TMI Blog1993 (1) TMI 310X X X X Extracts X X X X X X X X Extracts X X X X ..... s more than 19 as on 17.7.85. Therefore, it was treated as covered under the Employees' State Insurance Act, 1948 (hereinafter referred to as the Act) with effect from 11.7.85 provisionally. The fact of coverage was intimated to the respondent by notice dated 21.3.88. Since the final date of coverage could be decided only after verifying all the records pertaining to the date of functioning of the establishment, the respondent was requested to produce all the records such as attendance register, wage register, ledgers etc. from the date of starting of the establishment. The respondent was also called upon to start compliance under the Act with effect from 11.7.85. But there was no compliance. Hence, a notice was issued in Form C-18 dated 26.3.88 along with a draft order for contribution amount of ₹ 49,399.75 which was assessed under section 45- A of the Act for the period 11.7.85 to 313.88. Though the respondent was afforded an opportunity to appear before the officer, it was not availed of However, a letter dated 13.7.88 was received but the explanations were not acceptable to the appellant. Subsequently, a detailed order dated 3.8.88 under section 45-A of the Act was pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution alone. In these circumstances, I can only hold that the applicant had failed to comply with provisions of the ESI Act at the appropriate time. Therefore, according to me, after the closing of the establishment such recovery steps are not justified but only the prosecution as contemplated under sec. 85 of the ESI Act is attracted. Therefore, it is upto the ESI Corporation to decide whether any prosecution should be launched against the applicant for the contravention or noncompliance of the requirements of the ESI Act and Rules.' Aggrieved by the same the appellant-Corporation preferred an appeal in M.F.A. No. 800 of 1990. A Division Bench of the Kerala High Court by its order dated 18th December, 1990 posed the question for determination as to whether the appellant could proceed against respondent for realisation of contribution under the ESI scheme, after the closure of establishment. The High Court upheld the finding of Insurance Court that the respondent had failed to comply with the provisions of the Act at the appropriate time. However, it proceeded to hold that the respondent-establishment was closed on 31.3.88. Ext. P3 notice calling upon the respondent to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e so, when the employees have settled their claims and have gone away. Certainly, such a situation is not con- templated under the Act. From this point of view the judgment of the High Court is right and does not call for any interference. In order to appreciate the rival contentions, it would be useful to set out the necessary legal background. The Employees State Insurance Act is an act for certain benefits to employees in cases of sickness, maternity and employment injury and to make provision for certain other matters in relation thereto. Section 1(4) makes it applicable to all factories, in the first instance' Under sub-section (5) of the said section, the Government may, by a Notification, extend the provisions of the Act to any other establishment or class of establishment; industrial, commercial, agricultural or otherwise. Admittedly, in this case, the hotel industry like that of the respondent has been notified under the Act. Under section 26, a fund called Employees' State Insurance Fund is created by all the contributions paid under this Act, the purposes, for which it may be expended, are cataloged under section 28. Section 38 requires all empl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the above provisions it is clear that from the date of his commencement of business, namely, 11.7.85, there was a liability to contribute. It has already been seen under section 40 the primary liability is his, to pay, not only the employer's contribution but also the employee's contribution. Therefore, he cannot be heard to contend that since he had not deducted the employee's contribution on the wages of the employees, he could not be made liable for the same. The object of making a deeming entrustment sub- section (4) of section 40 will be altogether rendered nugatory if such a contention were to be accepted. After all, when he makes employee's contribution he is entitled to deduct from the wages. Therefore, by force of the application of the statutory provisions, the liability to contribute, during this relevant period, namely, 11.7.85 to 31.3.88, arose. There is no gain saying in that. Hence, we reject the arguments of Mr. Subramanian Poti, learned senior counsel for the respondent. From the above statutory provisions, it would be clear that from out of the common fund maintained under section 26, the employees derive various benefits like sickness ..... X X X X Extracts X X X X X X X X Extracts X X X X
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