Dismissed

Ms. Ajay Foundries v. Regional Director, Esi Corporation

Gujarat HC14 Aug 2018FA/3254/2018

Case brief

AI extract

What is this about?

The High Court dismissed a first appeal and a civil application filed by Ms. Ajay Foundries against an ESI Corporation recovery order. The Court held that the framed questions were not substantial questions of law, citing the settled principle that all employees are covered under the ESI Act when a factory is covered.

What did the court decide?

The appeal is dismissed and the civil application is disposed of.

Ms. Ajay Foundries Vs Regional Director, Esi… — Pension and Retirement Benefits | Gujarat HC (2018)

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C/FA/3254/2018 ORDER

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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

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R/FIRST APPEAL NO. 3254 of 2018

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With CIVIL APPLICATION NO. 1 of 2018

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MS. AJAY FOUNDRIES

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Versus

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REGIONAL DIRECTOR, ESI CORPORATION

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Appearance:

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MR MURALIN DEVNANI(1863) for the PETITIONER(s) No. 1 MR SACHIN D VASAVADA(3342) for the RESPONDENT(s) No. 1

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CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA

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Date : 14/08/2018

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ORAL ORDER

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This First Appeal under Section 82 of the Employees State Insurance Act, 1948 is at the instance of the original applicant and is directed against the judgment and order dated 19.09.2017 passed by the ESI Court in ESI Application No. 07/2002. The facts giving rise to this First Appeal may be summarised as under:

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“(1) A Notification dated 01.12.1980 came to be issued u/s. 1(5) of the ESI Act covering the specified area of Rajkot GIDC under the sweep of the benevolent legislation i.e. under the provisions of ESI Act. The Appellant herein has been doing work of manufacturing of Oil Engine Spare Parts and Fly wheel by engaging more than 20 employees as defined

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C/FA/3254/2018 ORDER

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u/s. 2(9) of ESI Act from 1.12.1980 and therefore the appellant was covered under the provisions of ESI Act with effect from 1.12.1980.

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(2) During the inspection dated 11.06.1998 of the Records of Appellant, it was found that the Owner/Partner of the Appellant was also doing the business in name of Kishor Engineering Works and therefore after giving opportunity of hearing to the Appellant herein, the Respondent Corporation passed an order clubbing both the units and directed the Appellant to comply with the provisions of ESI Act and to deposit the Contribution of the workers engaged by them. ESI Corporation found that there was common ownership, functional integrality, common office premises, common partners, one Telephone number in invoices of both organization and therefore the ESI Corporation was justified in clubbing both the units.

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(3) Since the Appellant employer was not complying with the provisions of the ESI Act with effect from 1-12-1980, before initiating recovery proceedings u/s. 45A to 45I, the Appellant was given an opportunity of hearing and to produce the documentary evidence to prove its case. However, the Appellant neither produced any documentary evidence nor availed any opportunity of hearing. In such circumstances, the Respondent Corporation had to pass an order to recover Rs. 4,37,270=00 from the Appellant.

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(4) The Appellant instead of complying with the

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C/FA/3254/2018 ORDER

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provisions of the ESI Act, approached to EI Court, Rajkot by way of filing EI Application u/s. 75/77 of ESI Act and challenged the decision of 1998 whereby the units of the Appellant were clubbed and the recovery action was initiated by way of issuing Notice dated 28-01-2002.

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(5) As the Appellant was not able to prove the facts by leading oral evidence for 15 years i.e. from the date of filing of the Application till 22-06-2017 i.e. for 15 years and was not able to produce and prove the documentary evidences, the EI Court, closed the right of the Appellant and dismissed the EI Application filed by appellant and confirmed the recovery order passed by ESI Corporation.”

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The following questions have been formulated as the substantial questions of law in the memorandum of the First Appeal:

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“14(a) What should be the approach of the Employees' State Insurance Corporation, the ESI Court and other authorities constituted under the provisions of the Employees' State Insurance Act while deciding an application filed before it ?

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(b) Should it be technical and archaic having no regard for the realities of life ? Or, should it be informed with the changed values of our society and should have close connection with the realities of life ?

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C/FA/3254/2018 ORDER

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(c) Whether the ESI Court was right in adopting a hyper-technical approach while it is a settled principle of law that:

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When substantial 'justice and technical considerations are pitted against each other, cause of substantial justice 'deserves to be preferred.”

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The learned counsel appearing for the appellant submitted that his client has a good case on merits and therefore, one opportunity should be given to him to prove his case.

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I am afraid it is not possible to accept the submission of the learned counsel. In my view, none of the questions formulated in the memorandum of the First Appeal could be termed as substantial questions of law.

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It is a settled position of law that when the act is made applicable to the factory/establishment, then all the employees stand covered under the benevolent piece of legislation. The law in this regard has been well explained by the Supreme Court in the case of Royal Western India Turf Club Limited v. E.S.I. Corporation, reported in 2016(4) SCC 521.

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C/FA/3254/2018 ORDER

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