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2024 Supreme(Online)(MAD) 12819
HIGH COURT OF MADRAS
Honourable Mr Justice J.SATHYA NARAYANA PRASAD
M/S.SHARON SOLUTIONS (INDIA) – Appellant
Versus
THE DEPUTY DIRECTOR – Respondent
Orders determining contributions under the ESI Act must follow procedural fairness and natural justice, particularly when significant evidence is unavailable due to external investigations.
Headnote:
Employees' State Insurance - Employees' State Insurance Act, 1948 - Sections 45, 45A - The court examined the procedural adherence under the ESI Act, ruling against arbitrary determinations made without due process, emphasizing principles of natural justice and the necessity for proper evidence in contributions assessment.
Fact of the Case:
The petitioner, a company under the Employees' State Insurance Act, challenged an order demanding unpaid contributions based on a report by a Social Security Officer, claiming lack of access to the report and violation of natural justice as they couldn't defend against the accusations due to CBI seizures.
Finding of the Court:
The court determined that the order issued was baseless due to the unavailability of records, which were seized and not producible by the petitioner. It highlighted that the requisite process was not followed, leading to arbitrary conclusions by the respondent.
Issues: Did the respondent properly adhere to judicial processes in the emission of the demanded ESI contributions? Was the proper jurisdiction followed in initiating the demand under Section 45A of the ESI Act when the petitioner's records were seized by the CBI?
Ratio Decidendi: The court found the determination of contributions without proper verification and adherence to procedural requirements to be illegal, emphasizing adherence to principles of natural justice and the lawful requirement for record examination by all parties.
Final Decision: The court quashed the order passed by the respondent and remitted the matter for fresh consideration.
O R D E R
This writ petition is filed for issuance of a Writ of Certiorarified Mandamus to quash the respondent's Order No.55-00-021986-000- 1099/3917 dated 21.11.2012 and consequential direction to the respondent to furnish a copy of the inspection report to the petitioner company, prepared by the Social Security Officer appointed under Section 45 of the 'Act 34 of
1948'.
2. The case of the petitioner is that the Petitioner Company having a factory situated at Puducherry is covered under the Employees' State Insurance Act, 1948 (34 of 1948) – for the sake of brevity, it would be called as 'Act 34 of 1948'- which is social security legislation that provides for certain benefits to the employees in case of sickness, maternity, employment injury, and to make provisions for certain other matters in relation thereto.
3. Learned counsel for the petitioner submitted that the Petitioner Company is aggrieved against the respondent's Order 08.2012055-00 021986-000-1099/C-18 (Ad)/3917 dated 02.08.2012 passed under Section 45A of the 'Act 34 of 1948'. The said notice inter-alia states that the Social Security Officer visited the Petitioner Company's Factory on 30.01.2012 and 29.03.2012 and submitted a report on the basis of the records said to have been produced before him and raised a claim to the tune of Rs.14,94,54,264.00 towards contributions on Employees' Insurance and omission of wages for the period from 2006-2007 to 2010-2011. It is not known the reasons warranting the Social Security Officer to arrive at the aforesaid figure without any basis. Admittedly, a copy of the report which determined the above alleged 'default amount', has not been furnished to the Petitioner's Company thereby inviting any objections thereto.
4. Learned counsel further submitted that there is a violation of principle of natural justice for having failed to furnish a copy of the report, which was prepared in a casual and perfunctory manner by the Social Security Officer following an inspection carried on by him on the aforesaid dates, thereby without providing any opportunity for the Petitioner Company to address their objections vis-à-vis explanations therefor. It is apprehended that the Social Security Officer has set his report on the basis of available records and the respondent without going into the merits of the report, has simply passed the impugned order without applying his mind. Pursuant to the respondent's letter bearing No.55-00-021986-000-1099 dated 29.08.2012, one Sri.D.Lakshmi Narayanan, Manager (HR), was deputed to attend the hearing slated for 12.09.2012 before the respondent and stated to the effect that the proposed contribution was on the higher side and placed before the authorities all the available records and copies of challans in relation to the payment of contributions collected from the employees, besides payment of the employer's share, which was remitted through the designated bank of the respondent in conformity with Clause 26 of 'The Employees' State Insurance (General) Regulations, 1950. In terms of the aforesaid Clause, as per the amendment made with effect from 01.01.2005, the employer shall send a return of contributions in quadruplicate in (Form 5) along with receipted copies of challans for the amounts deposited in the Bank.
5. Learned counsel further submitted that the Petitioner Company has complied with the above requirement, but submitted the returns in Form
6 as was done hithertofore, inadvertently for the following years:-
1. October 2007 to March 2008
2. April 2008 to September 2008
3. October 2008 to March 2009
4. April 2009 to September 2009
5. October 2009 to March 2010
6. April 2010 to September 2010 All the above payments have been made in conformity with Regulation 29 of 'The Employees' State Insurance (General) Regulations, 1950'. While so, it is not known the basis warranting the respondent herein to pass the impugned order determining the calculations based on the report of the Social Security Officer.
