The High Court · 2025

Judgment

Aggrieved by order, dated 03.08.2010, in E.I.C.No.gl of 2oo2 passed by the Employees Insurance court and chairman, Industrial Tribunal-r at Hyderabad, the present Civil Miscellaneous Appeal is filed.

2. Inspite of notice being served on respondent, there is no appearance on behalf of respondent. This court appointed Ms. B.Neharika varma as a.micus cuiae to assist the Court.

3. Heard Mr. B.G.Ravindra Reddy, learned counsel for appellants, and Ms. B.Neharika Varma, rearned amians anriae appearing for respondent.

4. Tribunal by its order, dated O3.Og.2O 10, in E.I-c.No.8l of 2oo2, held that "the proceedings directing the petitioner to pay contributions of Rs.66,Lg2/- along with interest of Rs.9,L95l- as legally not valid, and the petition filed by the petitioner is maintainable." 2 JAK. J C.M.A.No.206_201a ,l

5. The substantial questions of law for consideration a) Whether any material evidence has been ignored by the Tribunal resulting in an erroneous conclusion b) Whether the Tribunal was right in arriving at the conclusion on the basis of evidence before it. c) Whether Hamalies are employees rruithin the meaning of Section 2(pl of the Employees' State Insurance Act, L948 (for short 'ESI Act') and whether the factory is covered under ESI Act.

6. Respondent is a cold storage unit situated at Enumamula (15 kms from Warangal). The unit stores agricultural products like chillies, tamarind etc., before the products are sold in the market. Unit commenced its operations in March, 1999. It is averred that it rs a small unit employing not more than 6 to 7 employees. Further averred that only rent is charged from the farmers and unit is not responsible for loading and unloading the agricultural products. That they never engagecl any labour and the labour brought for purpose of loading and \ t JAK. J C.M./.No.ZM 2011 3

unloading are not their employees and they are brought by the parties (farmers). [No proof/evidence is adduced by the respondent unit to demonstrate that labour was brought by farmersl.

7. ESI Inspector visited the unit on 15.05.2000, at the time of visit, Inspector found that there were 2Z persons engaged and noted their names, signatures and thumb impressions were taken on a paper (Ex.Rl). Ex.R2 is the visit note. It is observed from the visit note that one B. Srinivas Reddy, Manager, and Candham Sudhakar were present, ESI Inspector had taken their signatures also. Ex.R3 is the preliminary inspection report, dated 15.05.2000. Under column No.g of Ex.R3, it is recorded as "No records were produced by the employer. I obtained names and signatures of 27 employees are enclosed,. Under column Nos. ll and 12, it is recorded that "No records produced by the employer,,. Column No. 13 reflects name of Shri B.Srinivas Reddy as manager. Under column No.15, it is reflected as follows ..As it is a cold storage use power for the storage and engaged 27 persons for wagers as JAK, J C M.A.No.206-201t 4 on the date of my visit which attracts the provisions of ESI Act under Section s 2(L2l I recommend this coverage of the visit from 15.05.2000 provisionally. The R.o. is requested to allot a code number and advise the employer to comply under the Act".

8. Ex.R4 is the annexure *A" dated 25.06.2001, seeking details of record.s to be produced i.e., all attendance registers, all wages and. salary registers, accounts books, ledgers, cash books, day books, journals, subsidiary books of accounts along with vouchers, other documents and all registers to be maintained. under ESI (General) Regulations, such as Form-7, Accident Register, Inspection Books and the said annexure is signed by B.srinivas Reddy. Ex.RS is €rn enquiry report. Ex.R6 is an opportunity provided for production of records addressed to one M.Ratna Reddy, Principal Employer, Kakatiya cold Storage (annexure-B) dated 18.08.2001, refused to be acknowledgeri at the residence. Ex.R7 is addressed to unit informing the dues i.e., amount of contribution payable from 15.05.2000 to

