The invocation of Section 45A of the Employees State Insurance Act requires clear non-production of records or obstruction of inspection, which was absent in this case, leading to the invalidation of the order against the appellant.

JUDGMENT :

UJJAL BHUYAN, J.

Leave granted.

2. This civil appeal by special leave is directed against the judgment and order dated 12.10.2023 passed by the High Court of Judicature at Madras (briefly ‘the High Court’ hereinafter) in C.M.A. No. 1284 of 2017 (M/s. Carborandum Universal Limited Vs. ESI Corporation).

3. Be it stated that appellant had filed the related appeal before the High Court assailing the legality and validity of the order dated 06.07.2015 passed by the Employees Insurance Court (Principal Labour Court), Chennai in E.I.O.P. No. 262 of 2001. By the aforesaid order dated 06.07.2015, the Employees Insurance Court upheld the order dated 17.04.2000 passed by the Regional Office (Tamil Nadu), Employees State Insurance Corporation holding that a sum of Rs. 5,42,575.53 is statutorily due as arrears of contribution and payable by the employer i.e. the appellant for the period from 01.08.1988 to 31.03.1992. Appellant was directed to pay the aforesaid amount with interest at the rate of 12 percent per annum upto 31.08.1994 and at the rate of 15 percent per annum from 01.09.1994. The aforesaid order dated 17.04.2000 was passed under Section 45A of the Employees State Insurance Act, 1948 (briefly ‘the Act’ hereinafter).

4. For proper appreciation, relevant facts may be briefly noted.

5. Appellant is a company and is engaged in the business of manufacturing various products. It is covered under the Act. It has been allotted an employers’ code and it is stated that the establishment was regularly making statutory contributions as required under the Act for its covered employees.

6. On 27.11.1996, respondent Employees State Insurance Corporation (for short ‘the corporation’ hereinafter) issued show cause notice alleging that appellant had neither paid contributions as per requirement of the Act nor had submitted returns of contribution for the period from August, 1988 to March, 1992. The show cause notice alleged non-submission of returns and non-production of complete record during earlier inspections and on that basis, proposed an assessment of Rs. 26,44,695.00 under various heads in terms of Section 45 -A of the Act. Appellant was asked to show cause within 15 days as to why assessment should not be made as proposed while affording an opportunity of personal hearing.

7. Upon receipt of show cause notice, appellant submitted its explanation and participated in the personal hearings on various dates. In the course of the personal hearings, representative of the appellant produced ledgers for the show cause period. That apart, relevant cash books, bank books, journal vouchers, relevant bills and contractor’s records as well as returns of contributions were produced for verification.

8. However, respondent confirmed that a sum of Rs. 5,42,575.53 was statutorily due as arrears of contribution and payable by the employer i.e. the appellant in respect of the claim covered by the show cause notice. Accordingly, order dated 17.04.2000 was passed by the corporation under Section 45 -A of the Act ordering that contributions totalling Rs. 5,42,575.53 for the period from 01.08.1988 to 31.03.1992 were finally determined and directed to be paid with interest at the rate of 12 percent per annum upto 31.08.1994 and at the rate of 15 percent per annum from 01.09.1994 failing which it was stated that the aforesaid amount would be recovered under Sections 45 -C to 45-I of the Act.

9. Being aggrieved, appellant filed a petition under Section 75 (1)(g) of the Act before the Employees Insurance Court which was registered as E.I.O.P. No. 262/2001. The Employees Insurance Court after due consideration framed the following questions for consideration:

(i) whether the order of the respondent dated 17.04.2000 was liable to be set aside?

(ii) whether the petitioner was liable to pay contribution, if so, to what extent?

(iii) to what relief?

9.1. Documents were exhibited and evidence adduced by both the sides. After hearing the matter, the Employees Insurance C