THE HON'BLE SRI JUSTICE NAGESH BHEEMAPAKA WRIT PETITION No.23310 of 2025

ORDER:

This Writ Petition is filed, aggrieved by the prohibitory order dated 11.02.2025 issued by the 4^th respondent, directing the 5th respondent bank to recover and transfer a sum of Rs. 10,29,460/- including interest, from the petitioner’s bank accounts towards alleged arrears under the ESI Act, 1948, read with Rule 5 of the Second Schedule of the Income Tax Act, 1961.

2. Heard Sri Mohd Ghulam Rasool, learned counsel for petitioner, and Sri A.Kranthi Kumar Reddy, learned Standing Counsel for the Central Government for respondent No.1. Perused the record.

3. Learned counsel for petitioner submits that the ESI contributions are being regularly and duly paid under Sub Code No.71520494530011019, while the Main Code No.52000494530001019 has remained inactive since 2019 due to closure of operations. As a result of the impugned order dated 11.02.2025, the petitioner’s three bank accounts have been frozen, causing serious financial hardship and obstructing receipt of Rs.1,97,96,995/- payable to petitioner by Electro Steel Casting Ltd. It is further stated that petitioner has already paid Rs.5,43,971/- through auto-debit, demand draft, and post-dated cheques; therefore, the attempt to recover the full amount again constitutes double recovery, which is wholly illegal and unjustified. The freezing of accounts has not only affected the petitioner’s business operations but also violates the fundamental right to property under Article 300A of the Constitution. Therefore, it is prayed to set aside the said order and restore the operation of the bank accounts.

4. Learned Standing Counsel for ESI Corporation submits that the issue raised in this Writ Petition is squarely covered by the Judgment of the Division Bench of this Court in Ashok Leyland Limited, Ductron, Castings Limited, Vs.Deputy Tahsildar/ Special Revenue Inspector (ESI) Recovery Cell, Collectorate and another, 2001 (4) ALD 96 (DB) in W.P.No.2120 of 1991 & Batch, and the relevant portion of the said order in paragraph Nos.4 and 6 reads as follows:

“ 4. That even the Courts and Tribunals, constituted under the ESI Act, have inherent power to issue appropriate relief by way of injunction to the party before it and it can enforce the orders.

6. The petitioners may approach the ESI Court, constituted under

Section 74 of the ESI Act, by filing appropriate applications, and in the event such applications are filed by the petitioners, the same shall be disposed of in

accordance with law.”

Wherein it was held that with regard to the grievances against ESI Contributions/matters, the ESI Court is the appropriate forum to adjudicate the matter and therefore, the petitioner may be directed to approach the ESI Court in appropriate proceedings.

5. Learned Standing counsel for ESI Corporation further refers to Sections 74 and 75 of the ESI Act, which reads as follows:

Section 74 of the ESI Act reads Constitution of Employees Insurance court:

(1) The State Government shall, by notification in the Official Gazette, constitute an Employees' Insurance Court for such local area as may be specified in the notification.

(2) The Court shall consist of such number of Judges as the State Government may think fit.

(3) Any person who is or has been a judicial officer or is a legal practitioner of five years' standing shall be qualified to be a Judge of the Employees' Insurance Court.

(4) The State Government may appoint the same Court for two or more local areas or two or more Courts for the same local area.

(5) Where more than one Court has been appointed for the same local area, the State Government may by general or special order regulate the distribution of business between them.

Section 75 of the ESI Act reads:

(g) any other matter which is in dispute between a principal employer and the Corporation, or between a principal employer and an immediate employer or between a person and the Corporation or between an employee and a principal or immedi