Allowed

Dr.Sunny Joseph v. the Recovery Officer

Kerala HC1 Nov 2022WP(C)/14819/2022

Case brief

AI extract

What is this about?

The High Court of Kerala quashed two orders imposing ESI contributions on a nursing home. The court held that a statutory notification under Section 1(5) was absent, making the Act inapplicable to an establishment with less than ten employees, and an order violated natural justice by ignoring wage registers.

What did the court decide?

The undated order under Section 45A and the order dated 28.03.2022 assessing liability for contributions were quashed.

Dr.Sunny Joseph Vs the Recovery Officer — Service and Employment | Kerala HC (2022)

¶1

IN THE HIGH COURT OF KERALA AT ERNAKULAM

¶2

PRESENT

¶3

THE HONOURABLE MR. JUSTICE AMIT RAWAL

¶4

TUESDAY, THE 1ST DAY OF NOVEMBER 2022 / 10TH KARTHIKA, 1944

¶5

WP(C) NO. 14819 OF 2022

¶6

PETITIONERS:

¶7

1DR.SUNNY JOSEPH,
AGED 63 YEARS,
S/O.CHACKO JOSEPH, THE PROPRIETOR THEKKEDATHU HOSPITAL,
PATHANAPURAM P.O., KOLLAM DISTRICT, RESIDING AT
THEKKEDATHU HOUSE, PATHANAPURAM P.O., KOLLAM DISTRICT.

¶8

2DR.LEENA SUNNY JOSEPH,
AGED 61 YEARS,
W/O.DR.SUNNY JOSEPH, PARTNER, ST.GREGORIOUS MEMORIAL
THEKKEDATHU HOSPITAL, PATHANAPURAM P.O., KOLLAM - 689
695, RESIDING AT THEKKEDATHU HOUSE, PATHANAPURAM P.O.,
KOLLAM DISTRICT.

¶9

BY ADV
SRI.THIRUMALA P.K.MANI

¶10

RESPONDENTS:

¶11

1THE RECOVERY OFFICER,
EMPLOYEES STATE INSURANCE CORPORATION (ESIC),
SUB REGIONAL OFFICE, PANCHDEEP BHAVAN, ASRAMAM,
KOLLAM - 691 002.

¶12

2THE DEPUTY DIRECTOR,
EMPLOYEES STATE INSURANCE CORPORATION (ESIC),
SUB REGIONAL OFFICE, PANCHDEEP BHAVAN, ASRAMAM,
KOLLAM - 691 002.

¶13

BY ADVS.
SRI.ADARSH KUMAR, SC,ESIC
SRI.SHASHANK DEVAN

¶14

THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON
01.11.2022, ALONG WITH WP(C).15366/2022, THE COURT ON THE SAME DAY
DELIVERED THE FOLLOWING:

¶15

WP(C) Nos.14819 & 15366/2022 -2-

¶16

IN THE HIGH COURT OF KERALA AT ERNAKULAM

¶17

PRESENT

¶18

THE HONOURABLE MR. JUSTICE AMIT RAWAL

¶19

TUESDAY, THE 1ST DAY OF NOVEMBER 2022 / 10TH KARTHIKA,

¶20

1944

¶21

WP(C) NO. 15366 OF 2022

¶22

PETITIONERS:

¶23

1 DR. SUNNY JOSEPH, AGED 63 YEARS, S/O.CHACKO JOSEPH, THE PROPRIETOR / PARTNER, ST. GREGORIOUS MEMORIAL THEKKEDATHU HOSPITAL, PATHANAPURAM P. O., KOLLAM DISTRICT, RESIDING AT THEKKEDATHU HOUSE, PATHANAPURAM P. O., KOLLAM DISTRICT.

¶24

2 DR. LEENA SUNNY JOSEPH AGED 61 YEARS W/O. DR. SUNNY JOSEPH, PARTNER, ST. GREGORIOUS MEMORIAL THEKKEDATHU HOSPITAL, PATHANAPURAM P. O., KOLLAM - 689695, RESIDING AT THEKKEDATHU HOUSE, PATHANAPURAM P. O., KOLLAM DISTRICT.

