Allied Industries Proprietor, Bajrangbali Steels v. The Employees State Insurance Corporation Rep. by its Regional Director 143, Sterling road, Madras - 342

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 20.06.2008C O R A MTHE HONOURABLE MR.JUSTICE P.R.SHIVAKUMAR C.M.A.No.846 of 2001Allied IndustriesProprietor, Bajrangbali Steelsby its Partner, 1, T.H.RoadMadras - 600 001...AppellantVs.1) The Employees State Insurance Corporation Rep. by its Regional Director 143, Sterling road, Madras - 342) The Collector of Madras Kamaraj Salai Chennai - 600 005...RespondentsThis Civil Miscellaneous Appeal has been filed under Section 82of the Employees' State Insurance Act as against the order dated29.08.2000 passed in E.S.I.O.P.No.41 of 1990 by the learned FirstAdditional Judge, City Civil Court, Madras and set aside the same.For Appellant: Mr.R.Yasod Vardhan, Senior Counsel for Mr.S.VenkataramanFor Respondents: Mrs.S.Jayakumari (for R1) Mrs.P.Shanthi Rakkappan Govt. Advocate (for R2)J U D G M E N TThis Civil Miscellaneous Appeal is directed against the orderdated 29.08.2000 passed by the E.S.I. Court (First Additional Judge,City Civil Court, Madras) in E.S.I.O.P.No.41 of 1990. The competentauthority under the Employees State Insurance Act passed theimpugned order dated 23.02.1989 fixing the contribution to be paid https://hcservices.ecourts.gov.in/hcservices/ by the appellant at Rs.1,11,311.22P for the period from April 1985to March 1987. The said determination of the contribution waschallenged before the E.S.I.Court by the appellant herein on theground that there were immediate employers, namely contractors andthe amount paid to the contractors were taken by the authority underthe Employees State Insurance Act to be the wages paid to theemployees. It was also the contention of the appellant hereinbefore the E.S.I.Court that the workmen employed by the immediateemployers (contractors) were earning more than Rs.1,600/- per monthand hence they were not covered by the scheme of insurance under theEmployees State Insurance Act and that this aspect was not properlytaken into account and considered by the authority concerned.However, the E.S.I.Court dismissed the above original petitionholding that the records furnished by the appellant herein were notgenuine and were prepared for the purpose of the case. The saidorder of the E.S.I.Court dismissing the E.S.I.O.P.No.41 of 1990 ischallenged in this Civil Miscellaneous Appeal.2. This court heard the submissions made by the learned seniorcounsel appearing for the appellant and the learned counselappearing on behalf of the respondents. The materials available onrecord were also perused.3. It is the contention of the learned senior counsel for theappellant that the order of the competent authority under theEmployees State Insurance Act as well as the order of theE.S.I.Court are vitiated because of the non-impleadment of thecontractors who are alleged to be the immediate employers of theworkers. It is the further contention of the learned senior counselappearing for the appellant that at least the contractors shouldhave been summoned to verify the fact whether they are the immediateemployers or not and to fix the liability of the immediate employersto reimburse any contribution to be paid by the principal employer.The learned senior counsel for the appellant also contended that theorders of the authority under the Employees State Insurance Act aswell as the E.S.I.Court are against the observations made by theHon'ble Supreme Court in Food Corporation of India vs. The ProvidentFund Commissioner and others reported in 1990(1) SCC 68 and inBharat Heavy Electricals Limited Vs. The Employees State Insurancereported in 2008 (3) SCC 247. According to the contention raised bythe appellant, when it is pleaded that there is an immediateemployer, the determination of the contribution to be made by theprincipal employer should have been made either after impleadingimmediate employer or after summoning the alleged immediateemployer. In view of the said contention, the short question thatarises for consideration in this appeal is:-"whether the order of the first respondent dated 23.02.1989is liable to be set aside on the ground that the allegedcontractors have not been impleaded or summoned beforedetermining the contribution to be paid by the appellantherein?". https://hcservices.ecourts.gov.in/hcservices/ In Food Corporation of India Vs. The Provident FundCommissioner and others wherein a similar question arose, of-coursewhile dealing with the liability of the principal employer to paycontribution under the Employees' Provident Funds and MiscellaneousProvisions Act, 1952, the Hon'ble Apex court made the followingobservations." 6. We have carefully perused the Commissioner's orderand also the order of the High Court. The total amountordered to be payable comes to about Rs.22,48,000/- inrespect of the employees of depots namely: Udaipur, Jaipur,Ajmer, Badmer and Sawai Madhopur. The Commissioner has alsodirected the Divisional Officer, Jaipur to deposit theprovident fund contribution i.e. Rs.18,72,194/- to the Fundbeing maintained by the trustees of the establishment. It isindeed a large amount for the determination of which theCommissioner has only depended upon the lists furnished bythe Workers' Union. It is no doubt true that the employerand contractors are both liable to maintain registers inrespect of the workers employed. But the Corporation seemsto have some problems in collating the lists of all workersengaged in depots scattered at different places. It hasrequested the Commissioner to summon the contractors toproduce the respective list of workers engaged by them. TheCommissioner did not summon the contractors nor the listsmaintained by them. He has stated that the Corporation hasfailed