JUDGMENT

The Employees State Insurance Corporation (henceforth referred to as ‘Corporation’) has filed this appeal under Section 82(2) of the Employees’ State Insurance Act, 1948 (henceforth referred to as ‘Act of 1948’) challenging an Order dated 17.06.2011 passed by the Presiding Officer, Labour Court-cum- E.S.I. Court, Dakshina Kannada, Mangaluru (henceforth referred to as ‘E.S.I. Court’) in E.S.I.No.4/2008 by which, it set aside the Order passed under Section 45A of the Act of 1948 by the respondent No.2 as well as demand notice issued by the respondent No.3 under Section 45C of the Act of 1948.

2. The Establishment of respondent No.1 was covered under the provisions of the Act of 1948 with effect from 31.01.1986 and was allotted distinctive ESI Code No.53-8361- 67. The Establishment was engaged in the business of fabrication and structuring of mechanical equipments/machinery. The Establishment was inspected by the Inspector of the Corporation in May 2006. An observation note was prepared by the Inspector and a show-cause notice dated 24.08.2006 was issued to the Establishment calling upon it to pay contribution on the omitted wages under various heads mentioned in the observation slip. The Establishment replied to the notice and contended that the security charges claimed by the Corporation, were unsustainable since the security was provided by another registered Establishment namely, M/s. Vab Services and that the security personnel deployed by M/s. Vab Services were used for the purpose of security services only. It also contended that in so far as fabrication charges were concerned, they were paid to independent contractors engaged to execute the work outside the Establishment and therefore, the Establishment was exempt from payment of any contribution. In so far as loading and unloading charges are concerned, it contended that the loading and unloading charges were done by mechanical equipments and some labour, who were not connected with the work of Establishment and were not directly employed by the Establishment and therefore, the Establishment was exempt from paying any contribution. With these and other contentions, the Establishment contended that it had submitted its returns and paid contribution in respect of its regular employees and therefore, the demand notice issued by the respondent No.3 was without any basis.

3. Based on these contentions, the respondent No.2 passed an order under Section 45A of the Act of 1948 followed by a certificate under Section 45C of the Act of 1948 resulting in a demand for a sum of Rs.3,17,470/- being contribution on the omitted wages.

4. The Establishment being aggrieved by the said order, filed an application under Section 75(1) read with Section 77(1) of the Act of 1948 before the E.S.I. Court to declare that the Order under Section 45A of the Act of 1948 was null and void and the certificate under Section 45C of the Act of 1948 and the demand notice issued, were all illegal and to declare that the applicant was not liable to pay contribution as claimed. Besides this, it also contended that the demand made by the Corporation was for the period prior to

16.10.2002, which was barred by time.

5. The application was contested by the Corporation contending that the Inspector of the Corporation, who inspected the Establishment came to the conclusion that there were omitted wages and despite being informed, the Establishment failed to avail the opportunities and therefore, the respondent No.2 was perforced to pass an order under Section 45A of the Act of 1948.

6. The ESI Court based on the contention urged by the Establishment and the Corporation, framed the following points for consideration:-

1) Whether the Applicant proves that the Order at Annexure-21 passed under Sec.45-A by the respondent, is null and void?

2) Whether the certificate at Annexure-22 issued by the 2nd respondent to the 3rd respondent, is illegal?

3) Whether the Applicant proves that the demand notice at Annexure-23 iss