Partly allowed

The Regional Director v. M/S Hindustan Aeronautics Ltd.

Karnataka HC2 Jul 2021MFA/3152/2017

Case brief

AI extract

What is this about?

High Court allowed part of the appeal against an ESI Court order. It set aside the lower court order, remanding the matter for fresh consideration after affording opportunity to both parties to amend the application and adduce evidence, noting the respondent filed the appeal within limitation despite not challenging the original order.

What did the court decide?

Impugned order set aside; matter remanded to ESI Court for fresh consideration with opportunity for amendments and fresh evidence; parties directed to appear by 28th July 2021.

The Regional Director Vs M/S Hindustan… — Pension and Retirement Benefits | Karnataka HC (2021)

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 02^ND DAY OF JULY, 2021

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PRESENT

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THE HON’BLE MRS. JUSTICE S. SUJATHA

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AND

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THE HON’BLE MR. JUSTICE E.S. INDIRESH

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MISCELLANEOUS FIRST APPEAL NO.3152 OF 2017 (ESI)

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BETWEEN The Regional Director Employees State Insurance Corporation No.10, Binny Fields Binnypet Bengaluru-560 023.

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….Appellant

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(by Shri M.N. Kumar, Advocate)

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AND M/s Hindustan Aeronautics Ltd Aircraft Research and Design Centre Design Complex Marthahalli Post Bangalore-560 017 Represented by DGM (HR)

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…..Respondent

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(By Shri T. Rajaram, Advocate)

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This Miscellaneous First Appeal is filed under Section 82(2) of Employees State Insurance Act 1948, against the order dated 28.10.2016 passed in ESI Application No.7 of 2013 on the file of the Employees State Insurance Court, Bengaluru, partly allowing the application filed under Section 75(1)(g) of the ESI Act, 1948.

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This Miscellaneous First appeal coming on for admission, this day, INDIRESH J., delivered the following:

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J U D G M E N T

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This appeal is filed by the respondent, challenging the order dated 28^th October, 2016 passed in E.S.I Application No.7/2013 by the Employees State Insurance Court at Bengaluru (for short hereinafter referred to as ‘ESI Court’).

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For the sake of convenience, the parties in this appeal are referred to with their status and rank before the parties before the ESI Court.

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It is the case of the applicant (respondent herein) before the trial Court that the applicant is a Public Sector Undertaking Company and engaged in designing and manufacture of aircrafts and other allied services. It is further

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averred in the application that the applicant was regularly making ESI contribution to the respondent-Corporation in respect of its employees. The applicant further stated that the respondent has issued notices to the applicant claiming contribution towards employees insurance and same was replied, explaining about the contribution made therein. It is further averred that the respondent has issued notice dated 21^st December, 2011 under Section 45-A of Employees State Insurance Act, 1948 (for short, hereinafter referred to as 'the Act’), claiming arrears of Rs.20,03,277/- and pursuant to the same, the applicant decided to appeal before the Appellate Court. Due to delay in depositing the statutory deposit of 25% of the total claim, the appellant submitted the cheque for sum of Rs.5,00,819/- towards 25% of the total claim and same was returned without acceptance. It is further averred in the application that the respondent had addressed a letter dated 26^th March, 2011 to the applicant, stating that the appeal cannot be entertained due to efflux of time as per Section 45-A of the Act. Immediately, thereafter, the respondent issued impugned Recovery Notices dated 16^th March, 2012 and 23^rd January,

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2013, claiming ESI contribution of Rs.20,03,777/-. Being aggrieved by the aforementioned Recovery Notices, the applicant filed Application No.7/2013 before the ESI Court.

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The respondent entered appearance and filed detailed reply denying the averments made in the application. It is the case of the respondent that since there was delay in payment of ESI contribution as per Section 45-A of the Act, the application deserves to be dismissed. The applicant examined its officer as AW1 and produced seven documents and same were marked as Exhibits A1 to A7. The respondent examined its officer as RW1 and got marked Exhibit R1. The ESI Court, after considering the material on record, by its order dated 28^th October, 2016 allowed the application in part and ordered that the applicant is liable to pay Rs.5,00,000/- towards claim of contribution within five months from the date of the order. Being aggrieved by the order dated 28^th October, 2016, the respondent-Regional Director, ESI Corporation, has preferred this appeal.

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We have heard Sri Kumar M.N, learned counsel appearing for the appellant and Sri T Rajaram, learned counsel appearing for the respondent.

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Sri Kumar M.N, learned counsel appearing for the appellant vehemently contended that the applicant-respondent has not challenged the original order dated 21^st December, 2011 passed under Section 45-A of the Act and has challenged only Recovery Notices and therefore, the application made by the applicant-respondent before the ESI Court is not maintainable. He further contended that in view of appellant not challenging the original order and challenging only consequential orders, the ESI Court ought to have rejected the application. He further contended that ESI Court failed to consider the fact that the competent authority by its order dated 26^th March, 2012 rejected the appeal preferred by the respondent under Section 45-AA of the Act and therefore, without challenging the order dated 26^th March, 2012, the application made by the respondent before the ESI Court is not maintainable. Hence, he sought for interference of this Court.

