TRASNPORT CORPORATION OF INDIALTD vs EMPLOYEES STATE INSURANCE CORPORATION & ORS.

The present petition is filed by the Petitioner under Article 226 of

the Constitution of India as well as under the Employees State

Insurance Act, 1948 for the prayer inter alia that appropriate writ,

order or direction may be issued quashing and setting aside the

impugned order passed by Respondent No.1 dated 8.12.2006 at

Annexure-A directing the petitioner to pay damages as stated

therein on the ground stated in the memo of petition and also for

stay of the operation of the order.

The facts of the case briefly summarized are as follows;

The petitioner is a Company incorporated under the Companies

Act 1956 engaged in the business of public carrier and

transportation having branches in different States of India. The

Petitioner Company had the business operation in various parts of

India as well as in the State of Gujarat. The Respondent No.1 -

Employees State Insurance Corporation is constituted under the

Employees State Insurance Act and is a statutory corporation

obliged to discharge the statutory duties. The Petitioner having the

branches contended that the provisions of the ESI Act did not apply

to the business establishment of the Petitioner Company from

30.3.1975 to 31.3.1988. Thus the dispute arose between the

Petitioner and the Respondent No.1 regarding the date from which

the Employees State Insurance Act would be applicable to the

business establishments of the Petitioner in the State of Gujarat.

Therefore, a demand notice was issued at Annexure-B, Annexure-

C and Annexure-D. However, the petitioner challenged the same.

It is also contended that the dues of the ESI were made payable and

the Petitioner preferred an Application being ESI Application No.

66/1990 before the Employees Insurance Court, Ahmedabad. The

ESI Court, Ahmedabad by judgment and order dated 17.8.1993

upheld the contentions raised by the petitioner regarding

applicability of the said Act to the establishment of the Petitioner

Company up to 31.3.1988. Therefore First Appeal No. 1302 of

1996 was preferred before the High Court and it was decided

finally by the High Court (K.S.Jhaveri,J) by judgment and order

observing that it would be applicable. Therefore, the recovery

proceedings were initiated against the petitioner which were also

challenged by way of Special Civil Application No. 15457 of 2006

and the High Court (Coram: Ravi R. Tripathi,J) vide order dated

31.7.2006 at Annexure-G granted a conditional stay. However,

pending the aforesaid petition, show-cause notice dated 26.7.2006

was issued by which the petitioner was asked to pay an amount of

Rs.710339/- for non-payment of the contribution in time. The

representation made by the petitioner was also rejected. Therefore,

another petition being Special Civil Application No. 25273 of 2006

was preferred and the petitioner was required to pay an amount of

Rs,710339 by way of damages within 30 days and therefore the

present petition has been filed again.

The affidavit-in-reply has been filed by the Respondent

Corporation raising the preliminary objection regarding the

maintainability of the petition itself. It has been contended that

there is already an alternative remedy provided under Section 75

(1) (g) of the ESI Act and therefore the petition would not be

maintainable. Moreover, it has been contended that the petition is

not maintainable and may not be entertained because the reliefs

prayed are barred by principle / rule of existence of statutory

alternative remedy and to run away with the liability to deposit

50% of the dues as provided in Section 75(2)(B) in the Respondent

Corporation and the present petition has been filed.

The other contention has also been raised referring to ESI

(General) Regulations, 1950 contending inter alia that the order has

been passed in exercise of statutory power under the benevolent

legislature and therefore the award of damage for the delayed

payment for the amount of contribution is justified. It is also

specifically contended that the Head Office of the present

petitioner has been covered from 1975 and therefore as laid down

by the Hon''ble Apex Court under the sweep of provisions of ESI

Act, the Corporation and its branches would be covered and they

would have started depositing the amount of contribution. It is

specifically contended that since the petitioner did not follow the

provisions of law and correspondence notices, the Respondent

Corporation is bound to recover the amount of contribution with

interest. As per Section 40 read with Regulation 39 of the ESI Act,

the petitioner has failed to comply with the necessary statutory

provisions even after the judgment of the Hon''ble Apex Court and

therefore the present petition may not be entertained. It is

contended that the liability of damages is admittedly statutory

liability as per Section 85(B) read with Regulation 31(C) of ESI

Act. It is contended that the Respondent Corporation is justified in

issuing a prohibitory order to recover the amount of contribution

which is required to to be deposited with interest thereon.

Heard learned Advocate Shri Rituraj M. Meena for the petitioner

and learned Advocate Shri Sachin D. Vasavada for the Respondent.

