Sulabh International Social Service Organisation vs Employees' State Insurance Corporation and Another

Ram Chand Gupta, J.—The present revision petition has been filed under Article 227 of the Constitution of India for quashing of order dated 15.6.2009, Annexure P1, passed by the Employees'' Insurance Court (hereinafter to be referred as ''El Court''), Chandigarh, on an application filed by the Petitioner u/s 75(2-B) of the Employees State Insurance Act, 1948 (hereinafter to be referred as the "ESI Act'').

I have heard learned Counsel for the parties and have gone through the whole record carefully including the impugned order passed by learned E.I. Court.

Facts relevant for the decision of present revision petition are that Petitioner-Applicant filed an appli-cation under Sections 75 and 76 of the Act for setting aside order dated 29.4.2009 passed by the Deputy Director Employees'' State Insurance Corporation, Chandigarh, vide which Applicant was held to be covered u/s 1(5) of the Act and directions were issued to the Applicant for the payment of contribution amounting to Rs. 82,563 for the period from October 2007 to March, 2008.

The impugned order passed by the Respondents was challenged mainly on the ground that Petitioner-Applicant, i.e., Sulabh International Social Service Organisation, (hereinafter to be referred as Organisation'') is a voluntary social service organisation of philanthropic nature working on no profit no loss basis and is not an establishment nor an employer and as such the provisions of the various labour laws, including the ESI Act are not applicable to the Organisation. It is also submitted that persons associated with the Organisation are not employees or workers but are volunteers, rendering their social services for the upliftment of scavengers and that there are no employees in this Organisation.

Petitioner-Applicant alongwith application filed an application u/s 75(2-B) of the ESI Act for waiving of deposit of 50% of the disputed amount in the El Court in order to challenge the impugned order passed by the Respondents and the said request was declined by the El Court against which the present revision petition has been filed.

The main argument raised by learned senior counsel for the Petitioner before this Court is that in view of proviso of Section 75(2-B) of the ESI Act, learned El Court is required to give reasons while not waiving of deposit of 50% of the mandatory amount. It is contended that the grounds taken by the Petitioner-Applicant in the application for waiving of deposit of 50% of the mandatory amount have not been considered by the El Court and speaking order has not been passed rejecting the prayer of Petitioner-Applicant. It has also been contended that for deciding the said application, learned El Court should have taken into consideration the relevant factors as to whether there is prima facie case in favour of the Petitioner, the balance of convenience qua depositor or otherwise, irreparable loss, if any, likely to be caused in case the stay is not granted and safeguard is in public interest and that order of El Court must reflect its application of mind on these factors. In support of this argument, learned senior counsel for the Petitioner-Applicant has placed reliance upon Adinath Dyeing and Finishing Mills Vs. Commr. of C. Ex., , which was a case under Central Excise Act, 1944, for recovery of excise duty.

On the other hand, it has been contended by learned Counsel for the Respondents-Corporation that as per mandate of Section 75(2-B) of the ESI Act, no dispute can be raised by the principal employer before the El Court, unless a deposit is made in the Court of the 50% of the amount due from him, as claimed by the Corporation. It is further contended that no irreparable loss is going to cause to Petitioner-Applicant by depositing the said amount as in case he succeeds in the present petition filed before El Court, which is yet to be adjudicated, the amount can be refunded.

Before appreciating the argument raised by counsel for the parties, it is necessary to reproduce Section 75(2-B) of the ESI Act, which reads as under:

No matter which is in dispute between a principal employer and the Corporation in respect of any contribution or any other dues shall be raised by the principal employer in the Employees'' Insurance Court unless he has deposited with the Court fifty per cent of the amount due from him as claimed by the Corporation: Provided that the Court may, for reasons to be recorded in writing waive or reduce the amount to be deposited under this Sub-section.

A reading of the aforesaid Sections shows that dispute between the principal employer and Corporation in respect of any contribution or any other dues could be raised by the principal employer in the El Court only after depositing 50% of the amount due from him as claimed by the Corporation. Only relief as provided in the proviso is that the Court may, for reasons to be recorded in writing, waive or reduce the amount to be deposited.

Hence, as per proviso recording of reason in writing would arise in a situation where the Court decides to waive of or reduce the amount to be deposited. In case the Court is not waiving of or is not reducing the mandatory deposit of the amount of 50%, the Court is not required to record reasons in writing. On this point, reliance has also been placed upon observations of a coordinate Bench of this Court in DLF Power Limited Vs. Regional Director and Another, , arising out of FAO No. 1089/2009 decided on March 17, 2009.

