Heard Mr v. Raghuveer, learned couri s rl representing

Judgment

This Civil Miscellaneous Appeal is filecl : ggrieved by the order dated 11.1O.2013 in E.l.C.No.2O of 2Oi8 on the file of the Employees Insurance Court and Chai .. ran lndustrial Tribunal I (for short, ,the Tribunal,), Hyderabrr 1

2 . Heard Mr. V. Raghuveer, learned couri s rl representing Ms. K. Udaya Sri, learncd counsel for r ppellant, and Mr. K. Hari I{ishan, Iearnecl counsei representing Mr. P. Ra.jasekhar, iearned counsel for respor r ent Nos. 1 and 2

3. Appellant herein is petitioner, resil ondents are respondents before the Industrial Tribunal. Hotel, started in January, 2OO5, claims that i persons and at no point of time, number of tr more than 18. That four (4) security pe depioyed by M/s. United Security Limited, (ir ISI Code No.52-238i6-tO1). A small portion o1 given on lease to M/s. pride of Hydera66d f Appeilant, a employed 1B rployees were -sonnel were was issued a he Hotel was rr running a 7 2 JlK J C.MA.No 739 2011 restaurant, the case of appellant is, it is no way concerned with their business. The Inspector(s) of Employees State Insurance Corporation (for short, 'the Corporation') visited the premises on 13.02.2006 and found that the appellant employed 18 persons fot wages and two out of 18 persons, were drawing a salary of Rs.7,500/- per month (they were not included in the list of 18 ernployees). That, Corporation considered four security personnel, as if they were also employed by the appellant and held that Hotel is covered under Section 1 (5) of the Employees State Insurance Act, 1948 (for short, 'the Act) [total employees 18, two uncovered, four security personnel, in all (I8-2:16, 16+4=2O)1. The Inspector(s) recommended for coverage from Ol .02.2006 to

30.09.2006. A show cause notice under Form C-18, dated

28.05.2007 was issued and 2a.O6.2O07 was fixed as the date of personal hearing. Appellant neither attended nor submitted statement of contributions. Corporation passed order dated 19.12.2007 under Section 45-A of the Act for an amount of Rs.42,9OO /-. Tribunal by its order dated 1 f . iO.20 13 held that appellant-Hotel employed four employees i.e., security personnei and they ane covered -) JAK, J C.M 4.No.739 2011 under the Act. The said order is under cha11: rge in this Civil Miscellaneous Appeal. 4 . LeeLrned coun sel for the appellant r ubmitted that appellant srarred the business in January, i0O5, engaging 18 employees and that at no point of tim: the appeilant engaged more than 18 employees. It is fur her submitted that M/s. United Security Services providr r four security personnel and th" ...rploy."s of M/s. ll rited Security Services were already covered under the ., .ct with Code No.52-238 16-i01. It is a-lso subnitted that ( into error and mechanically passed the orporation fell rrder without considering the fact that four securiq. personnel of M/s. United Security Services rn ere already ;overed under the Act and they could not have been :onsidered as employees of appellant.

5. It is submitted that M/s. United Se: rritv Services addressed a letter to the appellant-Hotel :larifying the security coverage and cha-rges (Ex.p10). t is further submitted that when the number of emplovr:r s are lg, the appellant is not liable to pay_ .gontribution r rder the Act. :I 4 JAK, J C.M.A.No 739 2014 Learned counsel invited the attention of this Court to Section 2(l2l of the Act and submitted that it is only when 2O or more persons are employed in preceding 12 months, the Unit would be covered under the Act. It is further submitted that in spite of specific plea, Tribunal did not consider the same in proper perspective and held that four security personnel are employees of the appellant and further held that contributions have to be paid

