IN THE HIGH COURT OF JUDICATURE AT MADRAS

DATED : 09.03.2021

CORAM

THE HONOURABLE MR.JUSTICE S.M.SUBRAMANIAM

C.M.A.No.1201 of 2018

and

C.M.P.Nos.9841 & 21435 of 2018

M/s.VijayalakshmiPalanisamy Charitable Trust

KalaignarKarunanidhi College of Engineering

Kannampalayam

Coimbatore

Rep.by its Managing Trustee

..Appellant

Vs.

The Sub-Regional Director,

Employees State Insurance Corporation

No.1897, Trichy Road,

Ramanathapuram,

Coimbatore – 641 045

..Respondent

Prayer : Civil Miscellaneous Appeal filed under Section 82 of

the Employee's State Insurance Act 1948, against the order

dated 20.09.2017, passed by the Presiding Officer, Employees

State Insurance Court Cum Labour Court, Coimbatore in

E.I.O.P.No.5 of 2011.

For Appellant : Mr.R.Jayaprakash

For Respondents : Mr.S.P.Srinivasan

ESI Counsel

J U D G M E N T

The order dated 20.09.2017 passed in E.I.O.P.No.5 of 2011

is under challenge in the present Civil Miscellaneous Appeal.

2. The Substantial Question of law raised by the

appellant, which reads as under:

“(a) Whether in the teeth of the admitted

factual position that the property purchased in a

public auction conducted under SARFAESI Act could

be termed as transfers that factory or

establishment in whole or in part, by sale, gift,

lease or license or in any other manner whatsoever

so as to attract Section 93A of the ESI Act?

(b) Whether the Impugned Order suffers from an

https://hcservices.ecourts.gov.in/hcservices/

error of Jurisdiction, particularly in view of the

Section 93A of the ESI Act?

(c) Whether the claim of the Respondent is

barred by limitation by virtue of proviso to

Section 45-A of the ESI Act.

(d) Whether the claim of the Respondent is

maintainable against the Appellant in the absence

of an order determining contributions under Section

45A of the ESI Act after giving reasonable

opportunity of being heard.

e) Under the facts and circumstances of the

case, can this Appellant be held liable for payment

of compensation?”

3. The learned counsel appearing on behalf of the

appellant confined with the substantial question of law by

stating that under Section 93-A of the ESI Act, auction

purchase of factory under the SARFAESI Act from the Bank

cannot be covered. The auction purchase of a property from a

Bank under the SARFAESI Act is not covered under Section 93A

of the ESI Act and therefore, the Recovery imposed by the

respondent/ Corporation is directly in violation of the

provisions of the Act and thus, the orders passed by the ESI

Court is liable to be scrapped.

4. In reliance, the learned counsel for the appellant

cited the judgment in the case of Sri Angappa Spinning Mills

and Ors., Vs Regional Commissioner, Employees Provident Fund

Tamilnadu and Pondicherry, in W.P.No.3760 and 4151/1979, dated

29.10.1985, wherein the scope of Section 17B of the Employees

Provident Fund and Miscellaneous Petition Act was considered

by this Court and he referred the following observations made

by this Court in Paragraph 6 and the same is extracted

hereunder:

“6.............The

liability

to

pay

contribution and other sums on transfer of an

establishment

is

specially

provided

for

under section 17-B of the Act. The need for making

special provision fastening liability for the

payment of contribution and other sums on the

transferee is a clear pointer that otherwise no

person other than the employer would be liable for

its payment. To put it differently, the underlying

principle behind section 17-B of the Act is that

the employer, who is liable under section 6 of the

Act to pay the contribution and other sums, cannot

by merely resorting to the device of transfer, be

permitted to avoid such liability and, therefore it

is, provision is made under section 17-B of the Act

that the employer as well as his transferee shall

be jo