Nitro Aromatics vs Regional Director and Another

K.A. Puj, J.—The Petitioner has filed this petition under Article 226 of the Constitution of India, praying for quashing and setting aside the impugned order passed by the Respondent No. 1 on 16.09.2010 in E.S.I. Application No. 5/2001. The Petitioner has also prayed for quashing and setting aside the notice, for recovery of damages, dated 29.10.2010 and 11.11.2010.

This Court has issued notice on 08.12.2010. Pursuant to the notice Mr. Sachin D. Vasavada, learned advocate appears on behalf of the Corporation.

Heard Mr. Kabir A. Hathi, learned advocate appearing for the Petitioner and Mr. Sachin D. Vasavada, learned advocate appearing for the Respondent.

It is the case of the Petitioner that the Petitioner at the time of conceiving the project and before the commencement of manufacturing process/production, wrote a letter dated 29.04.1991 along with Form No. 1 under the ESI Act to the Respondent No. 1, intimating that it is an independent and separate unit and also seeking direction about application of the ESI Act to the new unit. The Respondent No. 1 authority, responded to the above letter on 01.07.1991 and communicated to the Petitioner to intimate the exact date of commencement of production. The said division and/or unit came into existence and started the manufacturing process on 3rd March, 1992. The Petitioner vide its letter dated 5th March, 1992 intimated the Respondent authority that the manufacturing process/production commenced from 03.03.1992. After receiving of this information from the Petitioner, the Respondent No. 1 issued letter stating that the provisions of ESI will be applicable to the Petitioner with effect from 03.03.1992 and issued a separate and independent ESI Code Number to the Petitioner.

It is also the case of the Petitioner that after about six years, the Respondent No. 1 raised demand vide letter dated 20th August, 1998 for the contribution for the period from 01.04.1990 to 31.03.1992. The Respondent, thereafter passed an order u/s 45A of the ESI Act, raising the demand of Rs. 10,31,155/- along with 15% interest for the period from 01.04.1990 to 31.03.1992. Being aggrieved by the said order, the Petitioner made a representation on 07.09.2000 for reverification of the records. It appears that pending consideration of the said representation, the Respondent No. 1 directed the Petitioner to pay an amount of Rs. 2,70,593/- along with interest at the rate of 15%. It is the case of the Petitioner that on payment of the said amount as well as interest of Rs. 1,87,090/-, no further demand would be raised against the Petitioner and accordingly the said amount was paid by the Petitioner.

However, to the shock and surprise of the Petitioner, an order u/s 85B was passed on 1st March, 2001, directing the Petitioner to pay damages of Rs. 2,70,593/- for delayed payment of the amount of contribution. Being aggrieved by the said order, the Petitioner approached the ESI Court at Vadodara, by way of ESI Application No. 05/2001. The said application was decided by the ESI Court on 16.09.2010 and thereby the application was rejected with a cost of Rs. 1000/-.Subsequent to the rejection of the Petitioner''s application by the ESI Court, a notice for recovery of damages was issued on 29.10.2010 and 25.11.2010. It is at this stage, the Petitioner has filed the present petition before this Court.

Mr. Hathi made submissions with regard to the Petitioner''s challenge u/s 85B of the Act and submitted that this petition deserves an order of admission as well as interim relief. Mr. Vasavada learned advocate appearing for the Respondent raised a preliminary objection against the maintainability of this petition. He has submitted that an alternative remedy is available to the Petitioner u/s 82 of the Act under which an appeal lies to this Court. He has further submitted that when a statutory appeal is provided under the Act, the Court should not exercise its extraordinary writ jurisdiction under Articles 226 and 227 of the Constitution of India. In support of this submission, he relied on the decision of this Court in the case of ''Employees State Insurance Corporation v. Arvind Mills Limited'' in S.C.A. No. 4403 of 2008, decided on 08.04.2008. In this case the Court took the view that:

considering the objection raised against the maintainability of the petition and further considering the fact that the Petitioner is having statutory remedy of appeal u/s 82 of the ESI Act against the order in question, the petition is not entertained by this Court on that ground alone. The Court, therefore, disposed of the said petition without expressing any opinion on merits of the matter with a liberty to the Petitioner to file such appeal u/s 82 of the ESI Act, in accordance with law. The Court has also made it clear that the time consumed in the present petition may be considered while considering delay in filing of appeal.

