An appeal against an order under the ESI Act requiring the maintenance of registers. The single-judge bench held that the Act does not mandate employers to maintain specific documents under Section 45 and dismissed the appeal.
The appeal was dismissed; finding no substance in the argument that the Act mandates maintenance of documents under Section 45.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
MA No.412 of 2001
“(I) Whether the petitioner maintains register and records and made there open for the inspection of the OP complying section 44 and 45 of the Act?
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Section-45 of the ESI Act prescribes about Inspectors and their functions and duties. The Inspectors are competent to examine any registers, ledgers or any return referred to in Section-44 of the Act.
Section-44 of the ESI Act prescribes that every principal (here OP-2) and immediate employer (here petitioner) shall submit to the Corporation or to such officials of the Corporation such returns, such forms and containing such particulars.
Section-97 of the ESI Act empowers the Corporation to make regulation.
Regulation-32 of the ESI Regulation, 1950 speaks which registers are to be maintained. Regulation-102-A relates to inspection and it gives direction that every principal employer shall maintain a bound inspection book and shall be responsible for its production.
Regulation-66 of the ESI Act gives direction about maintaining the expenditure.”
(I) Whether, the Act empowers the Inspector/Social Security Officer of the Corporation to call upon the Employer to furnish him such information, as he may consider necessary in regard to compliance of the provisions, under the Employees’ State Insurance Act, 1948?
(II) Whether, the employers are required to maintain registers like Attendance Register, Wage Register, Ledger, Cash Book,
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Vouchers, Register of employees and other documents relating to employment of persons, payment of wages and required to produce the same before the Inspector/Social Security Officer in course of verification/Inspection to ascertain the correctness of the particulars in the return and other records produced by the employers?
(III) In absence of any materials produced by the employers, whether, the Corporation can take 25% as wage component on the total work orders/Bills?
5.1 So far as 2nd substantial question of law is concerned, learned counsel for the appellant draws attention of this Court to Section 45 of the Act and submits that since Security Officer at any time may inspect registers as mentioned in Section 45(2)(b) of the Act. Hence, the employer is required to maintain those records and keep those ready for inspection. He also relied upon a decision reported in (2008) LIC 1390 (SC) paragraphs-13 and 14 of which is relevant of our consideration and the same is quoted below:-
“13. The quantum of amount due has to be determined in respect of all contract workers engaged by the contractors. The principal employer would be entitled to recover the contributions from the contractor; they being the immediate employers. Whereas under the Provident Fund Act, the principal employer is statutorily liable in terms of the provisions of the
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Act to comply with the provisions therein; in terms of the Act, the principal employer is entitled to recover the amount of contribution payable by the immediate employer for them.
Section 45A of the Act enables the appropriate authority to recover such dues both from the principal as also the immediate employer. It provides for an opportunity of hearing to both of them. Apart from Section 41(1A), Regulation 32 of the Employees � States Insurance (General) Regulations, 1950 mandates an immediate employers to maintain registers in the prescribed form(s). An order passed under Section 45A of the Act has a serious civil and/or financial consequence as the amount so determined is liable to be recovered as arrears of land revenue. Section 44 of the Act, not only mandates the principal employer, but also the immediate employer to file its reports and maintain registers. Under Subsection (2) of Section 44, when such reports are not submitted either by the principal employer or by the immediate employers, the Corporation may require the person in charge of the factory or establishment to furnish such particulars as it may consider necessary for the purpose of enabling the Corporation to decide whether the factory or establishment is a factory or establishment to which this Act applies. Subsection (3) of Section 44 of the Act enjoins upon the principal as also the immediate employers to maintain registers or records as may be required by regulations. Section 45 also empowers the Inspector of Corporation to require an immediate or principal employer to furnish to him such information as he may consider necessary in regard to the compliance of the provisions of the Act by them. The Act, therefore, recognizes the existence of an immediate employer.
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contractor is also required to issue an employment card to the said workers. Muster rolls, wages registers and other records in respect of each worker engaged by the contractor are also required to be maintained.
Reliance has been placed by the Division Bench as also by Mr. Francis on Employees State � Insurance Corporation v. Harrison Malayalam Pvt. Ltd. [(1993) 4 SCC 361]. Unfortunately, therein attention of this Court was not drawn to the case of Food Corporation of India (supra). Even otherwise, the said decision has no application to the fact of the present case. The question therein which arose for consideration was as to whether the employees of the contractor who were casual employees were identifiable or not. It is in that context, this Court opined : Under the Act, the scheme is more akin to group insurance. The contribution paid entitles the workman insured to the benefit under the Act. However, he does not get any part of the contribution back if during the benefit period, he does not qualify for any of the benefits. The contribution made by him and by his employer is credited to the insurance fund created under the Act and it becomes available for others or for himself, during other benefit periods, if he continues in employment. What is more, there is no relation between contribution made and the benefit availed of. The contribution is uniform for all workmen and is a percentage of the wages earned by them. It has no relation to the risks against which the workman stands statutorily insured. It is for this reason that the Act envisages automatic obligation to pay the contribution once the factory or the establishment is covered by the Act, and the obligation to pay the contribution commences from the date of the application of the Act to such factory or establishment. The obligation ceases only when the Act ceases to apply to the factory/establishment. The obligation to make contribution does not depend upon whether the particular employee or employees cease to be
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employee/employees after the contribution period and the benefit period expire.”
5.2 He further submits that since the Act is a social beneficial statue enacted for benefit of the employees a liberal interpretation should be given to the provisions of the Act. In view of the above, he prays for setting aside the impugned order.
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6.1 So far as question No.3 is concerned, no such contention having been raised before the Insurance Court, the same cannot be raised in this appeal.
Urgent certified copy of this order be granted on proper application.
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K.R. Mohapatra, J.
ss
3 issues framed by the court
Whether the Act mandates the employer to maintain specific documents such as Attendance Register, Wage Register, Ledger, and Cash Book under Section 45.
Whether the appellant Corporation is required to maintain registers as mentioned under Section 45 of the Act.
Whether the Corporation can take 25% as wage component on total work orders/bills in absence of materials produced by the employers.
Colour shows how this judgement treated each authority
Unknown Supreme Court CaseDistinguished¶25
(2008) LIC 1390 (SC)
Employees State Insurance Corporation v. Harrison Malayalam Pvt. Ltd.Referred¶34
Employees State Insurance Corporation v. Harrison Malayalam Pvt. Ltd. [(1993) 4 SCC 361] · Who else cites this
Unknown CaseDistinguished¶34
Food Corporation of India (supra)
4 provisions across 2 enactments
Corporation
OP-1 (Immediate Employer)
K.R. Mohapatra
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