¶25

BY ADV SRI.THIRUMALA P.K.MANI

¶26

RESPONDENTS:

¶27

THE DEPUTY DIRECTOR,
EMPLOYEES STATE INSURANCE CORPORATION (ESIC),
SUB REGIONAL OFFICE, PANCHDEEP BHAVAN, ASRAMAM,
KOLLAM - 691002.

¶28

BY ADVS.

¶29

SRI.ADARSH KUMAR, SC, ESIC
SRI.SHASHANK DEVAN

¶30

THIS WRIT PETITION (CIVIL) HAVING COME UP FOR
ADMISSION ON 01.11.2022, ALONG WITH WP(C).14819/2022, THE
COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

¶31

WP(C) Nos.14819 & 15366/2022 -3-

¶32

JUDGMENT

¶33

This order of mine shall dispose of two writ petitions bearing Nos.14819 of 2022 (first writ petition) and 15366 of 2022 (second writ petition) preferred by the same very petitioners against different orders.

¶34

In the first writ petition challenge has been laid to the order dated ‘NIL’ Ext.P3 passed under Section 45A of the Employees State Insurance Act, 1948 assessing the liability to contribute in respect of the period ranging from 01.04.2013 to 28.02.2014 of Rs.58,988/- (Rupees Fifty eight thousand nine hundred and eighty eight only) by determining the average monthly wages of employee at the rate of Rs.8,250/- (Rupees Eight thousand two hundred and fifty only). The second writ petition is against the order Ext.P6 dated 28.03.2022 whereby the petitioners have been made liable to make contribution for the period March, 2014 to March, 2021 of Rs.3,45,701/-(Rupees Three lakh forty five thousand

¶35

WP(C) Nos.14819 & 15366/2022 -4-

¶36

seven hundred and one only) failing which, it would be recovered as arrears of land revenue under Section 45-C to 45-I of the 1948 Act.

¶37

Petitioners and his wife are running a nursing home under the name and style “St.Gregorious Memorial Thekkedath Hospital”, Pathanapuram P.O., Kollam, a private nursing hospital having employees less than ten(10) in number. As per the provisions of Section 2 (12) of the 1948 Act, would not be brought within the domain of an establishment defned under the provisions i of the ESI Act, 1948. To the utter dismay, petitioners were called upon, on the basis of the inspection conducted on 18. 07.2013, to pay the contribution as for the period April, May, June, July, 20 13 though the employees working were less than ten(10) in number, that included two doctors, petitioners. Petitioners stated to have submitted reply Ext.P2 dated 12.05.2014 and Attendance Register Ext.P5 to establish that the establishment had not been under deployment of more

¶38

WP(C) Nos.14819 & 15366/2022 -5-

¶39

than ten(10) employee s, in other words, the employee strength was 10. It was also stated that on the date of hearin g i.e., on 23.04.2014 representative of the petitioners requested for personal hearing but without giving any personal hearing assessment has been passed under Section 45A. Though the order under Section 45A is assailable under Section 45AA by preferring an appeal subject to deposit of 25% of the amount but since the order is prima facie without jurisdiction and not tenable, instead of availing alternative remedy, the writ jurisdiction has been invoked. There has not been any single discussion or whisper of the documents placed on record much less to the assertions raised in representation Ext.P2.

¶40

In second writ petition, it has been alleged that the petitioners received the notice dated 14.12.2021 for the contribution referred to therein and previous notices ranging from March, 2013 to October, 2021 which was duly replied by reply Ext.P3 dated 08.03.2022 and Ext.P4

¶41

WP(C) Nos.14819 & 15366/2022 -6-

¶42

dated 28.03.2022 whereby the photocopies of the attendance register (muster roll) for financial years 2012-13, 2013-14, 2014-15, 2015-16, 2016-17, 2017-18, 2018-19, 2020-21 and wages register for the same very period as Annexures 1 and 2 have been produced. It is contended that without referring to the wage register, an order for contribution to the tune of Rs.3,45,701/(Rupees Three lakh forty five thousand seven hundred and one only) has been imposed with a direction to deposit the same within a time frame, lest the proceedings under Section 45-C and 45-I as provided under the 1948 Act for recovery of the amount as arrears of land would be initiated.

