M/S Service Master Clean Ltd. Vs Employees State Insurance Corporation

M/S.SERVICE MASTER CLEAN LTD., (PRESENTLY KNOWN AS SMC INTEGRATED FACILITY MANAGEMENT SOLUTIONS LIMITED) NO.208, 2^ND FLOOR RAMANASHREE ARCADE 18, M.G ROAD BENGALURU-560 001. LIMITED COMPANY REGISTERED UNDER THE COMPANIES ACT REGISTERED OFFICE AT: ANNAPURNA BHAWAN PATLIPUTRA TELEPHONE EXCHANGE ROAD, PATNA BIHAR-800 010 REPRESENTED BY ITS AUTHORIZED OFFICER MR.SUNIL SHARMA AGED ABOUT 36 YEARS MANAGER COMPLIANCE

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…PETITIONER

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(BY SRI DEVAIAH I.S., ADVOCATE)

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AND:

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EMPLOYEES STATE INSURANCE CORPORATION

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NC: 2025:KHC:31754 WP No. 2098 of 2025

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REGIONAL OFFICE (KARNATAKA) NO.10, BINNYFIELDS TANK BUND ROAD BINNYPET BENGALURU-560 023 REPRESENTED BY ITS ASST./DEPUTY DIRECTOR

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THE RECOVERY OFFICER, EMPLOYEES STATE INSURANCE CORPORATION REGIONAL OFFICE, KARNATAKA NO.10, BINNYFIELDS, BINNYPET BENGALURU-560 023

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…RESPONDENTS

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(BY SMT.GEETHA DEVI M.P., ADVOCATE)

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THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE GARNISHEE NOTICE/ORDER DATED 16.01.2025 ISSUED BY RESPONDENT NO.2 TO THE BANK MANAGER, YES BANK, KASTURBA ROAD BRANCH, BENGALURU VIDE ANNEXURE-M AND TO QUASH THE NOTICE DATED 22.01.2025 ISSUED BY RESPONDENT NO.2 TO MANIPAL HOSPITAL, BENGALURU VIDE ANNEXURE-P AND ETC.

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THIS PETITION COMING ON FOR ORDERS, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

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CORAM: HON'BLE MR. JUSTICE PRADEEP SINGH YERUR

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ORAL ORDER

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This petition is filed by the petitioner seeking to quash the garnishee order dated 16.01.2025 issued to the Bank Manager, YES Bank, Kasturba Road Branch and the notice dated 22.01.2025 issued to Manipal Hospital by respondent No.2 and consequently, direct the respondents not to take any coercive steps against the petitioner until disposal of the writ appeal in WA.No.1806/2024.

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The petitioner is a Private Limited Company

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registered under the Companies Act, 2013 and it is engaged in the activities of supplying manpower and cleaning consumables (material and machinery of housekeeping) to various organisations to cater the need in various areas.

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The petitioner's establishment is covered under the Employees' State Insurance Act, 1948 (for short, 'ESI Act'). The ESI contribution remittances for all the

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establishments are being remitted centrally from the Delhi Office.

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It is the case of the petitioner that Respondent No.1 issued a notice dated 09.03.2020 to the petitioner under Section 45A of the ESI Act alleging that ESI contribution for the period covering 01.04.2015 to 31.03.2016 of Rs.5,20,70,049/- was not remitted by the petitioner-Company. Respondent No.1 had computed ESI contribution based on all the items available in the trial balance which are not related to wage factor. Respondent No.1 also failed to take note of the fact that the total remittance of Rs.3,40,13,316/- was remitted by the petitioner-Company for the year 2015-16 in respect of all eligible employees. Therefore, respondent No.1 claimed

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Rs.5,20,70,049/- purported to be the arrears of ESI contribution for the period from April, 2015 to March, 2016.

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It is the further case of the petitioner that owing to Covid-19 pandemic and lockdown, the representatives

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of the petitioner-Company were unable to appear before respondent No.1. Thereafter, respondent No.1 got issued notice dated 13.04.2020 calling upon the petitioner on 04.05.2020 with all necessary documents. The petitioner-

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Company vide letter dated 29.04.2020 addressed to respondent No.1-Assistant Director-ESIC, requests time for production of records and a chance for justification. It is further case of the petitioner that respondent No.1 without considering the bona fide request of the petitioner to provide reasonable opportunity owing to lock down due to the pandemic and travel restrictions and without verifying the records pertaining to the remittance already

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made by the petitioner-Company, arbitrarily passed an order on 04.05.2020 under Section 45A of the ESI Act, calling upon the petitioner to remit Rs.5,20,70,049/-.

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It is the further case of the petitioner that the petitioner-Company has already deposited a sum of Rs.3,40,13,316/- towards contribution under ESI Act,

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which was not considered by respondent No.1 while

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passing the said order.

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It is further case that the said order dated 04.05.2020 was passed by respondent No.1-authority without providing suitable opportunity for the petitioner to be heard and also to produce documents. Therefore, the said order is arbitrary and violates the principles of natural

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justice.