Mr. Hathi, on the other hand has submitted that Section 82 of the ESI Act does not put an absolute ban against the maintainability of the petition. He has further submitted that Section 82 starts with the opening words ''save as expressly provided under this section, no appeal shall lie from an order of an Employees'' Insurance Court.'' He has, therefore, submitted that when appeal is not lying against the order of Employees'' Insurance Court, the aggrieved party should not be left remediless and hence such party can certainly invoke the writ jurisdiction of this Court under Article 226 and/or 227 of the Constitution of India. He has further submitted that Sub-section (2) of Section 82 provides that appeal will lie to this Court only when an order of Employees'' Insurance Court involves a substantial question of law. If there is no substantial question of law and the dispute is only with regard to the substantial question of facts, the aggrieved party can certainly invoke the writ jurisdiction of this Court. He has, therefore, submitted that the appeal provided u/s 82 can not be considered to be an alternative efficacious remedy and because of that Section, the Court may not be restrained from exercising its writ jurisdiction. He has, therefore, submitted that considering the facts of the present case, the petition is required to be entertained and decided on merits.

In support of his submissions he relied on the decisions of the various High Courts. In the case of Deepak Chandani v. Deputy Director, ESI Corporation, decided on 23rd March, 2009, by the Madras High Court, it is held that:

In respect of the availability of the alternative remedy, it is well-settled that the availability of alternative remedy is itself not a bar for invoking the writ jurisdiction of this Court. The Hon''ble Apex Court has re-iterated the said settled principle of law in Committee of Management and Anr. V. Vice Chancellor & Ors, report in 2009 (1) Supreme 101.

He has further relied on the decision of the Himachal Pradesh High Court, in the case of Shivalik Steel and Alloys Pvt. Ltd. Vs. Workmen''s Compensation Commissioner and Others, decided on 30.08.1999, wherein it is held that:

Though normally a person approaching this Court under Article 226 of the Constitution of India should not be allowed to circumvent statutory obligations or liabilities or avoid the other statutory authorities, the fact that such alternative remedy by way of appeal is also provided only to this Court, on substantial questions of law and that if at all the rigour of liability to be satisfied to avail of such remedy of appeal is only the prior deposit of the amount and the further fact that pursuant to the conditional order passed by this Court at the time of entertaining the writ petition, the Petitioner did comply with the same by depositing the compensation awarded with up-to-date interest in the Registry of this Court, can not be over looked in appreciating or countenancing this objection. The Court ultimately held that there was no merit whatsoever in the objection taken in this regard based on the omission to exhaust the alternative remedy and the objection on this account on behalf of the Respondent, was overruled.

Mr. Hathi has also relied on the decision of the Karnatka High Court in the case of H.M.T. Limited, Watch Factory IV Vs. Employees'' State Insurance Corporation and Another, wherein it is held that this Court, in exercise of its jurisdiction under Article 226 of the Constitution of India, decided dispute like the present petition and held that the ESI Court does not have the jurisdiction and the issue can certainly be examined straightaway in exercise of writ jurisdiction under Article 226 of the Constitution of India.

Based on the aforesaid decisions coupled with the fact that the ESI Code No. was allotted from 3/3/1992 and that the levy of damages u/s 85(B) requires the authorities to prove the contumatious conduct and levy of damages being discretionary one, the Court should entertain this petition and decide the same on merits.

Having heard the learned Counsels appearing for the parties and having considered their rival submissions, the Court is of the view that the Court is concurring with the view expressed by Himachal Pradesh High Court as well as Karnatka High Court in the above referred judgments that there is no absolute bar on exercise of jurisdiction of this Court under Article 226 of the Constitution of India and in a given case the Court may exercise its jurisdiction. However, considering the facts of the present case and the decision of this Court in the case of Employees State Insurance Corporation v. Arvind Mills Limited, the Court is of the view that it is just and proper for the Petitioner to invoke the appellate jurisdiction of this Court in Section 82 of the ESI Act. If the Petitioner''s grievance is that the authority has not considered certain issues and the ESI Court also confirmed the order passed by the Respondent No. 1 without deciding those issues in their proper perspective, the Petitioner can certainly raise a dispute with regard to the orders having been passed by the ESI Court as well as the authority without application of mind and the same itself would constitute a substantial question of law. Ultimately the Petitioner has to convince the Appellate Court with regard to the substantial questions of law. When such an alternative remedy is available to the Petitioner, the Court is rather slow in exercising its writ jurisdiction under Article 226 of the Constitution of India.

In the above view of the matter and without going into the merits of the issues raised by the Petitioner in this petition, the Court does not entertain this petition only on the ground that an alternative remedy is available to the Petitioner by way of an appeal u/s 82 of the ESI Act. This petition is, therefore, dismissed. Notice is discharged, without any order as to costs.