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Judgment
Rekha Sharma, J.—The question which arises for consideration in this appeal is, whether the period of limitation provided in proviso to Explanation (b) of section 77 (1A) of the Employees'' State Insurance Act, 1948 (hereinafter called the Act) is applicable to section 45-A of the Act. Before I refer to the relevant facts, I deem it proper to reproduce section 77 of the Act. It runs as under:
Commencement of Proceedings--(1) The proceedings before an Employees'' Insurance Court shall be commenced by application.
(1A) Every such application shall be made within a period of three years from the date on which the cause of action arose.
Explanation--For the purpose of this sub-section--
(a) the cause of action in respect of a claim for benefit shall not be deemed to arise unless the insured person or in the case of dependents'' benefit, the dependents of the insured person claims or claim that benefit in accordance with the regulations made in that behalf within a period twelve months after the claim became due or within such further period as the Employees'' Insurance Court may allow on grounds which appear to it to be reasonable;
(b) the cause of action in respect of a claim by the Corporation for recovering contributions (including interest and damages) from the principal employer shall be deemed to have arisen on the date on which such claim is made by the Corporation for the first time:
Provided that no claim shall be made by the Corporation after five years of the period to which the claim relates;
(c) the cause of action in respect of a claim by the principal employer for recovering contributions from an immediate employer shall not be deemed to arise till the date by which the evidence of contributions having been paid is due to be received by the Corporation under the regulations.
(2) Every such application shall be in such form and shall contain such particulars and shall be accompanied by such fee, if any, as may be prescribed by rules made by the State Government in consultation with the Corporation.
And now the facts:
The Employees'' State Insurance Corporation (hereinafter called the Corporation) had vide a communication dated March 15, 1994 informed the respondent the it proposed to determine and recover a sum of Rs. 1,17,674.15 as contribution payable in respect of the employees of its factory/establishment u/s 45-A of the Act with effect from October 2, 1988 to September 30, 1983 and, accordingly, called upon it to show cause why assessment as proposed be not made. In response to the said notice, the respondent disputed its liability to pay on the ground that it was not a shop and hence was not covered by the Act. The plea so taken did not find favour, with the Corporation and, consequently, an order u/s 45-A of the. Act dated May 9, 1994 was passed, holding the respondent liable to pay Rs. 1,17,674.15 towards its'' own contribution and the employees'' contribution for the period October 2, 1988 to September 30, 1993 along with interest @ 12% per annum for each day of the default from the due date till the date of payment within a period of 15 days from the date of the award.
Feeling aggrieved by the order dated May 9, 1994 the respondent moved an application before the Employees'' Insurance Court u/s 75 of the Act. The application was heard by a Senior Civil Judge who relying upon proviso to Explanation (b) of section 77(1A) of the Act held that the claim of the Corporation was barred by time insofar as it pertained to the period between October 2, 1988 to October 1, 1991 and for the rest of the period, it was held to be within time. It may be noticed here that the limitation period of five years as laid down in the proviso to Explanation (b) of section 77(1A) was three years at the relevant time and it was raised to five years subsequently. The other plea of the respondent that it was not covered by the Act was dismissed. The respondent preferred no appeal against the said finding, while the appellant preferred the present appeal assailing the finding that the claim made between October 2, 1988 and October 1, 1991 was barred by time.
It is submitted by learned Counsel for, the appellant that the point in issue, as noticed at the outset, is no longer res integra and it is squarely covered by a judgment of the Supreme Court in the case of ESI Corporation v. C.C. Santhakumar 2007 (112) FLR 636 (SC)
Before I refer to what the Supreme Court has said, it will be appropriate to reproduce sections 45-A arid 45-B of the Act. The same run as under:
45A. Determination of contributions in certain cases--(1) Where in respect of a factory or establishment no returns, particulars, registers or records are submitted, furnished or maintained in accordance with the provisions of section 44 or any Inspector or other official of the Corporation referred to in Sub-section (2) of section 45 is prevented in any manner by the principal or immediate employer or any other person, in exercising his functions or discharging his duties u/s 45, the Corporation may, on the basis of information available to it, by order, determine the amount of contributions payable in respect of the employees of that factory or establishment:
Provided that no such order shall be passed by the Corporation unless the principal or immediate employer or the person in charge of the factory or establishment has been given a reasonable opportunity of being heard.
