The High Court · 2025

Counsel for the Appellants: SRI P.RAJASEKHAR Counsel for the Respondent: None appeared The Court made the following: JUDGMENT THE HON'BLE SHRI JUSTICE ANIL KI'MAR JUKANTI No. JUDGMENT: Aggrieved by order dated 28.O2.2OLL passed in E.I.C.No.46 of 2OO5 on the lile of the Employees Insurance Court and Chairman tndustrial Tribunal-I, Hyderabad (for short the TribunalJ, this Civil Miscellaneou.s Appeal is filed.

2. Heard Mr. P.Rajasekhar, learned counsel for appellants and none appears for respondent.

3. Respondent is running a fitling station under dealership and license of M/s. tndian Oil Corporation Limited. Inspecting Officer, Sri S.G.Taher, inspected the respondent establishment/ frlling station on 22.O1.2OO4, as a part of pre-implementation survey, conducted by Employees' State Insurance (for short 'ESI) Corporation, to ascertain the establishments covered under the ESI Act. The Inspecting Oflicer found that respondent filling station was using power in its buiiness unit and engaged ten employees from 01.01.2003. An inspection 2 report was prepared and recornmended that establishment/filling station is covered under provisions of ESI Act fronr the date of which the area would be covered under the provisions of ESI Act. 4' orr 18.05.2004, code bearing No.52-23 326-90 was allotted (Ex.RS). It was informed to the management of the establistrment that the provisionar date of coverage of trre filring station under the ESI Act would come into effect from 01.05.20o4. The proceedings in Form c-11 dared 1g.0s.2004 and proceedings in Form c-1g dated 16.08.2005, proposing to determine the contribution amount of Rs.16,991/- towards ESI contribution payable for the period from o1.o5.2o04 to 31.03.2005 were issued. It is these proceedings for payment of contribub.on challenged before the Tribunal. The Tribunal, after elaborately discussing the evidence and documents marked, set aside the proceedings dated 1g.0s.2004. It is this order dated 28.o2-2o I 1 in EIC No.46 of 2005 under challeno. I 3

5. It is submitted by learned counsel for appellants that inspection was conducted in the filling station and found that filling station has employed 10 members and as such, it was informed to the management that the said Unit will be covered under ESI Act, as it employed ten persons and as such, Unit was liable to pay the contribution determined i.e., Rs.16,991/- for the period from 01.05.2004 to 31-03.2005. It is further submitted that once the Unit is inspected and the report speaks that the number of employees were '10' and Unit stands covered under the ESI Act, there is no infirmity in the issuance ofproceedings in Form C-11 dated 18.05.2004 and Form C-18 dated 16.08.2OO5. It is also submitted that the Tribunal did not consider the fact that if the number of employees are 1O in the Unit, it is covered under the ESI Act and that ollicers of the ESI Corporation inspected the Unit and rightly concluded that the contribution amount is payable by the Unit for the period from 01.05.2004 to 31.O3.2O05. It is submitted that there is no infrrmity in the order passed and the proceedings issued on

18.05.2004. That Tribunal fell into error in not considering the 4 fact that the unit emproyed 10 persons, a contention is raised that the Unit made an application to be covered under the ESI Act (such application date and details are not forthcoming in the Tritrunal order). 6' There is no appeara.nce on behalf of respondent-unit. It is observe'l from the cause-rist that the notice is uncraimed. 7' cl\4A pertains to year 201s and EIC is of the year 2005. The pr,ceedings under charlenge in the EIC are dated 18.05.2()04, this court is not inclined to grant anv time and is disposing the matter on merits. 8 He.rd learned counsel for appellants and perused the record 9' Respondent is running the fi[ing station under a dealership and ricense of M/s. Indian oil corporation Limited. Inspector of ESI corporation visited the unit in 2003 and reported that provisions of ESI Act are applicable in the area(s) and sought to survey the establishment /tJnit. Inspector got f ( 5 filled Form No.l, stating that it is for statistical purposes and the unit was informed that corporation would conduct further inspection after the area in which the establishment is functioning, is notified by the Central Government covering within the municipat limits of Karimnagar under the provisions of ESI Act.

10. A letter dated 19.04.2004 is said to be received by the respondent unit from the Deputy Director of ESI corporation that the establishment has to comply the provisions of ESI Act from 01.05.2004 i.e., from the date of implementation of ESI scheme in areas of Karimnagar. That Deputy Director of ESI corporation by proceedings dated 1g.os.2oo4 informed the unit that the establishment is covered under Section 2(l2l ot ESI Act. unit management stated that they never engaged 10 or more tl'an L0 employees and hence not covered. under the ESI Act. It was contended before the Tribunal and averred that to cover the establishment under the ESI Act, verification of the salaries paid to the ernployees at the relevant point of time, 6 wage registers, employment registers and other registers have to be examined and then concluded.

