Appeal under E.S.I. Act No.1 of 1991

17th March, 1998

Petitioner Counsel: NITIN SARDESSAI
Respondent Counsel: A. A. AGNI

Cases Cited:
1991(63) FLR 638 [Para 4,10]
1982 Mh. L.J. 315 [Para 4,7]
AIR 1993 SC 2655 [Para 5]
1994 Supp. (3) SCC 580 [Para 5,9]

JUDGMENT

JUDGMENT :- This appeal is preferred against the Order dated 27th November, 1990 passed by the Employees Insurance Court at Panaji, hereinafter referred to as 'E.S.I. Court'. It appears that this Court did not formulate any substantial question of law at the time of admission of this Appeal. Moreover, in terms of section 82 of the Employees' State Insurance Act, 1948, hereinafter called as 'the said Act' an appeal can lie from an order of E.S.I. Court only if it involves substantial questions of law and not otherwise. No doubt paragraph 1 of the Memo of Appeal itself enumerated certain questions stated to be substantial questions of law. However, the point is whether all those questions can be said to be substantial questions of law ? Moreover, Shri N. Sardessai, learned advocate appearing for the appellant, has fairly admitted that the appellant wants to restrict the challenge to the impugned order only to the four grounds, which, according to the learned advocate, have given rise to the following substantial questions of law as framed in paragraph 1 of the Memo of Appeal :-

(1) Whether the respondents were justified in invoking the extraordinary remedy under section 45-A of the E.S.I. Act when the inspection report as well as the wages register were produced before the E.S.I. Court.

(2) Whether the burden of proving that less than 10 employees were employed in the establishment is on the employer.

(3) Whether the Court was justified in coming to the conclusion that once the coverage was proved it is enough to find out the total amount paid to the employees to work out the contribution amount and that it is not necessary to find out as to how many employees such wages were paid once the establishment is covered, and

(4) Whether the inspection report of the E.S.I. Inspector is conclusive proof in support of the coverage under the E.S.I. Act.

2. The case of the appellant is that he had vehicle repairs and power operated spray painting establishment at Baina, Vasco-da-Gama. On 2nd August, 1983, the appellant received intimation from the respondents regarding the applicability of the said Act to the said establishment and direction to pay contribution in the sum of Rs. 3,304.40 paise for the period from 1st January, 1981 to 30th November, 1982 against the wages of Rs. 47,206.01 for the said period. The said letter dated 2nd August, 1983 was replied by the appellant denying the claim of the applicability of the said Act to the establishment. Subsequently the appellant received another letter intimating that the contributions had been calculated as per the details given in the Annexure to the said letter. This second letter was not replied to by the appellant as the appellant had already replied to the earlier letter disputing the applicability of the said Act to the appellant's establishment. The respondents thereafter by Order dated 18th March, 1985 issued under section 45-A of the said Act determined the contributions along with the interest amount of Rs. 551.82 with a direction to pay the said amount of contribution along with the interest within 15 days from the date of Order. The said Order was duly served upon the appellant. It appears that thereafter the Collector, as required by the respondents, proceeded to recover the said dues from the appellant as the arrears of land revenue, Aggrieved by the said order under section 45-A, the appellant preferred application under sections 75 and 77 of the said Act before the E.S.I. Court. The challenge to the Order under section 45-A was mainly on the ground that the regional Director was not empowered under the said Act to pass an Order under section 45-A of the said Act and that the dispute raised by the appellant could have been decided only by E.S.I. Court, that the said Act was not applicable to the appellant's establishment, and that, in any case, the calculations worked out were wrong. The respondents on the other hand contested the case of the appellant by submitting that on inspection of the appellant's garage on 7th November, 1985, the Inspector found 15 persons working therein and, therefore, the appellant was informed by the letter dated 7th November, 1985 about the applicability of the said Act and, therefore, to comply with the provisions thereof. Upon denial of the applicability of the said Act by the appellant, his attention was drawn to the provisions of the said Act and he was reminded about the calculations done by the respondents for the period from January, 1981 to November, 1982 and a show cause notice was issued with the calculation sheet regarding the amount of contribution and finally by the Order under section 45-A, contributions to be made were determined, followed by the letter of the Collector regarding recovery proceedings.

