BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT

DATED: 31.03.2023

CORAM:

THE HONOURABLE MR.JUSTICE N.SATHISH KUMAR

C.M.A(MD)No.435 of 2022

1.The Regional Director,

Employees' State Insurance Corporation,

Sub Regional Office,

Municipal Shopping Complex,

Sindupoonthurai,

Tirunelveli.

2.The Recovery Officer,

The Employees' State Insurance Corporation,

Municipal Shopping Complex,

Sindupponthurai,

Tirunelveli.

:Appellants/Respondents

.vs.

1.R.Jeyasekar

2.A.Rajendrakumar

: Respondents/Petitioners

3.S.Ramu

4.Mahalakshmi

5.Nithuraj

6.N.Sadasivam

:Respondents/Respondents

PRAYER: Civil Miscellaneous Appeal filed under Section 82(2) of ESI

Act, 1948, against the decree and judgment of the Employees' State

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Insurance-cum-Labourer Court, Tirunelveli passed in E.S.I.O.P.No.14 of

2014, dated 10.04.2017.

For Appellants :Mr.I.Pinaygash

For R1 & R2 :Mr.M.Azeem

For R5

:No appearance

JUDGMENT

***********

This appeal has been filed challenging the order of the lower

Court in allowing the application filed by the respondents 1 & 2.

2. Challenge has been made for the demand notice issued by

the appellant for recovery of amount towards arrears of subscription. It

is the case of the respondents 1 & 2 before the Labour Court that the

respondents 1 & 2 are the transferee of the business and they are

statutorily liable to pay subscription or any arrears. The Labour Court

allowed the application mainly on the ground that admittedly the

property was purchased from one N.Sadasivam. The said Sadasivam was

not the previous employer and he was not running any business and he

was not liable to pay any subscription to the appellants. The

respondents 1 & 2 are transferees of the above said Sadasivam. When

the said Sadasivam was not in arrears of any amount, and no demand was

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made against him, the respondents under Section 93 cannot be made

liable to pay any amount. Accordingly, notice issued for recovery has

been set aside. Challenging the same, the appellants have filed the

present appeal.

3. The main contention of the learned counsel appearing for

the appellants before this Court that the factory known as Ramesh

Cashew Industries. This is run by on Ramu, S/o.Sadasivan and the

authorities found that there are arrears of Rs.19,24,669/- payable by the

said industry towards subscription and therefore, an order under Section

45A of the ESI Act, 1948 is also passed. Thereafter, the entire

establishment has been transferred to the respondents 1 & 2 herein.

Hence, action has been initiated under Section 93-A of the ESI Act,

which has been challenged before the Labour Court. The Labour Court

simply set aside the notice on the ground that since the property has been

transferred by Sadasivan, he was not in-charge of the industry on the

relevant time.

4. The learned counsel appearing for the respondents would

submit that the said Sadasivan has in no way connected with the Ramesh

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Cashew Industries. No amount is payable by the said Sadasivan. The

recovery effected from the said Sadasivan is erroneous. Therefore, the

Labour Court Judge has rightly appreciated the evidence and allowed the

petition.

5. Before the Labour Court the following substantial

questions of law are framed:-

“ 1.Whether the demand made by the respondents 1 and

2 against the petitioners are valid?

2.Whether the petitioners are liable to pay the

subscription prior to their purchase?

3.Whether the petition is to be allowed? ”

6. It is relevant to note that the Labour Court has set aside

the impugned order mainly on the ground that Sadasivan is not the

original employer of the Ramesh Cashew Industry since the Ramesh

Cashew Industry is run by one Ramu. Sadasivam cannot be fastened

with