Learned Advocate Shri Rikturaj M. Meena has referred to Clause 4

to support his contention that the liability to pay between March

1975 to March 1988 would not arise and therefore the notices as

well as the demand made is unjustified. Learned Advocate Shri

Meena has also referred to the background of the facts and

submitted that it is required to be considered when the damages can

be levied on the basis of the demand. He referred to the judgment

of the Hon''ble Apex Court reported in (2008) 3 SCC 35 in case of

Employees'' State Insurance Corporation v. HMT Ltd. and

referred to the observations made in paragraph 25. He emphasized

that as observed, it cannot be said that the proceedings for recovery

as an arrear of amount of revenue could be equated to such

proceedings and recovery cannot be made straightway. Learned

Advocate Shri Meena tried to submit that since the matter was

pending for consideration before the court and it was pending in

the litigation, imposition of the interest and / or the damages is not

justified. He referred to the background and submitted that in 1990

it was challenged before the court and thereafter in 1996 the

decision came which was the subject matter of further appeal

which came to be decided in 2006. He therefore submitted that the

present petition may be allowed.

Learned Advocate Shri Sachin D. Vasavada however referred to

the affidavit-in-reply with the chequerred history of litigation

pursued by the petitioner. He submitted that by pursuing the

litigation, the petitioner has avoided the payment of legitimate

statutory dues of the benevolent Act. He submitted that in fact the

Hon''ble Apex Court in a judgment in case of Transport

Corporation of India v. ESIC reported in AIR 2000 SC 238 has

clearly decided in the case of the petitioner itself, and therefore,

when the main office of the petitioner is made liable, there is no

justification to raise any such contention.

Learned Advocate Shri Sachin Vasavada submitted that when the

issue is decided by the Hon''ble Apex Court qua the same petitioner

specifically deciding that the branch is also liable for such payment

of the ESI contribution, the issue has been finally decided, and

therefore, such contentions are not permissible in this litigation.

He submitted that in fact the petitioner has deliberately not made

the payment in the guise of pending petition though in 2000 in case

of the Petitioner Company itself, the Hon''ble Apex Court has

finally decided the issue. He therefore submitted that the payment

of interest and damages for the delayed payment are the statutory

regulations which have not been challenged and therefore the

liability cannot be avoided in the name of the pendency of the

proceedings or by pursuing the litigation. He submitted that

though the alternative remedy is provided, the same has not been

pursued as otherwise 50% of the amount would have been

deposited. Therefore the present petition may not be entertained

and may not be allowed.

In view of the rival submissions and having regard to the

background of the facts it is not in dispute that the petitioner is

liable for contribution. It is not even the case of learned Advocate

for the petitioner that they are not liable in light of the statutory

provisions read with regulation. The only contention which has

been sought to be raised at the initial stage was whether the branch

would be liable to pay. This issue has also been covered by the

judgment of the Hon''ble Apex Court in case of Transport

Corporation of India v. ESIC (supra) in case of the petitioner and

it clinches the issue. Therefore, now an issue is sought to be raised

with regard to liability for payment of damages for such delayed

payment. It is required to be noted that merely because the remedy

is pursued would not absolve from the statutory liability

particularly in case of such benevolent act. Therefore the

Petitioner Company was required to make the payment of

contribution which it avoided as recorded in detail from time to

time by filing different petitions.

Though the statutory remedy could be pursued but it could not be a

ground to avoid the liability or postpone the liability. In any case,

if the Hon''ble Apex Court has decided the issue finally as per the

judgment of the Hon''ble Apex Court in case of Transport

Corporation of India v. ESIC (supra). Therefore there is no

justification to join an issue. Therefore, the moot question is

whether the petitioner which is liable to pay is required to pay the

damages and interest and the answer has to be affirmative

emphatically. The person like the Petitioner Company having

postponed the liability cannot seek any relief in the guise of

pending proceedings contending that it was pursuing a litigation. It

is required to be stated that the issue has been decided to the

knowledge of the Petitioner Company in light of the judgment of

the Hon''ble Apex court in case of Transport Corporation of

India v. ESIC (supra) and still the present petition is pursued

which is filed in 2007 and which is kept pending till 2017. This

itself reflect the attitude of the Petitioner Company to postpone and

/ or avoid the statutory liability of the Benevolent Act which cannot

be permitted.

The present petition therefore deserves to be dismissed and

accordingly stands dismissed with cost of Rs.10,000/- with a

clarification that it will be open for the Respondent Corporation to

proceed in accordance with law for recovery of the amount if the

said amount is not deposited within a period of four weeks. Rule is

discharged.

Shri Rituraj M. Meena for the Petitioner has requested for stay of

the operation of the order for four weeks to enable his client to

approach the higher forum.

11.In view of the discussions made and the judgment of the Hon''ble

Apex Court, the request is declined. Stay is refused.