6. Learned counsel invited the attention of this Court to letter dated 13.O2.2006 (Ex.P1) addressed to the Inspector of Corporation. On the basis of letter, it is contended that the Hotel Management informed that the four security personnel deployed are covered under ESI Code No.52-23816-iO1 Learned counsel further invited the attention of this Court to certificate(s) of registration annexed at page Nos.26, 27, 30, 31 and 32 ar-d contended that in all the certificates, nowhere it is stated that the number of employees were more than 18. It is pointed out that once the number of employees is below 20, the appellant-Hotel cannot be asked to pay the contributions. 5 JAK J C.M.A.No.739 20t 4 7 . Reliance is placed upon the judgme .l .s reported 1n Food Corporation of India v. pr,r rident Fund Commissioner and Othersr and Bharat Hea ry Electricals Limited v. ESI Corporation2. It is contr: Lded that the Commissioner has to exercise al1 his po r 3rs to collect e vidence and collate all material before comi rg to a proper conclusion. It is further contended that a z ir opportunity has to be given to the appellant before c t termining the liability. B. On the other hand, learned counsel for respondents Corporation submitted that in the letter da t: though it is mentioned that four security .; I 13.02.2006, :rsonnel were covered under ESI Code No.52-23816-lO1 , eI United Security Services, that in the cross : otted to M/s. lamination of PW.2, (accountant of the Hotel), he deposed r1 at he did not file aly document showing the trSI Code Nunr rer allotted to four security personnel. It is further submitte I that in the cross exatnination of pW.2 it is stated that t re appellalt- Hotel did not furnish the code number of th,r four security ' { tooo) I scc 68 ' (zooe) : scc zaz i I I I l 6 J'1K' J C.M A.No.739 2014 guards. Learned Standing Counsel further invited the attention of this Court to the cross examination of PW.3 (Hotel Accounts Manager) and submitted that PW.3 had deposed that he was not aware as to whether any insuralce/code number was allotted to the four security guards

9. Learned counsel further submitted that the certificates of registration at page No.30 (from O 1 .O 1 .2009 to

31.12.2011), Page No.31 (from Ol.Ol.2Ol2 to 31.12.20121 and page No.32 (from 01.01.2013 to 3l .12.2013) pertain to different years issued under the Andhra Pradesh Shops and Establishment Act, 1988 (for short, 'the Act, 1988J. 1O. Learned Standing Counsel for the respondents Corporation submitted that the Tribunal considered the evidence of PWs. I to 3 on behalf of petitioner and RWs.1 and 2 on behalf of respondents. That the Tribuna-l considered the documents marked as Exs.Pl to P10 and Exs.Rl to R9 and C- I I intimation, show cause notice, C- 18 (for which there was no response from the Hotel Managemen.t) was constrained to uphold the order passed under Section 45-A 7 JAK, J C.ll A No.739 2011 ol the Act determining the coirtributions as l',;.42,900 l- for the period from 01.O2.20O6 to 30.09.2006. 1 1. Heard learned counsels, perttsed the recl rl, considered the rival submissions

12. Appellant is a Hotel, started its busine s; in Januar5r, 20O5, obtarned a certificate of registration, unc er the Andhra Pradesh Shops and Establishments Act, 19U l Registration is valid from 01.0i.2005 to 31.12.2006 In t r: certificate of registration, the number of employees s lown is 18. Inspectors of the Corporation visited the ap: rllant unit on

13.02.2006. It is observed from the visit ncl: (Ex.RS) that names of 1B employees found in the AttendarL e Register, on ph1'sical verification, tallied q,ith the names Further, four security personnel u,ere also working in the F otel (deployed b5r M/s. United Security Services), the said n; e is signed by ESI Inspector ald a copy of tire said note is r:ceived by one Mr. Ramana, General Manager.

13. Ex.R6 is a notice in Form C-11 issued I I the Regiona-l :number of Director, ESI Corporation, it reflects r, I 8 JAK, J C.MA.No.739 2014 employees as 20 and the proprietor is Md. Saleem. It also reflects that appellant-Hotei was allotted a Code No.52- 25472-t tt.

14. Ex.R7 is letter dated 24.O5.2OO7 of Deputy Director, it is stated that the Unit is covered under Section 39 of the Act read with Regulation 31 of the ESI (General) Regulations, 1950, and that, contribution has to be paid within 21 days, after the expiry of "r"h *"g" period (month).

