THE HONOURABLE MR.JUSTICE S.VAIDYANATHAN C.M.A.No.4230 of 2019 The Regional Director, ESI Corporation, judge suggested amendment in esi act

DATED: 09.12.2019
C.M.A.No.4230 of 2019
The Regional Director,
ESI Corporation,
143, Sterling Road,
Chennai 600 034.
The Assistant Director,
ESI Corporation,
143, Sterling Road,
Chennai 600 034. … Appellants
Pazha Karuppaiah,
Proprietor, M/s.Kamalachitram,
No.6(23) Besant Street,
Lloyds Road, Royapettah,
Chennai 600 014. …Respondent
Civil Miscellaneous Appeal filed under Section 82(2) of ESI Act, against the order dated 11.08.2018 passed by the Employees Insurance Court (Principal Labour Court), Chennai in E.I.O.P.No.38 of 2015.
For Appellants : Ms.G.Narmadha for Mr.G.Bharadwaj For Respondent : Mr.V.Ayyadurai, Senior Counsel
Employees State Insurance Corporation has come up with this Civil Miscellaneous Appeal, challenging the order dated 11.08.2018 passed by the Employees Insurance Court (Principal Labour Court), Chennai in E.I.O.P.No.38 of 2015.
2. The 2nd Appellant, vide two Notices dated 09.01.2015, directed the Respondent herein, to pay the amount specified therein, towards ESI contribution, within 15 days from the date of receipt of the Notices. In both Notices, it is stated that the Respondent herein had employed 20 employees for wages. 3. Challenging the said Notices dated 09.01.2015, the Respondent herein filed E.I.O.P.No.38 of 2015 on the file of the Employees' Insurance Court (Principal Labour Court) at Chennai, which was allowed on 11.08.2018, holding that there is no positive evidence to have employed 20 persons and that, the Notices dated 09.01.2015 does not mention the names of employees, as admitted by R.W.1, who is a Department witness. Against the said order dated 11.08.2018, the present Appeal has been filed. 4. Learned counsel for the Appellants/ESI Corporation submitted that, the burden is on the Respondent/principal employer to produce the list of workers, who have been paid wages. He further submitted that, no document has been produced by the Respondent with regard to the number of persons employed by him in connection with the shooting of a movie in Fiji island and that, he has also not produced the list of employees, who travelled along with him to Fiji island. It is his contention that, in such circumstances, the Employees' Insurance Court ought not to have held that the ESI Department has not established their case. 5. In reply, learned counsel appearing for the Respondent submitted that, the Respondent, who is the Proprietor of M/s.Kamalachitram, a Proprietorship concern, is engaged in Film production and its office is located in a portion of the Respondent's residence, which is a rented premises. Further, in the said establishment, inasmuch as it engages all persons required for production of Film on contract basis, as such, there is no scope for applicability of the provisions of the Employees State Insurance Act, 1948. 6. It is further stated by the learned counsel appearing for the Respondent that, the last film titled “Naadi Thudikuthadi” produced by the Respondent during 2012 was shot exclusively in Fiji island and there was no occasion to employ any person for production of the said Film, in India. 7. Heard the learned counsel for the parties and perused the material documents available on record. 8. Undoubtedly, the Respondent herein would be liable to pay ESI contribution, provided, he had employed more than 10 persons with the aid of power or 20 persons without the aid of power. Admittedly, preliminary inspection was conducted in the premises of the Respondent herein, on 05.07.2013 and the ESI Corporation is also aware that the film, which, the Respondent shot in the year 2012, did not materialize. Two witnesses have been examined on behalf of the ESI Corporation and both of them have deposed that, there is no iota of evidence to the effect that the Respondent herein had employed 20 persons without the aid of power. 9. The Employees' Insurance Court came to the conclusion that the Respondent herein has proved that the film was not produced in India and, it was produced at Fiji island and that, the entire payment was made by the Respondent herein to its employees at Fiji island. The Employees' Insurance Court finally held that, the Respondent firm has not employed required number of employees under the coverage of ESI Act and hence, the Respondent is not required to pay any contribution to the ESI Corporation. 