The applicability of the Employees’ State Insurance Act is contingent on the factory having the requisite number of employees, and Section 1(6) only applies to those already covered, not to new applications.

JUDGMENT :

Ravi Nath Tilhari, J.

Heard Sri Venna kalyan Chakravarthi, learned counsel representing Sri U.R.P.Srinivas, learned Standing Counsel for the appellant-ESI Corporation.

2. No representation for the respondents.

3. This appeal under Section 82 of the Employees’ State Insurance Act, 1948 (in short ‘ESI Act’) has been filed by the Regional Director of ESI Corporation challenging the order and decree dated 20.10.2005 in ESI O.P.No.81 of 2001 passed by the Principal Senior Civil Judge, Nellore.

4. The respondent No.1 – Lakshmi Lavanya Dhall Mill filed petition being ESI O.P.No.81 of 2001 under Section 75 of ESI Act with the prayer to set aside the order of the Regional Director, ESI Corporation dated 07.08.2000 covering the respondent No.1 – factory under the provisions of the ESI Act.

5. The case of the respondent No.1 was that at any point of time it never employed more than 7 persons in the factory. On 16.06.2000, ESI inspector, Podalakur Road, Nellore visited the factory and at that time there were three customers who came to purchase the pulses in the factory. Without hearing the request of respondent No.1, ESI Inspector included their names to the employees of the factory and covered under the provisions of ESI Act. Respondent No.1 wrote a letter to Regional Director but no reply was received. On 19.03.2001, the ESI Inspector again visited and certified in the Attendance Register, that respondent No.1 was having 7 employees but inspite thereof, the Regional Director, ESI Corporation issued coverage order dated 07.08.2000 directing the factory to pay contribution under the provisions of the ESI Act.

6. The appellant (respondent No.1 in ESI OP) filed counter, supporting the demand notice and submitting that the factory was covered under Section 2(12)(a) of ESI Act and prayed that petition filed by respondent No.1 may be dismissed.

7. The learned Principal Senior Civil Judge, Nellore framed the following point for consideration:

“Whether the petitioner is entitled to set aside the order dated 07.08.2000 passed by the first respondent as prayed for?”

8. On behalf of petitioner in ESI OP (respondent No.1 herein), Ch.Narayana Rao was examined as PW1 and C.Siva Kumar was examined as PW2. On behalf of respondents therein DW1- P.L.N.Murthy was examined. The authorities also filed their respective documentary evidence as mentioned in detailed order.

9. The learned Court recorded the finding that as the Regional director did not furnish the details as required, there was no substance in the contention of the respondents in ESI OP (present appellant) that ten employees were working in the petitioner-factory on the date of visit. The Exhibit B1, visit note, did not disclose the particulars of the ten employees. Therefore, it was not covered under the ESI Act. ESI OP was allowed. The impugned order dated 07.08.2000 was set aside.

10. Learned counsel for the appellant raised the only submission that, after the amendment in ESI Act, in 1989 vide Act 29 of 1989, with effect from 29.10.1989, under Section 1(6), the number of persons employed, is of no relevance. Even if the number of persons employed is less than 10, the ESI Act shall be applicable. He submitted that prior to the amendment of 1989, the number of employed person was relevant to consider the applicability of ESI Act but not after the 1989 amendment. He placed reliance in Employeecrabad Race Club, [2004 AIR SCW 4326] and ESI Corporation v. M/s.Radhika Theatre, [AIR Online 2023 SC 52].

11. We have considered the aforesaid submissions of learned counsel for the appellant and perused the material on record.

12. We record that, the finding of the learned Court that number of employees, was less than 10, was not challenged before us. Nothing was argued on that aspect. So, we proceed to consider the submission advanced, taking the finding on the number of employees as less than 10, as correct.

13. The main point for consideration therefore is whether in view of the amendment vide Act No. 2