Point of Law : Supreme Court considered the scope of notification of establishments under section 1(5) of the 'ESI Act'.

JUDGMENT :

1. Heard Sri Shireesh Kumar, Advocate assisted by Sri Mustafa Khan, the counsel for the petitioner and Sri Shishir Pradhan, the counsel for the respondents.

2. The present petition has been filed quashing the orders dated 24.06.2004, 30.07.2004 and the recovery certificate dated 14.02.2002 (Annexure nos. 5, 6 and 7 to the writ petition) whereby the demands have been quantified against the petitioners and they have been directed to pay the said amount in exercise of the powers conferred under the Employees State Insurance Act, 1948 ('ESI Act' for short).

3. The facts, in brief, are that the petitioner is an apex cooperative society created under section 2(a-4) Clause 3 of the U.P. Cooperative Societies Act, 1965. It is stated that the society is registered under the Societies Registration Act and more than 90% paid up share capital is owned by the State Government. It is also on record that the rules, regulations and guidelines issued by the State Government are normally applicable to the employees of the petitioner's society and they also enjoy certain benefits which are admissible to the employees of the State Government. It is also on record that the petitioner's society runs and execute various schemes of the State Government such as purchase of wheat, paddy, sugar, fertilizer, coal etc. as and when the same were executed to the petitioner's society. It is stated that the petitioner is also running P.C.F. Press and the persons employed in the accounts section are enjoying the benefits of the State Government from time to time which according to the petitioner are far superior to the benefits flowing to the persons came under the 'ESI' Act. It is stated that the respondent no.1 issued a notice dated 18.11.2003 calling upon the petitioner to show cause as to why the petitioner's society should not be made liable for payment of the contribution to the ESI Fund, to which the petitioners raised their objections. However, an order came to be passed on 24.06.2004 wherein a demand of Rs.33,846/-was raised against the petitioners allegedly towards the employer's contribution for the employees working in the account section of PCF press for the period January 1981 to September 1986 and from January 1988 to May 1989 (Annexure 5).

4. It is stated that once again on 30.07.2004 a demand of Rs.1,39,262/- towards the employer's contribution was raised in respect of the employees working in the accounts section of the PCF Press. The petitioners once again stated that they had submitted their reply to the show cause notice dated 18.11.2003, however, the grounds taken in the show cause notice were not considered while raising the demand dated 24.06.2004. It is on record that subsequent thereto, a recovery certificate seeking to recover a sum of Rs.1,81,409/-was issued against the petitioners and the opposite party no.4 was directed to debit the said amount from the accounts of the petitioners. The said orders are under challenge before this Court.

5. The counsel for the petitioners argues that the petitioners would not be covered under the 'ESI Act' as the petitioner is not notified under section 1(5) of the 'ESI' Act. He further argues that the petitioners cannot be termed as a 'factory' as defined under section 2(12) of the 'ESI Act' so as to include the petitioners under the ambit and scope of the 'ESI Act' by virtue of section 1(4) of the 'ESI Act'. He further argues that in any event the petitioners are giving the benefits to their employees which are far superior to the ones that are given to the employees by virtue of applicability of 'ESI Act'. In the light of the said arguments, the counsel for the petitioners argues that the orders impugned in the present writ petition are liable to be quashed. The petitioners has placed reliance on the judgment of the Supreme Court in the case of M/s Srinivasa Rice Mill vs. Employees State Insurance Corporation; 2007 (1) SCC 705 as well as the judgment in the case of Bangalore Turf Club Ltd.