The High Court · 2025

Judgment

: I Il E f; i, t. i: :i , I I I I I 7 \ THE HON'BLE WSTICE B.R.MADHUSUDHAN RAO CIVIL MISCELLANBOUS APPEAL NO.1I95 OF 2017 JUDGMT}NT:

1. Thrs Appeal is filed under Section 82(2) of the Employees's State Ins;urance Act, lg48 (for short 'ESI ActJ by the appellant aggrievec. by the judgment passed by the Employees lnsurance Court and Chairman, Industrial Tribunal I, Hyderabad, in E.l.C.No.3S of 2009, dated 29.O8.2Ot7.

2. Apcellant herein is the petitioner and the respondents herein are the rt:spondents before the Industrial Tribunal at Hyderabad.

3.1 Petitioner has fited petition under Section 75(f )(g) of the ESI Act numbered as E.l.C.No.38 of 2OO9. Petitioner is the partnership flrrm, sitrLated at House No.L7 /377 Gooty road at Anantapur and was engrrged in the business of decortication of ground nuts, covered under the ESI Act by the respondent No.l and has been paying ESI contributions due to the ESI Corporation, during the period it employed man power and paid wages to them. Petitioner did not engage any person for wages and did not pay any wages from 2|2OOO to 9/2OO1 and April, 2OO4 to till date i.e.,

30.11 .2009. Due to change in the mode of business on account of practical r€ssorrS; no contributions to the ESI Corporation were FZ 2/ L4 BRMR, J CMA.NO. 1195 of 2017 payable at all from that time till now. IT statement for the financial year 2004-2005 is hled.

3.2 The Recovery Inspectors of ESI Corporation visited the petitioner premises on 19.11 .2OOg with attachment order of immovable properties of M/s.Meda Ramaiah Shetty Oil Mills in Form ESI CP-12 bearing No.52.Ql7718/OG dated 17.ll.2OO9 and threatened the managing partner that they would attach the properties and seal its premises unless the entire amount is paid. The managing partner of the petitioner informed the respondents

that the name and style of his firm is M/s. Meda Ramaiah Shetty Oil Mills but not M/s.Meda Ramaiah Shetty Oil Company and the petitioner is not at all liable to pay contribution to the ESI Corporation sinee April 2/2OOO to 9l2OO1 and 4/2OO4 to till date i.C, 30.1 1.2009 and no notice or orders or certilicates are served on them or on ex-managing partners. The Recovery Inspector has threatened the petitioner to seal the premises if the entire amount is not paid on the spot. Petitioner was not in a position to pay the entire amount on the spot and obtained demand drafts bearing Nos.474751 and 474752 dated 19.11.2009 for Rs.25,OO0/- each in favour of respond.ent No.2 drawn on Karuru Vysya Bank, Ananthapur branch. The Recovery Inspector has compelled the managing partner of the petitioner to issue a post dated cheque for Rs.91,611/- bearing Cheque No.960889, dated 30.11.2OO9 in r' .// 1 3lL4 BRMR, J CMA.NO. 1195 of 2Ol7 favour o:. the Recovery Officer, drawn on ING Vysya Bank, Ananthapur, under the threat of sealing the premises. The action of the respondents and their Recovery lnspector in attaching the propertie,s of the petitioner, in Form ESI CP-L2 bearing No.52.Q/ 77 t8-O6 dated 17 .lr.2OO9.

3.3 Tht: petitioner has instructed the respondent No.2 not to present the said cheque for encashment as per his telegram dated

26.L1.2OO9 as funds were insufficient and prayed to set aside the attachment order dated l7.Ll,zOOg with a direction to the respondents to return the DD amount of Rs.5O,00O/- (two in number) with interest at the rate of.25o/o per annum .