31.03.2001,asumofRs.56,I82/-'Ex'R8isformC-l1 \ .". \ JAK, J C.M.A.Ni.206 2014 5 notice, dated L4.oz.2o0o addressed to unit. Ex.R9 is an enquiry report. Ex.RlO is a letter of ESIC, dated 09'08.2001, addressed to unit for payment of contribution under ESI Act, informing that under section 39 of the ESI Act read with reguration 31 0f the ESI (Generar) Regulations, 1g50, that payment has to be made within 21 days' That default in payment of amounts would attract section 85 of the ESI Act, punishabre with fine as welr as a term of imprisonment or with both. Ex.Rll is an order, dated o4'o4 '2oo2, under section 4s-A of the ESI Act. In clause (d) of the order, it is reflected as follows: "In response to the aforesaid Notice, the employer/employer,s representative, Sri I. Surender, Advocate appeared before the undersigned/officer concerned on 2g.Og.2OO1 and requested for/informed that adjournment of his hearing to 2S.1O.2OO1. Shri M.Ratna Reddy, Mg. Director of the company attended the hearing on 23.1O.2O01 and 09.1l.2OOl but he did not produce any records or s,bmitted any evidence/statement regarding the exact contribution payable." -/,(j( 9' By order, dated o4.o4.2002 (Ex.Rr l), the contribution amount of Rs.66,Lg2/_ for period from ,S.O'.2OOO to 31'03'2ool under section 4s-A of ESI Act were to be paid / -/ JAK.J (:.i.l.A.No)00 -)011 6 along with interest of Rs.9,195/- uPto 31'10'2001 and further interest @15% till the date of payment rvithin 15 days from the date of receipt of this order, failing u'hich' the amount shall be recovered under Section 45-C to 45-I of the ESI Act. lO. Respondent stated that they never employed 10 persons and that for loading and unloading purpose, it was the farmers who bring their orvn labour and respondent never employed any Hamalies. It is also stated that respondent filed attendance and wage registers for the period from O1.04.1999 to 31.03.2004 and stated that the same to be marked as exhibits on behalf of respondent' It is also averred that in a routine manner, the contributions on adhoc basis had been determined and that respondent appeared before the concerned officer i'e', 1"t petitioner and brought to the notice that ESI Act is not applicable to the unit.

11. No registers were presented to the Inspecting Officer at the time of inspection nor when the ordr:r, dated O4.O4.2OO2, rvas passed under Section 45-A of the ESI Act' \ ,\ JAX, J C.M-A.Nd.206 201,t 7 But surprisingly, in an I.A. Iiled in E.I.C.No.gl of 2OO2 oa 06.01.2008, respondent stated that registers/documents were marked as exhibits. There is no whisper about these registers/documents that they were presented at the time of inspection, they are presented after g years.

12. If any register(s)/record are/is not presented at the time of an adverse inference can be drawn against the respondent Unit/employer. Respondent Unit is bound to maintain the register(s)/record from the date of the commencement of the Unit. Regulation 31 is to be read with Section 44 of the ESI Act.

13. Employee State Insurance Act is a Social Security kgislation, the cannons of interpreting a Social Security kgislation differs from the cannons of interpretation of other laws. ESI Act was enacted to ameliorate various risks and contingencies which the employees face while working stablishment or factory. It is thus intended to promote the general welfare of the workers and as such, is to be liberally interpreted. The ESI Act is not intended to give benefit to €Ln unscrupulous employer. Under JA!<. J C.M.A.No.206 201a I Regulation 32 of the ESI Regulations, the responsibility for maintaining registers of workmen lies with the employer irrespective of the number of employees. L4. In the cross examination of PWl (M. Ratna Reddy, Managing Partner), PWl stated that there was no person by name Srinivas Reddy working in establishment. But, it is observed from the record that Srinivas Reddy was present at the time of inspection. Ex.R4 is annexure-A dated

25.06.2001 and it is written in Telugu that "6a s"5 fuQJ6" (received copy) and signed by B.Srinivas Reddy. Statements made in the cross examination receive a set back and cannot be held to be true, as the evidence on record is otherwise than the statement(s) deposed, except denial, no proofis adduced to substantiate the statements deposed.

