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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
MAUNA M. BHATT, J.
Mehsana District Cooperative Milk Producers Union Ltd. – Appellant
Versus
State Of Gujarat & Others – Respondent
R/Special Civil Application No. 2041 of 2022
Decided on : 25-01-2024
Exemption - Cooperative Society - Gujarat Co-operative Societies Act, 1961 - Employees State Insurance Act, 1948 - Section 87, Section 89, Section 91A
Fact of the Case:
The petitioner, a cooperative society, sought exemption from the application of the Employees State Insurance Act, 1948 (ESI Act) for the periods 2018-2019, 2019-2020, and 2020-2021. The applications were not decided, and a recovery notice was issued. The petitioner challenged the rejection of the applications and the recovery notice.
Finding of the Court:
The court found that the petitioner had previously been granted exemption from the ESI Act and had timely filed renewal applications for the periods in question. The court held that the rejection of the applications and the recovery notice were contrary to the provisions of the ESI Act.
Issues: The main issue was whether the rejection of the exemption applications and the issuance of the recovery notice were in accordance with the ESI Act.
Ratio Decidendi: The court held that the rejection of the applications and the recovery notice were not in line with the provisions of the ESI Act. It emphasized that the applications were not seeking retrospective renewal and that the rejection was erroneous.
Final Decision: The court quashed the order rejecting the applications and the recovery notice, directing the respondents to consider the applications in accordance with the law.
JUDGMENT :
1. Rule returnable forthwith. Learned Assistant Government Pleader Ms. Surbhi Bhati and learned advocate Mr. Sachin Vasavada waive service of notice of rule on behalf of respondent Nos. 1 and 2 respectively.
2. The petitioner Co-operative Society has filed this petition with the following prayers: -
(B) Your Lordship may be pleased to issue a writ of mandamus or a writ in the nature of mandamus or any other writ, order or direction quashing and setting aside the order dated 04-09-2021 and further be pleased to direct the respondent to grant the application for exemption for the respective periods that is from 2/10/2018 to 1/10/2019, 2/10/2019 to 1/10/2020 and 2/10/2020 to 1/10/2021;
(C) Pending admission, hearing and final disposal of the present Special Civil Application, Your Lordship be pleased to stay implementation of the recovery order dated 09.12.2021 passed by respondent no. 2;
(D) Pending admission, hearing and final disposal of the present Special Civil Application, Your Lordship be pleased to direct the respondent to consider the application for grant of exemption;
(E) Your Lordship be pleased to pass such other and further orders as may be deemed fit, just and proper in the peculiar facts and circumstances of the present case.”
3. In this case Notice dated 22.02.2022, was issued. Thereafter, vide order dated 07.10.2022, stay against recovery notice dated 09.12.2021, was granted. Considering the issue involved and with consent of learned Advocate for respective parties, matter is taken up for final hearing.
4. The petitioner is a co-operative society established under Gujarat Co-operative Societies Act, 1961. The said society was set up on 08.11.1960 for organizing the farming sector for getting better benefit for farmers and milk producers. The Society is engaged in production, distribution and supply of milk and milk products throughout the State of Gujarat. It is not in dispute that the provisions of Employees State Insurance Act, 1948 (‘the ESI Act’ for short) are applicable to the petitioner from its inception and under the provisions of the ESI Act, they are exempted from the application of the Act. It is case of the petitioner that since they are exempted from the application of the ESI Act, upon filing the appropriate applications exemption was granted right from 02.10.1982 till 01.10.2002.
4.1 Earlier, the application seeking grant of exemption for the period 1993 onwards was not decided and petitioner received a recovery notice dated 31.07.1996. The petitioner preferred Special Civil Application No. 5496 of 1997 before this Court and this Court vide order dated 06.08.1997 directed the respondents to consider the application in accordance with the provisions of the Act and accordingly, the petitioner got exemption from 1993 onwards. Thereafter, time and again pursuant to the direction of this Court, the petitioner was granted exemption from application of the ESI Act. Thus, the petitioner was granted exemption from its inception till 2017-18.
4.2 Similarly, the petitioner applied for exemption for the year 2018-19, 2019-20, and 2020-21 v ide applications dated 10.05.2018, 25.07.2019 and 16.06.2020 respectively. It is case of the petitioner that the said applications were not decided and kept pending. The respondent No. 1, thereafter passed an order dated 04.09.2021, rejecting the applications of the petitioner stating that no retrospective exemption is permissible. The respondent relied upon Section 91A of the ESI Act. Consequently, recovery notice dated 09.12.2021, was served to the petitioner. Aggrieved by the order dated 04.09.2021 and recovery notice dated 09.12.2021, the present petition is filed.
5. Heard learned advocate Mr. Ajay Mehta for the petitioner, learned advocate Mr. Sachin Vasavada for the respondent – Corporation and learned Assistant Government Pleader Ms. Surbhi Bhati for the respondent – State.
6. Learned advocate for th
The main legal point established is that the rejection of exemption applications and the issuance of recovery notices must be in accordance with the provisions of the relevant act, and that applicati....
The main legal point established in the judgment is that the denial of exemption without providing an opportunity of hearing and reliance on undisclosed documents prejudiced the petitioner, violating....
Point of law: Power of the Government to grant exemption cannot be disputed and the Corporation gets a chance by virtue of Section 89 to put forth its views before Government decide on the question o....
A reading of Section 87 coupled with its proviso, makes it clear that an enquiry is to be done by the Government after hearing all the affected parties before passing orders in the exemption applicat....
The central legal point established in the judgment is the violation of principles of natural justice in the decision-making process, leading to the setting aside of the impugned order and the direct....
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.
An appeal against recovery proceedings under the E.S.I. Act is not maintainable without first challenging the correctness of the preceding order under Section 45-A.
Point of Law : Supreme Court considered the scope of notification of establishments under section 1(5) of the 'ESI Act'.
The main legal point established in the judgment is the requirement for approaching the ESI Court for adjudication of disputes under the Employees State Insurance Act, 1948.
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