The legal framework for recovery of contributions and dispute resolution under the ESI Act, as clarified by the court in reference to Section 45-A and Section 75.

1. The petitioner has filed both the writ petitions, challenging the order passed under Section 45A of the ESI Act dated 03.01.2007. By the order challenged in W.P.No.4325 of 2007, the respondent Employees State Insurance Corporation (ESIC) considered that the petitioner is liable to pay subscription for the Diploma Trainees engaged by them. It is the stand of the ESIC that Section 2(9) of the ESI Act applies only to the Apprentices who are appointed in terms of the Apprentices, Act 1961 and not to others engaged by the Management on their own, whether in the name of Trainee or Apprentice. Disputing the same, the first writ petition was filed. The second writ petition was filed for the period subsequent to the period covered by the earlier notice.

2. Both the writ petitions were admitted on 08.02.2002. Pending the writ petition, this Court granted an interim stay. Though notice was served, the respondent has not filed any counter affidavit till date.

3. The contention of the petitioner was that the Standing Order certified in terms of the petitioners establishment provides for engagement of Trainees. Therefore, Section 2(9) of the ESI Act is comprehensive enough to exclude all Trainees and the authorities were wrong in covering the Trainees engaged by the petitioner company. Reliance was also placed upon a judgment of the Supreme Court reported in 2006 (2) SCC 381 [The Regional Provident Fund Commissioner, Mangalore v. M/s.Central Aercanut & Coca Marketing and Processing Co-op Ltd., Mangalore]

4. Mere designation cannot decide the status of a person employed by an industrial establishment. Whether they were really Trainees engaged by them or they were engaged in the name of Trainees and work is extracted like a regular workman It is a factual dispute and that has to be decided only on factual basis. When an order is passed under Section 45-A of the ESI Act, the only course open to the Employer is to have recourse to raise dispute under Section 75 of the ESI Act before the ESI Court .

5. This position of law has been clarified by the Supreme Court vide its judgment in ESI Corpn. v. C.C.Santhakumar reported in (2007) 1 SCC 584. The Supreme Court held that in respect of a notice under Section 45-A of the ESI Act, which is not challenged under Section 75 of the Act, the authorities can deem it a final order and proceed to recover the amount. It is necessary to refer to the following passages found in paragraphs 17, 25, 28, 30 and 31 of the said judgment, which are as follows:

"17. Prior to the incorporation of Section 45-A under Act 44 of 1966, the only resort available to the Corporation was Section 75, for recovery of contribution through the court. Since this procedure was found to be impracticable and delayed process involved, a special provision was contemplated whereunder adjudication is to be made by the Corporation itself. By reason of incorporation of Section 45-A with effect from 17-6-1967, it became possible for the Corporation to have determination of the question, binding on the principal employer, without resorting to the ESI Court. In regard to the order under Section 45-A, the same is enforced, as envisaged under Section 45-B, which was similarly brought into the Act, by which the contribution may be recovered as arrears of land revenue. With regard to the decision reached by the ESI Court in the application under Section 75, the said decision is enforced, as envisaged in sub-section (4) of Section 75 as if it is a civil court. The mode of recovery under Section 45-B of the Corporation and the mode of recovery as per Section 75(4) by the ESI Court as the civil court are entirely different as both Sections 45 and 75 operate in different spheres.”

25. Section 45-A of the Act contemplates a summary method to determine contribution in case of deliberate default on the part of the employer. By Amendment Act 29 of 1989, Sections 45-C to 45-I were inserted in the Principal Act, for the purpose of effecting