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IN THE HIGH COURT OF KARNATAKA

DHARWAD BENCH

DATED THIS THE 23^RD DAY OF DECEMBER, 2021

BEFORE

THE HON’BLE MRS.JUSTICE M.G.UMA

MFA.NO.9320/2009 (ESI)

C/W MFA.NO.9321/2009

IN MFA NO.9320/2009

BETWEEN

M/S SHANKAR TALKIES

CHITRADURGA

REPRESENTED BY ITS PARTNER

MS. TEJAS M SATI

...APPELLANT

(BY SRI.C.K.SUBRAMANYAM, ADV. FOR

SRI.MALLIKARJUNSWAMY B.HIREMATH, )

AND

THE JOINT DIRECTOR

EMPLOYEES STATE INSURANCE CORPORATION

SUB REGIONAL OFFICE,

SARVODAYA CIRCLE, KESHWAPUR, HUBLI

…RESPONDENT

(BY SMT.G.MEERABAI, ADV.)

THIS APPEAL IS FILED U/S 82(2) OF ESI ACT TO SET ASIDE

THE

ORDER

DT.

17.9.2009

PASSED

IN

E.S.I.

APPLICATION

NO.24/2003 ON THE FILE OF THE E.S.I COURT, HUBLI AT HUBLI.

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IN MFA NO.9321/2009

BETWEEN

M/S MALLIKARJUNAIAH & SONS,

NO. 63, V.P.EXTENSION,

CHITRADURGA

REPRESENTED BY ITS PARTNER

SRI.MALLIKARJUNAIAH.

...APPELLANT

(BY SRI.C.K.SUBRAMANYAM, ADV. FOR

SRI.MALLIKARJUNSWAMY B.HIREMATH, )

AND

THE JOINT DIRECTOR

EMPLOYEES STATE INSURANCE

CORPORATION

SUB REGIONAL OFFICE,

SARVODAYA CIRCLE, KESHWAPUR, HUBLI

…RESPONDENT

(BY SMT.G.MEERABAI, ADV.)

THIS APPEAL IS FILED U/S 82(2) OF ESI ACT TO SET ASIDE

THE

ORDER

DT.

17.9.2009

PASSED

IN

E.S.I.

APPLICATION

NO.22/2003 ON THE FILE OF THE E.S.I COURT, HUBLI AT HUBLI.

THESE APPEALS HAVING BEEN HEARD AND RESERVED FOR

JUDGMENT ON 19.11.2021 COMING ON FOR PRONOUNCEMENT OF

JUDGMENTS THIS DAY, THE COURT DELIVERED THE FOLLOWING:

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COMMON JUDGMENT

MFA No.9320/2009 is preferred by the appellant i.e., M/s

Shankar Talkies and MFA No.9321/2009 by the appellant M/s

Mallikarjunaiah and Sons seeking to set aside the order dated

17.09.2009 passed by the Employees State Insurance Court,

Hubballi (‘the ESI court’ for short) in ESI Application Nos.22 and

24 of 2003.

2.

Brief facts of the case are that, two separate

applications were filed by the appellants herein before the ESI

court seeking to set aside the impugned order passed by the

respondent dated 10.07.2003 under Section 45A of the

Employees’ State Insurance Act, 1948 (‘the Act’ for short)

holding that there is functional integrity between the appellants

in these two appeals and that they have employed 20 employees

and therefore, the establishment as defined under Section

2(12)(b) of the Act. The appellants and the respondent led

evidence before the trial court and the ESI application Nos.22

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and 24 of 2003 were disposed of by a common order which is

impugned herein.

3.

Heard the learned counsel Sri.C.K.Subramanyam for

learned

counsel

Sri.Mallikarjunswamy

B.Hiremath

for

the

appellants

and

learned

counsel

Smt.G.Meerabai

for

the

respondent.

4.

Learned counsel for the appellants contended that

the appellants in these two appeals are different and separate

entities and there is no functional integrity between the two.

Both entities incorporated separately and carrying on its

businesses in different fields. Under such circumstances, the

respondent could not have held that there is functional integrity

between the two. He further submitted that the report submitted

by the respondent that the establishment engaged the services

of more than 20 employees and it is covered under the definition

of establishment under the Act is also erroneous, since at no

point of time, the appellants have engaged services of 20 or

more employees. The ESI Inspector had never visited the

establishment, but issued the report blindly without verification.

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As per the list submitted by the ESI Inspector, there were 20

employees including one Mr.Palaiah, and one Mr.G.P.Kumar who

is examined before the ESI court as AW2 wherein he has

specifically stated that he is not an employee or workman under

the appellants, but he is a film distributor. The name of

Mr.Palaiah mentioned twice in the report without any basis. If

these two names are deleted, then there wi