15. Unit has to submit declaration forms in respect of all coverable employees in the branch office concerned. It was also mentioned in the letter that delay or default in payment of contributions would attract Section 85 of the Act, punishable rvith fine or imprisonment or both, besides for delay in payment of contributions, interest and damages can be levied. There was no response to notice in Form C-11 and letter dated 24.O5.2007

16. Notice in Form C-18 was issued on 28.05.2007, it was mentioned that the appellant-Hotei was due an amount of Rs.42,9OO/- for February, 2006 to September, 2006 9 JAK, J C lt{ A \o.7t9 2011 Appearance of the representative was Iixed on )3-06.2OO7 at 11:OO A.M., there was no cornpliance. Notice i r Form C 18 was issued on 07.12.2OO7, marked as Ex.P6. Order dated

19.12.2OO7 unde r Section 45-A of the Act cam r to be passed by the Assistant Director for payment o1' rontributions totaling to Rs.42,900/ -. 17 . Order u,as challenged before the Tribunal. Ihe Trlbunal uideits order dated 11.10.2013 at paragraph I'lrs.23 and24 held as follows " . - .23 . In the facts and circumstance d s above and findings therein, I find that the ,: of RWs 1 & 2 corroborated with the evidenc : 2 & 3 and supported by Exs.Pl to P1O and l to R9 well established that the petitioner is runninq w-e.f. 01/2005. RW1 conducted a s lhe petitioner establishmt:r check of 30.O2.2006 and submitted Ex.P1lEx tl trx.R4, trx.R2, to the Regionai Officc, recommcnding coverage. At the time of ins Mr. Ramarao, who was present ald receivec Ex.R5 and endorsed the same on the face cf The petitioncr as per his own letter under Ex the letter of trx.P8 and Ex.P10 established t petitioner employed i8 employees out of tlr are out of coverage limit and m/s. United S,: Limited deployed four security guards in t employees are working in the premise petitioner. After excluding two non-cl employees, there are 2O employees. The p: is the supervision and control over t employees, rvho are working in the premist'r petitioner. 'lhe ESIC issued Ex.R6 For r intimation covering thei:rytitioner establi :usscd idencc :f PWs ;x.s.R1 L Hotel rrprise ESIC rcction :opy of trx.R5. P2, on )at the m two urities 'tal 22 :f the ,erable itioner 'le 20 of the c-11 6j r n?' I i0 JlK, J C.M.A.No.739 2014 w.e.f. 01.O2.20O6 and allotting code no. 52-25472- 111 and noting employees employecl 20. Accordingly the petitioner is covered under the due course of law and due verification of the records. Fur[her, established that the Respondent issued Ex. P4 / Ex. R7 letter dated 24 .O5 .2OO7 demanding to pay the defaultcd contributions of Rs.42,9OO/-. Immediately on 28.O5.2007 issued Ex.P3/Ex.R8 Form C-18 notice proposing to determine the contribution of Rs.42,9001- for the period from 01.O2.2006 to 30.09.2O06 i.e., from the date of coverage. As the petitioner did not appear for personal hearing in person or through authorizcd representative on 28.06.2007. The ESIC constrained to issued an order under Sec.4S-A under Ex.P7/Ex.R9. The circumstances clearly goes to establish that the ESIC followed the principles of natural justice afforded reasonable opportunity for hearing by issuing Ex.P3lEx.R8, Ex.P4lEx.R7 and Ex.P6, even then there is no response from the petitioner. Therefore thc ESIC constrained to issue Ex.P7/Ex.R9 order under Sec.4S-A and demanded to pay Rs.42,900/- for the period from O 1.02.2OO6 to 30.09.2O06. There is no any illegality or violation of principles of natural .iustice, while bringing the petitioner establishment under coverage or issuing the order under Sec.45-A of ESI Act. Therefore, lhe Ac[ of the Respondent in covering the petitioner establishment under the ESI provisions ald Regulations and issuing order under Sec.45-A is legai and valid. The petitioncr is liable to pay thc contributions as determined and demanded on "under Ex.P7/Ex.R9. Accordingly these issues are settled against the petitioner and in favour of the Respondents. "

18. Ex.P5 is letter dated 2l .Ol.2OOa addressed to the Director, ESI Corporation, by the Proprietor of Unit to cancel j I 1j I ! 1l (:.lvl.A JAK, J 2014 ^'a.739 the recovery proceedings, stating that, 20 er::loyees is an incorrect figure ancl that there ale only 14 emJ 1 t-yees