¶43

Learned counsel representing the respondents in the first writ petition submitted that petitioners have no case or legs to stand and challenge the undated order Ext.P3 under Section 45A as the remedy of appeal has not been availed of. It is an attempt to circumvent the statutory provisions, therefore the writ petition should be

¶44

WP(C) Nos.14819 & 15366/2022 -7-

¶45

dismissed with exemplary costs. Even otherwise, as per communication dated 13.09.2013 Ext.R1/A establishment has been allotted a code number 48000337370001401. In essence it has been covered under the 1948 Act as per the provisions of Section 1(5) thereof. The said order though was assailed by preferring IC N o.14/2014, the same was dismissed for default vide Ext.R1/B, thus petitioner cannot be permitted to assail the order either on merits or on the ground of non compliance of the principles of natural justice. The establishment had more than ten employees and rightly so, were allotted the code number. The inspection note prima facie establish that petitioner’s wife had been working in the establishment and was an employee but her name was not reflected in the muster or wage register. In other words, it had more than ten(10) employees and therefore was liable to make the contribution under the provisions of 1948 Act.

¶46

I have heard learned counsel for the parties

¶47

WP(C) Nos.14819 & 15366/2022 -8-

¶48

and appraised the paper books.

¶49

Before adverting to the rival contentions of the

¶50

learned counsel representing the parties, it would be expedient to refer the provisions of Section 1(5) the manner and mode in which the Government notified the applicability of the establishment. Section 1(5) and 1(6) reads as under:

¶51

“(5) The appropriate Government may, in consultation with the corporation and [where the appropriate Government is a State Government, with the approval of the Central Government], after giving[one month's] notice of its intention of so doing by notification in the Official Gazette, extend the provisions of this Act or any of them, to any other establishment or class of establishments, industrial, commercial, agricultural or otherwise.

¶52

[Provided that where the provisions of this Act have been brought into force in any part of a State, the said provisions shall stand extended to any such establishment or class of establishments within that part if the provisions have already been extended to similar establishment or class of establishments in another part of that State.]

¶53

[(6) A factory or an establishment to which this

¶54

WP(C) Nos.14819 & 15366/2022 -9-

¶55

Act applies shall continue to be governed by this Act notwithstanding that the number of persons employed therein at any time falls below the limit specified by or under this Act or the manufacturing process therein ceases to be carried on with the aid of power.]”

¶56

On perusal of the aforementioned provisions it is evident that when the Government contemplates to bring the Act within the purview, it is required to give one month’s notice to invite any objections and thereafter notification is issued. Ext.R1A is a communication dated 13.09.2013, the same reads as under:

¶57

“ C-11 Regd with a/d

¶58

Sub-Regional Office

¶59

EMPLOYEES STATE INSURANCE CORPORATION

¶60

ST THOMAS SHOPPING COMPLEX CROSS JN OS ROAD

KOLLAM

Dated 13/9/2013

M/S ST GREGORIOS MEMORIAL THEKKEDATH HOSPITAL PATHANAPURAM

¶65

KOLLAM KERALA 689695

¶66

WP(C) Nos.14819 & 15366/2022 -10-

¶67

Subject:- Implementation of the E.SI. Act, 1948 and Registration of Employees of the Factories and Establishments under Section 1(5) of the Act, as amended.

¶68

Dear Sir(s)

¶69

1 It is informed that under section 1(3) of the es act, 1948 is applicable to all factories/establishments covered under the act within the area where your factory/ establishment is situated.