3. Before the E.S.I. Court the appellant examined Madhusudan K. Kamat as A.W. 1 whereas on behalf of the respondents, Shri J.S. Murthy and Shri Shrikumar Shridhar Nair, both Inspectors were examined as O.W.1 and O.W.2 respectively. The E.S.I. Court on analysis of the evidence and the record produced before it held that the Deputy Regional Director was competent to issue Order under section 45-A and, therefore, the said order is valid and legal. He further held that no dispute was raised, pending the matter before the E.S.I. Court, when the calculations were determined by the authorities under section 45-A of the said Act and that the said Act is applicable to the establishment of the appellant and that the calculations of the contributions were not wrong.

4. While assailing the impugned Judgment, advocate N. Sardessai submitted that though the appellant had acknowledged the receipt of the copies of certain documents on 21st December, 1992, he had not, by the said acknowledgment, admitted the contents of the said documents and the respondents ought to have independently established the fact of the applicability of the said Act to the appellant's establishment. The Inspector did not record any statement of the employees of the appellant, though he had ample powers to do so under section 45(c) of the said Act. According to the learned advocate, no presumptive value can be attached to the report having been not corroborated by any other evidence and, therefore, the E.S.I. court erred in confirming the order under section 45-A. He further submitted that the details regarding calculations of the contribution were not furnished and produced by the respondents and that the respondents could have very well called for the vouchers from the appellant to verify the number of the employees employed instead of relying solely on the ledger books, which do not disclose the detailed information in that regard. He sought to rely upon the decision of the Karnataka High Court in the matter of Employees' State Insurance Corporation vs. Karnataka Asbestos Cement Products, reported in 1991(63) FLR 638 and that of this Court in the matter of Employees' State Insurance Corporation vs. Asian Paints India Ltd., reported in 1982 Mh. L.J. 315.

5. On the other hand Smt. A. A. Agni, the learned advocate appearing on behalf of the respondents, submitted that it is always the duty of the employer to bring on record the true facts regarding the factual aspect of the matter in relation to the number of employees employed by the employer. Under the provisions of law as contained in the said Act there is always presumption that the report prepared by the Inspector reflects the true situation, unless it is rebutted by necessary cogent evidence by the employer. According to the learned advocate, the appellant failed to establish his case that the Act is not applicable to his establishment. Mere allegations that the calculations were wrong is not sufficient and it was the duty of the appellant to disclose the correct calculations if the calculations made by the respondents were not correct. The wage register and the ledger books are required to be maintained by the employer in terms of the provisions of the Act and, therefore, it was the duty of the appellant to produce all such evidence which could have been of assistance to the adjudicating authority to decide about the matter and, therefore, the appellant is not entitled to make any grievance of failure to call for vouchers by the Inspectors. If the authority was satisfied from the materials placed before it that the Act is applicable to the appellant's establishment and if the appellant wanted the decision to be otherwise, it was for the appellant to establish that the Act was not applicable to his establishment. The learned advocate sought to rely on the decision of the Apex Court in the matter of Employees' State Insurance Corporation vs. M/s. Harrison Malayalam Pvt. Ltd., reported in AIR 1992 SC 2655 and in the matter of Modella Woollens Ltd. vs. Employees' State Insurance Corporation, reported in 1994 Supp. (3) SCC 580.

6. Before considering the substantial questions of law which are sought to be formulated for consideration in the matter, it will be convenient to glance through the impugned Order. A perusal thereof shows that the E.S.I. Court, on detail analysis of the materials on record and on proper appreciation thereof, arrived at certain findings such as :-

(a) The first inspection by the Inspector was held on 7-11-1981 and 15 persons were found working in the establishment.

(b) On the second inspection held on 18th December, 1982, three contract workers were found and seven workers were disclosed in the attendance register.

(c) The visit note bearing signature of Shri Naik, a person in-charge of the garage, is a clear admission of the number of employees working in the establishment at the relevant time.

(d) The wage register discloses monthwise payment of wages to the employees and based on this register, the amount of contribution was calculated. The calculations were thus based upon the information disclosed in the register maintained by the appellant.

(e) The resolution dated 14th December, 1980 specifically delegated powers under section 45-A of the said Act to the Deputy Regional Director, and the delegation was in accordance with the provisions contained in sections 7 and 94 of the said Act.

(f) The appellant did not submit any returns of the accounts in terms of section 44 of the said Act.

(g) The order under section 45-A was passed prior to the proceedings before the E.S.I. Court.

