Appellant Corporation challenged an Industrial Tribunal order allowing a respondent educational society to withdraw damages deposited under Section 85-B. The High Court held the Act's applicability was under litigation, no C-1 notice was issued, and reasonable hearing was due. The appeal was dismissed.
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.
[3258 ]
HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
MONDAY,THE TWENTY SEVENTH DAY OF I/ARCH TWO THOUSAND AND TWENTY THREE
PRESENT
THE HONOURABLE SRI JUSTICE SAMBASIVARAO NAIDU
CIVIL MISCELLANEOUS APPEAL NO: 385 OF 2021
Appeal Under Section 82(2) of lhe ESI Act, 1948 against the Judgment /Decree in ElC.No. 11 ot 2016 Oated 271812020 on the flle of the Court of the Chairman, lndustrial Tribunal-l , Hyderabad I
Between:
...APPELLANTS/TRESPONDENTS
AND
M/s.R.G.R.Siddanthi Educational Society, Survey No. 703, Bollon Road, Opp. Tivoli Garden, Secunderabad - 500003, Rep. by its Honorary Secretary, P.L. Srinivas'
..RES'.NDENT/'ETIToNER
Counsel for the Appellant: SRl. WILLIAM BURRA
Counsel for the Respondents: SRl. N. VINESH RAJ
The Court made the following: ORDER
THE HOl I'BLE SRI JUSTICE SAMBASIVA TiAO IIAIDU CML IIISCELLANEOUS APPEAL No.385 OF,lO2 I
ORDER:
i3eine :rggrievecl bv tl'r' ordcr o{- Ernirlr r e: s Insura ttce Colrrt c:unr ir rdustrial'l'ribunal, Il-r'dcrerb.rd (n:r cinaftcr be refer.rcd as'l'ribunal) clated 27.08.2O2O in 1I I C.I,tro.1 i of -20l(rrr ir:r- 'unrlr'r LhcTribrrrr;rl allon cdt hr,' sirirl case and i,L't ltsi(.l(' t lC 85 [J Orclr:r r..rf t hc r1-rrrcllaLnts 11:,rtcd 0i' ll.).2O ilj permlttrng tht' respond( ntilp:titioner to n'illldrarv lr(' arnounl u,hrc:ir hc has dei,osite: bcforc the 'i liir:niri. lie rcsponCtirrts lrt thc abovc Fl.l.L.:.1 I of )Ol6 lravc f:ieci r h,) prese rt Civil Miscellaneorrs Ap l):'itl on rhe fbilowir-rg gr )L r1d s
'lhc irrpugned orrler- clatc'ci 27.08.2020 in t).l.t,.No.l I oI 20 i() i.; r rr-r)ncor.ls, rllega) and against the Irr,rvir;ion:; of Iirrv, rhe'l' i[.,urral committed an error br tLolditig that L,nlc:is an( until thc rcspondents/pctil'on(:r's rec( t ve allotment c( rhr lrunrber it is :rot possible irr 1lzr.'nrcrt of thc ccntribut ior Thc allotment c-rf code num tt t' is not manda,.or'.r . ll rv;r:; ah-r::rdv sr'ltlr:cl b1, thc I-li11lL L out'ts Lirat
,)
SSRX, J C.M,A,No.3aS oj 2O2l
withou t recervlng C- I I nOtice the cmplo..er is under obligation to compl_rr tl-re provisions of lau,. The Tribunal tailed to appreciate that when the ESI Act l94g rvas made applicable to schools and hospitals u,.e.f. ia.I O.20Og by issuing a notilication published in the gazette, it would be the date on which the respondents had got knowledge and the respondent is liable to pav contributions from the date on which the act is made applicable. The respondent has got 62 employees as on the date of the applicability of the act. Therefore, the Orders impugned in the present appeal are illegal and rnoperative.
