Stargate Engineering Private Limited vs The Regional Director, Employees State Insurance Corporation

A.S. Bopanna, J.—The Appellant is before this Court assailing the order dated 3103.2005 passed in E.S.I. No. 48/2004.

The Appellant herein was the applicant before the E.S.I. Court the order passed by tilt E.S.I. Corporation covering the Appellant establishment with retrospective effect from 26.11.1996 was-called in question before the E.S.I. Court. After considering the rival contentions, the E.S.I. Court had dismissed the application. The applicants before the E.S.I. Court are therefore before this Court assailing the said order.

The Appellant while assailing the order passed by the E.S.I. Corporation and the consequent approval of the same by the E.S.I. Court would contend that the Corporation was not justified in covering the establishment with retrospective affect from 26.11.1996. It is their contention that ma Appellants themselves had infect at an earlier occasion sought for coverage of the institution of the establishment under the Act. In this regard, the letter dated 21.11.1997 as at Annexure - ''C'' is relied on. It is contended that, even though the Appellants had indicated that the establishment is covered and therefore to register, the Respondent corporation and Indicated that the establishment does not fail within the jurisdictional area to which the Act applies and therefore, at this juncture, the Respondent corporation cannot hold that the area is covered with retrospective effect, it is their further contention that the E.S.I. Court had failed to appreciate this aspect of the matter when the Appellant assailed the said order. It is contended that, when the employees of Appellant establishment had not availed the benefit under the E.S.I. Act for the earlier period, the coverage cannot be made with retrospective effect.

The Respondents however seek to justify their action as also the order passed by the E.S.I. Court, Firstly, it is contended that the present appeal u/s 82(2) could be maintained only if there is substantial question of law and the fact of coverage and the Act being applicable to the area wherein the establishment is situate is a factual aspect, which had been determined by the E.S.I. Court and therefore, this Court cannot consider that aspect of the matter in the present appeal. Even otherwise, it is contended that the applicability in any event cannot be in dispute in as much as the Appellants themselves had sought for coverage of the area. However, at the first instance, it had not been accepted by the Respondents since there was no clear indication with regard to the bifurcation of the area, and subsequently, when it was ascertained that the establishment in the area was covered. As such, the order passed by the E.S.I. Court is justified and the same does not call far interference.

In the light of what has been contended, it is no abut true the as contended by the learned Counsel for the Respondent, an appeal to this Court would lie only when there is any substantial question of law. However, in the instant case, since the issue relates to the retrospective coverage as made by the Respondents, the said aspect could be considered in this appeal even though such coverage is based on the factual determination as to whether the area in which the establishment. is located falls within the area of Bommanahalli to which the Act. was applicable. Hating noticed this aspect of the matter, the question would be as to whether the coverage as made by the Respondent corporation is sustainable and as to whether the E.S.I. Court was Justified in his regard, in order to appreciate this aspect of the milter, if is and that intact the Appellants themselves had addressed a letter dated 21.11.1997 indicating that their establishment is covered under the provisions of the E.S.I. Act and therefore seeking for registration in that regard. It is no doubt true, at that point, the Respondent corporation had indicated that the coverage would not arise at that juncture since the area where the establishment is situate is and within the geographical location to which the Act applies.

In the instant case, though that aspect of the matter is evident from the record, the fact which cannot also be disputed is that the area where the establishment was situate was within the geographical jurisdiction of Bommanahalli, the area to which the Act was applicable. Therefore, the only impact of the earlier refusal of the Respondent to register the establishment can be considered as an error but the same cannot be held against law since the establishment in any event stood covered and more particularly, the Appellants themselves have indicated that the establishment was covered and on all other aspects relating to the number of persons employed in me industry, there was no dispute whatsoever. In that circumstance, the only Issue is as to whether this Court should accept the contention of the Appellant that the retrospective coverage could not have been made merely because the-facility had not been utilized by them. In this regard, it has to be stated that the use of the facility is not a precondition for the coverage under the Act or the payment of the contribution, Therefore, if this aspect is kept in view and considering the fact that the Act was applicable to the area with after from. 16.04.1986 and the Appellants themselves had sought for coverage in the year 1997, the coverage as made by the Respondents with effect from 26.11.1996 is valid and therefore, the ESI Court was justified in this regard.

However, having come to the above conclusion, one aspect of the matter, which also requires to be observed at this juncture to avoid multiplicity of litigation, between the parties is that the manner in which the coverage was not granted by the Respondent at the first instance would indicate mat the Appellants though had bonafide sought for registration, the same had not been accepted by the Respondents. Therefore, the facts in the instant case is not one situation where the Appellants though covered have not paid the contribution. Therefore in the present facts, even though there can be no dispute with regard to the applicability of the provisions, relating to payment bf interest and damages, the same cannot be made applicable in the present case in view of the peculiar circumstances, under which, the Appellants though had sought for coverage had not been provided the registration by the Respondent corporation itself, Hence, to the said extent, the Appellants are to be protected, it is further directed that since the Appellants had deposited a portion of amount while preferring the application before the E.S.I. Court, the balance of the demand made by the Respondent corporation shall be deposited by them in two equal Installment on or before 31.12.2010. If the amount in not deposited by the said date, the Respondent corporation would be entitled to recover the amount and the said amount would attract interest from 01.01.2011 onwards.

With the above observations, the appeal stands disposed of. No order as to costs.