M/S. Besco Limited (Foundry Division) Vs Employees State Insurance Corporation and Ors. — Calcutta HC (2026) — LawSathi Research

M/S. Besco Limited (Foundry Division) Vs Employees State Insurance Corporation and Ors. — Calcutta HC (2026) — LawSathi Research

What the court decided

AI extract

Outcome

Writ application allowed and disposed of: (i) order under Section 45A of the ESI Act dated 26th December, 2018, demand notice dated 27th May, 2025 and garnishee order dated 14th October, 2025 set aside; (ii) authority to initiate a fresh Section 45A proceeding, hear the petitioner (who may press the discrepancies pleaded in the writ application) and pass a reasoned order in accordance with law; (iii) respondent authority to refund/return the amount withdrawn pursuant to the garnishee order.

Issue for consideration

Whether the order under Section 45A of the ESI Act dated 26th December, 2018 and the consequential demand notice dated 27th May, 2025 and garnishee order dated 14th October, 2025 were passed in violation of the principles of natural justice, the hearing having been fixed during the admitted period of suspension of work (lock-out) without any further opportunity after the suspension period. +2 more

Court's answer

The date of hearing in the Section 45A proceeding was fixed during the admitted period of suspension of work (lock-out); the respondent authorities proceeded without giving the petitioner a further opportunity or waiting till the lock-out was withdrawn, treating non-attendance as default — conduct clearly against the principles of natural justice.

Ratio / Principle

The Section 45A hearing concluded without taking into consideration the petitioner's predicament of suspension of work; the authorities neither waited for the suspension to be withdrawn nor fixed any date after the suspension period, thereby deciding without granting an opportunity of hearing — conduct prima facie against the principles of natural justice and clearly an abuse of the process of law.

Key takeaways

The order under Section 45A dated 26th December, 2018, the demand notice dated 27th May, 2025 and the garnishee order dated 14th October, 2025 are set aside; the authority is directed to initiate a fresh proceeding under Section 45A of the ESI Act, grant the petitioner an opportunity to place the discrepancies pointed out in the writ application, duly consider those submissions, and complete the proceeding by passing a reasoned order in accordance with law.ratio¶9
Several discrepancies were found regarding the amount claimed and the period for which it was claimed, between the order under Section 45A and the statement attached to the impugned demand notice dated 27th May, 2025; the petitioner is to be at liberty to place these discrepancies before the authority in the fresh proceeding.ratio¶7

Detailed headnote1 paragraphs

Employees State Insurance Act, 1948 — Sections 45A, 45G — Determination of contribution; garnishee recovery. Personal hearings in the Section 45A proceeding were fixed (26.04.2017, and again 14.06.2017) while the petitioner's establishment was under admitted suspension of work (lock-out from 19.04.2017); the employer had declared the lock-out by letter dated 20.04.2017, yet the order dated 26.12.2018 proceeded on the footing that the employer did not attend. The Calcutta High Court held that deciding without waiting for withdrawal of the lock-out or fixing a later date denied an opportunity of hearing, was contrary to natural justice and an abuse of the process of law; discrepancies in the amount claimed and the period claimed, as between the Section 45A order and the statement to the demand notice dated 27.05.2025, were also noted. The Section 45A order, the demand notice and the garnishee order dated 14.10.2025 were set aside; a fresh Section 45A proceeding with a reasoned order was directed, and refund of the amount withdrawn under the garnishee order was ordered as recovered under a prima facie erroneous order. (Justice Shampa Dutt (Paul), 09.04.2026.)

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IN THE HIGH COURT AT CALCUTTA Constitutional Writ Jurisdiction ORIGINAL SIDE

WPO/829/2025 M/s. BESCO LIMITED (FOUNDRY DIVISION) -VERSUS-

EMPLOYEES STATE INSURANCE CORPORATION AND ORS.

BEFORE:

The Hon'ble JUSTICE SHAMPA DUTT (PAUL) Date : 9th April, 2026.

Appearance: Mr. Soumya Majumdar, Sr. Adv. Ms. Debjani Sengupta, Adv. Mr. Rajib Mullick, Adv. Ms. Priyanka Barik, Adv. …. for the petitioner.

