An appeal under the Employees State Insurance Act is maintainable only on substantial questions of law; factual disputes do not warrant appellate interference.

CAV JUDGMENT

(PER: HON'BLE MRS. JUSTICE ANU SIVARAMAN)

This MFA is filed by the appellant - ESI assailing the order dated 31.01.2017 passed by the Employees State Insurance Court, Bengaluru in E.S.I. Application No.53/2011.

2. We have heard Shri. N.S. Narasimha Swamy, learned counsel appearing for the appellant and Shri. Joseph Kanikaraj, learned counsel appearing for the respondent.

3. Respondent - Establishment is a Company covered under the Employees State Insurance Act, 1948 ('ESI Act' for short) engaged in manufacturing of Dress Materials business. They have not paid the contribution from January 2007 to March 2009. The same was observed on verification of records on 13.08.2010, 07.09.2010 and 09.09.2010. A detailed inspection report along with the additional remarks was sent to regional office. Subsequently, appellant issued a show-cause notice dated 04.11.2010 to respondent, proposing to determine the contribution under Section 45-A of ESI Act. Respondents were given opportunity of personal hearing and called upon to produce the records and an order under Section 45-A of ESI Act was passed on 02.05.2011 assessing the contribution of Rs.29,18,281/-. The said order was challenged by the respondent. On 29.08.2011, appellant authority passed a detailed order and rejected the appeal. Respondent has approached the ESI Court and sought to set aside the order dated 31.01.2007, has partly allowed the said application, restoring the quantum of contribution due to Rs.50,000/- only.

4. The learned counsel appearing for the appellant submits that the contribution amount of Rs.29,18,281/- claimed for the period from 2006 to 2008 was regular contribution, in respect of the amount spent towards payment of wages of laborers.

5. The respondent had been issued with a show- cause notice dated 04.11.2010. The respondent failed to utilize the opportunity to produce records and prove that the amount of Rs.3,84,58,357/- booked after the manufacturing process started w.e.f. 01.01.2007 was actually spent before the commencement of manufacturing process as contended by the respondent. Accordingly, contribution was worked out at Rs.24,99,794/-. He further contended that respondent spent a sum of Rs.77,72,171/- only towards material and labour charges. The nomenclature indicates both material and labour are involved, but the respondent failed to produce bifurcation figures of labour and material. Hence, 25% of the said expenditure was treated as labour charges and a sum of Rs.1,26,298/- was treated as contribution due. Contribution was claimed in the Labour element involved in the accounting heads "Furniture and Fixtures" and "Plant and Machinery" which was worked out at Rs.35,510/- plus Rs.8,619/-.

6. Further, it is contended that as verified from the records of the respondent, a sum of Rs.3,48,68,207/- was spent by the respondent, before the commencement of the manufacturing process i.e., 01.01.2007. This amount being spent before the commencement of the manufacturing process, no contribution was determined or claimed. In the absence of production of relevant records by the respondent to dislodge the order under Section 45-A of the Act, the order needs to be upheld and recovery to be allowed. He further contends that the trial Court is not justified in not considering the evidence in proper perspective. The trial Court has not given any justification for reducing the claim of contribution from Rs.24,99,794/- to 50,000/-. The Trial Court order is arbitrary and not reliable on any of the provisions under the ESI Act. Therefore, by virtue of Section 45-A (2) of the ESI Act, the 45-A order dated 02.05.2011 and appellate order dated 29.08.2011 passed by the statutory authorities prevails.

7. In support of his contention, he has relied on the following judgments:-

(i) RDESIC v. South India Flour Mills(P) Ltd. , reported in AIR 1986 SC 1686

(ii) ESIC v. Harrison Malayalam Pvt. Ltd. , reported in (1993) 4 SCC 361 ;

(iii) ESIC v. The Central Press and anoth