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Aggrieved by the said order dated 04.05.2020 passed by respondent No.1-authority, though there was an alternative remedy available to the petitioner for filing

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an appeal under Section 45AA of the ESI Act, the petitioner-Company approached this Court in

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WP.No.9192/2020 (L-ESI) on the ground of violation of principles of natural justice and for not following the mandatory provisions of law and without affording opportunity of hearing to the petitioner. In the said writ petition, it is contended that this Court had granted an

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interim order of stay of the impugned order dated 04.05.2020 and notice was issued to the respondent.

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After service of notice, the writ petition was rejected on 09.07.2024 on the ground that there is a statutory appeal provided under Section 75 of the ESI Act. Pursuant to the order passed in writ petition mentioned herein supra , the petitioner has preferred a review petition in RP.No.386/2024, which came to be dismissed as withdrawn vide order dated 24.09.2024. It is further stated that aggrieved by the rejection of the writ petition in WP.No.9192/2020, the petitioner has preferred a writ appeal in WA.No.1806/2024, which is pending adjudication.

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When this being the state of affairs, respondent No.2 got issued a garnishee order dated 16.01.2025 to the Banker of the petitioner namely, YES Bank, Kasturba Road Branch, calling upon the Bank to transfer forthwith an amount of Rs.5,29,16,394/towards contributions/

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interest/damages and notice dated 22.01.2025 to the Manipal Hospital. Aggrieved by which, the petitioner is before this Court in this petition.

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Learned counsel for petitioner contends that the impugned orders issued by respondent No.2 are illegal, arbitrary and are issued only with an intent to damage the reputation of the petitioner-Company before its Banker and customers and the respondents have proceeded to issue further the garnishee order without even waiting for the expiry of the notice period.

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It is further contended by learned counsel for petitioner that entire subject matter is sub judice as the matter is pending adjudication before the Division Bench of this Court in writ appeal which is filed by the petitioner aggrieved by the order passed in the writ petition in WP.No.9192/2020 and the same is within the knowledge of the respondents. Despite the same, the respondents have proceeded to issue the garnishee order, which is in

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violation of the provisions of law and also before the expiry

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of the period of notice. Therefore, he contends that the impugned orders are issued only to tarnish the image of the petitioner-Company. Hence, the petitioner seeks to set-aside the same.

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Per contra , learned counsel for respondents contends that the petition itself would not be maintainable, in view of there being an alternative and efficacious remedy available in law against the orders passed by the respondents-authorities. It is also contended by learned counsel for respondents that the petitioner has already preferred an appeal before the appellate authority against the impugned orders herein. When that being case, it is for the petitioner to urge all the grounds that are put-forth before the appellate authority in support of his case and pursue the appeal before the appellate authority, as the present petition would not be entertainable in view of alternative and efficacious remedy being available. On

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these grounds, learned counsel for respondents seeks dismissal of the writ petition.

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I have heard Sri Devaiah I.S., learned counsel for petitioner and Smt.Geetha Devi M.P., learned counsel for respondents.

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It is not in dispute with regard to the demanding of the amount sought by the respondents and garnishee order issued by respondent No.2 to the Banker of the petitioner-Company. This Court, vide order dated 25.01.2025, directed the petitioner to deposit Rs.1,80,56,733/- apart from the amount already deposited to an extent of Rs.3,40,13,316/- by the petitioner and directed the respondents not to take any further precipitative action against the petitioner.

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It is submitted across the Bar that the said amount has been deposited. There are several contentions urged by learned counsel for petitioner, which are denied and opposed by learned counsel for respondent. However,

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the fact remains that aggrieved by the impugned orders issued by the respondents-authorities, apart from filing the present writ petition, the petitioner has challenged the same by filing an appeal before the appellate authority, which is pending adjudication. It is also not in dispute that there is an alternative and efficacious remedy available to the petitioner before the appellate authority on the impugned orders. Therefore, it would be appropriate for this Court to dispose off this matter by providing liberty to the petitioner to urge all contentions and to put-forth all materials before the appellate authority against the impugned orders, which shall be considered and heard in detail and suitable orders could be passed.

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This Court is of the opinion that when there is an alternative and efficacious remedy available, it would be prudent to refer the matter to be adjudicated before the appellate authority rather than entertaining this petition on the disputed questions of facts. It is noticed that the writ appeal challenging the writ petition by the petitioner has

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been disposed of. Therefore, the only remedy now available to the petitioner would be to agitate all contentions and grounds urged herein before the appellate authority. Hence, under these circumstances, I pass the following:

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ORDER

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i) This petition is disposed off ;

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ii) Liberty is reserved to the petitioner to urge all contentions and grounds that are taken up before this Court in the appeal pending before the appellate authority and the same shall be disposed off in accordance with law;

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iii) The amount so deposited pursuant to filing of this petition before this Court shall be transmitted to the appellate authority.

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iv) It is made clear that this Court has not expressed any opinion on merits of the matter;

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v) The interim order passed by this Court on 25.01.2025 shall continue till disposal of the said

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appeal, pending if any before the appellate

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authority;

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vi) Ordered accordingly.

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In view of disposal of the petition, pending interlocutory application, if any, does not survive for consideration and the same pales into insignificance.

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Sd/(PRADEEP SINGH YERUR) JUDGE

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LB List No.: 1 Sl No.: 9

M/S Service Master Clean Ltd. v. Employees State Insurance Corporation

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M/S Service Master Clean Ltd. v. Employees State Insurance Corporation

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