Ms. Soumi Guha Thakurta, Adv. Ms. Raima Ganguly, Adv. Ms. Madiha Haider, Adv. ...for the respondent nos.1 to 3.

1. The writ application has been preferred challenging the demand notice dated 27^th May, 2025 and the garnishee order dated 14^th October, 2025 and all other recovery action.

2. It is the case of the petitioner that the petitioner was not given a proper hearing during the proceeding under Section 45A of the ESI Act, 1948 and the respondent authority without hearing the petitioner/company has passed the impugned order dated 27^th May, 2025.

3. It is further stated that in spite of passing the order without granting an opportunity of hearing to the petitioner, the respondent authorities have proceeded against the petitioner

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vide an order dated 14^th October, 2025 by issuing a garnishee order under Section 45G of the ESI Act.

4. Mr. Majumder, learned senior counsel for the petitioner bas brought to the notice of the Court, the order under Section 45A of the ESI Act dated 26^th December, 2018 which is marked as annexure B at page 22 of the supplementary affidavit to the affidavit in opposition filed by the respondent nos.1 to 3.

5. On perusal of the said order, on the basis of which the impugned orders and notices have been issued, this Court finds that the authority concerned in his order in the proceeding under Section 45A of the ESI Act noted as follows :

“Whereas on 26.04.2017, the employer did not turn up for personal hearing but submitted a letter dated 20.04.2017 declaring suspension of work from 19.04.2017. However, in the interest of natural justice, the employer was given another opportunity of personal hearing on 14.06.2017 which was communicated to the employer vide this office letter of even no. dated 30.05.2017.”

6. It appears from the said observation that the date of hearing in the proceeding under Section 45A of the ESI Act was fixed during the period when there was admittedly suspension of work [lock-out] in the petitioner’s establishment. The respondent authorities without giving the

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petitioner further opportunity and/or waiting till the suspension of work was withdrawn, proceeded to hold that the employer did not attend the hearing and, as such, passed an order against the petitioner herein. The said conduct is clearly aginst the principles of natural justice.

7. Mr. Majumder, has further brought to the notice of this Court several discrepancies in the order under Section 45A of the ESI Act and the statement attached to the impugned notice dated 27^th May, 2025. It appears that there are several discrepancies regarding the amount claimed and the period for which the said amount has been claimed.

8. Considering that the hearing under Section 45A was concluded without taking into consideration, the predicament of the petitioner that there was “suspension of work” in his establishment, the authorities concerned neither waited for the suspension of work to be withdrawn, nor did they fix any date after the suspension period and have proceeded to come to a finding without thus granting an opportunity of hearing to the petitioner. Such conduct on the part of the respondent authorities is, prima facie, against the principles of natural justice and is thus clearly an abuse of the process of law.

9. Accordingly, on hearing the parties and considering the materials on record and the issues involved, this Court sets aside the order under Section 45A of the ESI Act dated 26^th

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December, 2018 and the impugned demand notice dated 27^th May, 2025 and also the garnishee order dated 14^th October, 2025 with a direction that the authority concerned shall

initiate a fresh proceeding under Section 45A of the ESI

Act and on granting opportunity to the petitioner, who shall be at liberty to place the discrepancies, as pointed out in the writ application, before the authority concerned and on giving due consideration to the said submission of the petitioner, shall complete the proceeding by passing a reasoned order in accordance with law.

10. Mr. Majumder, further submits that on the basis of such an erroneous order passed by violating the principles of natural justice, the respondent authorities have recovered a substantial amount for which the petitioner is liable to the Bank and submits that as the amount has been recovered by way of an erroneous order, the same be refunded to the petitioner herein, who has suffered severe prejudice. On the other hand, learned counsel for the ESI authorities submits that as the matter is being freshly heard, the amount may be retained and the same may be adjusted after the fresh adjudication is completed.

11. Considering the submissions of both the parties, the materials on record and in the interest of justice, this Court directs the respondent authority to refund/return the amount which has

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been withdrawn on the basis of the garnishee order, considering the fact the amount has been recovered on the basis of an order which is, prima facie, erroneous.

12. It is further directed that the authorities concerned while passing the order shall proceed in accordance with law.

13. Writ application stands disposed of.

(SHAMPA DUTT (PAUL), J.)

pkd/nm.