The main legal point established in the judgment is the requirement for compliance with the principles of natural justice in passing orders under Section 45A of the Employees State Insurance Act.

A.S. Chandurkar, J.

This appeal filed under Section 82 of the Employees State Insurance Act, 1948 (for short, the said Act) takes exception to the order dated 02.02.2007 passed by the learned Member, Employees State Insurance Court Nagpur, in proceedings under Section 75 of the said Act. By the said order the application under Section 75 of the said Act came to be dismissed and the demand towards contribution made by the respondent has been confirmed.

2. The facts giving rise to the present proceedings are that, the appellant is a registered partnership firm carrying on business of exhibition of films. Four theaters are being run by the appellant in which it had engaged its own employees. The establishment conducted by the appellant is governed by the provisions of the said Act and the coverage is with effect from 27.11.1976. On 15.02.1978 an inspection was carried out by the Inspector of the Corporation. During said inspection the coverage of employees of the cycle stand and canteen in the theaters was directed to be done. According to the appellant the persons working on the cycle stand and in the canteen were not the employees of the appellant. According to the appellant this explanation was accepted and no further demand was raised till about February 1994. It is the further case that in the year 1982 a writ petition came to be filed in the matter of payment of provident fund dues. This writ petition was withdrawn in the year 1989. Thereafter again inspections were carried out by the officers of the Corporation. After exchange of communications between the parties the Assistant Regional Director of the Corporation issued two notices dated 21.02.1995 seeking to determine the amount of contribution payable under Section 45A of the said Act. In the first notice a demand of contribution of Rs. 1,29,052/- was made for the period from 27.11.1976 till 31.12.1992. By the second notice a demand of Rs. 10,928/- for the period from April 1985 till March 1989 was made.

3. In response to the aforesaid notices the appellant submitted its reply on 09.03.1995. It was stated in the reply that the appellant was not the employer of the persons working on the cycle stand or in the canteen. The cycle stand and the restaurant had been given on lease and the persons who were working therein were the employees of the lessee who was a separate entity. It was further stated that the demand as made from the year 1976 was belated. As all records had been produced during the course of inspection it was stated that the appellant was not liable to pay any amount of contribution as demanded.

In so far as the second notice is concerned a similar reply was given and the liability to pay contribution was denied.

4. The appellant on 05.04.1995 placed on record of the Assistant Regional Director of the Corporation various licence agreements from the year 1986-87 onwards. Thereafter on 26.05.1995 Assistant Regional Director of the Corporation passed an order under Section 45A of the said Act and directed payment of contribution of Rs. 1,29,052/- for the period from 27.01.976 till 31.03.1985 and from 01.04.1989 till 31.12.1992. This amount was directed to be paid with interest at the rate of 18% P.A.

5. The appellant company being aggrieved by the aforesaid adjudication filed an application under Section 75 of the said Act. It reiterated its stand that was taken in the reply to the show cause notice issued before passing the order under Section 45A of the said Act. It was denied that the appellant was the “immediate employer” and also the fact that it was not liable to pay any amount of contribution.

The written statement came to be filed on behalf of the respondent-Insurance Inspector. After the issues were framed the appellant examined its General Manager as well as the representative of various lessees in support of its case.

After considering the entire evidence on record the learned Member of the Employees' State Insurance Court held that though the cycl