The duty of the Principal Employer to ensure compliance with the ESI Act for contract workers and the Corporation's right to proceed in accordance with the law if the employer fails to comply.

ORDER :

(Sunita Agarwal, J.)

ORDER IN SPECIAL CIVIL APPLICATION NO. 7824 OF 2008

1. This is a wholly misconceived petition filed by the Gujarat Narmada Valley Fertilizers Company Limited (in short as “GNVFCL”), seeking to challenge the notice dated 23.01.2008 issued by the Employees’ State Insurance Corporation (in short as “ESI Corporation”), asking the petitioner company to comply with the provisions of the Employees’ State Insurance Act, 1948 (“ESI Act” in short), with respect to the contract workers engaged by the petitioner through the labour contractors.

2. A bare perusal of the notice itself indicates that there is a reference of a Government of India Notification dated 23.12.1993, whereunder it was provided that “Areas within the Municipal limits of City Bharuch, Taluka and District Bharuch and within the revenue and Panchayat limits of villages Bholav, Zadeshwar, Vadadla, Nandelav including Industrial Estate and GIDC Estate Bholav, Taluka and District Bharuch”, came under the ESI Scheme with effect from 16.01.1994 and the said Notification clearly covers “Industrial Estates” and as such ESI Notified Areas are inclusive of Notified Centers of State Government of Gujarat.

3. The notice further states that ESI Scheme is applicable to the area in which the petitioner company, namely GNVFCL and M/s. Narmada Chematur Petrochemicals Limited (in short as “NCPL”) are situated. It further clarifies that the exemption granted by the State Government is applicable only to regular employees of the petitioner company and the said exemption is not applicable to a large number of contract labourers engaged by the petitioner company. There is a reference of Section 40(1) of the ESI Act to assert that the Principal Employer is liable to pay contributions in respect of all contract employees. It was advised that in order to avoid any liability afterwards, the petitioner company shall take the following steps:-

“1. Please ascertain whether the labour contractors engaged by you are independently covered under the ESI Act or not? If contractors are independently ESI covered, ensure to verify register of wages in Form-6 and payment challans, returns etc. before releasing the payment of such contractors. 2. If the contractors are not independently covered under ESI Act, ensure to deduct contribution @ 6.5% of the bill amount from such contractors and remit to ESI Fund A/c. No.1 under your Code No. i.e. 38-18839.”

4. The notice further states that office of the ESI Corporation has received number of complaints regarding non-extending of ESI benefits to the contract labourers engaged by the Company and that the contract labourers are entitled for benefits like ESI. It was further directed that as Principal Employer, the petitioner company is duty bound to ensure that:-

“a. All your contractors’ labours are registered under ESI Scheme.

b. All such contract workers are issued with ESI identity cards.”

5. The notice further requires the petitioner company to regulate the payments to all the contractors only after confirming/insisting the compliance under the ESI Act by the contractors and that the petitioner company is required to instruct all its contractors in that regard and advise them to submit declaration forms in respect of all contract labourers deployed in the factory run by the petitioner company within the specified time therein.

6. The notice also refers to the requirement of compliance under the ESI Act by the NCPL, which was covered under the ESI Act from 20.12.1994 vide ESI Code No.38-20262 till the merger of the said company with the petitioner company, namely M/s. GNVFCL.

7. It is pertinent to note that the petitioner company, instead of submitting any reply to the said notice dated 23.01.2008, had filed the instant writ petition on 15.02.2008 with the following reliefs: -

“(A) Your Lordships may be pleased to issue a writ of Mandamus or a writ in the nature of Mandamus and/or any other appropriate writ, direction or order, quashin