19. Ex.P10 is a cop5. of letter dated 05.1O.2i12 addressed b1, M/s. United Security Services. On a 1r, rusal of the contents of the letter (addressed by the author; ed signatory), it is apparent that it is not al agreement. i:citals of the letter indicate that M/s. United Security Ii rrrices is an agency, with certain standards. Contents do rr t indicate the perioC for which services are provided, numbcr of employees deployed, nor the date from which employee i .rre deployed and the rvage/rate per rnonth agreed upon

20. In the letter dated 13.O2.2A06 addre ssed by the Ceneral l,{anager, it is mer-rtioned that our security personnel zrre deployed at appellant-Hotel b r M/ s. United Security Serviced ald are covered under the El Code No.52- 238 16- 10 1 . No proof is adduced that an rgreement is entered between M / s. United Security Ser r ces and the appellalt-Hotel. In the absence of an agree t rent, a mere letter cannot be the basis to hold that they are r Lot employees I t2 JAK, J C ltl A No 739 2011 of the Hotel. Such self serving Ietters have no evidentiary va lue

21. On a perusal of the application filed under Section 75(1)(9) of the Act before the Tribunal, it is observed that neither any pleading nor an averment with respect to the agreement between the Hotel Management and M / s United Security Services for deployment of four Security personnel is adverted to. The contention that Ex.P10, dated 26.12.2OO5, has to be considered as an agree mcnt, cannot be upheld for the reasons stated supra.

22. lt is tritc law that a person who approaches a Court or a Tribunal has to plead and has to adduce proof. A mere letter cannot be given the colour of an agreement. Though it is contended that at the bottom of Ex.P10, it reflects as 'accepted", the same does not merit acceptance, as it is not an agreement, but merely a letter. When considered, the entire exercise seems to be to wriggle out of the contributions to be paid under the Act. l3 J1K, J CMAio739 2011

23. In the cross examination of PWs.2 anrl I , employees of the Hotel, ther clearly deposed that four ;:curity gr-rard s rverc allottcd. Documents rclied Llpon ar( certificates of registr:rtion under the Shops and Establishrr r nts Act, 1988, they do not come to the rescue of the ap 1 ellant, as the purport of registration uncier the Shops alc[ I ,stablishrnents Act, 1988 is different. It is not in dispute that prior to passing of the order under Section 45-A of tL r Act, notice in Form Cl-1 1 u,as issued on 08.03.2006 and nc t ce in Form C 18 was isstted on 28.05.2OO7. A letter (Ex.P4 ras addresseci on 24.05.2007 and a representation rvas (F: .P5) was also given on 01.O8.20O7. The proprietor subm t ,ed that there u'ere not more than 18 employees and hence, ,roceedings be dropped. A final notice in Form C 18 r,,Ls issued on 07 .12.2OO7 , date of personal hearing was i1 I o given. The opportunit], of personal hearing was not a.rai1,r I order under Section 45-A of the Act was passed on 19.12.2( 07.

24. On a perusal of the order of the Tribuna it is observed that the Tribunal ponsidered the entire facts rr rd issues in a proper perspective, Tribunal considered thr evidence of I I I T I l i I I I I I i l4 JAK,I C.M.A.No.739 20lt PWs.1 to 3, RWs. I and 2, the documents marked i.e., Exs.Pi to Pi0 and Exs.Rl to R9.

25. This Court does not find any infirmity or iliegality in the order ol the Tribunal. The appeal is devoid of merits, liable to be dismissed

26. For reasons aforesaid, the Civil Miscellaneous Appeal is accordingly dismissed. There shall be no order as to costs. Miscellaneous applications pending, if any, shall stald clo scd SD/- R.KARTHIKEYAN JOINT REGISTRAR //TRUE COPY// ECTION OFFICER To,

1. The Employees lnsurance Court and Chairman lndustrial Tribunal-1, at Hyderabad. (with records, if anY)

2. One CC to Ms. K. Udaya Sri, Advocate [OPUC] 3. One CC to Mr. P. Rajasekhar, Advocate [OPUC] 4. Two CD Copies Kam/PS L @ HIGH COURT DATED:1110412025 ( JUDGMENT CMA.No.739 of 2014 ,,; .-, ,/!,, : ,, ii5 . tr ?il25 DISMISSING OF THE CMA tD