4. Rer;pondents have filed their.counter and contended that as per the provisions of the Factories Act, 1948, the petitioner has to submit a closure notices to the Inspector of Factories and all other statutory authorities, submit all relevant registers and records for inspection for certifying the closure that no claim will be raised by the respondents. But he failed to do so in spite of giving several opporturLities. The Income Tax Returns for the assessment year 2OO4-2OO5 does not indicate that the factory was closed but it proves that it is doing business. Petitioner submitted returns for one year only out of six to seven years. Respondents did not jump to inltiate recovery steps all of a sudden, but respondent No.1 has tr: t,r i. I I' 4/t4 BRMR, J CMA.NO. 1195 of2Ol7 periodically issued C-18 (adhoc basis) notices, orders under Section 45-A of ESI Act and then issued several recovery certificates numbering about 7. A11 the recovery certificates relates to the demands for contributions prior to the alleged closure of factory. Respondents have all the postal acknowledgment to show that both tJre partners have received the notices and the petitioners are trying to make mockery of the entire legal action taken against them by the respondents. Respondent No.l has issued notice in Form C-18 giving opportunity of personal hearing and 45-A orders were issued when no compliance was forthcoming following C-19 recovery certificate. At every stage copies were sent to the petitioner, they received the same, but failed to comply. The steps taken by the respondent Nos.l and 2 are legal and valid, followed tl1e principles of natural justice and the petitioner is liable to pay Rs.91,611/-, similarly they are not entitled for refund of Rs.SO,OOO /- and prayed to dismiss the same.

5. The Tribunal has framed the following issues:

1. Whether the attachment order,s passed by the second respondent, dated: l7.ll-2}Og is against to the principles of natural justice and consequently liable to set aside the same?

2. To direct the respondents to refund art amount of Rs.5O,O00/- recovered from the petitioner along wlth 25o/o interest p.a.?

3. To what relieP .1 s lL4 BRMR, J CMA.NO. ll95 of 2Or7

6. Managing partner of the appellant - petitioner is examined as PWl and got marked Exs.Pl to P7. Social security officer (Legal) of the respondents is examined as RWl and got marked Exs.Rl to R15.

7. The: Tribunal, after analyzing the evidence adduced by the parties and after going through the documents thereon, has dismissecl E.l.C.No. 38 of 2OO9 on 29.08.2017.

8. Learned counsel for the appellant submits that the Tribunal failed to appreciate the evidence that the appellant has not paid the amount as there is no work for the relevant period, that prior to the attachment order dated 17.IL.2OO9 no notice or order is served on the a,rpellant and that the respondent failed to produce any acknowleCgment of service. Respondents have passed the order under Section 45-A on the Adhoc basis assessment and without verifying lhe actual records under Seetion 44 of the Act; by giving reasonab..e opportunity to the appellant by serving notice. The Tribunal lailed to appreciate that there is no notice or order served on the appellant prior to the alleged warrant of attachment of immovabJ.e property and also faited to see that the appellant did not engagie any person for wages from 2|2OOO to 9 /2OO1 and April 2oo4 to 30. ll .2oog. The Tribunal has also failed to appreciate that thJ. appellant is Meda Ramaiah shetty oil Mills, whereas the )\ t1 J, 6/t4 BRMR, J CMA.NO.1195 of 2Or7 respondents served the attachment order on M/s.Meda Ramaiah Oil Company. RWl has admitted in his cross examination that he has not filed any acknowledgment in respect of any notice or order pertaining to the present dispute. Findings arrived by the Tribunal are erroneous and against the guidelines. In support of his contentions, he relied on a decision in the case of Royal Talkies, Hyderabad and Others Vs. Employees State, Insurance Corporationl.

9. Learned counsel for the respondents submits that the appellant - petitioner has not made any application about the closure of his business so also there is no communication from the appellant for change of the company, there is no evidence that the Oil company is closed, IT returns for. tlre period 2OO4-2OOS ar'e not filed and the Tribunal has properly appreciated the evidence of the parties by taking into consideration the documents marked thereon, rightly dismissed the E.I.C. and no interference is called for and prayed to dismissed the appeal.

