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2008 Supreme(Del) 528
High Court of Delhi
THE HONOURABLE MR. JUSTICE PRADEEP NANDRAJOG
M/s. DCM Shriram Consolidated Ltd - Appellant
Versus
Employees Insurance Court Delhi & Others - Respondents
FAO No.4 of 2001
Decided on : 12-05-2008
For the Petitioner:Harvinder Singh with Sapna Malik, Advocates. For the Respondents:K.P. Mavi, Advocate.
Headnote:
ESIC Act - Demand Notice - Section 2(22), Section 75 - The court discussed the demand notice issued under the ESIC Act, 1948, and the violation of principles of natural justice. The court emphasized the importance of providing an opportunity to respond and the need for supplying relevant information or reports before taking action. The court set aside the impugned order and allowed the appellant's application under Section 75 of the ESIC Act, quashing the communications and reviving the proceedings before the Competent Authority under the ESIC Act.
Fact of the Case:
The appellant challenged the demand raised under the ESIC Act and the rejection of its letter, citing violation of principles of natural justice.
Finding of the Court:
The court found that the demand was calculated based on the records of the appellant, and the appellant failed to provide evidence to the contrary. The court emphasized the importance of providing an opportunity to respond and supplying relevant information before taking action.
Issues: Violation of principles of natural justice, calculation of demand without opportunity to represent.
Ratio Decidendi: The court emphasized the importance of providing an opportunity to respond and supplying relevant information before taking action under the ESIC Act.
Final Decision: The impugned order was set aside, appellant's application was allowed, and the communications were quashed. The proceedings before the Competent Authority under the ESIC Act were revived, with directions to supply the inspection report to the appellant and hold a hearing as required by law.
PRADEEP NANDRAJOG, J. (Oral)
1. Having heard learned counsel for the parties, in my opinion, it is a fit case to remand the matter for proper adjudication by the Competent Authority under the ESIC Act, 1948. Since I am remanding the matter, lest any observation made by me prejudicially affects either party I shall be extremely brief.
2. It all commenced when the respondent issued a communication to the appellant on 8.7.1982 in forming as under:- “REGIONAL OFFICE EMPLOYEES' STATE INSURANCE CORPORATION ‘EMCA HOUSE’: 23/23-B:
Ansari Road: Darya Ganj :
New Delhi 2
No. D/Ins.I/11-223-11 Dated: 8-7-82 M/s. Delhi Cloth and Gen. Mills Co. Ltd.
(Br. Office/Sales Office)
Bara Hindu Rao Delhi 110006
Subject: Inspection of records/Rectification of discrepancies.
Dear Sir,
As a result of inspection of your records for the period from 28-1-68 to 31- 2-78 in respect of Textile
Marketing Organisation and Branch Office/Sales Office conducted by the Insurance Inspector on 16/22-3-82 it has been observed that you have not paid contribution on a sum of Rs.1,91,38,500/-paid through wages register/payment sheets for the period 28-1-68 to 31-12-78 which are wages within meaning of section 2(22) of the E.S.I. Act. A total sum of Rs.18,69,860-75 is therefore payable by you as contribution and interest as per details given below:-
II) E.C. UPTO 30-6-73 Wages = Rs. 75,69,200.00 Rate = 2?% Contribution = 75,69,200.00 x 5 = 1,89,230.00 100 x 2 III) Contribution from 1-7-73 to 31-12-78 Amount for the period from 1-7-73 to 31-12-78 is ----------------
Rs.1,15,69,300.00 Rate=7% Contribution = 1,15,69,300.00 x 7 = Rs.8,09,851/-- 100 INTEREST UPTO 30-6-82 @ 6%
E.S.C. = 1,88,583-25 E.C. = 1,28,386-15 Contribution = 2,82,216-85 The total dues of Rs.18,69,860-75 may, therefore, please be deposited urgently. Further interest from 1-7-82 @ 6% may also be paid upto the date of deposit.
You have also not produced the Contractor's records for the period from A-day to 31-3-76 which may be kept ready for inspection by the Insurance Inspector who will be visiting you shortly.
Yours faithfully,
Sd/- S.Kumar
(S.KUMAR)
for REGIONAL DIRECTOR”
3. The appellant responded vide its letter dated 23.7.1982. The appellant responds as under:-
“THE DELHI CLOTH and GENERAL MILLS CO.LTD.
Bara Hindu Rao, Delhi 110006
No.AG/JSB/LAW/3115
Dated: 23rd July, 1982
The Regional Director
Employees State Insurance Corporation
(Regional Office)
‘EMCA House’, 23/23-B Ansari Road Daryaganj, New Delhi.
Dear Sir:
We acknowledge the receipt of your Demand Notice No.D/Ins.I/11-223-11 dated 8-7-82 calling upon us to pay a sum of Rs.18,69,860.75. We would like to point out that the proceedings for the determination for such a demand cannot be taken unilaterally without giving an opportunity to the person affected to show cause against the alleged demand. Also you have referred to your Inspector's report in the letter under reply. Kindly favour us with a correct copy of his report in order to enable us to ascertain the basis of the demand as well as the determination of the amount claimed. Under the circumstances you are requested to issue a show cause notice setting out the nature and basis of the demand and the determination of the amount to enable us to place before you our case.
Thanking you.
Yours faithfully
sd/-
B.D. Pathak EXECUTIVE DIRECTOR”
4. The respondent responded by closing the dialogue when it issued the communication dated
18.10.1982. The same reads as under:- “REGD A.D. Regional Office Employees' State Insurance Corporation 23/23-B, Emca House, Ansari Road, New Delhi No.11-223-11 18 Oct 1982
To,
M/s. The Delhi Cloth and General Mills Co. Ltd.
Bara Hindu Rao, Delhi 110006
Subject:- Rectification of discrepancies
Dear Sir,
Kindly refer to your letter No.AG/JSB/LAW dated 23-7-82 on the subject cited above. In this connection, I have to state that the contributions have been demanded on the basis of the records produced by you before our Insurance Inspector on 16-3-82 ti 22-3-82.
