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BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
R. VIJAYAKUMAR, J.
Employees State Insurance Corporation Represented by its Deputy Director Tirunelveli - Appellant
Versus
M/s. Sree Visalam Chit Fund Ltd., Represented by its Director A.R. Umapathy Tirunelveli - Respondent
C.M.A (MD)No. 1326 of 2015
Decided On : 20-03-2023
E.S.I.Corporation - Challenge to E.S.I.Court's order under Section 45-A of the E.S.I. Act - 45-A - Summary: The court discussed the finality of the establishment's coverage under the E.S.I. Act, the effect of pending litigations on the initiation of proceedings for contribution determination, and the introduction of a limitation period under Section 45-A. The court found that the impugned order under Section 45-A was clearly barred by limitation.
Fact of the Case:
The respondent establishment, covered under the E.S.I. Act, challenged a demand notice issued by the E.S.I.Corporation for a sum of Rs.1,96,46,247 covering the period between February 1979 to January 2007. The E.S.I.Court allowed the petition on the ground that the demand was raised belatedly and time-barred.
Finding of the Court:
The court found that the impugned order under Section 45-A of the E.S.I. Act was clearly barred by limitation, as the 5-year limitation period starts from the last date on which the contribution became payable, and the order covering the period between February 1979 to January 2007 was beyond the powers conferred upon the Corporation.
Issues: The issues revolved around the finality of the establishment's coverage under the E.S.I. Act, the effect of pending litigations on the initiation of proceedings for contribution determination, and the applicability of the limitation period introduced under Section 45-A.
Ratio Decidendi: The court held that the impugned order under Section 45-A of the E.S.I. Act was clearly barred by limitation, as it covered a period beyond the 5-year limitation period from the last date on which the contribution became payable.
Final Decision: The Civil Miscellaneous Appeal was dismissed, and no costs were awarded.
JUDGMENT
(Prayer: Civil Miscellaneous Appeal filed under Section 82(2) of the ESI Act, 1948, to set aside the decree and judgment of ESI Court (Labour Court) Tirunelveli passed in E.S.I.O.P.No.28 of 2014 dated 08.09.2015 and allow the Civil Miscellaneous Appeal.)
1. The above appeal has been filed by the E.S.I Corporation challenging the order of E.S.I.Court reversing the order passed by the E.S.I.Corporation under Section 45-A of the Act on 21.08.2012.
Factual Matrix
2. The respondents is a Chit Fund Company and they are originally covered under E.S.I Act with effect from 16.01.1977. The coverage order was challenged by the said establishment by filing W.P.No.6380 of 1980 before the Madras High Court and the same was dismissed on 06.04.1987. The establishment had filed S.L.P.No.12697 of 1987 and the same was dismissed as withdrawn on 14.10.1993. Therefore, the coverage of the establishment had become final.
3. The Tuticorin Branch of the respondent establishment was allotted a different code number and the said branch challenged the same in E.S.I.O.P.No.10 of 2005 before the E.S.I Court, Tirunelveli and the same was dismissed on 01.07.2011. As against the said order, the establishment had filed C.M.A.(MD)No.1131 of 2011 before the Madurai Bench of Madras High Court and the same was dismissed by the High Court on 19.03.2012. The Tuticorin branch had filed Civil Appeal No.6212 of 2012 and the same was dismissed by the Hon''ble Supreme Court on 31.07.2014. Therefore, the coverage of the establishment was again reconfirmed by the Hon''ble Supreme Court.
4. Due to pendency of the litigation, demand notices were not raised by the Corporation. On 21.08.2012, a demand notice was issued for a period covering 01.02.1979 to 31.01.2007. After hearing the establishment, two independent orders were passed under Section 45-A of the E.S.I.Act. The order dated 31.06.2012 was passed under Section 45-A for demanding a sum of Rs.86,00,000/- covering the period between 01.02.2007 to 31.12.2011. The said order was not challenged by the establishment and it is admitted by both the parties that the order has been complied with.
5. On 21.08.2012 another order was passed under Section 45-A of the E.S.I.Act demanding a sum of Rs.1,96,46,247/- covering the period between February 1979 to January 2007. The said order was challenged by the establishment by way of filing E.S.I.O.P.No.28 of 2014. The E.S.I.Court was pleased to allow the said petition on the ground that the demand has been raised belatedly and it is time barred. Challenging the said order, the present appeal has been filed by the E.S.I.Corporation.
6. Contentions of the learned counsel appearing for the Petitioner/ E.S.I.Corporation:
(i). The litigation relating to the coverage of the establishment was decided finally by the Hon''ble Supreme Court only on 31.07.2014. Therefore, due to pendency of litigation, proceedings could not be initiated for determination of the contribution. Therefore, the issuance of demand notice on 28.01.2012 or the order passed under Section 45-A on 21.08.2012 cannot be considered to be time barred.
(ii). The Tuticorin Branch of the establishment had obtained interim orders and therefore, the proceedings could not be initiated for determination of the compensation. Therefore, the period during which the interim order was operating as against E.S.I.Corporation should be excluded at the time of calculation of the limitation period.
(iii). The establishment was given many opportunities to substantiate their case. However, they have not come forward to produce the records. Therefore, the order of E.S.I.Corporation should not have been interfered by the E.S.I.Court.
(iv). The E.S.I.Court has not properly appreciated the amendment introduced to Section 45-A of the E.S.I.Act, introducing the period of limitation for initiating action for determination of the contribution. When Section
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