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BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
R. VIJAYAKUMAR, J.
M. Subramani - Appellant
Versus
The Assistant Regional Director The Employees State Insurance Corporation Madurai & Another - Respondents
C.M.A(MD)No. 446 of 2016 & CMP(MD). No. 5884 of 2016
Decided On : 21-03-2023
E.S.I. Act - Employer's Challenge to E.S.I. Court Order - Section 45-A
Fact of the Case:
The employer, running a wood working shed, challenged the E.S.I. Court's order under Section 45-A of the E.S.I. Act, claiming no employees and non-maintenance of attendance or wage registers.
Finding of the Court:
The court found that the employer failed to attend the enquiry and provide evidence to establish the alleged independent contractor status of individuals noted as employees during inspection.
Issues: Dispute over employee status, non-cooperation in enquiry, and validity of E.S.I. Court's confirmation of E.S.I. Corporation's order.
Ratio Decidendi: Non-cooperation in enquiry does not absolve the employer from proving non-employee status. Failure to examine alleged independent contractors not fatal. Employer's case found believable.
Final Decision: The E.S.I. Court's and E.S.I. Corporation's orders were set aside, and the employer's appeal was allowed.
JUDGMENT
(Prayer: Civil Miscellaneous Appeal filed under Section 82(2) of the ESI Act, 1948, to set aside the Fair and Ex-order of the Employees State Insurance Court (Labour Court) Madurai in E.S.I.O.P.No.99 of 2007 dated 08.12.2015 and allow the appeal.)
1. The present appeal has been filed by the employer challenging the order of the E.S.I.Court confirming the the order of the E.S.I.Corporation passed under Section 45-A of the E.S.I.Act.
2. According to the appellant/employer, he is running a small wood working shed where lathe turning, plaining and cutting are being carried out. There are no employees in the said Unit and one Shanmugam who is the relative of the employer is taking care of the Unit and he is receiving 40% out of the total income. The outside Carpenters used to bring their work on their own and get it plained in the machine belonging to the petitioner. Since there are no employees, the petitioner has not maintained any Attendance Register or Wage Register.
3. The E.S.I.Inspector had visited the petitioner Unit on 09.11.2006 and made some entry in English and asked the petitioner to sign it. Thereafter, no notice was served upon the petitioner for any personal hearing. Directly Section 45-A of E.S.I. Act order was passed directing the employer to pay a sum of Rs.16,920/- towards contribution for the period between 09.11.2006 and 03/2007 of Rs.5,500/- per month per employee by an order dated 12.11.2007. A recovery order was passed on 21.11.2007 directing the employers to deposit a sum of Rs.18,312/- with interest. Since there are no employees with the petitioner, the employer had challenged the said order under Section 75 of the E.S.I.Act before the E.S.I.Court, Madurai.
4. The Labour Judge had considered the submissions made on either side and arrived at a finding that though several chances were given to the employer before passing orders, they have not chosen to attend the enquiry. Therefore, the order passed by the E.S.I. Court under Section 45-A of the E.S.I. Act cannot be found fault with.
5. The Tribunal further found that E.S.I.Inspector had noted in his report that when 10 persons were available at the time of inspection, the entire burden is upon the employers to establish that they are independent Carpenter and not employees under the petitioner. Since the petitioner is not maintaining any records, he has not proved the said fact. The Tribunal further found that the petitioner has not produced any account to show the receipt of alleged 60% of the amount from the said Shanmugam and other independent contractors. The Tribunal further found that the employer has not chosen to examine any one to show that they were not employees of the petitioner. Based upon the said findings, the E.S.I. Court confirmed the order passed by the E.S.I. Corporation. Challenging the said order, the present appeal has been filed by the employer.
6. According to the learned counsel for the appellant/employer, the appellant is running a small Wood Working Shop for lath turning, plaining the wood and woodcutting. No employee is engaged in the said work. The independent Carpenters bring their own wood to the shop and get it plained. The presence of the independent Carpenters at the time of inspection has been noted down as employees. One of the alleged employee namely Shanmugam who is a relative of the employer has been examined. He has categorically stated that he is not a paid employee. Therefore, the order of the Tribunal is erroneous and it is liable to be set aside.
7. Per contra, the E.S.I. Corporation had contended that when the visit note clearly points out that there are 10 employees at the time of inspection, the entire burden is upon the employer to establish that none of them are his employees and they are independent Carpenters. However, no steps has been taken by the employer to establish the same. The employer has not produced the Attendance Register or the Wage Register. He has also not produced the account to establish
Employer's obligation to prove non-employee status, non-cooperation in enquiry, and believability of employer's case.
Point of law : Partnership Act - In the enquiry, sufficient opportunity was not given to the respondent to produce documents or to adduce evidence. Hence, the question raised by the appellant regardi....
The court established that employment status must be supported by concrete evidence, and inferences drawn without such evidence are insufficient to impose liability under the Employees’ State Insuran....
The central legal point established in the judgment is the interpretation of the definition of 'employee' under Sec. 2(9) of the ESI Act and the provisions related to the payment of contribution and ....
The main legal point established in the judgment is that apprentice appointed under the standing orders of the establishment are excluded from the definition of employee under Section 2 (9) of the ES....
Cooperation with authorities and production of genuine documents are essential in disputing establishment coverage under the E.S.I. Act.
Payments for transport charges do not constitute wages under the Employees' State Insurance Act, and contractors are not considered employees as per the Act's definitions.
Statutory orders must be speaking orders and cannot be based on presumptions or assumptions. Orders under Section 45A of the ESI Act must be self-speaking and based on deliberations and sincerity.
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