7. Turning to the first point sought to be raised by the appellant which relates to the power of the Corporation to determine the contribution, it is seen that section 45-A of the said Act clearly provides that the Corporation may, on the basis of the information available to it, determine the contribution payable in respect of employees of a factory or establishment. Undoubtedly as is held by this Court in the matter of Employee's State Insurance Corporation vs. Asian Paints India Ltd. (supra) before determining the liability under section 45-A of the said Act, it is necessary to give reasonable opportunity of being heard to the employer. Certainly the compliance of the principles of natural justice by the Corporation before determination of such contribution is not ruled out. Moreover, in the case in hand undisputedly the appellant was given such opportunity by the respondents by the letter dated 2nd August, 1983. Admittedly apart from merely denying the applicability of the said Act the appellant did not produce any material to justify his claim. Thereafter, admittedly, another letter in that regard was sent by the respondents to the appellant, which was not even replied to by the appellant. It was only thereafter on the basis of materials available with the respondents that the order under section 45-A of the said Act was passed. The appellant certainly cannot be heard to say that the Corporation was duty bound to decide the matter under section 45-A with reference to only the wage register produced by the appellant and without referring to any other information available with the authority in respect of the appellant's establishment. It is certainly the duty of the authority to ascertain from all the materials available to it in that regard and based on all such materials to determine the contribution, if any, payable by the employer under the Act. Though the appellant did try to submit that the remedy under section 45-A to be an extraordinary remedy, the appellant has not been able to substantiate the said submission. In fact by no stretch of imagination the proceedings under section 45-A can be termed to be an extraordinary remedy. On the contrary it is the duty of the Corporation to determine the contribution payable by the employer in respect of each and every factory or establishment which is covered by the said Act. Being so the Corporation was well justified in invoking the powers and section 45-A of the said Act and decide about the contribution payable by the appellant. In this regard the Judgment of the Division Bench of this Court in the matter of Employee's State Insurance Corporation vs. Asian Paints India Ltd. (supra) is of no help to the appellant since the authority acting under section 45-A before determining the contribution payable by the appellant had issued necessary show cause notice to the appellant as well as a reminder thereof.

8. As regards the second point which relates to the burden of proof regarding the number of employees in an establishment, there is no doubt the applicability of the said Act to an establishment would necessarily depend upon the number of employees employed in such an establishment. Certainly it is always within the knowledge of the employer as to how many employees he has engaged in his establishment. The burden regarding the proof of number of employees would definitely be upon the employer of the establishment to discharge and once the employer establishes the number of employees employed in such establishment, it will automatically disclose whether the Act is applicable to such establishment or not. However, the fact of number of employees being primarily within the knowledge of the employer, it cannot be said that the burden to prove the same would lie upon the Corporation.

9. The next point is regarding the question of contribution payable by the appellant. The E.S.I. Court, on the basis of the evidence produced before it, has arrived at the finding that the calculations done by the respondents are based on documentary evidence made available to the respondents and the same are correct. It is a finding of fact based on assessment of materials on record. It is not permissible to interfere with the finding of fact in an appeal under section 82 of the said Act. Besides, as rightly pointed out by the learned advocate for the respondents, while challenging the said finding the appellant has nowhere disclosed as to what would be the correct calculation regarding the contribution payable by the appellant. Besides, the Apex Court in Modella Woollens Ltd. (supra) has already held that when the employee impugned the Corporation's assessment without disclosing correct amount of contribution according to him. E.S.I. Court cannot be accused of committing wrong in accepting the Corporation's assessment even without any further scrutiny.

10. The last point sought to be raised is regarding the inspection report and its conclusiveness. Moreover, this is purely a point of academic interest in the facts and circumstances of this case and, therefore, the same does not arise for consideration in the case in hand. Apparently, the decision regarding the applicability of the Act to the establishment has not been arrived at merely on the basis of the Inspector's report as is evident from the impugned Judgment of the E.S.I. Court. The decision of the Karnataka High Court in the matter of Employees' State Insurance Corporation vs. Karnataka Asbestos Cement Products (supra) is of no assistance in the facts and circumstances of the case in hand which are totally different from the case in the reported decision.

11. In the result, therefore, the appellant has failed to make out any case for interference in the impugned Judgment of the E.S.I. Court and, therefore, the appeal is liable to be dismissed and is, accordingly, hereby dismissed. There shall be no order as to costs.

Appeal dismissed