¶70

2 It is further informed that the appropriate government has extended the provisions of the act to other establishments under section 1(5) of the act in this area

¶71

3 Under section 2 a of the act such a factory/establishment is required to register itself under the act chapter iv thereof casts a responsibility on the principal employer thereof to get his employees registered and pay contributions in respect of these employees covered under the act

¶72

4 On the basis of the particulars in respect of your factory/establishment submitted by you the report of the inspection conducted by the Social Security Officer, who inspected your establishment on -NA-, your establishment falls within the purview of Section 1(5) of the Act with effect from 01/04/2013. In case, however, subsequent facts reveal that your establishment was coverable from a date prior to the date mentioned above, you shall make yourself liable to comply with the provisions of the Act from such earlier date

¶73

5 It is requested to take immediate steps for registration of your employees by submitting declaration forms online, payment of contribution, maintenance of records etc. from the date of coverage of your

¶74

WP(C) Nos.14819 & 15366/2022 -11-

¶75

factory/establishment under the act**You are also requested to submit employer's registration form (form 01) as required under the provisions of sec2a of the esi 1948 read with regulation 10 b of the esi(general), regulations, 1950

¶76

6 For the sake of convenience your establishment has been allotted code No 48000337370001401 which may kindly be used in all communications sent to this office and on all forms at the place indicated for the purpose. The Branch Office of the Corporation situated at A Block, 1st Floor, Shivan Kovil Road, Punalur 691 305, Kollam District. has been instructed to render necessary assistance to you in connection with registration of your employees. In case you find any difficulty or for any other purpose which may be neary in connection with the Scheme you are requested to contact the Manager of the above Branch Office who will render necessary help in the matter

¶77

7- A State wise list of ESI Dispensaries is available on our website www.esic.nic.in under the link Directories which can be downloaded. It is requested that publicity may be given about the Employees State Insurance Dispensaries to enable your employees to choose their ESI Dispensaries

¶78

8.The corporation officials would be pleased to give all necessary and possible guidance to you in discharging your duties and obligations under the esi act, 1948 and I am confident of prompt and timely compliance under the provisions of the ESI act and regulations on your part.

¶79

9.All the Branches of State Bank of India are authorised to accept ESI Contribution.

¶80

10.The brochures/leaflets containing benefits available under the scheme and obligation of the employer etc are available on our website www.esic.nic.in under the link publications

¶81

WP(C) Nos.14819 & 15366/2022 -12-

¶82

which may be downloaded for wide publicity for the smooth functioning of the scheme. 11.Please indicate your code no.on all correspondences to avoid delay.

¶83

Yours faithfully

¶84

Asst.Dy.Director

¶85

Encl:As state above Copy for information and necessary action to: Name of the principal employer: Dr.SUNNY JOSEPH No. of employees : 10

¶86

ENSURE-TO INSURE ALL ELIGIBLE WORKERS WITH ESI FOR TOTAL SOCIAL SECURITY”

¶87

Aforesaid communication cannot be equated with the expression ‘notification’ referred to in provisions 1(5) and 1(6) of the 1948 Act. In the absence of any notification, simple communication and allotment of the code cannot bring any establishment under the purview of t he 1948 Act liable to make contributions as sought to be projected and recovered as per the provisions of the Act.

¶88

In the first case, on receipt of the notice petitioner had submitted a representation dated 12.05.2014 which had been though noticed in the order under Section 45A dated NIL, but the opportunity to

¶89

WP(C) Nos.14819 & 15366/2022 -13-

¶90

refer to the documents while sitting across the Assessing Officer, sought for by the petitioner, was not granted for the reason best known, by the officers at the helm of affairs and a stereo-type order was passed in a mechanical manner. On bare perusal of the wage register it can be prima facie established that petitioners did not have workers more than nine in number.

¶91

Section 2(12) of the 1948 Act specifies the recovery provisions which entitles any establishment having more than ten(10) employees to make contributions after having allotted the numbers under the provisions of 1948 Act. The same reads thus:

¶92

“2 [(12) “factory” means any premises including the precincts thereof whereon ten or more persons are employed or were employed on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on or is ordinarily so carried on, but does not include a mine subject to the operation of the Mines Act, 1952 (35 of 1952), or a railway running shed ;]”

¶93

It is a matter of record that in the month of

¶94

WP(C) Nos.14819 & 15366/2022 -14-

¶95

April, 2013 an authorised Officer of the respondent Corporation visited the premises/Nursing Home of the petitioners and found that the employees were less than ten(10) in number. It was also observed that it had two more doctors. The doctors were none else but the 1^st petitioner and his wife. They cannot be considered as employees as they are either the partners or proprietors that would not be a matter of adjudication by this Court.