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.S,SRN, J t .ttr A N<: 38s of 2021
c'on1r-r1;Lrt.ior ',r'ithin thc tirnL' [Jut. tlrc'l'ril;rural-or rmittcd a11 crr )r ir rlrling thzrI tl-tc order Lrrrr]c: li-, I] irrl;osing clainagcs is rot llarrdaton. But, thc lrppr: l::n1:; n,trile placrng r'3li u rcc on il judgment ln Argonc, Chemical Industries us, Union of India and Othersr, 'r'rerein rhe Ilon ble Are i Sourt urls pleascd to obscrvi: that m[)ositlon ol dan' agt-s IS sla[Lllorl, and must bc p:Lrr-['lh:refore, accordll.rg tc t.re appellant thc Tribunal crornrnttt( (l z n error in allori ing t[-rc petitron iiled 1r-r' the respon,lerrtsT 1lr.t rioncrs as sr-Lcl-., soL qht for sel.ting asicle the order
1 .1[t i9./ (] sC I ,r1.r l
4
SSRN J c-lr.A.No.3As of 2O2 t
^l
Secundcrabad on 16.03.20 i 1 ancl founcl (62) employees were working by drawing r,r,ages less than Rs. 10,000/- per month. Therefore, the respondent is covered by ESI Act, 1948. But, the respondent lailcd to pay contribution and interest and that there .'as deiay in payment of contribution. Therefore, a demald notice under Section 85-B dated 07.10.2015 was issued with a demand to pay Rs.6,12,735/-.
4 . The respondent has disputed the said notice ald contended that they paid contribution from i4. 10.2008 to 28.08.2013 vide two 45-A orders dated 19.08.2013 for a tota-l sum of Rs.21,00,OOOl . The respondent/ petitioner society is a non-commercial organization functioning on non-profit ald no loss basis. But, the appellants herein without considering the said aspect, imposed damages of Rs.6,12,735/- which is illegal and barred by limitation. The appellants have claimed that if there is any limitation, it starts only from 30.OT .2O 15, thereby it is within limitation.
5
s.sFN, J ) tt A.N. 3AS of 2O21
l \'he tL r:r the demand order dated 0,'. 1 O.,lr:, I 5 passed
b'i the rr:spondent is valid?
7 . 'lLLe I ribunal having considered tl-re ora1 and documentrlr e,vidence placed before it, allow.ed tfre petition filed b., th,: respondent and set asicle B.) B Notice perrnrtting tl re respondent herein to withdrarv t h : amount thaL u'as clep rs,ited pursuant to 85-B notice.,
Whethe r the conclusion arriued by the h.tbunaL irt alLou'in.t D.t.C.No.l1 of 2016 is inconect aut, liable to be set r stde.?
9. POINT
6
SSRN. J c.M-A No-3a5 of 2O21
The issue involved inthe case on hand is about the failure of respondentsocietyin paymcnt of contribution making the societyliable to pay damages-The respondent has claimed that itwas not possible to the society to pay contribution till theyreceiveC- 11 llotice about the allotment of code tothe society. As could be seen from the material placed bythe respondent,itshowsthat the respondent was intimatedabout the allotment of code number vide C-l1 noticedated 18.05.20 11'Therecord further shows thatthe respondent paid contributionafter receiving 45-A noticedated l9.O8.2013 There isno dispute aboutthe challengemade againstG O'Ms No'584' of 2OO8 covering theschools and hospitals by way of writ petition vide W.P.No.235Oof 2010 and other writ petitions and about the orderdated 06.10.2015, by which itwas held that theschools and hospitals are covered with effect frorn l4.lO .2008.The writ appeaiagainst the saidorder w'as dismissed on 16.03.2016.
7
S.SRN, J :.M.t1 t:o.3 as of 2O21
,
Llnrle thr ol,ligaticn to p.1, contributiort r..,.crt u.ithout rci'i,rul1q iLrr\ C- I I :'rotice. The appellar ts lul l rer- pJcaclcd thitt s.rn('c' tlrt: ESI A<:t is madc appiicab)e u,.e .i I21.10.2009 tht' rL:;Prr-,.ilnt is unrier obligatron to pa' ,h( ( ontrlbution lro,,, tl,e : a;d date and in view of the failnrc to pa\ the r.ontriru -ic n. r.he respondent is liable t() I)ily ,lamages ilenriirrrlccl lti the erppcllant.
