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IN THE HIGH COURT OF ORISSA
B.N. Mahapatra, J.
NATIONAL ALUMINIUM COMPANY LTD. AND OTHERS - APPELLANT
Versus
EMPLOYEES STATE INSURANCE CORPORATION AND OTHERS - RESPONDENT
Writ Petition (C) Nos. 17955 and 17956 of 2012
Decided On : 05-11-2012
Employees' State Insurance Act - Statutory Obligations - Sections 39, 40, 75 - The court held that the employer is obligated to pay the entire contribution under the ESI Act, irrespective of the provision of medical facilities or any settlement with the workers' union. The employer's failure to discharge this statutory obligation is a violation of the law. The court also emphasized that the show cause notices issued by the ESI authorities were within their jurisdiction and should be addressed through the statutory process.
Fact of the Case:
The petitioners, a government company, sought to quash show-cause notices issued by the Employees State Insurance Corporation (ESIC) and the Deputy Director (Revenue) under the Employees' State Insurance Act, 1948. The notices demanded compliance with the ESI Act provisions for the company's contract laborers and threatened prosecution for non-compliance.
Finding of the Court:
The court found that the employer's failure to pay the ESI contributions for its contract laborers, despite being covered under the ESI Act, constituted a violation of statutory obligations. It also held that the show cause notices were valid and within the jurisdiction of the ESI authorities.
Issues: The issues involved included the employer's statutory obligations under the ESI Act, the validity of the show cause notices, and the enforceability of the ESI provisions in the absence of medical facilities.
Ratio Decidendi: The court emphasized that the employer's obligation to pay ESI contributions is independent of the provision of medical facilities or any settlement with the workers' union. It also highlighted that show cause notices, issued within the authority of the law, should be addressed through the statutory process.
Final Decision: The court dismissed the writ petitions, upholding the validity of the show cause notices and emphasizing that the statutory obligations under the ESI Act must be discharged by the employer, regardless of any settlement or lack of medical facilities.
JUDGMENT :
B.N. Mahapatra, J. - These two writ petitions have been filed with identical prayer to quash Annexures-11, 12 and 17 on the ground that those are bad in law and in operative. The further prayer in both the writ petitions is to issue a writ of mandamus directing opp. party no. 1 -Employees State Insurance Corporation and opp. party no. 2-Deputy Director (Revenue), Employees' State Insurance Corporation not to insist implementation of the provisions of Employees' State Insurance Act, 1948 (in short, "ESI Act") and the scheme framed therein until the ESI Dispensary functions effectively and starts parallel service to such Contract Labourers.
Annexure-11 is a show-cause notice dated 25.7.2012 issued by opp. party no. 2 to the petitioner to show-cause within ten days from the date of that show-cause notice as to why the petitioner as one of the factory of M/s. Nalco (Project) should not be prosecuted for non-compliance with the provisions of the ESI Act, 1948 and Regulations framed thereunder.
Annexure-12 is also a show-cause notice dated 25.7.2012 issued by opp. party no. 2 to the petitioner to show-cause within fifteen days as to why assessment should not be made as proposed in the said letter with further opportunity to file statement showing full particulars of contribution and for personal hearing.
Annexure-17 is also a show-cause notice dated 6.8.2012 issued by opp. party no. 2 to the petitioner-Company to show-cause within ten days from the date of that show-cause notice as to why the petitioner as one of the Principal Employer of their factory M/s. Nalco (Project) should not be prosecuted for non-compliance with the provisions of the ESI Act, 1948 and Regulations framed thereunder.
Since the issues involved and the relief sought for in both the writ petitions are identical, they are dealt with together by this common judgment.
2. Petitioners' case in a nutshell is that NALCO is a Government of India Public Sector Company having its Head Office at Bhubaneswar and Unit Office at Angul as well as Damanjodi. The petitioner manages some of its work in the Project establishment through Contractors by way of tender works and at present its project establishment has total strength of 517 contract labourers. Such works are generally conducted through tender process to different Contractors and as per conditions the Contractors used to have their own E.S.I. Code as well as P.F. Code and under the terms of contract they are bound to follow the statutory provisions and responsibility of NALCO comes only when such contractors fail in undertaking such statutory obligations. NALCO has its own hospital at all its units including Damanjodi. The hospitals of NALCO are providing the hospital benefits only to its regular employees and providing medical facility to the Contractors' workers as per the settlement, the Management of NALCO at Damanjodi entered into a settlement with the Utkal Contractors Association representing the Contractors working there at Damanjodi and the Alumina Mazdoor Sangh at Damanjodi representing such workmen on 26.02.2007. Under Clause-3 of the said settlement the NALCO Management has agreed to provide medical allowance @ 4.75% of the earned wages to the contract labourers w.e.f. 01.02.2007 and to continue such facilities till the workmen are covered under the E.S.I. Scheme. The said settlement even though was operative up to 25.02.2008, but the condition as narrated above is allowed to continue as on date and all the contractors workers are being paid by their employer the aforesaid benefits every month and their employer used to get the same reimbursed from NALCO. While the matter stood thus, the petitioners received a letter dated 29.10.2010 indicating therein that the Factory of NALCO has been covered under E.S.I. Act, 1948 w.e.f. 01.01.2010 and was allotted Code No. 44000071450000501 vide letter No. 6885 dated 29.10.2010 and in the said letter the NALCO was directed for starting the deposit of the ESI dues i
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