15. It is also deposed in the cross examination by PWI that they used to mark attendance for the employees, but the employees never signed in the attendance registers. In wage registers, the employees signed. It is further deposed that designation of the employees and working JAK. J C-M-A-Nd.2M 2011 9 hours are not mentioned in attendance registers, that all employees are unskilled. These depositions in the cross examination establish the fact that the Unit was maintaining the registers, but, surprisingly registers were not presented to the inspector at tJle time of inspection. In the absence ofpresenting/production of attendance and wage registers at the time of inspection, an adverse inference can be drawn. The unit/employer produced all the registers only in the year 20Og i.e., after g years of inspection date which creates any amount of doubt with regard to the genuinity of registers. Evidence of pWl was recorded on 21.01.2008. Inspection was conducted on 15.05.2000. It is a-lso deposed that pWl was looking after the affairs of the establishment.

16. In the objections filed by employer in response to proceedings dated 30.08.2001, it is stated that since respondent is private limited unit not covered under the ESI Act, return of contribution need not be submitted in Form-6. Further, it is sated tha& hg.s employed operators, JAK. J t:MANa)06 2014 l0 Gumastas and watchman to run their business and that there were two to three operators.

17. On the day of inspection, Inspector has recorded the narnes of 27 persons with their signatures and thumb impressions (Ex.Rl). Except denying that they were labourers employed on that day by farmers who came to load and unload the agricultural products of farmers, nothing is stated with regard to the number of labourers present who were brought by the farmers at the time of inspection (for loading and unloading), details of the agricultural products brought, narnes of farmers are also not forthcoming. No proof/evidence is adduced by unit/employer to demonstrate that labour was brought by farmers. It is further stated in the objections that employer is ready to produce the registers before the inspector to prove the said fact(s). But in the order, dated O4.O4.2OO2, (under Section 45-A of ESI Act), it is clearly observed that the managing director of the company attended the hearing on 23. 1O.2OO I and on 09. 1 1.200I, but did not produce any J,IX. J C-M.A.No.206 20ta registers/record, neither any proof nor evidence was adduced to substantiate the stand taken by the employer.

18. On a perusal of the order of Tribunal and the entire original record, it is apparent that evidence on record has not been appreciated/considered properly by the Tribunal; in other words, there is a complete non application of mind by the Tribunal. An order which does not appreciate/ consider the entire evidence on record can be said to be an order which attains the character of being a perverse order. The Tribunal in its order extracted that Exs.pl to p9 documents are proceedings, letter, attendance and wage registers and so on, but, it did not discuss as to whether these registers were rnade available at the time of inspection i.e., on 15.OS.2OOO. When there is no e,ridence adduced with regard to maintenance of registers as on date of inspection, the Tribunal fell into error in not considering this crucial aspect which goes to the root of the issue. Mere statement by the employer that the labourers were brought by farmers will not come to the rescue of the emPloyer/unit. '- , JAK, J C.M.A.No.206 2014 t2

19. It is pertinent to extract a few relevant provisions of the ESI Act, 1948 and ESI Regulations, 1950. Section 39 of the ESI Act is as follows:

39. Contributtons.-(1) The contribution pavable under this Act in respect of an employee shall comprise contribution payabie by the employer (hereirrafter referred to as the employer's contribution) and contribution payable by the employee (hereinafter referred to as the employee's contribution) and shzrll be paid to the Corporation. (2) The contributions shall be paid at such rates as ri:ray be prescribed by the Central Gcvernment: Provided that the rates so prescribed shall not be more than the rates which were in force immediately before the commencement of the Employees' State Insurance (Amendment) Act, 1989 129 of 1989). (3) The wage period in relation to an employee shall be the unit in respect of which all contributions shall be payable under this Act. (a) The contributions payable in respect of each wage period shall ordinarily for due on the last day of the wage period, and where €rn employee is employed for part of the wage period, or is employed under two or more employers during the wage period, the contribution shall fall due on such days as may be specified in the regulations. (5) (a) If any contribution payable under this Act is not paid by the principal employer on the date on which such contribution has become due, he shall be liable to pay simple interest at the rate of twelve per cent. per annum or at such higher rate as may be specified in the regulations tiLl the date of its actual payrnent: Provided that higher interest specified in the regulations shall not exceed the lending rate of interest charged by any scheduled bank. (b) Any interest recoverable under clause (a) may be recovered as €rn arre€rr of land revenue or under section 45C to section 45-I. Explanation.-[n this sub-section, "scheduled bank" means a bank for the time being included in the \ \, I1K. J C.M.A.No.206 20ll l3 Second Schedule to the Reserve Bank of India Act, t934 (2 ot 19341. Section 44 of the ESI Act is follows:

