The main legal point established in the judgment is the statutory obligation of the employer to seek coverage under the Employees' State Insurance Act and the interpretation of relevant sections in determining the liability and coverage.

S. R. Singharavelu, J.

The substantial questions of law that arise for consideration is this appeal are as follows :

"i. Whether the reliance of the lower Court on Section 2(12) of the Employees' State Insurance Act as regards the statutory obligation of the employer to seek coverage can be sustained in law?

ii. Whether the interpretation placed by the lower Court on Section 77-b of the said Act can be sustained in law ?;

iii. Whether the finding of the lower Court as regards the assessment of the concerned authority can be sustained in law ?

iv. Whether the finding of the lower Court as regards the notification applicable to the area in question can be sustained in law ?"

2. The Regional Director, E.S.I.Corporation, Madras-34 has preferred this appeal as against the order dated 20.12.1995 passed by the learned Second Additional District Judge (Employees' State Insurance Court), Pondicherry.

3. The respondent herein filed an application under the said Act to set aside the order dated 13.12.1991 of the appellant claiming coverage of the provisions of the said Act from 2.7.1985 to 31.10.1987.

4. Issue No.(ii) : The respondent is an establishment engaged in the production of caustic soda and allied chemicals and categorised as hazardous products under the Factories Act. It had come to be covered under the said Act with effect from 1.11.1987. On 14.5.1991, a show cause notice was issued by the appellant asking the respondent to show cause as to why the order should not be passed under Section 45-A of the said Act determining the contribution of Rs.1,10,247/-. This figure was arrived at on the basis of a claim that the wages paged between 2.7.1985 and 31.10.1987 were to the tune of Rs.15,01,729.05.

5. The respondent disputed the coverage for the period from 1985 to 1987. The appellant passed an order asserting that the factory was located in the zone of implementation and directing that the contribution should be paid as per the demand. On the application filed by the respondent, the order of the Regional Director - appellant was set aside by the learned Second Additional District Judge, against which, this appeal has been preferred.

6. Learned counsel for the respondent firstly submitted that the claim for coverage between 2.7.1985 to 31.10.1987 by a show cause notice dated 14.5.1991 under Section 45-A of the said Act is time barred.

7. Sections 45-A of the said Act provides as follows :

"Determination of contributions in certain cases :-

(1) where in respect of a factory or establishment no returns, particulars, registers or records are submitted, furnished or maintained in accordance with the provisions of Section 44 or any Inspector or other official of the Corporation referred to in sub.section (2) of section 45 is prevented in any manner by the principal or immediate employer or any other person, in exercising his functions or discharging his duties under Section 45, the Corporation may, on the basis of information available to it, by order, determine the amount of contributions payable in respect of the employees of that factory or establishment."

8. Sections 77 and 77(1A) of the said Act read as follows :

"Commencement of proceedings : (1) The proceeding before an Employees' Insurance Court shall be commenced by application.

(1A) Every such application shall be made within a period of three years from the date on which the cause of action arose.

Explanation: For the purpose of this section,

(a) the cause of action in respect of a claim for benefit shall not be deemed to arise unless the insured person or in the case of dependants' benefit, the dependants of the insured person claims or claim that benefit in accordance with the regulations made in that behalf within a period of twelve months after the claim became due or within such further period as the Employees' Insurance Court may allow on grounds which appear to it to be reasonable;

(b) the cause of action in respect of a claim by the Corporation for recovering contributio