Disposed

S.Ravinder Reddy v. Employees State Insurance Corporation and 3 others

Telangana HC4 Apr 2022WP/21400/2021

Case brief

AI extract

What is this about?

High Court disposed of a writ petition challenging a recovery order under the ESI Act. The Court held the petition was barred as the petitioner must first exhaust the remedy of appeal before the ESI Court under Section 45-AA. Petitioner directed to approach ESI Court.

What did the court decide?

Petitioner directed to approach ESI Court; Recovery suspended for 60 days.

S.Ravinder Reddy Vs Employees State… — Civil Procedure and Limitation | Telangana HC (2022)

¶1

HIGH COURT FOR THE STATE OF^TELANGANA AT HYDERABAD

¶2

(Special Original J urisdiction)

¶3

[,1ONDAY, THE FOURTH DAY OF APRIL TWO THOUSAND AND TWENTY TWO

¶4

PRES ENT

¶5

THE HONOURABLE DR. JUSTICE G.RADHA^RANI

¶6

WRIT PET ITION NO: 2'1400 OF²⁰²¹

¶7

Between:

¶8

S.Ravinder Reddy, S/o. S.Malla^{Reddy, aged about47 years,Occ: Business'RJo.} D.No.5-6-163/18/i, Krishna Nagar,^{NTPC, Somanapalle, Karimnagar-505215.}

¶9

...PETITIONER

¶10

AND

¶11

Employees State lnsurance Corporalion,^{Having its Regional Office at 5-9-23,} Hill Foit Road, Adarshnagar, Hyderabad^{-500 083. Rep byits RegionalDirector}

¶12

Employees State lnsurance Corporation,^{Having its ReglonalOffice at 5-9-23,} Hill Fo;t Road, Adarshnagar, Hyderabad^{-500 083 Rep.by its Deputy Director}

¶13

The Recovery Officer, ESI Corporation^{RegionalOfficeat 5-9-23' Hill Fort Road,} Adarshnagar Hyderabad -500 083

¶14

State Bank of lndia, Rep.by its Branch Manager^{SCCL Godavarl Khani Branch,} Godava'i Khani, PeddapalI^{D str ct.}

¶15

..,RESPONDENTS

¶16

Petition. under Atlicle 226 of the Constitution of lndia^{praying thatin the} circumstances stated in the affidavit^filed lherewith,^{the High Court may be pleasedto} issue the writ, order or direction more^particularly oneⁱⁿ the^{nature of Writof} IVANDANIUS deciaring the action of the^{respondents under lmpugned orderbearing} No.52Q/52143-0999 dated 05-04-2021^issued by^{the 3rd respondent undersection} 45-G of the ESI Act r/w 2nd and 3rd schedule of the^{lncomeTaxAct,1961and} lncome Tax^(Certificate of Proceedings) Rules,1962^{as arbitrary, illegal,capricious} and violative of^provisions of ESI Act and consequently^{set-aside the sameby} directing the respondents not to holding of^{petitioner'sS.B accountbearing} No.5220051 1502 maintained with 4th respondent^bank.

¶17

lA NO:^'l OF 2021

¶18

Petition under Section 151 CPC^praying that^{in the circumstances stated in the} affidavit filed in support of the^{petition,the Hlgh Court may be pleased to Suspend the}

¶19

operation of impugned order bearing No.52Q/52'143-0999 dated 05-04-2021 by the 3rd respondent under section 45-G of the ESI Act r/w 2nd and 3rd schedule of the lncome Tax Act,196'l and lncome Tax (Certificate of proceedings) Rules,j962, pending dlsposal of the above Writ Petition in this Honble Court.

¶20

Counsel for the Petitioner : SRl. V. V. RAMA KRISHNA

¶21

Counsel for the Respondent Nos.1 to 3 : SRt. PASHAwI SR|N|VASULU. SC FOR ESIC

¶22

Counsel for the Respondent No.4 : lvus.PEARL LAW ASSOCIATES

¶23

The Court made the following : ORDER

¶24

THE HON'Bl,E Dr. JUSI'ICE^(;. ITADHA IIANI

¶25

\ttlT Plil-11'lO\ \o.21{00 OIr 2021

¶26

oRl)l.]tt:

