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2025 Supreme(Online)(KER) 7758
HIGH COURT OF KERALA
P.M. MANOJ, J
RAJEEV – Appellant
Versus
EMPLOYEES STATE INSURANCE CORPORATION – Respondent
WP(C) 23879/2016
K.P.SUJESH KUMAR, SRI.ADARSH KUMAR, SRI.SHASHANK DEVAN
A contractor is liable for statutory payments as per tender conditions, and recovery can be sought under the Employees' State Insurance Act for amounts due.
Headnote:(A) Employees' State Insurance Corporation Act, 1948 - Sections 45
(C) and 75(g) - Recovery of amounts due for Forest Development Tax - Petitioner, a contractor, failed to remit VAT and Forest Development Tax as per tender conditions; ESI Corporation paid the dues and sought recovery from the petitioner - Tender conditions explicitly required successful bidder to pay all statutory payments. (Paras 2-12)
(B) Writ Jurisdiction - The court emphasized the binding nature of tender conditions and the liability of the petitioner to pay the amounts due to the Forest Department as per the contract terms. (Paras 12-13)
Facts of the case:
The petitioner, a contractor, was awarded a contract for selling standing trees and was liable for VAT and Forest Development Tax under the tender conditions. The ESI Corporation paid these dues on behalf of the petitioner and initiated recovery proceedings against him.
Findings of Court:
The court found the petitioner liable for the outstanding Forest Development Tax and dismissed the writ petition.
Issues: The court addressed whether the ESI Corporation could recover amounts due under the contract through ESI Act provisions and the liability of the petitioner.
Ratio Decidendi: The court held that the petitioner was bound by the tender conditions to pay all statutory taxes, including the Forest Development Tax, which the ESI Corporation was entitled to recover.
Result: Writ petition dismissed.
JUDGMENT
Dated this the 22 nd day of January, 2025 The above writ petition is preferred being aggrieved by the issuance of Exts.P2 to P4 notices for recovery of amounts, which is due in the nature of taxes to the Forest Department, which has already been paid by the Employees’ State Insurance Corporation (for short ‘ESI’) towards the department concerned.
2. It is the case of the petitioner that he is a contractor by profession, responded to the invitation to closed tenders by the 1st respondent for the sale of standing trees in ESI Hospital compound at Parippally, Kollam District. Being the highest bidder, the petitioner was awarded with the contract. Thereafter, he remitted the bid amount and was permitted to cut and remove the auctioned trees as per letter dated 11.02.2010. Accordingly, the petitioner cut and removed the trees standing in the property of the 1st respondent and all the formalities in connection with the tender notification have been completed in 2010 itself. It is also admitted that there was dispute regarding the remittance of Value Added Tax (VAT) by the 1st respondent. They have paid an amount of Rs.3,70,830/- to the Commercial Tax Department on account of the petitioner and it was directed to recover the said amount from the petitioner. For that amount, already the respondent has approached the Munsiff Court, Kollam by preferring OS No.912 of 2013. It is admitted by the petitioner that the suit was decreed against the petitioner.
3. Thereafter, the 3rd respondent by issuing Ext.P2, another demand was raised for an amount of Rs.2,51,204/- towards the Forest Development Tax. It is also stated that on default of payment of the amount demanded within the stipulated time, recovery will be effected under the provisions of Sections 45(C) to (I) of Employees’ State Insurance Corporation Act, 1948 (for short ‘the ESI Act, 1948’). The petitioner has chosen not to respond against Ext.P2 before the ESI Corporation. However, it is stated in the writ petition that the said notice does not disclose how the petitioner is liable to make payment of Rs.2,51,204/- and under what capacity he is liable to make the payment. It is further contended that the proceedings under sections 45(C) to (I) of ESI Act, 1948 can be invoked only in cases where contribution to the ESI Fund is due in arrears as provided under the said Act and the same cannot be resorted to for recovering money due under a contract for which the remedy is elsewhere.
4. It is the case of the petitioner that the contentions raised before the 1st respondent were ignored and issued Ext.P3 notice once again summoning the petitioner to appear in person before the 3rd respondent. Thereafter, the petitioner received another notice from the 3rd respondent demanding to pay an amount of Rs.2,62,695/-. In that background, it is contended that if any amount is due to the 1st respondent under any circumstances other than contribution payable under Section 39 of the ESI Act, the same cannot be recovered by resorting to Section 45 of the ESI Act, especially when the liability was disputed. These are the circumstances in which the petitioner has preferred this writ petition challenging Exts.P2 to P4 notices.
5. In response to the contentions raised in this writ petition, the respondents have filed a counter affidavit, in which it is specifically stated that the 2nd respondent invited closed tenders for sale of standing trees at the site of proposed ESIC Medical College at Paripally, Kollam. The tender process was started based on the valuation statement and communication dated 04.02.2010 received from the Assistant Forest Conservator, Social Forestry Division, Kollam, wherein there was mention about payment and rate of VAT/Cess/Forest Development Tax etc. due/payable. The tender notice was published in the leading dailies dated 05.01.2010 inviting closed tenders specifying the conditions of tender process. The last date for submission of tenders was fixed on 11.01.2010 at 11.00 a.m
