Dismissed

Employees State Insurance Corporation v. Som Nath

Punjab & Haryana HC13 Jul 2009FAO/319/1988

Case brief

AI extract

What is this about?

Appeal against an order allowing a suit for unpaid employee contributions. The High Court held that while recovery under Section 45-B has no limitation, the claim failed on merits because the factory was not operational during the disputed period due to insolvency proceedings.

What did the court decide?

The appeal was dismissed as it was found to be devoid of merits.

Employees State Insurance Corporation Vs Som… — Service and Employment | Punjab & Haryana HC (2009)

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FAO No. 319 of 1988 1

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IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

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FAO No. 319 of 1988 Date of decision: July 13, 2009

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Employees State Insurance Corporation

........ Appellant

Versus

Som Nath

.......Respondent

Coram: Hon'ble Ms Justice Nirmaljit Kaur

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-.-

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Present: Mr. B S Bhalla, Advocate for the appellant

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Mr. Shekhar Verma, Advocate for the respondent

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-.-

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Nirmaljit Kaur, J.

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This is an appeal against the order dated 06.02.1988 passed by the Sub Judge Ist Class, Amloh, allowing the petition under Sections 75 to 79 of the Employees State Insurance Act, 1948.

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Facts of the case, in brief, are that respondent/petitioner Som Nath, was a partner of M/s Aery Steel Rolling Mills, Mandi Goingarh. During the insolvency proceedings, initiated by M/s Banarsi Dass and Sons and Others filed before the Senior Sub Judge, Patiala, the property of M/s Aery Steel Rolling Mills was attached, which included the premises, the machinery and other parts of the factory. The attached property was handed over to Shri Suraj Bhan, on Spurdari in the month of July 1975 and the possession of the said property remained with him from the date of attachment till the date it was released by the Court i.e. 21.04.1981. Under the circumstances, the respondent is not liable to pay even a

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FAO No. 319 of 1988 2

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single paise by way of employees contribution interest or penalty. In the reply filed by the appellant/respondent, it was stated that the appellant was not claiming any amount after July, 1975 and since the applicant had not paid the amount up to July, 1975 and, as such, Rs.7360/- were due towards the applicant, for the period from August 1974 to July, 1975. The Petition filed under Sections 75 to 79 of the Employees State Insurance Act, 1948 (in brevity 'the ESI Act') was, therefore, allowed. The order dated 28.02.1985 passed by the appellant/respondent, holding respondent/petitioner Som Nath, liable for the payment of any amount on account of employees contribution, penalty and interests, was quashed.

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Aggrieved, the appellant/respondent challenged the order dated 06.02.1988 passed by Sub Judge Ist Class, Amloh, before this Court, by raising mainly two fold submissions. Firstly, the trial Court had wrongly held that the recovery of the aforesaid amount has become time barred and secondly, since no limitation is applicable, the respondent is required to make the payment under Section 45-B of the ESI Act.

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There is merit in the first arguments raised by learned counsel for the appellant, as Section 77 of the ESI Act, provides that “proceedings before an Employees Insurance Court shall be commenced by application”, and that “every such application shall be made within a period of three years from the date on which the cause of action arises”, has no relevancy to the present case, in view of the judgement rendered by this Court in the case of ' E.S.I.C. v. C.C.Santhakumar, JT 2006 (10) SC 549 , wherein, it was held that there is no hurdle for recovery of the amount determined under Section 45-B by invoking the ambit of recovery as contemplated in Sections 45C to 45-I. The right of the Corporation to recover the arrears by coercive process is not restricted by limitation. The proceedings under Section 45-A and 45-B in Chapter IV are different from that of under Sections 75

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FAO No. 319 of 1988 3

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and 77 in Chapter VI of the ESI Act.

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Learned counsel for the respondent also does not dispute this settled proposition of law and accepted the fact that there is no limitation in proceedings under Sections 45-B of the ESI Act. The present notice of recovery was sent under Section 45-B of the ESI Act and hence limitation was applicable.

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After hearing learned counsel for the parties, I do not find any merit in the second argument of the learned counsel for the appellant that the appellant was entitled to recover the said amount, pertaining to the period from August 1974 to July 1975 on the basis of the notice dated 28.02.1985, in view of the finding recorded, on merits by the trial Court. The factory of the respondent was attached in solvency proceedings in July 1975 and Suraj Bhan was given the possession on Spurdari and the factory was released by the Court on 21.04.1981. There is no denial to the fact that the factory was not running even prior to July 1975. Thus, the respondent did not run the factory and it was, on this account, that insolvency proceedings were initiated. As such, the question of keeping any worker did not arise. The entire case was made up on the basis of the Inspection report submitted by Shri J L Verma on 25.07.1976 and he was never brought in evidence, in spite of his being very much in service. No record on the basis of which report R-1 was filed, has been either produced or proved. Hence, adverse inference was drawn against the appellant.

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For the reasons stated above, the appeal is dismissed, being devoid of

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merits.

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(Nirmaljit Kaur) Judge

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July 13, 2009 mohan

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Whether to be referred to reporter : Yes/no

Employees State Insurance Corporation v. Som Nath

Case brief

What is this about?

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Employees State Insurance Corporation v. Som Nath

Case brief

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