44. Employers to furnish retums aaiatain reglsters ia certain cases.-(l) Every principal and immediate employer shall submit to the Corporation or to such oflicer of the Corporation as it Eay direct such returns in such form and containing such particulars relating to persons employed by him or to arry factory or establishment in respect of which he is the principal or immediate employer as may be specified in regulations made in this behalf. (2) 'tl/here 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. (3) Every principal and immediate employer shall maintain such registers or records in respect of his factory or establishment as may be required by regulations made in this behalf. Section 4 of the ESI Act is follows: of contributions il certala 45A. cases: (l) 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 any Inspector or other oflicial of the Corporation referred to in sub- section 45 is 8o[prevented in any mannerl by t]re principal or immediate employer or any. otJrer person, in exercising his functions or discharging his duties under section 45, the Corporation may, on the basis of information available to it, by order, determine the arnount of contributions payable in respect of the employees of that factory or establishment: \.rr C-M-A-No-2N 2011 l4 Provided that no such order shall be passed by the Corporation unless the principal or immediate employer or the person in charge of tJre 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 treyond Iive years from the date on which the contribution shall become payable. (2) An order made by the Corporation under sub- section (l) 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 rccovery under section 45C to section 45-1. Sections 45C to 45-l deal with the foll( 45C. Issue of certificate to the Recovery Oflicer. 45D. Recovery offrcer to whom certificate is to be forwarded. 45E. Validity of certilicate and arncndment thcrcof. 45F. Stay of proceedings under certificate and amendment or withdrawal thereof. 45G. Other modes of recovery. 45H. Application of certain provisions of the Income- tax Act. 45-I. Definitions. Section 68 of the I Act is as follows:

68. Corporatton's rights where a prlnclpal employer frlls or rcglects to pay aay contrlbution.-(1) If any principal employer fails or neglects to pay any contribution which under this Act he is liable to l)ay in respect of any employee and by reason thereof such person becomes disentitled to any benefit or entitled to a benefit on a lower scale, the Corporation may, on being satisfied that the contribution should have been paid by the principal employer, pay to the person the benefit at the rate to which he would have been entitled if the failure or neglect had not occurrerl and JAK,J C.M.A.No.206_201a l5 the Corporation shall be entitled to recover from the principal employer either- (i) the difference between the amount of benefit wttlc! is paid by the Corporation to the said person and the amount of the benefit which would have been payable on the basis of the contributions which were in fact paid by the employer; or] (ii) twice the amount of the contribution which the employer failed or neglected to pay, whichever is greater. (2) The amount recoverable under this section may be recovered as if it were an arrear of land-rerenul o. under section 45C to section 45-I. Chaoter VII of the ES I deals with the matter of 'Penalties". the followins are the und r chapte uI. Chapter VII Sections: 84. Punishment for false statement. 85. Punishment for failure to pay contributions, etc. 85A. Enhanced punishme.ri in certain cases after previous conviction. 85B. Power to recover damages. 85C. Power of Court to make orders_ 86. Prosecutions. 864.. Offences by cornpanies- n85 1S