10. On a perusal of the material documents, it is seen that the ESI Corporation has not proved its case that, the Respondent herein has employed required number of employees under the coverage of the ESI Act. The question as to whether the film produced by the Respondent herein was shot in India or in a foreign country is not relevant for deciding this issue, as the order passed by the Employees' Insurance Court is a finding of fact. Therefore, this Court finds no reason to interfere with the same. 11. The time limit prescribed under Section 45-AA of the Employees' State Insurance Act, 1948, is only 60 days. Section 45-AA of the Act appears to be redundant. There is no time limit prescribed under the ESI Act for the disposal of the Appeal. In this regard, it is worth referring to the decision of the Apex Court in the case of Krishna District Co-operative Marketing Society Limited vs. N.V.Purnachandra Rao, (1987) 4 SCC 99, wherein, it was held that the provisions of the Industrial Disputes Act require amendment. Relevant portion of the said decision, reads thus: "11. We may incidentally observe that the Central Act itself should be suitably amended making it possible to an individual workman to seek redress in an appropriate forum regarding illegal termination of service which may take the form of dismissal, discharge, retrenchment etc. or modification of punishment imposed in a domestic enquiry. An amendment of the Central Act introducing such provisions will make the law simpler and also will reduce the delay in the adjudication of industrial disputes. Many learned authors of books on industrial law have also been urging for such an amendment. The State Act in the instant case has to some extent met the above demand by enacting section 41 providing for a machinery for settling disputes arising out of termination of service which can be resorted to by an individual work- man. In this connection we have one more suggestion to make. The nation remembers with gratitude the services rendered by the former Labour Appellate Tribunal which was manned by some of our eminent Judges by evolving great legal principles in the field of labour law, in particular with regard to domestic enquiry, bonus, gratuity, fair wages, industrial adjudication etc. The Industrial Disputes (Appellate Tribunal) Act, 1950 which provided for an all-India appellate body with powers to hear appeals against the orders and awards of Industrial Tribunals and Labour Courts in India was repealed in haste. If it had continued by now the labour jurisprudence would have developed perhaps on much more satisfactory lines than what it is today. There is a great need today to revive and to bring into existence an all- India Labour Appellate Tribunal with powers to hear appeals against the decisions of all Labour Courts, Industrial Tribunals and even of authorities constituted under several labour laws enacted by the States so that a body of uniform and sound principles of Labour law may be evolved for the benefit of both industry and labour throughout India. Such an appellate authority can become a very efficient body on account of specialisation. There is a demand for the revival of such an appellate body even from some workers' organisations. This suggestion is worth considering. All this we are saying because we sincerely feel that the Central Act passed forty years ago needs a second look and requires a comprehensive amendment." 12. In view of the said decision, this Court is of the view that, the provisions of the ESI Act also need to be properly amended. Similarly, the time limit to approach the Employees' Insurance Court has to be reduced to less than 120 days from three years, as prescribed under Section 77 of the Act. The Appellate Authority must be empowered to consider the delay if any, beyond 120 days, but, on a condition precedent that the entire amount together with interest at 9% per annum, as determined under Section 45-A, from the date it became due, is deposited within a period of 30 days. The Appellate Authority must also be empowered to extend time for depositing the amount in instalments within a maximum period of 12 months, however with interest at 12% per annum. 13. That apart, the Appellate Authority must exercise powers to grant interim order, which would make the provision workable, and time limit has to be fixed for disposal of the Appeal. Also, the Appellate Authority must have powers to accept additional documents at the Appellate stage. 14. After the disposal of the Appeal under Section 45-AA of the ESI Act, parties must be permitted to approach the ESI Court. Powers of Appeal would enable the parties to get clarification from the Appellate Authority and pay the legitimate dues. These factors need to be taken note of, for bringing out amendment. Since, at present, Section 45-AA of the ESI Act is unworkable, this is given a go-by and straightaway, parties approach the ESI Court. 15. It is needless to mention that the mandatory requirement under the ESI Act has to be complied with by the Respondent herein, without any further delay. The Civil Miscellaneous Appeal is dismissed with the above observations. No costs. 09.12.2019
Index : Yes
Speaking Order : Yes
To :
The Employees Insurance Court (Principal Labour Court),
The Secretary,
Employees’ State Insurance Corporation
(Ministry of Labour & Employment),
Panchdeep Bhawan,
Comrade Indrajeet Gupta (CIG) Marg,
New Delhi – 110 002.
C.M.A.No.4230 of 2019

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