The court found the lower court's reasoning unsustainable and upheld the appellant's liability under the ESI Act.

JUDGMENT

The Employees State Insurance Corporation is challenging the judgment dated 21.09.2023 in IC No.61 of 2016 rendered by the Employees’ Insurance Court, Alappuzha.

2. The respondent approached the Insurance Court challenging an order passed under Section 45A of the Employees’ State Insurance Act (‘ESI Act’ for short) by the Corporation on 02.05.2014. By the order under of the ESI Act, it was found that the respondent establishment was liable to pay a contribution of Rs.3,42,090/- and interest of Rs.2,38,986/- and a cost of Rs.500/-.

3. According to the respondent it is an establishment engaged in imparting education to the students in Kuruppampady area. Notice was issued for the assessment under Section 45A of the ESI Act. According to the respondent sufficient opportunity was not given and the authorities under the ESI Act passed the 45A order without proper appreciation of the actual facts and circumstances. The ESI Corporation resisted the case. During trial, AW1 was examined on the side of the respondent and marked Exts.A1 to A5. The Social Security Officer who had conducted the inspection was examined as DW1 and Exts.D1 and D2 were marked.

4. Though notice was served, there is no appearance for the respondent.

5. Heard the learned counsel for the appellant – Employees State Insurance Corporation.

6. The following issue was considered by the Insurance Court:

“Whether the Exhibit A3 order dated 02.05.2014 demanding an amount of Rs.3,42,090/- under Section 45A is legally sustainable or not?

7. It is relevant to refer to the findings rendered by the Insurance Court in Paragraph No.9 of the impugned judgment which reads as under:

“9. Though the applicant had contended that the Social Security Officer did not verify the daybook, they did not produce the same before the 45A Authority or before this Court at the time of evidence. Ample opportunities were given to the applicant establishment for the production of vouchers and other documents to segregate the wage part from the expenditure detailed in the Balance Sheet. The applicant establishment neither appeared before the 45A Authority nor produced any document. The applicant establishment also failed to adduce evidence before this Court for segregating the wage element in its expenditure. They contend that since the St. Mary's Charitable Trust is not covered under the ESI Act the expenditure made by the Charitable Trust on the properties owned by them cannot be considered as the expenditure of the school will not stand in the eyes of the law as the school is owned and run by the St.

Mary's Charitable Trust.”

8. However, strangely in the next paragraph, the Insurance Court relied on clause L.13.4 of the ESI Revenue Manual and decided the case in favour of the respondent. Perusal of Paragraph No.10 of the impugned judgment itself would show that the said provision in the ESI Revenue Manual was regarding situations where immediate employers/contractors being engaged by the principal employers for capital construction, repairs and maintenance of the building of factory/establishment etc. Such a provision had no application in the facts and circumstances of the instant case. Even according to the case of the respondent pleaded before the Insurance Court, there was no contention that the case was covered by the provisions of the ESI Revenue Manual referred to by the Insurance Court. Therefore, the reasoning of the Insurance Court for passing the impugned order cannot be sustained.

9. In fact in view of the clear finding rendered in Paragraph No.9 of the impugned judgment, there was no scope for entertaining the insurance case and the Court below ought to have dismissed the insurance case.

In view of t