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Per contra, Sri T Rajaram, learned counsel appearing for the respondent argued that the impugned order passed by the ESI Court is just and proper and same deserves to be affirmed in this appeal. Learned counsel submitted that the grounds now urged by the appellant is highly technical, no such ground regarding the maintainability of the application was made before the ESI Court.

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Having considered the rival contentions raised by the learned counsel appearing for the parties, we have perused the original records and examined the finding recorded by the ESI Court. The records reveal that the appellant-Corporation has issued Notice dated 21^st December, 2011 under Section 45-A of the Act (Exhibit -A2) claiming contribution of Rs.20,03,276.56 from December 2006 to September, 2007 to the application made by the applicant-respondent. Pursuant to same, applicant has filed appeal under Section 45-AA of the Act along with Cheque bearing No.715524 dated 16^th March, 2012 for sum of Rs.5,00,819/-. Pursuant to the same, the appellant-Corporation rejected the appeal by order dated 26^th March, 2012 on the

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ground that the appeal filed by the applicant-respondent is not maintainable under Section 45-AA of the Act as 25% of the claim amount has not been deposited within the stipulated period of 60 days from the date of issue of order under Section 45-A of the Act and consequently returned aforementioned cheque. The said order was not challenged by the applicant-respondent, undisputably. Thereafter, the appellant issued Notice of Demand dated 16^th March, 2012 under Rule 2 of the Second Schedule of Income Tax Act, 1961 read with Section 45-C to 45-I of the Act as per Exhibit-A5 to the Application. Since the respondent did not make any reply to the Order under Section 45-A of the Act (Exhibit-A2) nor challenged the order dated 26^th March, 2012 (Exhibit-A4), the appellant issued another Recovery Notice under Section 45-G of the Act, claiming Rs.20,03,777/- as per ExhibitA7. Being aggrieved by the notice dated 16^th March, 2012 (Exhibit-A5) and Recovery Notice dated 23^rd January, 2013 (Exhibit-A7), the respondent has approached the ESI Court under Section 75(1)(g) of the Act.

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In the backdrop of the said undisputed facts, we have carefully considered the submissions made by the either of the parties and the provisions contained under Section 75 of the Act. Notably, the appellant herein has not taken specific contention with regard to the maintainability under Section 75 of the Act. However, at paragraph 4 of the statement of objection raised a plea that the application filed by the applicant-respondent was not considered on the ground of delay and laches, as the appeal was preferred beyond 60 days. We have also noticed that the respondent herein has not challenged the original order dated 21^st December, 2011 (Exhibit A2) passed under Section 45-A of the Act, however, questioned the consequential Recovery Notices issued on 16^th March, 2012 and 23^rd January, 2013 well within the period of three years, the period of limitation prescribed under Section 75(1)(g) of the Employees State Insurance Act. This Court, in the case of EMPLOYEES’ STATE ISURANCE CORPORATION, BANGALORE v. ANANTHAPADMANABHA MILLS, MANGALORE reported in 2009 LLR 685 has held that no petition could be entertained beyond three years from the date of cause of action under Section 75(1)(g) of the Employees State

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Insurance Act. Perusal of the impugned order indicates that the ESI Court allowed the application and directed the respondent to pay contribution of Rs.5,00,000/- within five months from the date of the order. Evidence had been adduced by both the sides and documents have been marked by the parties. For the foregoing reasons, we are of the considered view that entertaining the application/ challenging the recovery notices, in the absence of not questioning the original order though not appropriate, admittedly, the respondent has deposited the required amount before the ESI Court, which shows bona fides on the part of the respondent, despite the respondent having not challenged the original order before the ESI Court nor approached this Court by way of writ petition. Therefore, the impugned Order passed by the ESI Court requires to be set aside and matter is to be remitted to the ESI Court for fresh consideration, after affording opportunity to both the sides. Both the parties are permitted to make amendments to the application and adduce fresh evidence, if any, to resolve the dispute, within the parameters of law. Hence, the following:

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O R D E R

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i) Appeal is allowed in part;

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ii) The impugned order dated 28^th October, 2016 passed in ESI Application No.07 of 2013 on the file of the Employees State Insurance Court at Bangalore is set aside. The matter is remanded to the ESI Court for reconsideration providing opportunity to the respondent-applicant to amend the application filed under Section 75(1)(g) of the Employees State Insurance Act, 1948 keeping open the rights and contentions of both the parties to adduce fresh evidence, if any;

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iii) The ESI Court shall consider the matter in accordance with law keeping in mind the scope and ambit of the challenge made under Section 75(1)(g) of the Act. The matter shall be disposed of in an expedite manner;

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iv) Since the parties are represented by their learned counsel, parties are directed to appear before the ESI Court on 28^th July, 2021 without waiting for any further notice and shall take further orders from ESI Court.

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Sd/JUDGE

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Sd/JUDGE

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lnn

The Regional Director v. M/S Hindustan Aeronautics Ltd.

Case brief

What is this about?

What did the court decide?

The Regional Director v. M/S Hindustan Aeronautics Ltd.

Case brief

What is this about?

What did the court decide?

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