(2) An order made by the Corporation under sub-section (1) shall be sufficient proof of the claim of the Corporation u/s 75 or for recovery of the amount determined by such order as an arrear of land revenue u/s 45-B or the recovery under sections 45-C to 451.
45-B. Recovery of contributions.--Any contribution payable under this Act may be recovered as an arrear of land revenue.
I may now refer to what the Supreme Court has said on sections 45-A and 45-B and the proviso to section 77(1A) (b) of the Act in the case of ESI Corporation v. C.C. Santhakumar (supra) as under;
Section 45-A of the Act contemplates a summary method to determine contribution in case of deliberate default on the part of the employer. By amendment Act 29 of 1989, sections 45-C to 45-1 were inserted in the Principal Act, for the purpose of effecting recovery of arrears by attachment and sale of movable and immovable properties or establishment of the principal or immediate employer, without having recourse to law or the ESI Court. Therefore, it cannot be said that a proceeding for recovery as arrears of land revenue by issuing a certificate could be equated to either a suit, appeal or application in the Court. u/s 68(2) and sections 45-C to 451, after determination of contribution, recovery can be made straightaway. If the employer disputes the correctness of the order u/s 45-A, he could challenge the same u/s 75 of the Act before the ESI Court.
On a plain reading of sections 45-A and 45-B in Chapter IV and sections 75 and 77 in Chapter VI of the Act, as indicated above, there cannot be any doubt that the area and the scope and ambit of sections 45-A and 75 are quite different.
If the period of limitation, prescribed under Proviso (b) of section 77(1-A) is read into the provisions of section 45-A, it would defeat the very purpose of enacting sections 45-A and 45-B. The prescription of limitation u/s 77(1A)(b) of the Act has not been made applicable to the adjudication proceedings u/s 45-A by the Legislature, since such a restriction would restrict the right of the Corporation to determine the claims under, section 45-A and the right of recovery u/s 45-B and, further, it would give benefit to an unscrupulous employer. The period of five years, fixed under Regulation 32(2) of the Regulations, is with regard to maintenance of registers of workmen and the same cannot take away the right of the Corporation to adjudicate, determine and fix the liability of the employer u/s 45-A of the Act, in respect of the claim other than those found in the register of workmen, maintained and filed in terms of the Regulations.
What section 75(2) empowers is not only the recovery of the amounts due to the Corporation from the employer by recourse to the ESI Court but also the settlement of the dispute of a claim by the Corporation against the employer. While this is so, there is no impediment for the Corporation also to apply to the ESI Court to determine a dispute against an employer where it is satisfied that such a dispute exists. If there is no dispute in the determination either u/s 45-A(I) or u/s 68, the Corporation can straightaway go for recovery of the arrears.
Section 77 of the Act relates to commencement of proceedings before the ESI Court. The proviso to Sub-section (ka)(b) of section 77 of the Act cannot independently give any meaning without reference to the main provision, namely). Section 77 of the Act. Therefore, the proviso to Clause (b) of section 77(1-A) of the Act, fixing the period of five years for the claim made by the Corporation, will apply only in respect of claim made by the Corporation before the ESI Court and to no other proceedings.
In the light of the above-quoted paragraphs, it is clear that no period of limitation can be read into an order passed u/s 45-A of the Act and, that any determination made under the said section by the Corporation shall not attract the limitation prescribed under proviso to section 77(1A) of the Act. After having held so, the Supreme Court also dealt with the question, whether a concept of reasonable time can be read into the provision even though not specifically provided for? On this aspect, it has been said in the judgment that a ''reasonable period'' would depend upon the factual circumstances of the case concerned and there cannot be any empirical formula to determine that question. It has been further held that the Court/authority considering the question, whether the period is reasonable or not, has to take into account the surrounding circumstances and relevant factors to decide that question.
It may be noticed here that none appeared for the respondent to contest the appeal and, therefore, the question whether the period) for which assessment u/s 45-A of the Act was made could be termed reasonable period; did not arise.
For what has been noticed above, the impugned order insofar as it holds that the demand made by the appellant for the period October 1, 1988 to October 1, 1991 was barred by time is set aside.
The appeal is accordingly disposed of.