to produce the evidence.7. The question, in our opinion, is not whether one hasfailed to produce evidence. The question is whether theCommissioner who is the statutory authority has exercisedpowers vested in him to collect the relevant evidence beforedetermining the amount payable under the said Act."After quoting the relevant section, namely Section 7-A of theEmployees' Provident Funds and Miscellaneous Provisions Act, 1952,the Hon'ble Supreme Court has also made the following observation:-" 9. It will be seen from the above provisions that theCommissioner is authorised to enforce attendance in personand also to examine any person on oath. He has the powerrequiring the discovery and production of documents. Thispower was given to the Commissioner to decide not abstractquestions of law, but only to determine actual concretedifferences in payment of contribution and other dues byidentifying the workmen. The Commissioner should exerciseall his powers to collect all evidence and collate allmaterial before coming to proper conclusion. That is thelegal duty of the Commissioner. It would be failure toexercise the jurisdiction particularly when a party to theproceedings requests for summoning evidence from a https://hcservices.ecourts.gov.in/hcservices/ particular person."Again in Bharat Heavy Electricals Ltd. Vs. Employees' StateInsurance Corporation reported in (2008) 3 Supreme Court Cases 247cited above, the Hon'ble Supreme Court has held that the principleapplicable to the determination of contribution to the providentfund under the Employees' Provident Funds and MiscellaneousProvisions Act, 1952 applies to the determination of contributionunder the Employees' State Insurance Act also and that if it ispleaded that there is an immediate employer (contractor) under whomthe workmen are employed directly, the authority should eitherimplead the said contractor or at least summon him to be examinedregarding the said aspects. The relevant portion in the judgment isextracted here under for better appreciation.It reads:" 20. We, with respect to the learned Judges, fail tonotice any significant difference in the purport and objectof both the provisions. The purport and object of both thestatutes, for all intent and purport, in our opinion, is thesame. In the proceedings initiated under Section 45-A ofthe Act, an immediate employer or principal employer mayalso show that they are not liable to deposit anycontribution on behalf of the employees as the establishmentin question did not come within the purview thereof. Thepurpose of the proceedings, both under the Act as also theEmployees' Provident Funds Act, is to determine the amountdue from any employer in respect of the employees under thestatutory schemes. Both the Acts envisage compliance withprinciples of natural justice. The proviso appended toSection 45-A of the Act provides for a statutory mandate ofgiving a reasonable opportunity of being heard.21. The quantum of amount due has to be determined inrespect of all contract workers engaged by the contractors.The principal employer would be entitled to recover thecontributions from the contractor, they being the immediateemployers. Whereas under the Provident Funds Act, theprincipal employer is statutorily liable in terms of theprovisions of the Act to comply with the provisions therein;in terms of the Act, the principal employer is entitled torecover the amount of contribution payable by the immediateemployer for them.22. Section 45-A of the Act enables the appropriateauthority to recover such dues both from the principal asalso the immediate employer. It provides for an opportunityof hearing to both of them.The Hon'ble Supreme Court proceeded further and passed thefollowing order:- https://hcservices.ecourts.gov.in/hcservices/ "It appears that the determining authority did not give anopportunity of hearing to the petitioner in regard to thenames and other particulars of the contractors. The impugnedjudgment, therefore, cannot be sustained. It is set asideaccordingly. The appeal is allowed and the matter isremitted to ESI Corporation/ determination authority forconsidering the matter afresh. The authority shall eitherimplead the contractors as parties and/or summon them forproducing necessary records for the said purpose."4. Following the said judgments of the apex court and applyingthe principle enunciated therein, this court comes to the conclusionthat the order of the authority has got to be interfered with andset aside and the matter has to be remitted back to the saidauthority to re-determine the contribution payable by the appellant,if any, after either impleading the alleged contractors or summoningthem and examining them.5. For all the reasons stated above, this appeal is allowed andthe order of the learned First Additional Judge, City Civil Court,Madras dated 29.08.2000 passed in E.S.I.O.P.No.41 of 1990 is setaside. E.S.I.O.P.No.41 of 1990 shall stand partly allowed settingaside the impugned order of the Assistant Regional Director,Employees' State Insurance Corporation, Chennai dated 23.02.1989.The matter is remitted back to the Regional Director, Employees'State Insurance Corporation, Chennai, with a direction to conduct ade novo enquiry and decide the liability of the appellant to paycontribution after impleading the alleged contractors or summoningand examining them. There shall be no order as to cost.Sd/Asst.Registrar/true copy/Sub Asst.Registrar asrTo1) The Regional DirectorThe Employees State Insurance Corporation 143, Sterling road, Madras - 34 https://hcservices.ecourts.gov.in/hcservices/ 2) The Collector of Madras Kamaraj Salai Chennai - 600 0053.The I Addl. Judge,City Civil Court, Chennai.4.The Record Keeper,VR Section, High Court, Madras.+1cc to Govt. Pleader Sr 30344SSK (CO)km/7.7.C.M.A.No.846/2001