Regional Director, ESI Corporation vs Kohinoor Glass Factory (P) Ltd.

Elipe Dharma Rao, J.—The Regional Joint Director, ESI Corporation filed this appeal aggrieved by the order passed by the Employees'' Insurance Court, Hyderabad, in EI Case No. 16 of 1993 dated March 24, 1994 wherein it was held that the petitioner-factory has not employed any person for wages during the relevant period and hence, the petitioner is not liable to pay the contributions as claimed by the respondent-Corporation and notices dated June 10, 1992 and October 22, 1992 claiming an amount of Rs. 5,752.60 and Rs. 9,650/- by the respondent-Corporation are set aside.

The brief facts of the case are that the first respondent i.e., Kohinoor Glass Factory Limited, Sanathnagar, Hyderabad, was demanded by the Corporation through its notices dated June 10, 1992 and October 22, 1992 an amount of Rs. 5,750.60 ps. and Rs. 9,650/- towards contribution for its employees engaged for the period 1984 to 1987. According to the appellant herein, the petitioner factory situated at Sanathnagar was covered u/s 2(12) of ESI Act. As per Section 40 of the Act, the petitioner is liable to pay the contribution in respect of the employees engaged directly by him or through an immediate employer. When the respondent-petitioner has not paid the contributions in respect of labour engaged on building maintenance for the period from February, 1984 to February, 1987 and also not paid the contributions in respect of regular employees engaged for the month of February, 1987. The Inspector of the appellant who verified the petitioner''s ledgers has reported that the petitioner has paid an amount of Rs. 2,94,442.71 towards labour charges on building maintenance followed by Rs. 23,205.85 ps. towards wages for his regular employees for the periods mentioned above. Thereafter, the respondent-petitioner was given an opportunity to represent his case on June 8, 1992, but the petitioner failed to represent neither personally nor submitted any explanation. Accordingly, the respondent has issued the final order u/s 45-A dated July 2, 1992 requesting the employer to pay the contribution. The arrears of contributions pertain to the period from July, 1984 to February, 1987 only and not for the various periods as stated in the ESI case. It is further stated that originally the petitioner factory functioned under the name and style of; Kohinoor Glass Factory (P) Limited with effect from June 15, 1965 and thereafter the name of the factory was changed to Mahalaxmi Glass Works (P) Limited with effect from August 1, 1966 and functioned upto June 22, 1983. Again: the name was changed to Kohinoor Glass Factory (P) Limited with effect from June 23, 1983. During the abovesaid period, there was no change in the ownership, manufacturing process, employees and even the premises, Hence, the coverage of the factory under the Act is continued. Hence, they made the demand based on the labour charges for building maintenance paid by the respondent-petitioner. Against the demand notices, respondent-petitioner filed ESI case. According to the respondent-petitioner, the petitioner-factory was closed down in the year 1965 and remained closed in 1983 and as such it is not correct to state that the factory functioned from 1972 to 1975. Exs. P1 and P5 are the notices impugned. On September 20, 1985 the Income Tax Department conducted raid on the factory and all the documents were seized by the Department and the documents are lying with the Income Tax Department even today. After that date, the factory has not worked. Based on both oral and documentary evidence, the Tribunal held that the petitioner-factory is not liable to pay the contribution.

It is submitted by the learned Counsel for the appellant that on verification of the record that an amount of Rs. 2,94,442.71 was spent towards labour charges on building maintenance for the period July, 1984 to February, 1987. The above amount is conclusive of cost of material and labour charges. Further, an amount of Rs. 23,205.85 ps., was paid towards the wages of regular employees for the month of February, 1987. Therefore, it can be concluded that once the respondent-petitioner has spent the said amount for the maintenance of building and labour charges, as per the provisions of ESI Act, he has to contribute for these employees. Therefore, it is held that the defence taken by the respondent-petitioner is not correct. I am satisfied that during the period under which the demand was made, the respondent-petitioner spent the said amount for building maintenance and labour charges and therefore, he is liable to pay the contributions as per Section 2(22) read with Section 45-A of ESI Act, as demanded by the Corporation. Accordingly, the order passed by the ESI Court is set aside and the demand made by the Corporation is upheld. The appeal is allowed. No costs.