10. Heard learned counsel on record and perused the material.

11. Now the point for consideration is: whether the impugned order passed in E.I.C.No.38 of 2OO9 dated 29.O8.2OI7 by the rriaunal-f lt Employees Insurance Court and Chairman, Industrial ' (tgztt4 scc 204 .11 7 lt4 BRMR, J CMA.NO. 1 L95 of 2Ol7 Hyderabzrd suffers from any illegality, perversity and if so, does it require interference of this Court?

12. Ex.Pl is the warrant of attachment of immovable property of the petit:oner in Form No.ESI CP- 12, which attachment order is also givee to the managing partner i.e., Sri M-Chandrasekhar. The Companl, address is D.No.17 1377 Gooty Road, Ananthapur, whereunler they were prohibited and restrained until further order from transferring or changing the scheduled property in any way. Ex.P2 is the Panchanama dated 30.1 1 .2OO9 issued by ESIC to the petitioner

13. There is no dispute with regard to issuance of Exs.P3 to P5 as the appellant - petitioner has stated that he issued them in favour of the respondents. Appellant - petitioner has issued a teiegram to the respondents on 26.LL.2OO9 under Ex.P6 to postponr: the presentation of cheque bearing No.96O889 dated

30.11 2CtO9 for Rs.91,611/- due to insufficient funds in the bank. Ex.P7 is the statement of income and tax pertaining to the Firm uide PA\[.No.AACFM2753J, the Firm narne shown therein is Meda Ramaiah. Setty Oit Mills which is for the assessment year 2OO4-

14. Managing partner of the appellant stated in his cross examination that he has not filed letter of intimation of closurq p.f I \\ t ;I 'l 8lt4 BRMR, J CMA.NO.1r95 of 2017 (-i the Unit with effeet from April, 2OO4. Witness adds that he has given a letter to the employee of the ESIC so also he has not filed any document to show that the company was closed from February 2OO0 to September 2001. As per Ex.P7, the petitioner-Company was working. Witness adds that for the purpose of Income Tax he has shown the statement and he has not liled Income Tax particulars except 2OO4-2OO5. PWl denied the suggestion that appellant is liable to pay Rs.91,6lL/- and they are not entitled for Rs.50,OOO/-.

15.1 Ex.Rl is the Notice in Form C -18 (Adhoc basis) issued by the ESI Corporation, Hyderabad to the appellant - petitioner, dated 01.12.1999, whereunder it is proposed to determine and recover the amount of contribution payable in respect of employees of the fdctory established under Section 45-A of the Act for the period from 01.10.1998 to 31-03. lggg and the contribution amount payable is Rs.5,5771- and also directed to show cause within 15 days as to why assessment should not be made absolute and to appear before them in person or through an authorized representative.on 22.12.1999 at 11 a.m. with necessary documents to explain the case.

15.2 Ex.R2 is also a similar notice dated 15.01 .2OO2 for the period from 2|2OOO to 9/2OO1 and the contribution amount is / ,n 9lL4 BRMR, J CMA.NO. 1195 of2Ol7 Rs.46,4751- and to show cause within 15 days as to why assessm(:nt should not made absolute and to appear before them in person or through an authorised representative on 25.O2.2OO2 at 1 1.a.rrr.

15.3 Ex R3 is C-18 Actual basis notice dated 11.08.2003 stating that the ,:ontributions are not paid as per the provision of law and as per the Inspector Report dated 11.07.2OO3, called upon them to pay the c:ontribution within 15 days under intimation to the office failing which they will be constrained to cause the same to be recoverecl under Section 45-C to 45-l of the Act.

15.4. Ex.R4 is the adhoc dated 17.O5.2OO7 issued to the petitioner and to il.s managing partner viz., Meda Chandrasekhar and the contribution is from O1.03.2OO5 to 31.03.2007, contribution aniount is Rs.7,24Ol- to show cause within hfteen days as to why assessm€:nt should not be made absolute and to appear before them in person or through an authorized representative on 2l.06.20r)7 at 02.45 p.m.

