TaxTMI 
TaxTMI 
2006 (11) TMI 706
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....easons if any as to why you should not be prosecuted, within a week of receipt of this letter. If no reply is received within stipulated time it will be presumed that you have no valid reasons to explain and further action will be taken accordingly without any further notice." Suits were filed before the Employees' Insurance Court under Section 75(1)(g) of the Act. The question which inter alia was raised therein was as to whether the aforementioned notice was legal. By reason of a judgment and order dated 30.6.2003, the learned Employees' Insurance Court dismissed the applications. Aggrieved thereby and dissatisfied therewith, appeals were preferred before the High Court purported to be in terms of Section 82 of the Act. The said appeals, by reason of the impugned order, have been dismissed. Mr. C. Mukund, learned counsel appearing on behalf of Appellants would raise three contentions in support of these appeals, viz., (i) Having regard to the definitions of "employees" and "wages" as also the applicability of the Act in relation to the factories, it was obligatory on the part of the authorities under the Act to determine the question as to whet....
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....n 1 states that the Act at the first instance shall apply to all factories other than seasonal factories provided that nothing contained in this sub-section shall apply to a factory or establishment belonging to or under the control of the Government whose employees are otherwise in receipt of benefits substantially similar or superior to the benefits provided under this Act. "Contribution" is defined in Section 2(4) of the Act to mean "the sum of money payable to the corporation by the principal employer in respect of an employee and includes any amount payable by or on behalf of the employee in accordance with the provisions of this Act". "Factory" is defined under Section 2(12) of the Act which reads as under: "2. (12) 'factory' means any premises including the precincts thereof (a) whereon ten or more persons are employed or were employed for wages on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on with the aid of power or is ordinarily so carried on, or (b) whereon twenty or more persons are employed or were employed for wages on any day of the preceding twelve months, ....
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....were fulfilled and includes any payment to an employee in respect of any period of authorised leave, lockout, strike which is not illegal or lay-off and other additional remuneration, if any, paid at intervals not exceeding two months, but does not include (a) any contribution paid by the employer to any pension fund or provident fund, or under this Act; (b) any travelling allowance or the value of any travelling concession; (c) any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment; or (d) any gratuity payable on discharge;" Section 38 occurring in Chapter IV of the Act provides that all employees are to be insured in the manner provided by the Act. Section 39 provides for contributions payable under the Act in respect of the employees. Sub-section (4) of Section 39 of the Act reads as under: "(4) The contributions payable in respect of each wage period shall ordinarily fall due on the last day of the wage period, and where an employee is employed for part of the wage period, or is employed under two or more employers during the same wage period, the contributions shall fall due on such days as may be specifie....
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....te employer and require any person found in charge thereof lo produce to such Inspector or other official and allow him to examine such accounts, books and other documents relating to the employment of persons and payment of wages or to furnish to him such information as he may consider necessary; or (c) examine, with respect to any matter relevant lo the purposes aforesaid the principal or immediate employer, his agent or servant, or any person found in such factory, establishment, office or other premises, or any person whom the said Inspector or other official has reasonable cause to believe to be or to have been an employee; (d) make copies of, or lake extracts from, any register, account book or other document maintained in such factory, establishment, office or other premises; (e) exercise such other powers as may be prescribed. (3) An Inspector shall exercise such functions and perform such duties as may be authorised by the Corporation or as may be specified in the regulations." Section 97 provides for the power of the Corporation to make regulations, pursuant whereto the Corporation framed Regulations. Regulation 10B reads as under: "10-B. Registration of f....
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....ns 77, 78, 79 and 81 which have already been brought into force) of the said Act shall come into force in the following areas in the State of Andhra Pradesh namely: - Areas falling within the limits of revenue villages of : (i) Kovvada and Narsimhapuram in Bheemavaram Manda; (ii) Vandrum and Cherukuwada in Undi Mandal (iii) Peda Amiram in Kalla Mandal; and (iv) Akiveedu in Akiveedu Mandal of West Godavari District." Admittedly, the rice mills are situated within the Narsimhapuram area. The appointed day therefor was 1st August, 2000. The factories of Appellants were inspected prior to that date. Prior to that date, therefore, Appellants were not bound to comply with the provisions of the Act. They could appoint employees at their own sweet will. But the period wherefor the provisions of the Act would be applicable is 12 months preceding the said date, viz., from 1st August, 1999 to 31st July, 2000. Compliance of the requirements of the statutes on the part of the employer, however, would begin from the appointed day, viz., 1st August, 2000. Before an Act is made applicable, in the event, a dispute is raised, the authorities exercising statutory power must determine the ....
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....d out prior to the date of coming into force of the Act. Such inspections, thus, could have been carried out only in terms of the provisions contained in Section 45 of the Act, which could mean that the Inspector would be appointed for the purpose of the Act. He is authorized under the Act to enquire into the correctness of any of the particulars stated in any return referred to in Section 44 or for the purpose of ascertaining whether any of the provisions has been complied with. It is, therefore, evident that any action taken prior to or in furtherance of a report made on an inspection, prior to coming into force of the Act, would be ultra vires Section 45(2) of the Act. Once the inspection is held to be illegal, Respondent could not have taken any statutory action for imposition of penalty. The question may be considered from another angle. Appellants could have been directed to file returns or make their contribution in terms of the Act. Had such a notice been served, they could have shown that they have appointed employees who do not draw wages within the meaning of the provisions of the said Act and, thus, they do not come within the purview thereof. In Employees' State ....
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....t;employed for wages". The exact amendment we have already noticed above. When the word "wages" is specifically introduced in the section, it can only mean to have reference to what "wages" mean in Section 2(22) of the Act. It cannot be given any other meaning as has been done by the Andhra Pradesh High Court. In our view, therefore, the Act would apply to an establishment only when the number of employees is 20 or more and all those employees answer the description of employee contained in Section 2(9) of the Act." Section 44 of the Act embraces within its fold the principles of natural justice. Sub-section (2) of Section 44 is explicit. A notice was required to be issued directly in terms of Sub-section (2) of Section 44. However, from a perusal of the notice dated 20th October, 2000, it is evident that Appellants were not directed to comply with the provisions of the Act but were asked as to why the criminal cases should not be instituted against them purported to be in terms of Section 85(g) of the Act. Mr. V.J. Francis, learned counsel appearing on behalf of Respondent, has drawn our attention to the fact that letters have been issued on 8.9.200....
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....ration before the Allahabad High Court in Employees' State Insurance Corporation v. M/s. U.P. Hotel and Restaurants Ltd. and another [1975 Lab. I.C. 1025], wherein a Division Bench of the High Court opined: "It was contended by learned counsel for the appellant that since the Act sets up an Employees' Insurance Court for decision of certain disputes where the employer can get a hearing, it is not necessary to give a hearing at the stage of the decision by the Corporation. We are unable to agree with this contention. Whether the function of the Corporation in deciding the question whether the Act applies or not to a particular employer is quasi-judicial or not, does not depend upon whether there is any further remedy open to the employer or not. Learned counsel for the appellant relied upon a decision of the Supreme Court in Chandra Bhawan Boarding and Lodging, Bangalore v. State of Mysore, AIR 1970 sc 2042. In our opinion, the case supports the view that we have taken other than the view which the learned counsel has contended for. It was held in this case that the dividing line between administration power and quasi-judicial power is quite thin and is being gradually....