¶27

This writ petitiorr is flled fbr the Ibllou'ing reliel

¶28

"..to issue the writ order or direction^{ntore panicularlyonetn} the nature ol \'rit ol NIi\NDAlvltlS^{declaringthe action of the} respondents under impugncd order bearing No.52Qi52l43099c) dated 05.04.2021 issued by the^{3'd respondentunder} section 45-G of the ESI Act r/u' 2nd and^{3'd schedule of the} Inconie Tax Act l96l and Inconre Tax^{(Certificate of} Proceedings) Rulcs 1962. as arbitrary, illegal,^{capriciousand} T,iolative of provisions ol ESI Act. and consequently set aside the same by directing the rcspondents^not to^{holding of} pel.itioncrs S.B. Account bearing No 5220051 1502^rnaintained r.vith 4'hrcspondent bank and pass.,"

¶29

l. .ll,-'ard the learned coLulsel^lbr the^{petitiorleranci the learned} Standing Counscl tbr the respondr'nts^{No. I lo 3}

¶30

Learned counsel lor the^{petitioner submitted thatthe} petitioner was an individuai contl'actor^{providingmanpower to the} conrpanies. During the^year ?015.^{he appliedlor work with NTPC,} Ranragundam. So as to^get a^{work order fl'oln NTPC, registration} with the ESI was mandatory. The^{petitioner appliedlor a code with} respondenls' organization and^{obtainedcodeNo'5200052143} 0000999.^'lhe NTPC rejected the^{application submittedby the}

¶31

Dr. GKlt,J tt P \o.)l4l)0 of2t)21

¶32

petitioner, as such, the petitioner had not paid any payntenrs to ESI as no worker or labour lorce was employed by the petitioner since 2015. While so, the 3'd respondent passed orders on 05.04.202i under Section 45-C of rhe Ernployees' Stare lnsurance Act (lor shorr^,ESI Act'). read with Second and^'['hird Schedule ol'rhe lncome Tax Act. 1961 and Incorne tax (Certificate ol proceedings) Rules, 1962 directing the 4'h respondent to hold an amounr ot' Rs.3,09.242l- f'rom the petitioner's bank account No.522005 I I 502. No notice was served on the petitioner as contemplated under the ESI Act. No explanation was called for from the petitioner and no opportunity was provided to him to explain the said circumstances under Section 45 ol the IISI Act. The petitioner approached the respondents personally several times, but they lailed to provide personal hear.ing, as such filecl the writ petition.

¶33

Leamed Standing Counsel tbr the respondents No. I to 3 submined that the petitioner himself registered his establishment under the provisions of ESI Act online with effect from 0i.0g.2015 but had not paid any contributions since then. The respondent Corporation issued a notice dated | 5 .O2.ZOl9 advising the petitioner to pay contribution from the date of coverage. The petitioner received the notice as per the postal consignment track reports, but had not

¶34

Dr, CRR,,1 WP ,Yo.21140 ol 2021

¶35

paid the contriblrtion. As suclr, the Corpolation issued C- l 8 dated 09.04.2019 proposing to deterrnine the contribution for the period fiom 0i.08.2015 to 31.03.2018. The C-l 8 noticc w'as received by the petitioner. br-rt hc neither attencled thc personal hearing on 20.05.20 i9 nor paici tl.re contributions tbr the period nrentioned in the notice. Alier giving another opporturlit), to the petitioner, the respondent Ciorporation invoked tl.re provisions under Section 45-A of the Act deterrrining the contribution as Rs.2,03,7161- for the above period. The petitioner received order passed under Section 45-A of the Act, but had not availed the opportunity of appeal before the appellate Authority under Section 45 AA o1'the Act rvithin 60 days. As such, the respondent issued recoveD/ certificate in Form C-19 dated 12.03.2021 to the recovery officer to recover an alnount of Rs.3,0;1,895/- including the interest.^'fhe recovery olflcer also issued a notice to the petitioner as the petitioner lailed to pay the dues. The recovery olficer issued an ordel untler Section 45-G of the ESI Act, dated 05.0,1.202 I to the petitioner's bank endorsing a copy to the petitioner. The petitioner approachcd thc' coun by irling the rvrit petition without availing the rernedv o1'appeal under Section 45-AA o1- the ESI Act and hence, prayed to dismiss tire rvrit^petition.

