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2003 (9) TMI 808

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..... assessed to the contribution; recovery proceedings also were initiated for collection of contribution amount. At that stage the appellants approached the Employees' Insurance Court (El Court) seeking declaration that the toddy shops run by the appellants during the period 1991-1994 could not have been brought under the ESI Scheme and, therefore, no liability to pay contribution could be foisted on them. According to the respondents the toddy shops were covered by the ESI Scheme from 1983 onwards and only when the inspection was conducted it was noticed that the appellants did not pay the contribution during the period of their licence; in spite of the communication of the coverage and demand for payment of contribution the appellants did not respond and in those circumstances revenue recovery proceedings were initiated. According to the respondents there was no illegality in the action taken by them. The appellants elaborated their case in reply statement contending, even assuming, that the previous contractors were complying with the ESI Scheme, that did not make the appellants liable in any manner to continue the coverage as the very applicability of the Act to the workers o .....

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..... s filed by the appellants and granted relief to them. The respondents challenged the validity and correctness of the orders passed by the El Court by filing miscellaneous first appeals before the High Court. The High Court, after hearing the learned counsel for the parties and considering the respective contentions raised by them, allowed the appeals and set aside the judgment of the El Court. Hence these appeals are filed by the appellants questioning the validity and correctness of the impugned common judgment. This Court, on 9.5.2000, issued notice limited to the question whether the provisions of the Act are applicable to the employees of toddy shops in the State of Kerala under the notification in question. Subsequently leave was granted on 13.9.2001. Section 1 of the Act reads : - " 1. Short title, extent, commencement and application. - (1) This Act may be called the Employees' State Insurance Act, 1948. (2) It extends to the whole of India. (3) It shall come into force on such date or dates as the Central Government may, by notification in the Official Gazette, appoint, and different dates may be appointed for different provisions of this Act and for different Stat .....

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..... the Act. (2) Toddy shops were owned and controlled by the State Government and employees of these shops were otherwise receiving benefits substantially similar or superior to the benefits provided under the Act; because of the same the toddy shops were exempted from the purview of the Act by virtue of proviso to Section 1(4) of the Act; the State is the sole authority to do the business of any intoxicating substance and no citizen has any right to do such business; the appellants being only licensees (known as Abkari contractors) to run abkari business of the Government, were only immediate employers under the State Government or its Excise Department, who is the principal employer; from various provisions of Abkari Act, Rules and the licence conditions it is clear that the authority to run the business is only limited and the main powers are vested with the Government itself. (3) The finding of the High Court that the establishments of the appellants, i.e., toddy shops having been covered by the Act, they shall continue to be governed by virtue of Section 1(6) of the Act even though sub-Section (6) of Section 1of the Act came into force with effect from 20.10.1989 by an amendment .....

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..... herwise receiving benefits substantially similar or superior to the benefits provided under the Act. The High Court rightly took the view that the toddy shops of the appellants neither belonged to the government nor they were under the control of the Government. If the first requirement of the proviso itself is not satisfied, it becomes unnecessary to examine as to the satisfaction of second requirement of the proviso. No doubt, the State has the monopoly in liquor trade but it is open to the State to part with that right for a consideration so as to grant privilege of carrying on trade in liquor to the licensees. Under Abkari Act right to run toddy shops is auctioned annually and licences are granted to carry on business in liquor subject to the provisions of Abkari Act, Rules and conditions of licence. The provisions contained in the Abkari Act and Rules and conditions of licence having regard to the nature of business, namely, dealing with liquor, are regulatory. None of these provisions of the Act, Rules and conditions of licence interfere with a right to carry on business by licensee subject to the regulatory measures contained therein. In the matter of carrying on business an .....

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