An order for contribution under Section 45-A of the ESI Act is legally unsustainable if the foundational inspection report is vague and fails to provide specific employee details to establish the establishment's coverage under the Act.

JUDGMENT

This Civil Miscellaneous Appeal is directed against the order dated 15.07.2022 in E.I.C No.59 of 2018 by the learned Employees Insurance Court and Chairman, Industrial Tribunal-1 (for short ‘Tribunal’), at Hyderabad. By the said order, the learned Tribunal allowed, the Petition filed by the Respondent herein under Section 75(1)(g) of the Employees State Insurance Act (for short ‘ESI Act’), wherein the respondent sought for setting aside the order dated 17.01.2018 issued by the appellant No.1 under Section 45-A and the Recovery Notice dated 08.06.2018 issued by Appellant No.2 under CP-2.

2. For the sake of the clarity and convenience, the parties hereinafter shall be referred to as per their status before the learned Tribunal.

I. BRIEF FACTS:

3. It is the case of the proprietor of the Petitioner that he is running a small bakery shop under the name Cups N Cakes Bakers at Kazipet, Hanumakonda, with only three employees and limited business turnover. The petitioner asserts that no inspection was ever conducted by the ESI Inspector, yet he suddenly received a Recovery Notice dated 08.06.2018 in Form ESI CP-2, demanding Rs.88,188/- towards contribution for the period from 11/2016 to 09/2017 together with interest up to 22.05.2018. On enquiry, he came to know that an order under Section 45-A dated 17.01.2018 had been passed determining Rs.78,293/-. It is his contention that the unit is not coverable under the ESI Act since he never employed more than three persons. He further submits that the order was passed without reasons, without disclosing particulars, and without affording him an opportunity, and therefore, both the order and recovery notice are liable to be set aside.

4. The respondents filed a written statement denying all the allegations and averments made therein. The respondent contended that the petitioner’s unit was covered under the ESI Act with effect from 01.08.2010 based on a preliminary survey report dated 31.08.2010, and a code number was allotted. According to them, the petitioner failed to comply with the Act from the very beginning. It is their case that the petitioner failed to comply with the statutory provisions from the inception, due to which C-18 (adhoc) notices dated 05.11.2014 and 01.08.2010 were issued demanding Rs.42,900/- and Rs.2,84,213/- respectively. Since the petitioner failed to attend personal hearings or produce records, orders under Section 45-A were passed on 26.05.2015 and 09.10.2017 determining Rs.42,900/- for the period 01.08.2010 to 31.03.2011 and Rs.2,68,125/- for the period 01.09.2012 to 31.10.2016. As the petitioner failed to respond, a prosecution case in P.C. No.13 of 2018 was filed and was pending before the Tribunal. Though the petitioner received the notice, he failed to appear even after affording a second opportunity on 08.01.2018. Therefore, order under Section 45-A dated 17.01.2018 and the consequential recovery proceedings were lawfully initiated, and the petition was liable to be dismissed.

II. ISSUES FRAMED BY THE TRIBUNAL:

5. The following issues were framed for determination by the Tribunal:

1. Whether the 45-A order dt:17-01-2018 passed by R1 is legal & valid?

2. Whether the recovery notice issued by R2 is against the principles of natural justice and consequently to set aside the same?

3. Whether the petitioner is liable to pay any amount as demanded by the respondents?

4. To what relief?

III. EVIDENCE ON RECORD:

6. On behalf of petitioners P