11. Un<ler the provisions of ESI Act, 1948, an establishment or factory employing 10 or more employees as workmen is covered ,-rnder the ESI Act, when using electricity, or when engaging more than 20 employees as workmen without using electricit5,. It is only when these twin conditions are met with, the unit/establishment/factory is covered under the provisions of the Act. It was the specific case of filling station that it has not enga;ged 10 employees at any point of time and as such, filling station is not covered under the ESI Act.

12. It is observed from the record that inspection was conducte,l on 22.OL.2OO4, it was a pre-implementation survey conducte,l by the corporation to know the establishments which art: to be covered under Act in the areas of Karimnagar. At the time of inspection, Form No.l (Ex.Rl) and HRO-325 (Ex.R2) \vere submitted and inspection report (Ex-R3) was prepared and recommended tlle establishment to be covered under the provisions of ESI Act. f f i 7

13. Government issued notilication dated 31.o2.20o4 (Ex.R6) covering the filling station under the provisions of ESI Act w.e.f. 01.05.2004 and proceedings dated 1g.0s.2004 (Ex.RS) was issued allotting code No.52-23 326-90 and the establishment was informed about the provisional date of coverage from 0 1.05.2004.

14. Rwl and Rw2 are employees of corporation, in their evidence/statements, they stated that inspection was conducted on 22.o1.2oo4 and as on the date of inspection, respondent establishment was not covered under the ESI Act nor was declared to have been covered under the provisions of ESI Act for the purpose of compliance of the provisions of ESI Act. Government of India issued Gazette notification No.s_ 38013/38 I 2oo4-ssl dated 3 1.03.2oo4 extending the provisions of ESI Act w.e.f. 01.0s.2004 from the areas falling under the municipal limits of Karimnagar where the petitioner esta.blishment is situated. \ 8

15. ES[ authorities visited the establishment on 22.O1.2OO4, obtained Exs.Rl and R2 and prepared inspection report i.e., Ex.R3. Lr the cross-examination of RW2, it was admitted that inspecticn report was prepared prior to issuance of notification by Central Government and that no inspection was conducted subsequr:nt to notification. In other words, proceedings dated

18.05.2004 were not an outcome of any inspection report of filling station after the provisions of ESI Act extended to the unit. It lras also admitted in the cross-examination of RW2 that he issued Ex.R5 i.e., coverage intimation dated 18.05.2OO4 without verifying the records, except Ex.R3 which is prelimina.ry report. He also adnritted il the evidence that there were no other documents to show as to the number of employees working in the establishment, except Ex.Rl i.e., Form No. I obtained before the implementation of the scheme where the: respondent Unit is situated.

16. RWI in his cross-examination stated that Exs.Rl to R3 were prcducts of part of pre-implementation survey on

22.01.2OO4 and no inspection6fflre frlling station (petrol bunk) 9 after M"y, 2oo4, was conducted. It was arso stated in t].e evidence of RWI that he had not mentioned t],e particulars of employees employed in the Unit, their wages as on the date when the filling station/Unit was not covered under the provisions of ESI scheme. Rwl in his evidence stated that he verified the attendance register and wage register from 01-o1.2003 to Januar5r,2oo4, but Exs.p3, p4, p5 and p6 which are attendance and wage registers do not show to have been verilied by the Inspector. If the version of RWl that he verified the registers is to be taken as true, those records should have signatures of the inspector who inspected the Unit on 22-ol-2oo4.It is a Iinding recorded in the order of the Tribunal that no such signatures are found. Though authenticity of entries in Exs-P3 and p4 were disputed, the authenticity of Exs.P5 and p6 were not disputed. \ \ L7. It is trite law that respondent corporation has no authorit5r to make any inspection of the estabrishment/tJnitl filling station prior to the issuance of Gazette Notification (Ex.R6), area where the Unit is situated was not an area which 10 was cove::ed under the scheme provided under the provisions of ESI Act till the notification was issued. There is no finding that the Unit was inspected after 01.05.2004, in the absence of any inspectio::r being conducted after 01.05.2004, the date on which the area in which the filling station is situated was covered by the notification (Ex.R6), the Unit could not have been brought under th,: purview of ESI Act. The issuance of proceedings in Form C-11 dated 18.05.2004 is not sustainable under law. This Court dor:s not find any infirmity and no perversity or illegality is forthcoming in the order cf the Tribunal. This Court is inclined to uphold the order of the Tribunal and holds so.

18. For reasons aforesaid, Civil Miscellaneous Appeal is devoid of merits, is liable to be dismissed and is accordingly dismissecl. No order as to costs. Mis,:ellaneous applications pending, if any, shall stand closed. SD'.V.KAVITHA PUTY REGISTRAR //TRUE COPY// SECTION OFFICER To, M

1. The Employees insurance Court and Chairman, lndustrial Tribunal-|, at Hyderabad.

2. One CC to SRI P.RAJASEKHAR Advocate [OPUC] 3. Two CD Copies ) t THE S 6 1 I tllAR 2fl2[ ( t'I * () t HIGH CICURT ATED:12l0612025 JUDGME:NT CMA.No.126 ot 2015 DISMISS]NG THE CIVL MTSCELLANEOUS APPEAL c) 1 ?- 6 \