15.5 Ex.RS is the order passed under Section 45-A of ESI Act dated 19.03.2OO2 issued to the appellant - petitioner determining the contribution amount of Rs.46,475/- for the period from 02l2OOO to 09 l2OO 1 together with the interest of Rs.7 ,72O / - up to

28.02.201)2 \ I to/14 BRMR, J CMA.NO.l195 of 2Ol7 (-\

15.6. Ex.R6 is the order under Section 45-A of ESI Act dated

27.06.200T wherein it is ordered that contribution amount of Rs.7,24Ol- for the period from O1.03.2OO5 to 31.03.2007 are finally determined under Section 45-A of ESI Act and ordered to pay within a period of 15 days from the date of the order failing which the amount shall be caused to be recovered under Section

45.C to 45.I of ESI Act. L5.7.. Ex.R7 is the recovery certificate dated L7.O5.2OO0 for the period from 01.10.1998 to 31.03.L999 issued by ESIC to the Appellant - petitioner. Ex.RS is the recovery certificate dated

23.O4.2OO2 for the period from 2/2OOO to 9l2OO1 and the total amount worked out is Rs.54,195/-, stating that the above said amount may be recovered under Section 45-C to 45-I of the act.

15.8. Ex.R9 is recovery certificate under Section 45-C to 45-I of ESI Act, in Form C-19 dated 23.IO.2OO3 for an amount of Rs.1S0/- in respect of employees for a period from 2OOl to 2OO2 plus interest of Rs.5/-. Ex.R1O is the notice in Form D.18 dated

11.O8.2OO3 for the wage period O4ll999 to 06/2003 and called upon them to appear in person or through an autho rizedagent on

19.O9.2OO3 at 1O.3O a.m.

15.9. Ex.R11 is the order passed under Section 85(B) of ESI Act, datedZ9.10.2003 against the appellant - petitioner for the p7iod // tr/14 BRMR, J CMA.NO. I 195 of 2Ol7 0411999 to 06/2003 and ordered to pay an amount of Rs.377/- within 3() days from the date of the order failing which amount will be recovt:red under Section 45(C) to 45 (l) of ESI Act. Ex.R12 is the recovery certificate in Form D19 dated 16.12.2OO3 for recovery of Rs.377 /- .

15.10.Ex:.R13 is the notice in Form C18 dated 11.08.2003 for the period fiom O4lL999 to 0612003 directing to deposit interest of i' ,: Rs.251/-. Ex.R14 is the recovery certilicate of Interest in Form C19 dated 2?;.LO.2OO3 for an amount of Rs,215/- for the period from 04lL999 to 0612003. Ex.R15 is the recovery certificate in Form C- 19 datec 16.08.2007 for a period from 01.O3.2OO5 to 31.O3.2OO7 for an ar:rount of Rs.8,3O8/-.

16. RV/l has stated in his cross examination that Ex.R1 was adCressed to M/s. Meda Ramaiah Setty Oil Company, L7-377 Gooty, Ananthapur. Witness adds that M/s. Meda Ramiah Setty Oil Mills and Meda Ramaiah Setty Oil Company are one and the same and the name has been changed to M/s. Meda Ramaiah Setty Oi,. Mills. The Corporation has not filed any documents in respect of the same as it was not intimated. and no postal acknowlt:dgments are filed for service of C-18 adhoc notices i.e., Exs.Rl t:o R3, R10 and R13, 45-A orders i.e., Exs.RS and R6, recovery certificates - Exs.R7 to R9 and R14. Served postal ) ) i I A t2/14 BRMR, J CMA.NO.I195 of 2Ol7 acknowledgement dated 05.O6.20O7 for R4 is filed. ESI inspector has visited the petitioner's unit. As per Ex.R3, C-18 [actual basis] the contribution on omitted wages is Rs.l8O/- at the rate of 6.50/o for the period 2OOI-2OO2 is Rs.2,756/-. RWl denied the suggestion that Ex.Pl warrant of attaehrnent of immovable property is illegal and that Meda Ramaiah Setty Oil Company is different from M/s. Meda Ramaiah Setty Oil Mills and. that the petitioner (appellant herein) is not liable to pay any contribution and they are liable to refund Rs.5O,000/- obtained under Exs.P3 and P4 with interest.