In Employees'' State Insurance Corporation, Bangalore v. Catholic Club, Bangalore and Anr. 2000 1 LLJ 1136, it was observed by Hon''ble Karnataka High Court that Section 75(2B) of the ESI Act has made it mandatory that in order to raise dispute before the El Court, 50% of the demanded amount has to be deposited by the Applicant and the said requirement of deposit of 50% of amount claimed cannot be waived of by the El Court, on the asking of the Applicant.

In Nizam Club Vs. Employees State Insurance Corporation and Others, , a petition filed u/s 75(2B) of the ESI Act for waiving condition of the deposit of 50% of the contribution amount, as demanded by Employees'' State Insurance Corporation was dismissed by El Court, which was challenged before Hon''ble Andhra Pradesh High Court by filing an appeal, which was dismissed by observing that order under appeal was only an interlocutory one passed by the El Court and the question raised in the application could be gone into in the final disposal of the dispute and El Court had not decided it in the order under appeal.

In the present case, the request of Petitioner-Applicant for waiving of the mandatory requirement of deposit of 50% of the claimed amount under proviso to Section 75(2-B) of the ESI Act was declined by learned El Court by observing as under:

From the perusal of the above Sub-section it is crystal clear that the Plaintiff has no right to get exemption from depositing 50% of the amount rather it is for the court to see whether the amount of 50% should be waived or not. In the present case, in my view the Petitioner has not been able to show any ground for exemption of 50% of the amount. Petitioner simply made reliance upon the copy of order of El Court Bangalore and El Court of Saharanpur, which are not applicable to the present case and this Court is not binding by the order passed by Banglore Court and Saharanpur Court. Rather reliance is placed upon citation Employees'' State Insurance Corporation Vs. Catholic Club and Another, , wherein it is held that 75(2B) Section has made it mandatory that in order to raise dispute, 50% of amount shall be deposited. Accordingly, the'' application is hereby dismissed.

Hence, it cannot be said that El Court has dismissed the application filed by Petitioner-Applicant without assigning any reasons.

So far as the ground taken by the Petitioner-Applicant that the Petitioner-Organisation is not covered under ESI Act and that payment is not in accordance with the ESI Act is concerned, the said plea could be gone into by the El Court at the time of final disposal of the dispute. Learned El Court could not give any finding on the said fact while deciding the application for waiving of the requirement of deposit of 50% of the amount demanded by the Corporation.

Even if the arguments of learned Counsel for the, Petitioner-Applicant is accepted that learned El Court was to see prima facie case, balance of convenience and as to whether an irreparable loss would be caused to Petitioner-Applicant, if the discretion is not exercised in favour of Petitioner-Applicant is concerned, a perusal of notice issued by the Respondents to Petitioner, which has been challenged before the El Court shows that the same is a detailed order passed u/s 45A of the ESI Act, after hearing Applicant-Petitioner-Organisation and in the said order, a reference has also been made that Applicant-Petitioner entered into an agreement with Management of Post Graduate Institute of Medical Science and Education and Research Centre, Chandigarh, wherein it has been stipulated that remuneration paid to the persons engaged would be fixed remuneration of Rs. 2,900 per month and the service charges in the form of administrative expenses over and above the remuneration are also claimed.

Hence, at this stage, it cannot be said that demand is totally illegal. Moreover, if at the time of final adjudication, the Court comes to the conclusion that the payment is illegal, 50% of the deposit of the amount can be refunded. Hence it cannot be said that any irreparable loss would be caused to the Petitioner-Applicant by not accepting his plea for waiving of the requirement of deposit of 50% of the amount claimed by the Corporation as contemplated u/s 75(2-B) of the ESI Act.

More-over law is well-settled in Surya Dev Rat v. Ram Chander Rai and Ors. 2004 (1) RCR (Civil) 147 that mere error of fact or law cannot be corrected in the exercise of supervisory jurisdiction by this Court. This Court can interfere only when the error is manifest and apparent on the face of proceedings such as when it is based on clear ignorance or utter disregard of the provisions of law and a grave injustice or gross failure of justice has occasioned thereby.

Hence, as a sequel to my above discussion, it cannot be said that any illegality or material irregularity has been committed by learned El Court in passing the impugned order rejecting the prayer of Petitioner Plaintiff for waiving of mandatory deposit of 50% of the amount claimed by the Corporation, in its discretion on the facts and circumstances of this case, or grave injustice or gross failure of justice has occasioned thereby, warranting interference by this Court.

Hence, the present revision petition is hereby dismissed being devoid of any merit.

However, it is made clear that nothing observed herein shall be construed to have any bearing on the decision of main application on merit by learned EI Court.