IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD THE HON'BLE SRI JUSTICE NAGESH BHEEMAPAKA WRIT PETITION No.34683 OF 2025 DATE OF ORDER: 23.01.2026 Between:

Penugonda Venkata Rao …Petitioner And The State of Telangana and others …Respondents

O R D E R:

The case of the petitioner, precisely, is that the petitioner is the President of M/s JagadiswaraWaddera Labour Contract Mutually Aided Cooperative Society Limited, and the Society was awarded Work Contracts by respondent No.4-Commissioner, Khammam Municipal Corporation, for providing labour on outsourcing basis. On the grounds that the petitioner has not made the requisite Employees State Insurance (ESI) Contributions, as an employer, the respondent No.3-Recovery Officer, ESIC, has taken the impugned action, by issuing the Prohibitory Order dated 25.03.2025, freezing the Bank Account of the petitioner (A/cNo.335111121045 in State Bank of India) in connection with the alleged recovery of dues, instead of freezing the Bank Accounts of the Society. It is the grievance of the petitioner that the impugned action has been taken without affording an opportunity of hearing to the petitioner, and without following principles of natural justice; hence, the writ petition.

2. Heard Sri. G. Ravi Chandra Sekhar, learned counsel for the petitioner; Sri G. Venkateshvarlu, learned Standing Counsel for ESIC, appearing for respondent No.3, learned Government Pleader for Labour, appearing for respondent No.1, learned Government Pleader for Municipal Department, appearing for respondent No.2.

3. Learned counsel for the petitioner draws attention to paragraph No.6 of the impugned Prohibitory Order dated

25.03.2025, which reads as follows:

“Whereas, I Shri. Pranab Kumar Santra, Recovery Officer, hereby, instructs the Branch Manager, State Bank of India to transfer forthwith an amount of Rs.15,95,297/- (Rupees Fifteen Lakh Ninety Five Thousand Two Hundred and Ninety Seven Only) which includes further interest up to 24.03.2025 on the contribution due thereon from and out of any account held by the said defaulter(s)/defaulting unit including Fixed/Termed Deposit or any A/C by whichever name the same is designated by the Bank by any a/c payee Demand Draft drawn in favor of ESI Fund A/c No.1, payable at Hyderabad rounded to the next higher rupee. Separate orders with regard to interest till the date of payment and any futher cost, charges and expenses incurred in the recovery proceedings for realizing the arrears liable to be recovered under the ESI Act, 1948 read with Rule 5 of the Second Schedule of the Income Tax Act, 1961 shall be issued on the receipt of Demand Draft from the Bank.”

4. Learned Standing Counsel for the respondent-ESIC relies on the Order passed by the Division Bench of this Court in Ashok Leyland Limited v. Deputy Tahsildar/Special Revenue Inspector (ESI) Recovery Cell, 2001 (4) ALD 96 (DB), wherein the Hon’ble Division Bench has observed as follows:

“Section 75 of the ESI Act reads as follows:-

Matters are to be decided by the Employees’ Insurance Court:-

(1) If any question or dispute arises as to (a) Whether any person is an employee within the meaning of this Act or whether he is liable to pay the employee’s contribution; or (b) The rate of wages or average daily wages of an employee for the purposes of the Act; or (c) T he rate of contribution payable by a principal employer in respect of any employee; or (d) The person who is or was the principal employer in respect of any employee; or (e) The right of any person to any benefit and as to the amount and duration thereof; or (ee) any direction issued by the Corporation under Section 55-A on a review of any payment of dependents’ benefits; or (f) xxxxxxxxx;

(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 immediate employer, in respect of any contribut