17.1. Ex.Pl is the warrant of attachment of immovable property dated 17.Ll.2OO9 issued against the appellant as he failed to pay a sum of Rs.1,4l,6LL/- which includes further .interest up to

13.11.2009 in respect of certificate No.AP/lNS.ll52-7718-06 dated

13.05.1998; 17 .O5.2Oo0 (Ex.R7); 27 .12.2OOO; 23.O4.2OO2 (Ex.R8);

23.I0.2OO3 (Ex.R9), \6.L2.2OOS (Ex.R12) and 16.08.2OO7 (Ex.R15).

17.2. Exs.R7 to R9, R12 and R15 are the recovery certificates issued by ESIC to the appellant - petitioner to their address i.e. 17 1377, Gooty Road, Ananthapur. The same address is also shown in the cause title of the appeal with regard to the appellant- petitioner. The admission made by the appellant in his cross examination is sufficient to come to a conclusion that they l1ave t3/14 BRMR, J CMA.NO.1195 of 2017 not fi1ed letter of intimation of closure of the Unit with effect from April 2OO4 so also they have not filed any document to show that the comlrany was closed from February 2OO0 to September 2001. Further as per Ex.P7, the appellant - petitioner company was working. As rightly observed by the Tribunal that the appellant has failed to challenge orders passed under Section 45-E of the Act uide Exs.R5 and R6.

18. In Royal Talkiesl the assessment of quantum of the employe::s'contribution has been made on an adhoc basis, on the strength of Section 45(A) without hearing.

19. E::.R5 is for the period from 2|2OOO to 09l2OOt the amount is Rs.7,'72O1- and Ex.R6 is for the period from O1.03.2OO5 to

31.03.2O07, tirre amount is Rs.7,24Ol-. lt is mentioned in Exs.RS arld R6 l.hat the employer failed to respond to the notices and failed to app()ar before ESIC, for opposing the determination of contribution and that the employer has not offered any objection or opposition to such calculation even after affording sufficient opportunity. The decision in Royal Talkiesl is not applicable to the case on hand as the facts differ.

20. Ttre Tribunal has properly appreciated the evidence adduced by the parties coupled with the documents marked thereon by" I1 :i : t4l14 BRMR, J CMA.NO.l195 of.2Ol7 giving justifiable reasons from paragraph Nos.14 to lZ. No substantial question of law is involved in the appeal

21. In view of the reasons above, this court is of the view that there is no illegality or perversitJr in the older passed by the Tribunal and that the appellant-petitioner has not made out any case to set aside the order dated L7.Ll.2oo9 - Ex.Al so also the Tribunal has rightly negatived the prayer for refund of Rs.5O,000/-. No interference is called for, appeal deservers no consideration and the same is liable to be dismissed and his accordingly, dismissed. ,2t: CMA.No.1195 of 2O17 is dismissed. As a sequel miscellaneous application/applications pending, ifany, shall stand closed. No costs. SD/- T.VIJAY DEPUTY //TRUE COPY// SECTION OFFICER To, 1 The Employees lnsurance Court and Chairman, Hyderabad, Tribunal-l at

2. One CC to Sri P.Venkanna, Advocate [OPUC] 3. One CC to Sri Pasham Srinivasulu, Advocate IOPUC] 4. Two CD Copies ry, NVB/PSL s I .... -*:=::'? -.':r't.il tl' i'r'- : r ?4 I g rr8 2020 * HIGH COURT DATED i24l0gl2025 ORDER CMA.No.'l 195 of 2017 DISMISSING THE CMA *\ \b