85. Funishment for failure to pay contributions, etc.-If €rny person- (a) fails to pay any contribution which under this Act he is liable to pay, or (b) deducts or attempts to deduct from the wages of an employee the whole or any part of the employer,s contribution, or (c) in contravention of section 72 reduces the wages or any privileges or benelits admissible to an employee, or (d) in contravention of section Z3 or any regulation dismisses, discharges, reduces or otherwise punishes an employee,€[_ - JAK,J rl..M.A.No.206 2014 t6 (e) tails or refuses to submit any return required by the regulations, or makes a false returrr, or (f) obstructs any Inspector or other oflicial of the Corporation in the discharge of his duties, or (d is guilty of any contravention of or non- compliance with any of the requirements of this Act or the rules or the regulations in respect of which no special penalty is provided, he shall be punishable- (i) where he commits an offence under clause (a), with imprisonment for a term which may extend to three years but- (a) which shall not be less than one Yatr, in case of failure to pay the employee's contribution which has been deducted by him from the employee's wages and shall also be liable tc fine cf ten tJ:c'u-*and- rupees; (b) which shall not be less than six months, in any other case and shall also be liable to fine of live thousand mpees: Provided that tl:e Court may, for any adequate and special reasons to be recorded in the judgment, impose a sentence of imprisonment for a lesser term; (ii) where he commits an offence under any of the clauses (b) to (g) (both inclusive), with imprisonment for a term which may extend to one yea-r or with fine which may extend to four thousand rupees, or with both. Resulation 32 of The General 1950 is as s State Insurance

32. Register of Employees. - (U Every employer shall maintain a register in [Form 6] in respect of every employee of his factory or establishment. (U (a) Register of employees engaged by immediate employer. - Every immediate employer shall maintain a register in Form 6 in respect of every employee engaged by him and submit the same to the principal employer before the settlement of any €rmount pay:rble under sub-section (1) of section 41 of the Act. (21 Every employer shall preserve every register maintained under this regulation after it is filled, for a period of five years from the date of last entry thereirr. \ \ ttx, t c-M-ANo2$ 20ta t7 (3) The employer shall give a reasonable opportunity to any of his employees, if he so desires to see entries in respect of such employee in this register once a month.

20. On a combined reading of the provisions of the ESI Act and the Regulations, in particular the sections and regulations extracted supra, it is clear that the unit has to maintain registers from the date of commencement of tle Unit and the same have to be presented to the Inspecting OIIicer at the time of Inspection. Failure to do so by the employer, sets into motion the provisions of the ESI Act which are applicable (to such of those employers who do not adhere to the provisions of the ESI Act) and consequences would follow as enumerated under the ESI Act. Section 44 of the ESI Act read with Regulation 32 makes it clear that regardless of number of employees in the unit, the unit has to maintain registers. presenting registers in the year 2008, deposing that registers are maintained and they are ready and willing to be produced in the year 2606, i.e., after 8 years from the date of inspection, creates any arnount of doubt. As such, this Court is inclined to draw an adverse inference, because, presenting of registers after long delay of 8 years casts a "21 JAX. J C.M.A.No.2N 20la l8 doubt about the maintenance of registers from the date of commencement of unit. This Court is not inclined to accept the contentions put forward for the employer. The relevant portion of the order of Employees Insurance Court and Chairman, Industrial Tribunal-I is as follows:

13. It is not the facts situation as emerged from appreciation of the evidence adduced that there were 27 employees allegedly engaged by the petitioner unit for attending the work of loading/unloading. It ist that thc Respondents authorities had not examine'd or verified the records of the petitioner unit on I5.5.12000. But, RW I noted dou.n the nanes of the employees allegedly working in the petitioner unit only basr:d on the information as regards the names of the persons working in the petitioner unit provided by the other employees. Ex.PS and P6 do not show the names of hamalies allegedly working in the petitioner unit trnder its control. The Respondents . failed to adduce any evidence to show that the hamalies shown in the [)x Rl being the workers were attending the work of loading/unloading at the petitioner unit. Thereiore, in the absence of evidence to show that the said hamalies were employed by ttre petitioner's unit, it cannot be said that they were the employees of the petitioncr unit for the purpose intended under the provisions of the ESI Act. Sri K.K.Prasada Rao learned counsel for the petitioner placed reliernce on authoriQr reported in 2O0t (m) LU (SC) (Suppl) page 1356 in the case of ESI Corporation Vs Premier Clay Products. The Hon'ble Supreme Court of India held as under 'the respond.ent twd hired somc casual coolies for loadins and. unloadin4 af its goods. Thc u.nrk itself uas of sporadb nature. TIE coolies were auailabl<t .for uork to othcrs and in .fad, on tle uery day worked for seueral otlers who erqaged them. In the circumstances, tle said coolies mnnot be called as co.sual workmen- Hence, ra antributitn is pct!.lable bg the respondent to the Corporation on- thcir behnlf. .\ \ JAK, J C.M.A.No.206_2014 t9 In tlre authorities reported in i) 2OO2_ALD (Suppt) (t) ALD 362 in the EID parry (India) Ltd., Vijayawada Vs Employees State Insurance - Corporation i{yderabad and another, ii) 2OO4 (S) ALD ZLS in the casl of BOC India Ltd., calcutta vs Assistant Regional Director, Employees State Insurance Corporation and another, iii) 2OO8 (3) ALD 33 (DBl in the case of Hindustan Petroleum Corporation Ltd, Secunderabad, Vs Employees State Insurance Corporation, Hyderabad and another, the Hon'ble High Court of A.p Jxpressed the same view. In the authority reported in (iggA) A Supreme Court Cases 111 in the ca"e of Employees State Insurance Corporation Vs M.M.Suri and Associates Rrt Ltd., the Hon,ble Supreme Court held as under: Labour Law-Emplogees State Insurance Act, 1948 secfrons 1 (4) 2 (22) and.2 (9) - Appticabititu of the , Number o.f pesons emploged - Computation of _ !! Held, Act would applA to an establishment onlu wlten the number o.f employees faltino under Sectiorn 2 (g) reacltes th.e stafutory mintmum A d.ifferent uieut cannot be taleen merelu on the ground. that the Act ,b a beneficiat one- Interpretation of statutes- partiatlar stahttes - Beneftcial statutes. Delhi Administration notiftcation d.ated.: 30.09.1988 bsued und.er Section I (S) of tte Emplouees State Insurane Act, I94g ertended ihe said"' eit to shops uherein twentg or more persolls were employed. Tle num.ber of em,plogees af tlrc respondent failing under Seabn 2 (9) utas less thnn twenty white there were.fiue o.ffiers not.fallirug there und.er. Tle appellant ESI Corporation antended tlwt since Section 2 (12) used" the words "persons a.re emploued or uere emploged. for wagles, .for applicabilitll o.f the Act, tltc onlu criterion io" to see lf the estabtishment lwd 2O or more persons in ifs emplogm.ent irrespectiue of thc number of persons.fafiirq ttnder Section 2 (9) partiailarty because the Act wa.s a beneftctal one. 1-5. Although Ex Rl which is the list of the employees allegedly prepared by RWl shows the petitionir iJnit having engaged 27 employees to carry on his business the said piece of evidence cannot be said to have srrbstantially proved the very claim of ttre Respondents that tl:e said employecs having been engaged were attending to the work of loading/untoaain-g in the petitioner unit undef'fts control. ftre entries reflected JAK. J C.M.A.Nd-206 2011 20 in Ex P5and P6 show only the employees seven in number were working in the petitioner unit and for the services rendered by them they were being paid the salary. The act of the petitioner paying the salary for the said employees are reflected in the Ex P7 and P8 which are the ledgers and cash books. The instances are such that the petitioner was not servgd with any notice, only after the proceedings initiated by the Corporation for recovery of the contributions the petitioner came to know that its unit was covered under the proceedings of *ie ESI Act. The factual situation as regards the hamalies allegedly working in the petitioner unit is that they were not employees of the petitioner unit and therefore tJre petitioner is right in taking the plea that the ESI Corporation authorities without properly appreciating the true state of allairs of thc pctitioner unit issued the proceedings bringing the petitioner unit under the coverage of ESI Act. Irr the back ground of matter before the Court of Law what could be infcrred is that the authorities of the: ESI Corporation having not examined and appreciated t}re petitioners case arbitrarily has initiated the recovery proceedings for ESI contribution from the petitioner unit. t 6. I{aving regard to the material placed befor,: the Court the opinion of the court is that since the petitioner Unit was not covered under the provisions of the ESI Act the petitioner unit is not liable to pay contributions. The action of the ESI Corporation in issuing the proceedings vide Ex P2 directing the petitioner unit to pay the contributions of Rs.66,812/- cannol be justified. Therefore the recovery proceedings of the ESI Corporation are hereby set aside and consequently the petitioner is not liable to pay the contributions as demanded under Ex P2. Accordingly the issues are answered in favour of tJ:e petitioner unit and against the Respondents. 2l . It is for the employer/Unit to prove and establish as to why there werc 27 persons present at the time of the inspection of the unit in the premises, the inspector would note the details of who were present at the time of J/4K J c.M.A.No.2M 20t4 2t inspection. Their identity has to be established from the registers to be maintained by the employer. Registers were not presented at the time of inspection, mere denial and stating that they were hamalies employed by the farmers would not suffice. An adverse inference can be drawn when the registers are not presented at the time of inspection, no other proof or evidence was adduced by the employer even at the time of passing of order u/s 45A of the ESI Act. ESI Act requires that ttre unit/employer has to maintain the registers/record from the date of commencement of unit, such requirement is not adhered to by the employer/Unit. The Tribunal fell into error in holding the respondents i.e., ESI Corporation were not able to establish about the 27 employees.

