JUDGMENT :

ABDUL QUDDHOSE, J.

Prayer: Appeal filed under Section 82(3) of the Employees State Insurance Act, 1948 against the order in the Employees Insurance Court/Principal Labour Court, Chennai dated 16.11.2017 made in E.I.O.P. No. 274 of 2004.

1. This appeal has been filed under Section 82 of the Employees State Insurance Act, 1948, challenging the impugned order passed by the Employees Insurance Court (Principal Labour Court), Chennai, dated 16.11.2017 made in E.I.O.P. No. 274 of 2004, which has confirmed the order passed by the Original Authority under Section 45-A of the Employees State Insurance Act dated 11.04.2004. At the time of admission of this appeal on 26.07.2018, the following substantial questions of law were formulated by this Court:

“1. Whether the ESI Court was justified in allowing the claim of the first respondent Corporation by taking 60% of bill amount of the contractor as basic wages, which includes the cost of material, as a basis for determination of contribution?

2. Whether the ESI Court was justified in dismissing the petition filed by the appellant, when it is the specific plea of the appellant that the contribution claimed by the first respondent Corporation include the contribution payable by Coded Contractors also, which are to be remitted by the contractors?”

2. The only point for consideration in this appeal is whether the ESI Court was justified in accepting the contention of the respondent Corporation that 60 per cent of the bill amount of the appellant will have to be taken into consideration for the purpose of determining the ESI contribution payable by the appellant.

3. Admittedly, as seen from the order dated 11.04.2004 passed by the Original Authority under Section 45-A of the ESI Act, no finding has been given that the appellant is a labour contractor. The appellant is a registered Club and they have been remitting the ESI contributions by engaging the service of contractors to carry out the works in their Club. Before the Original Authority as well as before the ESI Court, the letter dated 24.10.2002 issued by the petitioner Club to the Deputy Director, Regional Office, Tamil Nadu, Employees State Insurance Corporation was very much available which gave the break-up details of the payments made to various contractors by the petitioner Club. The break-up details for the total expenditure of Rs. 62,67,117/- was given in the said letter, which includes material and labour cost. However, in the order dated 11.04.2004 passed by the respondent under Section 45-A of the ESI Act, the respondent/Corporation has observed that the appellant Club has not given the details of the contractor records and hence they are liable to pay the ESI contribution at 60 per cent of the total bill amount.

4. It is the contention of the learned counsel appearing for the appellant that as per the Circular issued by the respondent Corporation on 26.05.2003, the determination of contribution in respect of employees employed through immediate employers for capital construction, repair and maintenance of building of factory/establishment including repairs to machinery, repairs of furniture, packing charges, the ESI contribution payable by the employer will have to be determined only at 25 per cent when segregation of material and labour cost is not possible. He would submit that only in case of labour supply contractors where the principal employer is unable to produce full record of the contractors to determine wage component, 60 per cent gets attracted. He would submit that the appellant comes under the first category of the Circular dated 26.05.2003 and, therefore, only 25 per cent of the total bill amount will have to be taken into consideration for the purpose of determining the ESI contribution.

5. Learned counsel for the appellant drew the attention of the Court to the findings of the first respondent in its order dated 11.04.2004 passed under Section 45-A of the ESI Act as well as the impugned order passed by the ESI