¶96

No material has been placed on record on behalf of the respondents other than the communication dated 13.09.2013 extracted above and the order dismissing the IC No.14/2014 covering the establishment under the provisions of 1948 Act. In the second case, two show cause notices were issued to the petitioners to make the contribution. The contention of the learned counsel for the respondents is that there had been a clear admission as reflected from the proceeding books Ext.R1C, wherein representatives of the petitioners /petitioners admitted that the assessment should be

¶97

WP(C) Nos.14819 & 15366/2022 -15-

¶98

made as per the actual number of employees.

¶99

I am afraid the said contention cannot cut the

¶100

ice by believing that petitioner had admitted the coverage of the establishment under the provisions of the Act. The wage register prima facie reflects that all throughout the employees had been less than ten(10) i.e., nine(9) or (8). No material contradicting such documents have been either placed or referred to in the order under Section 45A as well as in the order Ext.P6 dated 28.03.2022 in respect of the period March, 2014 to March, 2021. It is conceded position on record that there is no advertence to the wage register or muster roll either in the order dated ‘Nil’ under 45A or dated 28.03.2022 Ext.P6 in the second writ petition in holding the petitioner responsible for not making the contribution. Even if, IC No.14/2014 challenging the communication dated 13.09.2013 has been dismissed for default, that would not come in the way of the petitioner, for, no notification as contemplated/provided in the

¶101

WP(C) Nos.14819 & 15366/2022 -16-

¶102

provisions referred to above, had been issued covering the petitioners establishment under the provisions of law.

¶103

Even if the alternative remedy is available, once the order prima facie do not reflect the compliance of the principles of natural justice and reference to the order, it would be a farcical exercise for an effected party to avail the alternative remedy.

¶104

For the reason aforementioned, order dated ‘Nil’ passed under section 45A Ext.P3 in the first writ petition and Ext.P6 dated 28.03.2022 in the second writ petition are quashed. Writ Petitions stand allowed.

¶105

Sd/-

¶106

AMIT RAWAL JUDGE

¶107

VV

¶108

WP(C) Nos.14819 & 15366/2022 -17-

¶109

APPENDIX OF WP(C) 15366/2022

¶110

PETITIONERS EXHIBITS

¶111

Exhibit P1TRUE PHOTOCOPY OF THE NOTICE DATED
14.12.2021 ISSUED BY THE RESPONDENT U/S
39 & 40 OF ESI ACT DEMANDING AN AMOUNT
OF RS.3,76,035/- TOWARDS THE
CONTRIBUTION FROM SEP. 2016 TO OCT. 2021
AND DIRECTING THE PETITIONERS TO APPEAR
ON 04.01.2022 TO APPEAR BEFORE THE
RESPONDENT AND TO EXPLAIN THEIR CASE
WITH DOCUMENTS.
Exhibit P2TRUE PHOTOCOPY OF THE NOTICE DATED
09.02.2022 DIRECTING THE PETITIONERS TO
APPEAR BEFORE THE RESPONDENT ON
08.03.2022 TO EXPLAIN THEIR CASE WITH
DOCUMENTS.
Exhibit P3TRUE PHOTOCOPY OF THE STATEMENT OF
OBJECTION DATED 08.03.2022 SUBMITTED BY
THE 1ST PETITIONER IN RESPONSE TO THE
EXT.P1, P2 NOTICES.
Exhibit P4TRUE PHOTOCOPY OF THE ADDITIONAL
STATEMENT DATED 22.03.2022 FILED BY THE
1ST PETITIONER BEFORE THE RESPONDENT IN
RESPONSE TO THE EXT.P1 AND P2 NOTICES.
Exhibit P5TRUE PHOTOCOPY OF THE BOOKLET CONTAINING
THE ATTENDANCE REGISTER (MUSTER ROLE),
WAGES REGISTER AND LABOUR REGISTRATION
CERTIFICATE FOR THE PERIOD FROM 2012-
2013 TO 2020 -2021.
Exhibit P6TRUE PHOTOCOPY OF THE ORDER DATED
28.03.2022 ISSUED BY THE RESPONDENT
DEMANDING AN AMOUNT OF RS. 3,45,701/-
TOWARDS THE CONTRIBUTION FOR THE PERIOD
FROM 2014 MARCH TO 2021 MARCH.