22. Tribunal considered the judgment of Hon,ble Apex Court in the case of lt/s Rekamat Transport and, ANR a. The Emplogees Storte Hgderabad reported in 1996 (3) SCALE SC 806 and held that evidence adduced with regard to 2T employees indicates that respondent authorities have not verified the JAK, J t:.M.A.No.206 20la 22 record of unit. It defies the logic of this Court as to how the Tribunal could conclude in such a manner, u'hen the registers/records were not presented at the time of inspection nor they were presented at the time of passing of the order, dated O4.O4.2O02, (under Section 45-A of ESI Act). Tribunal lost sight of this crucial fact and aspect and misguided itself. Any documents not made available at the time of inspection and produced after a iong delay of 8 years raise any amount of doubt and suspicion about the registersf record. Even in the preliminary inspection report at Column Nos.S, I I and 12, it is reflected that no records were produced by the employer and that B.Srinivas Reddy was Manager, though it is denied that there was no Manager at that point of time. The statements recorded by the Inspecting Officer during the time of visit attain the character of pubtic document(s) and they are presumed to be genuine unless rebutted. No other presumption can be drawn in the absence of rebuttal by the employer. Except stating that employees tvere not more than 10 in number, nothing is produced at the time of inspection. The ESI Act does not contemplate that registers be produced/presented JAK, J 23 after a period of 8 years of inspection. Registers have to be maintained by unit from the date the unit comes into existence, even though the number of employees is below l0 or above 10. Ignorance of law is no excuse.

23. Learned counsel appearing on behalf of appellants has placed on record informa.tion regarding Kakatiya Cold Storage Private Limited frorn the website of Registrar of Companies. It is observed that directors of company are four in number and pWl is one of the director, and also managing director, date of incorporation is 01.05.199g and the company status is active and it is registered with CIN No.U63O21TG1998PTCO29341 and the active code is 6302 and NIC description is storae:e and warehousing and the age of company is 26 years, 10 months, 12 days and the date of last annual general meeting held is on 30.O9.2023. These are the details of the company. Learned counsel for appellants states ttrat the company is still in existence and the company has been served vith a notice on the address mentioned. JAR.J C.M.A.No.206_2014 24

