1. Demand for contributions under the Employees State Insurance Act, 1948 — Dispute regarding the period of liability and the applicability of limitation. (Para 2 )
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1996 Supreme(SC) 2006
1996(8) Supreme 751
SUPREME COURT OF INDIA
K. Ramaswamy and G.T. Nanavati, JJ.
M/s. Goodyear India Ltd. -Appellant
versus
The Regional Director Employees State Insurance Corporation & Ors. -Respondents
Civil Appeal No. 1152 of 1985
Decided on 27-11-1996
Counsel for the Parties :
For the Appellant : Krishan Mahajan, Amit Dhingra, P.H. Parekh, Advocates.
For the Respondents : T.C. Sharma, Mrs. Anil Katiyar, Advocates.
Important Points
The Court held that for recovering contributions under the Employees State Insurance Act, 1948, the cause of action arises only after the decision by the Insurance Court in proceedings under Section 75. Consequently, the demand for contributions was not barred by limitation.
Subject
Employment Law - Employee Benefits
Act Referred
EMPLOYEES STATE INSURANCE CORPORATION ACT: S.77(1), S.77(1)(a), S.45(b), S.75, S.77(a)
EMPLOYEES STATE INSURANCE GENERAL REGULATIONS: Reg..26
EMPLOYEES STATE INSURANCE GENERAL REGULATIONS: Reg..26
Headnote
Employees State Insurance Act, 1948-Section 77-A r/w Employees State Insurance (General) Regulation 1950-Regulation 26-Demand made of appellant to contribute amount under the Act to the fund of Corporation from 28-1-1968 to 31-10-1979-Demand was made on 1-12-1982-Contention that demand was barred by limitation-There was no bar of limitation under the Act-Appeal was liable to be dismissed. (Para 9)
Legal Category Hierarchy
Table of Contents
2. Contention that demands for contributions are barred by limitation under Section 77-A of the Act and Regulation 26 of the Employees State Insurance (General) Regulation 1950. (Para 3 )
3. Analysis of Section 75, Section 77, and Regulation 26 to determine the point at which the cause of action for recovering contributions arises. (Para 4 , 5 , 6 , 7 , 8 )
4. The cause of action for recovering contributions arises only after the decision by the Insurance Court in proceedings initiated under Section 75 of the Act. (Para 9 )
5. Appeal dismissed without costs. (Para 10 )
6. When does the cause of action arise for the recovery of contributions under the Employees State Insurance Act?
The cause of action for contribution arises only after the decision by the Insurance Court in the proceedings initiated under Section 75 of the Act. (Para 9 )
7. How is the limitation period under Section 77(1-A) applied to the recovery of contributions?
While Section 77(1-A) prescribes a three-year limitation from the date the cause of action arose, no bar of limitation exists until the Insurance Court renders a decision under Section 75. (Para 6 , 9 )
8. Does the 1989 amendment to the Employees State Insurance Act apply to proceedings where the cause of action arose before the amendment?
No, the amendment by Section 30 of the Amendment Act 28 of 1989 does not apply to proceedings where the cause of action had arisen prior to the amendment's effective date of October 20, 1989. (Para 9 )
ORDER
This appeal by special leave arises from the judgment of the Punjab and Haryana High Court, made on January 30, 1985 in FAO No.21/85 and C.M. No. 192-CII.
2. The appellant-establishment was covered under the provisions of the Employees State Insurance Act, 1948 (for short, the Act ). On December 1, 1982, a demand was made of the appellant to contribute the amount under the Act to the fund of the Corporation for the period from 28.1.1968 to 31.10.1979 for the establishment at Bangalore and from 28.1.1968 to 31.8.1979 for the establishment at Indore. Initially, a contention had been raised by the appellant that these establishments are not covered under the Act and there is no relationship of employer and employee between the workmen and the appellant. This controversy was covered by a three Judge Bench decision of this Court in Kirloskar Brothers Ltd. v. Employees State Insurance Corporation1 wherein this Court had held that the appellant is covered by the provisions of the Act and is liable to contribute the amount to the Fund of the Corporation to ensure insurance coverage of the employees working under the appellant. In this appeal, the controversy is as to the limitation and the period from which they are liable to make the contribution.
3. The appellants placing reliance on Section 77-A of the Act read with Regulation 26 of the Employees State Insurance (General) Regulation 1950, as was in operation at the relevant time, contended that the demands are barred by limitation and, therefore, the appellants are not liable to make any contribution for the period in question. With a view to appreciate the contention, it is necessary to look to the provisions of the Act.
4. Section 45-B provides for the procedure for recovery of contributions which says that any contribution payable under this Act may be recovered as an arrears of land revenue. Section 75 (2) provides that :
"the claim shall be decided by the Employees Insurance Court (Subject to the provisions of sub-section 2-A), namely :
"(a) claim for the recovery of contributions from the principal employer;
(b) claim by a principal empolyer to recover contributions from any immediate employer;
(c) omitted.
(d) claim against a principal employer under Section 68;
(e) claim under Section 70 for the recovery of the value of amount of the benefits received by a person when he is not lawfully entitled thereto; and
(f) any claim for the recovery of any benefit admissible under this Act."
5. Section 77 provides for that "commencement of proceedings". Sub-section (1) provides that the proceedings before an Employees Insurance Court shall be commenced by application.
6. Section 77(1-A) provides for the limitation and envisaged that "Every such application shall be made within a period of three years from the date on which the cause of action arose".
7. Explanation (b) to Section 77(1-A) provides that "cause of action" in respect of a claim by the corporation for recovering contributions from the principal employer or a claim by the principal employer for recovering contributions from an immediate employer shall be deemed to have arisen till the date by which the evidence of contributions having been paid is due to be received by the corporation under the regulations."
8. Regulations 26(2) provides for the limitation for payment and reads thus :
"For purpose of Section 77 of the Act the due date by which the evidence of contributions having been paid must reach the Corporation shall be last of the days respectively specified in clauses (a), (b), (c) and (d) of sub-regulation (1)."
Clause (a) to (d) of sub-regulation (1) read as under :
"(a) within 7 days of the date on which he comes to know of the death of such person ;
(b) within 7 days of the date of receipt of a requisition in that behalf from the appropriate office ;
(c) within 42
