JUDGMENT :

1. The present Civil Miscellaneous Appeal has been filed against the against the order dated 20.06.2002 in E.I.Case.No.60 of 2000, on the file of the Employees Insurance Court and Chairman, Industrial Tribunal – I, Hyderabad, whereby the application filed by the respondent herein under Section 75(1)(g) of the Employees State Insurance Act, 1948 [for short ‘ESI Act’], to set aside the demand notice dated 17.04.2000, whereunder demand of payment of Rs.1,48,051/- was sought towards arrears of contribution and interest there on, was allowed and demand notice was set aside.

2. The petitioners herein are the respondents and the respondent herein is the petitioner before the Court below. For the sake of convenience, parties herein-after referred to as they are arrayed before the Court below.

3. The facts leading to file the present impugned application are that, the Inspector of the respondents-Corporation inspected the factory of the petitioner on 06.03.1998 and noted that three employees were in the factory premises and no ledger or cash books were maintained in the factory, as the factory was closed. Further, he inspected the attendance register and wage register under Exs.P1 and P2. The factory was covered under the ESI Act from 30.03.1975. The contributions were paid up to 1995 and default was committed from April, 1995 to March, 1996; February, 1998 to March 1998; and April, 1999 to September, 1999. Subsequently, show cause notices were issued to the petitioner under Exs.R9, R13 and R16, and as there was no response from the petitioner, final orders were passed under Section 45(A) of the Act. Later, demand notices were issued under Exs.R10, R14 and R17 when the amounts were not paid. Thereafter, recovery proceedings were initiated by issuing notice under Exs.R11, R15 and R18 for arrears of amounts of contribution and interest. Finally, the arrears of contributions and interest were determined at Rs.1,48,051/-.

4. Aggrieved by the said proceedings, the petitioner has filed a case in E.I.Case.No.60 of 2008, before the Insurance Court. The case of the petitioner was that, he did not deny the original coverage of the factory under ESI Act with effect from 30.03.1975. Their case is that the factory was closed with effect from 01.04.1995 and no manufacturing activities or any other kind of activities were carried on. The employees found on the inspection were only security personnel and they were employed to guard the factory as well as the properties. Therefore, no employees were engaged for the purpose of manufacturing activity as was done previously, as the factory was closed down. Further, they claim that they are not liable to pay any coverage on account of close down of the factory. Considering the said facts, the Court below has allowed the case. Therefore, present Civil Miscellaneous Appeal has been preferred at the instance of the respondents.

5. The petitioner, to support their case, examined PW1 and relied upon Exs.P1 to P7. The respondents to support their case examined RW1 to RW4 and relied upon Exs.R1 to R19.

6. The Court below had agreed with the claim of the petitioner with regard to close down of the factory with effect from 01.04.1995 and held that the petitioner is not liable to pay contribution and consequently, quashed the demand notice. Hence, the present appeal.

7. The contention of the learned standing counsel for the respondents-Corporation is that the Court below while holding that the petitioner is not liable to pay contributions, has not considered the effect of Section 1(6) of the ESI Act. Non-consideration of Section 1(6) of the ESI Act itself raises the substantial question of law, so as to maintain the present appeal before this Court. According to him ground No.2 raised in the present appeal raises a substantial question of law. Therefore, he seeks indulgence of this Court to reverse the findings of the Court below.

8. The contention of the learned counsel for the petitioner is that the Court below