The mandatory requirement of providing a reasonable opportunity of being heard and cooperation from the establishment for best assessment orders under section 45A of the Employees State Insurance Act, 1948.

This Civil Miscellaneous Appeal is filed by the Regional Director, Employees State Insurance Corporation, Madras, challenging the order dated 111. 1999 made in ESI.O.P.No.71 of 1990.

2. The respondent herein filed ESI.O.P.No.71 of 1990 under section 75 of the Employees State Insurance Act, 1948, to set aside the order dated 30.5.1990 declaring that the respondent establishment is not covered under Employees State Insurance Act, 1948, for the period from 3. 1989 to 3. 1990 on the ground that the respondent establishment is engaged in the business of manufacturing certain industrial products, having a small unit with seven employees to work regularly and at times one or two casual employees be engaged and at no point of time ten or more persons were engaged.

3. On 3. 1989, the Inspector of ESI Corporation visited the respondent establishment and verified the records, pursuant to which a communication was issued on 4. 1989 stating that the respondent establishment is covered under the Employees State Insurance Act, 1948, from 3. 1989 and on the basis of the said inspection report C-18 notice dated 23. 1990 was issued to the respondent establishment to show cause as to why contribution should not be determined at Rs.8,421.60 from March, 1989 to February, 1990 and orders under section 45A should not be passed calculating at 7.25% and the assumed wages of Rs.880/-per month per employee. The respondent establishment sent a reply on 5. 1990 disputing the coverage. Respondents representative appeared before the appellant on 15. 1990 and explained in person that the respondent establishment is not covered under the Employees State Insurance Act, 1948. In spite of the same, on 30.5.1990, an order was passed under section 45A for Rs.8,204/- towards contribution from 3. 1989 to 3. 1990 with 12% interest and the same was directed to be paid within 15 days. The grievance of the respondent establishment was that without serving the inspection report, which is the basis for issuing the show cause notice, the coverage of the respondent establishment under the Employees State Insurance Act, 1948, was passed.

4. The E.S.I. Court framed the following issues:

.(a) Whether the respondent establishment is not covered under the ESI Act for the period from 3. 1989 to 3. 1990 ?

.(b) Whether the order passed under section 45A on 30.5.1990 directing the respondents to contribute Rs.8,294/- is illegal or not ?

5. The E.S.I. Court considered the defence of the respondent establishment that at any point of time more than seven persons were not employed in the respondent establishment. One Murali was examined as PW-1 and one Tamilmani was examined as PW-2. Their evidence was that after the inspection of the establishment, copy of the inspection report was not sent to the establishment. The said Murali also submitted that two persons viz., Veeraraghavan and Purushothaman, who were found at the time of inspection, were not engaged by the respondent establishment and the said Veeraraghavan was working in some other company. One Dayalan and Murali were engaged casually on that particular day and the attendance register which was marked as Ex.A-7 contained only seven persons name who were employed in the company. RW-1 who was the Assistant Director of the ESI Corporation deposed that on 3. 1989 he inspected the premises and found that the establishment was manufacturing automobile components and he found 11 persons were working and he submitted a report Ex.R-1.

6. The E.S.I. Court found that the said Veeraraghavan and Purushothaman were employees of Insap Flexibles and Engineers Private Limited and Murugan Industries and they are not employees of the respondent establishment. The ESI Court also found that during the inspection, attendance register and wage register were verified, but still the Inspector who was examined as RW-1 submitted Ex.R-1 report on presumption without proper enquiry. The Inspector also failed to note the salary paid to othe