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2025 Supreme(Online)(Ker) 49485
IN THE HIGH COURT OF KERALA AT ERNAKULAM
SUSHRUT ARVIND DHARMADHIKARI, SYAM KUMAR V.M., JJ
THE DEPUTY DIRECTOR, EMPLOYEES' STATE INSURANCE CORPORATION (ESIC) – Appellant
Versus
1 DR.SUNNY JOSEPH, 2 DR.LEENA SUNNY JOSEPH – Respondent
WA NO.358 OF 2023 | WA NO.325 OF 2023
For the Appellants/Petitioners: SRI.ADARSH KUMAR, SRI.SHASHANK DEVAN
For the Respondents: SRI.R.NIKHIL, SMT.K.K.NESNA
The notification presence under the ESI Act determines coverage, and factual disputes about employee count require resolution in the EI Court.
Headnote:(A) Employees' State Insurance Act, 1948 - Sections 39, 40, 1(5), and 1(6) - Coverage of establishment - Dispute regarding ESI contribution for nursing home - Respondents contended establishment not covered due to fewer employees - ESIC issued order demanding contribution - Learned Single Judge quashed orders for non-compliance of natural justice - Appellants argued that the establishment is covered under ESI Act regardless of employee count - Court found notification exists bringing establishment under purview and relegated matter for factual assessment. (Paras 2-10)
(B) Appeals - Appellate court's role - When factual disputes require evidence, jurisdiction shall be with the EI court while appellate courts limit themselves to legal reviews. (Paras 9-10)
Facts of the case:
Dispute over ESI contributions between ESIC and respondents' private nursing home; ESIC issued orders demanding payments based on employee count which respondents disputed, asserting fewer than statutory required employees.
Findings of Court:
Notification exists for establishment under ESI, thus legal framework necessitates dismissal of prior assumption based on insufficient evidence; factual disputes must be resolved in EI Court.
Issues: Coverage of establishment under ESI Act; employee count dispute; compliance of legal procedures in issuing contribution demands.
Ratio Decidendi: Court emphasized the necessity of factual determination by EI Court for disputes involving employee counts and highlighted existing provisions of ESI cannot be overlooked owing to misinterpretations of adjudicators at lower levels.
Result: Writ Appeals disposed as above.
| Table of Content |
|---|
| 1. dispute over esi coverage of nursing home. (Para 1 , 2) |
| 2. learned single judge's decision quashing esic orders. (Para 3 , 4) |
| 3. arguments on employee count and notification requirements. (Para 5 , 6) |
| 4. court's need for factual assessment and authority determination. (Para 7 , 8) |
| 5. holds that disputes are remitted to ei court. (Para 9 , 10) |
JUDGMENT
Dated this the 31st day of October, 2025
Syam Kumar V.M., J.
These appeals are filed by the Employees' State Insurance Corporation (ESIC), challenging a common judgment dated 01.11.2022 of the learned Single Judge disposing of W.P.(C) No.14819 of 2022 and W.P.(C) No.15366 of 2022.
2. The subject matter in dispute concerns the ESI coverage of a private nursing home viz., St. Gregorious Memorial Thekkedath Hospital, Pathanapuram P.O., Kollam, run by the respondents, who are a doctor couple. The ESI Corporation had issued a notice to the establishment under Section 40 read with Section 39 of the Employees' State Insurance Act, 1948 (hereinafter referred to as 'the ESI Act') demanding an amount of Rs.3,76,035/- towards contribution for the period from September 2016 to October 2021. The respondents contended that their establishment is not covered under the ESI Act since the employees working therein are fewer than the statutorily required number of 10. To substantiate the same, the respondents had produced before the concerned officer of the ESI Corporation the attendance register, wages register, labour registration certificate, with application forms for the relevant period. During the hearing afforded, the relevant aspects to prove that the establishment does not fall within the cover had also been apprised. However, without a proper appreciation of the documents produced and on an incorrect appreciation of the dispute raised, the ESIC had issued the orders, which were impugned in both W.P.(C)s.
3. The learned Single Judge, after hearing the parties, disposed of the Writ Petitions inter alia quashing both the orders issued by the ESIC, holding that there had been prima facie non- compliance of the principles of natural justice and the orders impugned were not legally sustainable. Aggrieved by the said judgment of the learned Single Judge, ESIC has filed these Writ Appeals.
4. We heard Sri.Adarsh Kumar, Advocate on behalf of the appellant Corporation and Sri.R.Nikhil, Advocate, on behalf of respondents 1 and 2.
5. It is submitted by the learned counsel for the appellant that the learned Single Judge had erred in rendering the impugned judgment quashing the orders issued by the ESIC. The said orders had been issued strictly in accordance with law and were sustainable. It is contended that, as per Section 1 (6) of the ESI Act once an establishment is brought under the coverage of ESI Act and its schemes, then the said establishment shall continue to be governed by the said Act, notwithstanding whether the number of persons employed falls below the limit prescribed by the Act at any time. It is contended that the respondents had filed I.C.No.14 of 2014 before the Employees Insurance Court, Kollam, challenging the notice issued by the ESI Corporation directing implementation of the ESI Act with respect to the establishment as well as to register the said establishment under the Act. The same had been dismissed for default. The order so rendered had been produced as Ext.R1(B) along with the counter affidavit. Insofar as the said I.C. had been dismissed, the coverage of the said establishment under the ESI Act had become settled in favour of the ESI Act, and the coverage has become final. The said aspect was not considered at all by the learned Single Judge. Reliance is placed on the dictum laid down in Employees State Insurance Corporation v. Hotel Kalpaka International ( AIR 1993 SC 1530 ) to contend that if the establishment is a notified industry and in the establishment more than 20 employees were working at the relevant time, the same would fall within the purview of the
