, K.K.Nagar,
Madurai-20
Rep. by its Assistant Director : Appellant/Respondent
Vs.
M/s.J.J.Traders,
7, Parayan Malai Road,
Tirupparankundram,
Madurai-625 005 : Respondent/Petitioner
PRAYER:- Civil Miscellaneous Appeal is filed under
section 82(2) of the ESI Act, 1948 to set aside the order
passed in ESIOP No.87 of 2009, dated 10/11/2020 on the
file of the ESI Court (Labour Court), Madurai.
For Appellant : Mr.R.Ravikumar
For Respondent : Mr.K.Hema Karthikeyan
J U D G M E N T
This Civil Miscellaneous Appeal is filed seeking an order to set aside the order passed in ESIOP No.87 of 2009, dated 10/11/2020 by the ESI Court (Labour Court), Madurai.
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2.The facts in brief:-
The respondent Company is a Factory covered under the provisions of the ESI Corporation Act. It was inspected by the Inspector of Corporation to verify the compliance of the provisions. Records were verified and found that a sum of Rs.7,38,738/- shown as excess wages paid during the year 2004 to 2006. It was noted that those persons are coming under the category of 'exempted employees'. On suspicion, notice was issued in Form C-18, dated 20/08/2009. Hearing was held on 04/09/2009. Documents were produced by the respondent's Company. Finding that those documents are not reliable, the objections were negatived and by order, dated 18/11/2009 under section 45(A) of the Act directed the respondent herein to pay the contribution amount of Rs.48,018/- from the year 2004 to 2008.
3.Aggrieved over the order, the subject petition was filed by the respondent Company before the Labour Court, Madurai in ESIOP No.87 of 2009 stating that the order was passed by the present appellant Corporation without making proper verification of the records. Copy of the report, dated 20/07/2004 was furnished to the respondent, inspection report dated 24/07/2019 is not relied on, but the report dated 20/07/2004. In the factory, two https://www.mhc.tn.gov.in/judis 2/9 CMA.(MD)No.423 of 2021 employees were working as permanent employees. Other employees are only doing supporting work. In the report itself, it is admitted by the Inspecting official that the respondent Factory is having exempted employees. On these grounds, the petition was filed seeking an order to set aside the order passed under section 45(A) of the Act.
4.Before the Labour Court, on the side of the petitioner, their official was examined as PW1 12 documents marked. On the side of the respondent namely the appellant herein, one witness was examined and 4 documents were marked.
5.After hearing both sides, at the conclusion of the enquiry, an order was passed setting aside the order of the ESI Corporation, dated 18/01/2009.
6.Against which, this Civil Miscellaneous Appeal is preferred by the appellant Corporation,
7.Heard both sides.
8.The learned counsel appearing for the appellant would submit that TDS amount was not deducted; and the IT https://www.mhc.tn.gov.in/judis 3/9 CMA.(MD)No.423 of 2021 ceiling slab of the relevant period was not considered. According to him, without examining the documents and evidence properly, ESI Court has allowed the petition.
9.Per contra, the learned counsel appearing for the respondent would submit that the Factory accounts were properly audited and the auditing reports were submitted; the beneficiaries were not examined on the side of the appellant before the Labour Court. So according to him, without examining the beneficiaries, the order passed by the appellant is not legal. On that ground only, the Labour Court allowed the petition, which requires no interference at the hands of this court.
10.Now let us go to the order passed by the Sub Regional Officer (Madurai), ESI Corporation under section 45(A) of the ESI Act, 1948.
11.In pursuance of the notice issued by the competent authority, the representative of the respondent enterprises was present, produced the wage register from July 2004 to August 2006, wages records in the form of computer sheet from September 2006 to May 2009, Income Tax Assessment order and balance sheet, ledger and cash book, returns in Form No.22, Form A, Form No.21 and Wages https://www.mhc.tn.gov.in/judis 4/9 CMA.(MD)No.423 of 2021 records for the month of July 2004; Apart from that licence was also produced.
12.The main defects pointed by the Authority are, not producing Income Tax PAN of exempted employees. It was submitted by the Company that two employees were drawn salary upto Rs.500/- per day. There was no income tax assessment and PAN for them. After perusing the records, the competent authority recorded a finding that the Inspector noticed the employment of 10 employees drawn salary of less than Rs.7,500/- per month. Very low amount was paid towards contribution viz., Rs.35/- per day. So the competent authority doubted the correct contribution stating that it is highly improper and practically not possible to get the workers at such a low rate of wages considering the activity undertaken in the company. So it doubted the genuineness of the documents produced. The documents produced were also defective. It is also recorded a finding that the Register was maintained only for the purpose of avoiding contribution. Apart from that, various reasons were also mentioned in the order. The competent authority decided that to avoid the contribution only, such defective records were maintained or unwanted records were produced. https://www.mhc.tn.gov.in/judis 5/9 CMA.(MD)No.423 of 2021
13.The Labour Court also recorded a finding that the doubt raised by the competent authority is not well founded. In the absence of examination of the beneficiaries, the conclusion reached by the competent authority is not legal. If really the records were not genuine, the competent authority would have proceeded against the Company under section 84 of the Act.
14.From the above said narration of factual grounds, now the question, which arises for consideration is whether the record of finding by the competent authority is legally sustainable.
15.How the assessment must be made, we can make a reference to the judgment of the Hon'ble Supreme Court in E.S.I.C vs C.C. Santhakumar (2007(1)SCC 584). Wherein, it has been held that best assessment method can be adopted by the competent authority, when there is non-cooperation from the establishment. But here, nothing has been stated by the appellant that there was no cooperation on the side of the respondent herein. So, it is not a case of non cooperation.
16.Reading of the order of the competent authority shows that it is only a subjective satisfaction of the https://www.mhc.tn.gov.in/judis 6/9 CMA.(MD)No.423 of 2021 authority not based upon the objective reasonings. Doubting the records produced by the Establishment without proper reason, may not be proper. That is why, the Labour Judge has made a comment that there was no reason for the competent authority to doubt the documents. They ought to have undertaken the exercise of summoning the beneficiaries and examine them. Without the possible direct evidence, mere subjective satisfaction is not enough to discard the documents produced. More importantly, as pointed out by the Labour court, absence of steps taken by the appellant Corporation under section 84 of the ESI Act also renders the subjective satisfaction recorded by the competent authority, invalid.
17.No doubt that it is an administrative order. Even though, the Labour Court order is not subjected to judicial review, but the process of reasoning is subject to judicial review and anything from found fault, then the ultimate order itself is liable to be interfered. That is why, it has been pointed out by the Hon'ble Supreme Court in the above said judgment that only in case of non-cooperation of the Establishment, best assessment method can be adopted.
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18.Here, it is not the case of non cooperation. But the competent authority has adopted the best assessment method, in spite of the fact that the documents were produced. It is very easy to doubt the genuineness of the documents. But it must be supported by reasoning and evidence. Absolutely, nothing is available like that in that matter.
19.For all the reasons, I find that the order passed by the Labour Court requires no interference.
20.In the result, this Civil Miscellaneous Appeal is dismissed. No costs.
04/06/2024 Index:Yes/No Internet:Yes/No er To,
1.The ESI Court (Labour Court), Madurai.
2.The Section Officer, VR/ER Section, Madurai Bench of Madras High Court, Madurai.
https://www.mhc.tn.gov.in/judis 8/9 CMA.(MD)No.423 of 2021 G.ILANGOVAN, J er CMA(MD)No.423 of 2021 04/06/2024 https://www.mhc.tn.gov.in/judis 9/9