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NEUTRAL CITATION

C/FA/7/2007 JUDGMENT DATED: 01/04/2026

0.3539300775246561

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/FIRST APPEAL NO. 7 of 2007

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REGIONAL DIRECTOR AND RECOVERY OFFICER Versus HOTEL MAUSAM

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Appearance:

MR HEMANT S SHAH(756) for the Appellant(s) No. 1 MR CS NAIDU(1218) for the Defendant(s) No. 1 MR DIPAK R DAVE(1232) for the Defendant(s) No. 1

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CORAM:HONOURABLE MR. JUSTICE J. C. DOSHI Date : 01/04/2026

JUDGMENT

1. The instant Appeal is filed under Section 82(2) of the Employees’ State Insurance Act, 1948 (for short the “ESI Act”), at the behest of the Regional Director & Recovery Officer, Employees State Insurance Corporation, challenges the judgment and order dated 03.05.2006 passed by the learned Employees’ Insurance Court, Bhavnagar, in E.S.I. Application No.3 of 2002, filed by the respondent herein. By the said judgment, the ESI Court, declared the order dated 29.03.2000, whereby Hotel Mausam was brought under the provisions of ESI Act, as illegal and unjustified, and further held that the Hotel Mausam is not liable to pay any

contribution to the ESI Corporation.

2. Hotel Mausam, filed an application before the ESI Court, Bhavnagar, under Section 75 of the ESI Act, inter alia, contending that it was not liable to pay any contribution for the period from 29^th March, 2000 to 31^st March, 2002 and challenging the order dated 29^th March, 2000 bringing it within the purview of the ESI Act. The said application came

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NEUTRAL CITATION

C/FA/7/2007 JUDGMENT DATED: 01/04/2026

0.3539300775246561

to be filed pursuant to the initiation of recovery proceedings by the ESI Corporation through an order dated 11th July, 2002, followed by a further order dated 22nd July, 2002 directing Opponent No. 2 – Recovery Officer to attach the property of Hotel Mausam and to arrest the responsible person in case of non-payment of the determined amount. It was contended that the order passed by the ESI Corporation was one-sided, unilateral, and in breach of the principles of natural justice. It was further contended that Hotel Mausam does not fall within the definition of “industry,” and the impugned order is in violation of Sections 1(5) and 45A of the Act. It was also contended that the officers of the ESI Corporation, without conducting a proper inquiry and without affording an opportunity of hearing, arbitrarily decided that the business operations of Hotel Mausam were covered under

the ESI Act.

3. In the backdrop of the aforesaid factual aspect, the original petitioner sought to set aside the order passed by the ESI Corporation bringing it with the purview of the ESI Act. The learned ESI Court, after framing the issues and permitting both parties to lead evidence, pleased to allow the petition under Section 75 of the ESI Act and passed the aforesaid judgment and order. Being aggrieved, the ESI Corporation has preferred the present First Appeal under Section 82(2) of the ESI Act, raising the following questions as

substantial questions of law:-

“(A) Whether the ESI Act is applicable to the establishment? (B) Whether the demand raised by the corporation is

justified?

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NEUTRAL CITATION

C/FA/7/2007 JUDGMENT DATED: 01/04/2026

0.3539300775246561

4. Heard learned advocate Hemant Shah appearing for the appellant – original opponent and learned advocate

Mr.Dipak Dave for the respondent – original claimant.

5. Learned advocate Mr.Shah submitted that the learned ESI Court has committed serious error in interpreting the notification issued by the State Government, produced at Ex.21. He further submitted that, as per the provisions of the ESI Act, more particula