Central Cottage Industries Corporation of India Limited vs Employees State Insurance Corporation and Another

Valmiki J Mehta, J.—The challenge by means of this first appeal u/s 82 of the Employees State Insurance Act, 1948 (in short ''ESI Act''), is to the impugned order dated 7.7.2008 passed by the lower appellate court which has decided the following two issues in favour of the respondents herein:

1) Whether, the notice/judgment dated 27-03-1996 issued by respondent No. 1and 2 is liable to be set aside as violative of principles of natural justice or of the procedure prescribed under the ESI Act? OPP.

2) Whether the impugned notice/demand dated 27-03-96 raised by respondents No. 1 and 2 is barred by limitation? OPP

So far as the issue No. 1 is concerned, the lower appellate court has rightly observed as under, and with which I completely agree:

It is pertinent to mention here that even vide the impugned order dated 27-3-1996, the petitioner was given an opportunity not only of filing objections but also for personal hearing. Even in response to the said impugned order the only response filed by the petitioner was that it has applied to the Government for exemption u/s 90. Hence, the petitioner failed to show (or even contended) that the Act was not applicable to it. In other words, no dispute with regard to the applicability of the Act was raised by the petitioner before the respondents. Hence, the contention of the petitioner is rejected.

Learned Counsel for the appellant placed reliance upon Srinivasa Rice Mills and Ors. v. ESI Corporation (2007) 1 SCC 705 and para 18 whereof which reads as under:

Before an Act is made applicable, in the event a dispute is raised, the authorities exercising statutory power must determine the jurisdictional fact. Applicability of the Act would be a jurisdictional question. The employer is entitled to raise such a question before the appropriate authority. Such a question can also be raised for the first time before a court exercising the power of judicial review although ordinarily the same should be raised before the authority concerned as a preliminary issue. (See The Management of Express Newspapers Ltd. Vs. Workers and Staff Employed under it and Others,

It is accordingly argued that since the appellant has already pleaded that it is exempted from operation of the ESI Act, by virtue of the proviso to Section 1(4) of the ESI Act, the trial court was bound to consider this issue before proceeding further. I may note that there is no dispute to the aforesaid proposition of law, however, the appeal of the appellant is still pending before the ESI court and this disputed question of fact as to whether the appellant falls within the proviso to Section 1(4) of the ESI Act, so as to be exempted from operation of the Act, will be an issue before the ESI court and will have to be decided after trial at the stage of final judgment. The impugned order only decides the aforesaid two issues.

The issue with respect to the limitation, and which was the subject matter of issue No. 2 before the ESI court, has not been pressed before me. The issue as to whether the appellant is or is not covered under the ESI Act by virtue of the proviso to Section 1(4) of the ESI Act, is left open to be decided after the parties have led evidence and at the final stage of hearing before the ESI court, before which the main matter is still pending. The appeal is accordingly dismissed with the aforesaid observations. Trial court record be sent back.