Allowed

The Employees State Insurance Corporation v. M/s.Vikas Enterprises

Telangana HC22 Mar 2010CMA/3527/2004

Case brief

AI extract

What is this about?

In an appeal against a Tribunal order dismissing a claim for ESI contributions as time-barred, this high court held that non-payment of contributions is a continuing cause. Consequently, the limitation period under Section 77 of the Employees State Insurance Act does not apply to orders under Section 45-A.

What did the court decide?

Appeal allowed insofar as rejection of claim for period 4/1992 to 2/1996. First respondent directed to pay contributions for that period.

The Employees State Insurance Corporation… — Pension and Retirement Benefits | Telangana HC (2010)

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THE HONOURABLE SRI JUSTICE K.C.BHANU

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C.M.A.No.3527 of 2004

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JUDGMENT:

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This appeal is directed against the order, dated 26.04.2004, passed by the Judge, Employees Insurance Courtcum-Industrial Tribunal-I, Hyderabad, in E.I. Case No.111 of 2000, insofar as dismissing the claim of the Corporation with regard to contributions for the period from 4/1992 to 2/1996, as barred by limitation.

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2. The factual matrix of the case is not in serious dispute.

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3. It is the case of the appellant-Corporation that the first respondent herein has not paid the contributions as per the Employees State Insurance Act, 1948 (for short ‘the Act’), for the period from 01.04.1992 to 30.09.1999. Though a notice was issued to the first respondent herein to produce the relevant documents to enable them to arrive at the actual contributions payable, it failed to do so. Hence, an order, under Section 45-A of the Act, was passed on 23.05.2000, determining the contributions payable by the first respondent herein. The said order had been challenged by the first respondent before the Tribunal, which, after consideration of material on record, held

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that the first respondent herein is liable to pay the contribution to the appellant-Corporation under the Act for the period from 01.04.1992 to 30.09.1999. But, however, dismissed the claim of the Corporation for the period from 4/1992 to 2/1996, as barred by limitation. Challenging the same, the present appeal is filed by the Corporation.

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4. Learned counsel for the appellant-Corporation contended that the order impugned before the Tribunal was passed under Section 45-A of the Act, determining the liability of the first respondent herein, the limitation to recovery of contributions has no application. He also placed reliance on the decision of the Supreme Court in ESI Corpn V. C.C.Santhakuma r^[1] and prays to set aside the impugned order insofar as rejecting the claim of the appellant-Corporation for the period from 4/1992 to 2/1996.

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5. On the other hand, learned counsel for the first respondent herein contended that the order impugned before the Tribunal was not an order passed under Section-45-A of the Act; that even if it is an order passed under Section-45-A of the Act, the respondent herein, being the employer, is entitled to challenge the same under Section 75 of the Act, and hence, the Tribunal, after considering the material on record, rightly disallowed the claim of the Corporation, which is barred by

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limitation, and accordingly, prays to dismiss the appeal.

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6. Now, the points for determination are (1) Whether the first respondent is liable to pay the contribution to the appellant-Corporation under the Act for the period from 4/1992 to 2/1996, along with interest, which, according to the Tribunal, is barred by limitation?

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(2) When an order is passed under Section 45-A of the Act, the limitation prescribed under the Act is applicable or not?

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7. In the impugned order, a categorical finding has been recorded by the Tribunal that the first respondent herein is liable to pay the contribution to the appellant-Corporation under the Act for the period from 01.04.1992 to 30.09.1999, and the said finding has become final in view of the fact that the first respondent herein has not, admittedly, preferred any appeal challenging the same.

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8. The Corporation passed the order, under Section 45-A of the Act, on 23.05.2000, xerox copy of which is marked as Ex.R-3, determining the liability of the first respondent herein to pay the contribution for the period from 01.04.1992 to 30.09.1999. The Xerox copy of the order under Ex.R-3 is neither disputed nor denied by the first respondent herein, before the Tribunal. The first respondent herein had challenged

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the said order before the Tribunal only on the grounds of illegality and without any jurisdiction. Therefore, the contention of the learned counsel for the first respondent that no order was passed under Section 45-A of the Act is devoid of merit and untenable in law.

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9. On this aspect, the learned counsel for the appellantCorporation placed strong reliance on the decision of the Supreme Court in ESI Corpn’s case (1 supra), wherein at para 16 it is held as under: -

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“When an order is passed under Section 45-A, it is the duty of the employer and not the Corporation to approach the ESI Court. Since no application need be filed by the Corporation after an order is passed under Section 45-A, the limitation prescribed under Section 77 does not get attracted. The non-payment of contribution is a continuing cause, which is clear from the fact that the employer is enjoined to pay the interest under Section 39(5)(a), which was introduced by Act 29 of 1989, until the date of its actual payment.”

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From the above, it is clear that non-payment of contribution is a continuous cause, and therefore, the limitation prescribed under Section 77 of the Act has no application.

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10. Learned counsel for the first respondent relied upon the same judgment at para 13, which reads as under: -

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“Sections 38 to 45-I are contained in Chapter IV while Chapter VI relates to sections 74 to 83. Sections 45-A and 45-B in Chapter IV were introduced by Act 44 of 1966 with effect from 17.06.1967, in order to curb the default by the employers and to provide for an efficient method of recovery. The mode of recovery is provided under Sections 45-C to 45-I. On the other hand, Section 75 in Chapter VI relates to the commencement of proceedings before the ESI Court. Proviso to clause (b) of Section 77(1-A) was introduced by Act 29 of 1989 with effect from 20.10.1989. A combined reading of the provisions indicates that no claim shall be made by the Corporation beyond five years, to which the claim relates. The relevant section in Chapter IV, which deals with the order passed by the Corporation is Section 45A. Similarly, the relevant section in Chapter-VI, which deals with the resolving of disputes between the employer and the Corporation by the ESI Court, is Section 77(1-A).”

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11. This para has no application to the instant case because the Corporation had already determined the liability of the first respondent herein under Section 45-A of the Act. Therefore, when the liability of the employer has already been decided, the question of limitation does not arise.

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12. The Tribunal held that the first respondent herein is liable to pay the contribution for the period from 01.04.1992 to 30.09.1999, but, however, directed the first respondent herein to pay the contribution to limited period only i.e., covering the period of three years prior to the determination of the liability. In

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view of the above decision of the Supreme Court, as the liability is a continuing cause, the limitation prescribed under Section 77 of the Act has no application. Therefore, the impugned order insofar as rejecting the claim of the appellant-Corporation for the period from 4/1992 to 2/1996 is set aside. The first respondent herein is directed to pay the contribution to the appellant-Corporation for the said period also, as determined by the Tribunal in the impugned order.

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13. The appeal is, accordingly, allowed. However, there shall be no order as to costs.

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_____________________ JUSTICE K.C.BHANU

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22^nd March 2010 dr

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[1] (2007) 1 SCC (L&S) 413

The Employees State Insurance Corporation v. M/s.Vikas Enterprises

Case brief

What is this about?

What did the court decide?

The Employees State Insurance Corporation v. M/s.Vikas Enterprises

Case brief

What is this about?

What did the court decide?

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