¶36

Dt, GRR,J ll P ,\o.2 Il l)l) oJ 2l)) I

¶37

Perused the record. Learned Standing Counsel lor the respondents contended that several notices were issued to the petitioner, but he had not responded. But, the leamed counsel lor thc petitioner submitted that the petitioner was not residing in the said address and no notice was sered on him till date. He contended that no online records were generated as the petitioner was lrot doing any contractual serviccs nor engaged any labour and closed his operalions as a labour contractor. The contention raised by the learned Standing Counsel was that the petitioner had to challenge the notice under Section 45-A of the ESI Act, but without challenging the same,^he was challenging the notice under Section 45-G of the ESI Act which was not perrnissible and relied upon the^judgment of a Division Bench of this Courl in Ashok Leyland Limited, f)uctron, Castings Limited, R.R. District v. Deputy Tahsilda r/Specia I Revenue Inspector (ESI) Recovery Cell, Collectorate, R.R. District, Hyderabad and anothert. This Court, relied on the^judgment of the Hon'ble Apex Couft in Employees' State Insurance Corporation v. F. Fibre Bangalore (Private) Linited [1997 SCC (L&S) 190], wherein it was held that:

¶38

"5. The Full Bench ol'the lligh Court has held that in a case rvhcrc the ordcr undcr Scction^.15-A hecornes llrral. thcrc is no

¶39

2001 ('l) A r-D 96 (D8)

¶40

¶41

Dr. GRR,J ll'P .'o.21100 of 2021

¶42

need lbr the Corporation to seek adjudication before the Insurance Court. In all other cases, the Corporation is required o go to the lnsurance Court. have it ad.judicated and then make a demand. We are of the vicr.r, that the [:ull Bench of the fligh Courr is clearly in error to rcach that conclusion. 1-hough Section 75 ol' the Act does not envisages as to u ho has to approach the Insurance Court, by neccssary implication uhen the enrployer denies the liabilitl or applicability ol'the provisions ol the Act or the quantum of thc contribution to bc deposited bv the erlplol'er. it is lirr him to approach the Insurance Court and seek adiudication. It is not fbl the Corporation in each case rvheneveL thcrc is a dispute. to go to thc lnsurance Coun and have thc dispute adjudicatcd. Otherwisc: the Act u'ould bccolre unrvorkablc and dcleat thc oblcct and pLrrpose ol thc Act."

¶43

Considering the said observations, this Court in the above case heid that the wlit petition was not maintainable in view of the remed!' available betbre the Employees' State Insurance Court.

¶44

7 " Thc petitioner', withor-rt approaching the ESI Courr, had ciirectly approached this Court without availing the rernedl.available to him befbre the ESI Court. Hcnce. it is considcred fit to dispose ol this writ petition directing hir.n to approach the ESI Court by filing appropriate application and also dilecting the ESI Court to dispose of the sarne in accordance w'ith larv

¶45

/*+.?

¶46

¶47

Dr. G RR,J ' tt P \o.2140A of 2l1l

¶48

In the result, the Writ^petition is disposed of dir.ecting the

¶49

petitioner to approach the ESI Court by filing appropriate application and the ESI Court is dir.ected to dispose ol the said application in accordance with law. The respondents No. I to 3 shall nor take any coercive steps for recovery of the purported due aniount lrom the petitioner for a period of sixty (60) days. No order as to cosrs.

¶50

Miscellaneous Petitions pending, if any, shall srand closed.

¶51

SD/. P.PADMANABHA R ED ASSISTANT REGIS T AR //TRUE COPY//

¶52

To,

¶53

SECTION OFFICER

¶54

1 The Regionat Direclor ErnotovFes State lnsuraoce Corporation. Having its 2 The Depuly Director, Regionaj Off,ce at 5-9_23. EmoloveesHitt fort Rord Adarshnagar, Hyderabad _S00 083 :Pte^{rns!rance corporatron' Having115} negionar cjrice?;-;itiff:

¶55

3 rni n""ou".ybli*i ii, i"-i" Road' Adarshnaqar' Hvderabad -500 083 eoarsnnasari H-fJ",jtro"liljt"atSt'on^{Resional orrice at 5-e-23,HilrFo(} Road. 4 U:fl#",i^y;:3:::;:l?,?,:3[l''*ia'^{sccL Godavari Khani Branch,}

¶56

5 6 313 33 3 3[i X;XfiUiJI,t:HNA'^{AdvocateroPUC]} 7 Advocate ropUcl B one Two CD cc Copiesto r,r;l pian^jii,ir Xi'Jj3liit ..?JB,r:;|c,

¶57