24. This Court is inclined to hold that the Tribunal's ord.er, dated 03.08.2010, passed in E.l.C.No.81 of 2OO2 is bad in law, for not appreciating/considering rhe entire evidence on record and arriving at an erroneous conclusion. There is a complete rion-€rpplication of mind, ESI Act requires that registers are to be maintained and they have to be presented at the time of inspection. This fact is completely lost sight of b-v the Tribunal. It is oniy after 8 years, the registers are produced. Tribunal passed the order on 03.08.2010 and the C.M.A. is liled in the year 2OL4. This Court is not inclined to remand the matter back to Tribunal as prayed for by the amtctts. The order of Tribunal is apparentty perr/erse and suffers from non- application of mincl and for non-appreciation/non- consideration of evidence on record. The finding of the Tribunal that the appellants herein were unable to adduce any evidence to show that the Hama,lies shown in Ex.Rl being the workers were attending to the work of loading and unloading at the employer's Unit is riddled rvith non- application of mind least of all:" proper perspective, for, it is for the employer/unit to come out with a satisfactory \ \LL JAT, J C M A-No.206 2Al J 25 explanation. Questions of law are answered in favour of the appellants, the contention that the euidence on record is ignored, in other words, not appreciated and also the contention that a total non-application of mind is apparent is found to be true, for the reasons stated above. The order, dated 04.04.20O2, passed under Section 4S-A of ESI Act is confirmed. Respondent Unit herein is liable to pay the amount(s) as per order, dated O4.O4.2OO2, passed under Section 45-A of ESI Act.

25. It is informed that the director of ESI Corporation has not initiated any proceedings to recover the said amount under Sections 45-C to 45-I of ESI Act. Section 85 of ESI Act speaks of punishments for default of payment within a specified period. This Court in the case of Emplogees 1r. Jagalakshml Cotton and Oll ptoducts (Ttttoate), Ltd.., herla (though lts Manager) reported in 1980 SCC Online AP 45, held ttrat ESI Act is a social security legislation enacted to ameliorate various risks and contingencies which the ernployees face while serving. I I JAK. J C.M.A.No.206_201a 26 \ Honble Apex Court in the case of .ESf Corporation a. CC.Sornthakumar reported in (2OO7) 1 SCC (L&S) 413, held that under Section 68(2) and Sections 45-C to 45-I of ESI Act, after determination of contribution, recovery can be made straightaway. Section 85 of the ESI Act empowers the Corporation to take steps for recovery of amount. Such steps have not been initiated by the officials of ESI Corporation in spite of being empo'uvered. Provisions empowering the officers to recover the contribution would effectuate the object and purpose of the statute. Non- implementation or not initiatrng steps as provided under the statute i.e., recovery of amounts after the proceedings, under the ESI Act would defeat the very purpose of intent of Social Security Legislation which inures to the benefit of the employees. This Court expresses a fond hope tJ.at officials of the ESI Corporation shall give effect to the provisions under Chapter VII of the ESI Act (read with other provisions) to initiate steps/rneasures as enumerated under Chapter VII in letter and spirit, as desired by the Legislature, else the very purpose of the ESI Act would \ \ JAK,J C.M.A.No.206_Nla 27 stand defeated thereby benefitting an unscrupulous employer

26. For reasons aforesaid, the Civil Miscellaneous Appeal is allowed by setting aside the order dated 03.08.2010 in E.I.C.No.81 of 2OO2 of the Employees [nsurance Court and Chairman, [ndustrial Tribunal-t at Hyderabad. Needless to state that the order dated O4.O4-2OO2 passed by Dy. Director, Regional Office, under ESI Act stands upheld. Any amounts, if paid, by respondent Unit shall be given credit to while recovery proceedings are initiated. No order as to costs. Miscellaneous applications pending, if any, shall stand closed. Sd/.I. NAGA LAKSHI,II JOINT REGISTRAR ,/TRUE COPY// SECTION OFFICER :t. The Employees lnsurance Court and Chairman, lrdustrial Tribunal-l at Hyderabad. (with re@rds, if any) 2- The Deputy Diredor, Regional Office, under ESl, Act, Hyderabad 3. One CC to Sri B. G. Ravinder Reddy, Advocate [OPUC] 4. One CC to Sri V. Surendra Reddy, Advocate [OPUCI 5. One CC to Ms. B. Neharika Varma, Amicus Curiae [OPUC] 6. Two CD Copies : t To, VHAam lHE {if4 21tlou 5t t * JUDGMENT CffiA.No.206 of 2014 ALLOWTNG THE CMA @ \31