WP/13531/2010 of M/S.INDIA PISTONS LTD., Vs THE DEPUTY DIRECTOR, on 23 December 2010

O R D E R

These writ petitions are filed by the employerchallenging the order passed under Section 45-A of the ESI Act,1948dated 4.6.2010. By the said order, the petitioners were informedthat an inspection report was called for which would show that thepetitioner had not paid their due amounts which worked out toRs.7,52,430/- for the period from 2004-2005 in respect ofW.P.No.13531 of 2010, Rs.83,98,963/- for the period from 2001-2002and 2002-2003 in respect of W.P.No.13532 of 2010 and of

Rs.17,14,533/- in respect of W.P.No.13533 of 2010 for the period2003-2004.

2. The writ petitions were admitted on 28.6.2010. Pendingthe writ petitions, this Court granted interim stay on conditionthat the petitioner deposits 25% of the total contribution inW.P.No.13531 of 2010 and 10% of the total contribution inW.P.Nos.13532 and 13533 of 2010. It is now claimed by Mr.SanjayMohan, learned counsel appearing for M/s Ramasubramaniam Associatesthat the said condition was complied with.

3. In normal circumstances, this Court would havedirected the authorities to go before the ESI Court under Section75 of the ESI Act. The Supreme Court in ESI Corpn. v. C.C.Santhakumar reported in (2007) 1 SCC 584 held that in respect of anotice under Section 45-A of the ESI Act, which is not challengedunder Section 75 of the Act, the authorities can deem it a finalorder and proceed to recover the amount.

4. However, the Parliament has now amended the ESI Act byCentral Act 18 of 2010 and provided a new Section 45AA in the Act.Section 45A of the Act also undergone change by the introduction ofa proviso to that section. The amendment Act was brought intoforce with effect from 01.06.2010 as per the Governmentnotification in SO 1296/E published in the Gazette of India dated1.6.2010.

5. In the light of this amendment, learned counsel forthe petitioner submits that when the authorities passed theimpugned order, they have lost sight of the amendment made to theAct. Admittedly, the impugned order came to be made on 4.6.2010 andthey ought to have taken note of the proviso to Section 45A of theAct which reads as follows:

"Provided further that no such ordershall be passed by the Corporation in respectof the period beyond five years from the dateon which the contribution shall become payable"

6. Any person who is aggrieved by any order passed under45A of the Act has now been provided with an appeal remedy in terms 45AA which reads as follows:

"45AA. If an employer is not satisfiedwith the order referred to in section 45A, he mayprefer an appeal to an appellate authority as maybe provided by regulation, within sixty days of thedate of such order after depositing twenty-five percent of the contribution so ordered or thecontribution as per his own calculation, whicheveris higher, with the Corporation:

Provided that if the employer finally succeedsin the appeal, the Corporation shall refund suchdeposit to be employer together with such interestas may be specified in the regulation".

7. However, the respondent themselves have admitted intheir circular sent on 24.6.2010 that for a formal decision, onnotifying the Appellate Authority may take some more time. Thoughit is now claimed by a circular dated 4.8.2010, appellateauthorities have been notified by introducing new regulation 31-D,those regulations are yet to be published in the Gazette asrequired under the Act. The circulars dated 24.06.2010 and4.11.2010 cannot be taken as substitute for the regulation to bemade in terms of Section 97 of the ESI Act. The Act requires theCorporation to make regulation after prior publication in thegazette.

8. The contention of Ms.Jothivani, learned counsel forthe respondent that they should abide by the provisions of Section75 of the Act may not be proper. The Act itself now provided underSection 45AA of the amended ESI Act to go before the AppellateAuthority. Admittedly the orders impugned in these writ petitionscame to be made on 04.06.2010. Therefore, the petitioner can havethe benefit of amended provision and obviously the AppellateAuthority have not been notified under the regulations and in termsof Section 45AA of the Act, the petitioner can very well approachthis Court.

9. The contention raised by Mr.Sanjay Mohan, learnedcounsel for the petitioner was that in passing the impugned orders,the proviso to Section 45A of the Act must be taken note of. TheParliament has now directed that no order can be passed by theCorporation in respect of period beyond 5 years from the date ofwhich, the contribution shall become payable.

10. A perusal of the impugned order shows that theproviso to Section 45A of the Act has not been kept in mind and itconsists of periods barred by the proviso as well as the periodsnot covered by the proviso. Hence, this Court is of the view thatthe impugned order must be set aside and the respondent to redo theexercise afresh in the light of the proviso, after givingopportunities to the petitioner. If any order is passed pursuant tothe direction given by this Court, the petitioner can always workout his remedy in terms of the Act and in case, if appellateauthorities are notified, they can always approach the appellateauthority. The writ petitions are allowed to the extent indicatedabove. No costs. The Miscellaneous Petitions stand closed.

11. At this stage, Mr.Sanjay Mohan, learned counsel forthe petitioner submitted that by virtue of the orders passed dated28.6.2010, the petitioner had deposited amounts and if the impugnedorders are quashed, they are entitled to get the refund of the saidamount. Since this Court had not decided the merits of theliability of the petitioner and has only permitted the ESIauthorities to perform their statutory duties in accordance withthe amended provision, the question of refund of the deposit made,pursuant to the interim orders passed by this Court on 28.6.2010can be decided after the outcome of the orders to be passed by theESI Corporation.

Sd/- Asst.Registrar. /true copy/ Sub Asst.Registrar.VJYToThe Deputy Director,The Employees' State Insurance CorporationRegional office (Tamil Nadu)143, Sterling Road, Chennai 600 034.3 CCS TO m/S.S. Jothivani & Divya, Sr. 91992, 91991 & 91990W.P.NO.13531 to 13533 OF 2010andM.P.NOS.1,1 & 1 OF 2010

RV (CO)kk 27/1