I 1'l'he c:spr_tte in the present case is abou the liabilitv of tlrc r1...pr nCent to pa1. the damages in yieu rf th,: failure t() pir\ rlr,-- r o ttributiorr. As could be secn fr-,)rl Ilec:ion g l-.r Ll ol tl rc ES I Ac.r, the appellants herein hat e 11ot power Lo l-eco\rer tLLe dirmages. The following is Section g 5 Ei ol trSI Act:
"Pott,1'y o recouer damages. Wltere an employ=t.fa s to ])ctiltltc 'u,t.ourlt due in respect of ang contriL,utrot.,, or ona ot!'t' at .rtrtrtt paga.ble under this Act, the O<,r1prrrr1o,. tnett r.'<-. .t':r frotL the emploAer by way of 1rcnalty :;ttclt tlatrtcttT<.: t ot exceedtng the amount of ctrrectrs a:. ,na1 be spt t'tJieu irt the regulations: prouidect rhat before r ei:Ltue,ir '.i sttch darrtages, tLLe emploAer sttall b,z ,liuttt tt reesonrrl ,te opporturtitg of being hecLrd: pt.outdel firllrer I hcti llle .-t rporatiort mag red-uce or u.raiue, tlLe it. nuiges
8
ssFN', J C.M-A.No.Ja5oJ 2o21
recouerable under thissectton1. relation to an estab' lishment ttthich is a sickindustrictl cornpa n-y i't respect of ttlhich a scheme forrehabilitation hos beensa nctit:ned by the Board for Industialand Financtal ReconstntctiotL establishetT und-ersection 4 of the Sick Industial Companies(speciot Prouisions)Act, 1985 (1 of 1986), subject to such termsand conditions os maA be speciJied in regulations."
"Ang damagesrecouerableunder sub-section (1) magbe- recouered as anarrear of landreuenue4[or under section 45C to section45'1."
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-s,sRrv, J (.'LA.^o.3as o).2O27
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.ssti" J c.M A.No.3As oI 2O2l
allou'ed the petition liled b1, the lespondent hercin Thcreb-l there is no necessity to interlere r,rrith the said fir-ring and the Civil Miscellaneous Appeal is liable to be dismissed
1S 14. In the result, the Civil Miscellaneous Appeal
dismissed.
As a sequel, pending Miscellaneous Applications, if
any, shall stand closed.
SDF K. SRINIVAS RAO JOINT REGISTRAR (:*
//TRUE COPY//
SECTION OFFICER
To,
BM
?
HIGH COURT
DATED:27 0312023
ORDER
CMA.No.3l'5 of 2021
.t.qrs
1j,. l. ).-t
t.: )
,) E JU}l ?O?3
\ ::.
/
DISMISSING THE CMA WITHOUT COS S
I
Srl--ra\AP
3 issues framed by the court
Whether the appellant Corporation is barred from imposing damages for failure to pay contributions when the Act's applicability was under challenge.
Whether the Corporation could recover damages without first issuing a notice to show cause regarding the imposition of damages.
Whether the Civil Miscellaneous Appeal challenging the Tribunal's order permitting withdrawal of deposited damages should be allowed or dismissed.
Colour shows how this judgement treated each authority
Argonne Chemical Industries vs. Union of IndiaDistinguished¶27
Argonne Chemical Industries vs. Union of India
G.O.Ms No'584' of 2OO8Referred¶49
W.P.No.235O of 2010Referred¶49
2 provisions across 1 enactments
The Employees State Insurance Corporation, Rep. by its Regional Director
The Recovery Officer, Mis. Employees State Insurance Corporation
M/s. R.G.R. Siddanthi Educational Society, Rep. by its Honorary Secretary
Sri Justice Sambasivarao Naidu
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
