The inspection team’s failure to adhere to procedural guidelines invalidated the recovery order under the Employees State Insurance Act, reinforcing the importance of proper authorization and adherence to natural justice principles.

JUDGMENT

Mr. Karamjit Singh, J. (Oral)

The present appeal is filed by the appellants against the judgment dated 22.08.2023 passed by ESI Court of Civil Judge (Senior Division), Bhiwani whereby the petition filed by respondent under section 75 of the Employees State Insurance Act has been allowed.

2. The brief facts of the case of the respondent are that respondent's hospital i.e. M.K. Hospital, Bhiwani was being run by Shri Hari Health and Education Foundation, New Delhi and is a charitable hospital. The said hospital came under ESI Act w.e.f. 07.05.2013 and its started complying with the provisions of ESI Act. The hospital prepared the list of employees. That appellant No.2 passed order dated 06.07.2016 to the effect that employer has failed to pay the contribution in respect of the employees who were employed by house keeping company i.e. M/s Krishna Facility Management Services which was hired by respondent hospital. As per order dated 06.07.2016 team of SSO reported about the coverable employees on 17.05.2013. The team also mentioned the name of Dinesh Pahuja head of marketing. The SSO team forced Dinesh Pahuja to sign certain statement, which he was not authorized to do. The team did not obtain copies of identity cards and attendance sheet. The balance sheet submitted by respondent shows that no payment was made to M/s Krishna Facility Management Services as the alleged employees were not on pay roll of the respondent and were not employed by it at any point of time. The team led by SSO did not follow the proper procedure and had not obtained signatures of employees who were present in the hospital at that time. Petitioners also violated principals of natural justice as no opportunity of hearing was provided to the respondent through its representative. That actually, at the time of aforesaid checking respondent hospital was virtually closed due to acute shortage of staff including house keeping services. That order dated 06.07.2016 is illegal being passed without application of mind and in contravention to the provisions of ESI Act and notifications. Hence, petition under section 75 of ESI Act was filed by respondent.

3. The petition was contested by the appellants who filed written statement taking preliminary objections regarding maintainability and locus standi. On merits, it was pleaded that respondent failed to deposit the ESI contribution of its entire employees and also failed to pay the contribution amount as per order dated 06.07.2016. That appellants raised demand of contribution amount as per inspection and in accordance with provisions of ESI Act. It was further pleaded that SSO inspected the premises of the hospital on 17.05.2013 and found 10 employees employed through Gajraj Security Guards Limited and 5 employees through M/s Neelkanth Drugs Private Limited and accordingly site inspection report was prepared which was countersigned by Dinesh Pahuja marketing and admn, incharge of the respondent hospital and during the said inspection team led by SSO followed proper procedure. At that time 27 employees were working under outsourcing scheme and they were covered under the employment of respondent hospital it being principal employer and thus, was liable to deposit the payment of ESI contribution. The other averments of the petition were denied and it was pleaded that the petition be dismissed.

4. From the pleadings of the party, the following issues were framed by ESI Court:-

1. Whether the order for recovery of Rs.1,68,833/- from the petitioner is illegal on the grounds as mentioned in the petition? OPP

2. Whether the petition of the petitioner is not maintainable? OPR

3. Whether the petitioner has no cause of action to file this petition? OPR

4. Relief.

5. The counsel for the petitioner examined PW-1 Balraj Kumar and PW-2 Dr. Divya, Kirti Ahuja, General Physician who was competent and authorized person appointed on behalf of respondent. The respondent also produced documents Ex.P-1 to Ex.P-31 which also includes