¶112

WP(C) Nos.14819 & 15366/2022 -18-

¶113

RESPONDENT EXHIBITS

¶114

Exhibit R1(A)A true copy of the C.11 dated 13-9-2013
issued by the ESIC Regional office,
Kollam to M/s St. Gregorious Memorial
Thekkedathu Hospital

¶115

Exhibit R1(B)A true copy of the order dated 19-11-
2021 passed by the EI Court, Kollam in
MP(IC) 124/2018.

¶116

Exhibit R1(C)A true copy of the relevant portion of
the hearing note pertaining to the
hearing conducted for the 1st petitioner
on 08-03-2022.

¶117

WP(C) Nos.14819 & 15366/2022 -19-

¶118

APPENDIX OF WP(C) 14819/2022

¶119

PETITIONERS EXHIBITS

¶120

Exhibit P1TRUE PHOTOCOPY OF THE VISIT NOTE DATED
18/07/2013 OF THE SOCIAL SECURITY
OFFICER, ESTI CORPORATION.
Exhibit P2TRUE PHOTOCOPY OF THE REPRESENTATION
DATED 12/05/2014 SUBMITTED BY THE
COUNSEL OF THE PETITIONER FOR AND ON
BEHALF OF THE PETITIONERS.
Exhibit P3TRUE PHOTOCOPY OF THE ORDER DATED NIL
PASSED UNDER SECTION 45-A OF THE ESI
ACT, 1948 FOR THE PERIOD 01/04/2013 TO
28/02/2014.
Exhibit P4TRUE PHOTOCOPY OF THE RECOVERY NOTICE
DATED 14/12/2021 ISSUED BY THE 1ST
RESPONDENT PURSUANT TO EXHIBIT P3
ORDER.
Exhibit P5ATTENDANCE REGISTER OF THE
ESTABLISHMENT OF THE PETITIONERS,
ST.GREGORIOUS MEMORIAL THEKKEDATH
HOSPITAL FROM THE PERIOD FROM APRIL
2013 TO FEBRUARY 2014.
Exhibit P6WAGES REGISTER OF THE ESTABLISHMENT OF
THE PETITIONERS, ST.GREGORIOUS
MEMORIAL THEKKEDATH HOSPITAL FROM THE
PERIOD FROM APRIL 2013 TO FEBRUARY
2014.

¶121

RESPONDENTS EXHIBITS

¶122

Exhibit R1(B)A true copy of the order dated 19-11-
2021 passed by the EI Court, Kollam in
MP(IC) 124/2018
Exhibit R1(A)A true copy of the C11 notice dated
13-09-2013 issued by the ESIC,

¶123

WP(C) Nos.14819 & 15366/2022 -20-

¶124

Regional Office, Kollam to M/s. St.
Gregorious Memorial Thekkedathu
Hospital

Dr.Sunny Joseph v. the Recovery Officer

Case brief

What is this about?

What did the court decide?

Dr.Sunny Joseph v. the Recovery Officer

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Abdul Kader Mohammed Iqbal Vs V.R. Premkumar

Sajeev Kumar Vs Cholams Insurance Company Limited

Moosa Haji@Moothedath Moosa Vs United India Insurance Company

K.K.Rajesh, Vs C.D.Suresh

Dr.S.Y. Ganga Vs Dr. Venu

Dr. Sunny Joseph Vs the Deputy Director