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1997 Supreme(Mad) 439
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE A.R. LAKSHMANAN
Employees State Insurance - Appellant
Versus
Thiruvalargal Oraiyur Devanga Handloom Weavers Co-Operative Sales Society and Others - Respondents
C.R.P. No. 1175/1995
Decided On : 27 March 1997
Section 75(3) of the ESI Act, 1948 ousts the jurisdiction of Civil Courts to entertain suits of the nature brought by the plaintiff.
Headnote:
EMPLOYEES' STATE INSURANCE ACT, 1948 - SECTION 75(3) - JURISDICTION OF CIVIL COURT - CIVIL COURT HAS NO JURISDICTION TO DECIDE MATTERS PERTAINING TO E.S.I. CORPORATION - SUIT BY SOCIETY CHALLENGING CONVICTION OF ITS SECRETARY FOR FAILURE TO COMPLY WITH ACT - NOT MAINTAINABLE - SECTION 75(3) OF ACT OUSTS JURISDICTION OF CIVIL COURT.
Fact of the Case:
The Handloom Weavers' Co-operative Sales Society (plaintiff) challenged the conviction of its Secretary (second respondent) for failure to comply with the Employees' State Insurance (ESI) Act, 1948. The plaintiff argued that the ESI Corporation could not prosecute the Secretary without first holding an enquiry under Section 44(2) of the Act to determine whether the Society was an establishment covered by the Act. The plaintiff also sought a declaration that the conviction was not binding on the Society and that the Secretary and the third respondent, who was the Secretary at the time of the conviction, should remit the fine paid to the Society.
Finding of the Court:
The court held that the Civil Court did not have jurisdiction to decide matters pertaining to the ESI Corporation, as Section 75(3) of the Act specifically barred Civil Courts from adjudicating on any liability which by or under the Act is to be decided by a Medical Board, a Medical Appeal Tribunal, or the Employees' Insurance Court. The court also held that the plaintiff's suit challenging the conviction of its Secretary was not maintainable in a civil proceeding, as the Secretary had pleaded guilty and paid the fine, and the Society should have challenged the conviction by way of revision or appeal under the Criminal Procedure Code.
Issues: 1. Whether the Civil Court has jurisdiction to decide matters pertaining to the ESI Corporation? 2. Whether the plaintiff's suit challenging the conviction of its Secretary was maintainable in a civil proceeding?
Ratio Decidendi: 1. Section 75(3) of the ESI Act, 1948 ousts the jurisdiction of Civil Courts to entertain suits of the nature brought by the plaintiff. 2. The plaintiff's suit challenging the conviction of its Secretary was not maintainable in a civil proceeding, as the Secretary had pleaded guilty and paid the fine, and the Society should have challenged the conviction by way of revision or appeal under the Criminal Procedure Code.
Final Decision: The court allowed the revision petition and set aside the order of the lower court. The court also dismissed the plaintiff's suit for want of jurisdiction.
Though respondents were served, no representation on their side and therefore they were set exparate.
2. Heard Mr. G. Desappan, for the petitioner. This revision is directed against the order of the Sub Court, Tiruchirapalli in O.S. No. 224 of 1988, dated March 29, 1994.
3. The first respondent is the Handloom Weavers' Co-operative Sales Society, represented by its Secretary, Oraiyur, Trichy. The first respondent society has been functioning as a Handloom Weavers Society since 1936. In pursuance of the powers of the defendant under he Employees' State Insurance Act, 1948, the plaintiff was summoned to bring the society under the provisions of the Act by submitting a Form 01 under the regulation of 10-S State Insurance (Central) Regulation. The society did not comply with the same, since according to them the said society is not covered under the Act. It is the contention of the first respondent society that the provisions of the Act are not attracted towards the plaintiff Society. However, a proceeding dated May 25, 1981 stating that the society is covered under the provisions of the Act with effect from May 14, 1981 was issued and code No. 12695/19 had been allotted to the first respondent. It is also stated in the plaint that once the authorities come to the conclusion that the first respondent society is one, which is to be covered as a factory or establishment must call upon the plaintiff/first respondent to submit the application in Form 01 and if the first respondent has not submitted the same, then it is incumbent upon the first respondent -- society to invoke Section 44(2) of the Act and adjudge whether the first respondent is a factory or establishment to which the Act applies. Only after adjudication, the first respondent factory can be brought under the net of the Act. According to the first respondent, no adjudication order was passed or issued. Hence, the first respondent -- society passed a resolution challenging the proceedings in E.S.I. O.P. 1/81 on the file of the Sub Court, Trichy and challenged the said proceedings dated May 25, 1981. The said proceedings were resisted by the defendant. The Sub Court, Trichy disposed of the said case on February 18, 1984, after observing as follows :
"In view of the fact that the plaintiff has not submitted the Form 01, in the case it is always open to the defendant to invoke the provision 44(2) of the Act. But before the said provisions have been invoked the plaintiff has rushed to the Court to declare the proceedings Ex. A-2 (Proceedings dated May 25, 1981 of the defendant photostat copy of which is also submitted herein) illegal and ultra vires. I am of the view that not withstanding the issue of Ex-A.2 to the plaintiff the defendant can bring the plaintiff society within the purview of the Act only after invoking section 44(2) of the Act. I am of the opinion till such proceedings are taken under Section 44(2) the plaintiff society cannot be brought under the scheme of ESI Act. Further I am of the view that Ex.A.2 is not conclusive to decide that the plaintiff society is an establishment coming under the scheme of the Act. When action under Section 44(2) is taken by the defendant Corporation, it is for the plaintiff society to put forward his objections".
4. On March 10, 1987, the E.S.I. Corporation again issued a proceeding to the first respondent society calling upon them to pay contribution, failing which it threatened to prosecute the second respondent herein, the second defendant in the suit, who was the then Secretary of the first respondent society for failure to comply with the Act. According to the first respondent, the E.S.I. Corporation has issued the said proceedings without complying with the directions issued in E.S.I. O.P. 1/81 for passing suitable orders in accordance with Section 44(2). So, the first respondent society could not comply with the demand raised in the proceedings dated March 10, 1987 in as much as there Was no adjudication holding t
