FAO No.197 of 1986 1 In the Punjab and Haryana High Court,at Chandigarh. FAO No. 197 of 1986 Decided on February 03,2009. Employees State Insurance Corporation --Appellant vs. New Azad Transport Co-operative Society Ltd. and another -- Respondents CORAM: HON'BLE MR.JUSTICE RAKESH KUMAR JAIN Present: Mr.Vikas Suri,Advocate, for the the appellant. None for the respondents. Rakesh Kumar Jain,J: (Oral) This appeal by the Employees State Insurance Corporation (for short, 'the Corporation'), is directed against the order of Employees Insurance Court, Amritsar, dated 16.8.1985, whereby the petition filed by the respondents under Section 75 of the Employees State Insurance Act, 1948 (for short, 'the Act) was allowed. Brief facts of the case are that the respondents herein filed a petition under Section 75 of the Act, for quashing the Recovery Certificate attached as Annexures 'A', 'B', 'C' 'D', whereby demand of Rs.13,439.00 on account of alleged contribution from 11/76 to 7/77, Rs.16,722.50 from 9/77 to 9/78 and Rs.13105.00. on account of alleged damages for the contribution period from 11/76 to 7/77, was challenged. In the petition, the respondents herein, inter-alia, alleged that they are carrying on passenger transport business at Amritsar. The State FAO No.197 of 1986 2 Government in exercise of powers under Section 1 (5) of the Act, issued a Notification in the end of month of March,1975 extending the provisions of the Act to the passenger transport industry. It is alleged in para 4 of the petition that the routes of the petitioner society are scattered beyond the Municipal Limits of Amritsar and as such, they were made liable to contribute in respect of the traffic staff of the respondent posted in un-implemented area. It is further alleged that since the scheme framed under the Act has been made applicable to the respondents with effect from 5/ 76,therefore, the respondents had deposited contribution on actual basis from 5/ 76 to 9/78 totalling Rs.14,011.65 P. It was also averred that the Corporation has illegally imposed damages for the period with effect from November 76 to July 77 without passing any separate order as contemplated under the Act. The petition was contested by the Corporation by filing a reply in which it was maintained that notification issued by the Government has become operative w.e.f. 30.3.1975 against the respondent establishment carrying on its business of transport which is covered under the E.S.I. Scheme. It was asserted that the respondent is carrying on its transport business having its Head Office at Amritsar within the implemented area. All the operational staff employees including Drivers, Conductors and others are covered under the E.S.I Scheme where-ever they may work without any distinction of their place of work and residence. It was not admitted that the scheme framed under the Act has become applicable to the respondent with effect from May 76 because the scheme is operative from 30.3.1975 as per notification of the Punjab Government. In respect of damages, it was alleged that damages have been imposed after issuing show cause notice of 15 days dated 27.11.1978 with respect to non-submission of contribution cards. Since the respondents did not make any representation oral or in writing to show cause notice dated 27.11.1978, therefore, damages were imposed in accordance with law. The learned Court below held that the amount has already FAO No.197 of 1986 3 been deposited by the respondents on actual basis as such no further amount is liable to be paid by them. As regards the damages, it was held that in view of the observations made by this Court in the case of Employees State Insurance Corporation and others Vs. M/S Dhanda Engineers Private Limited Faridabad-II 1981 P.L.R. 354, damages prior to contribution for November, 1977 cannot be imposed in view of Regulation 26. Aggrieved against the said order of the Employees State Insurance Court, Amritsar, dated 16.8.1985, the Corporation has come up in the present appeal before this Court. Mr.Vikas Suri, learned counsel for the appellant/Corporation has vehemently contended that the dispute in the present case is as to whether the employees of the respondents who are working at places other than the head office at Amritsar falls within the implemented area or non-implemented area and in case they fall within non-implemented area, are they covered within the definition of employees under Section 2 (9) of the Act and are amenable to the provisions of the Act rendering the respondent liable to pay contribution to the Corporation ?. Learned counsel for the appellant has relied upon a decision of the Supreme Court in the case of Transport Corporation of India vs. Employees State Insurance Corpn and another (2000) 1 Supreme Court Cases 332 to contend that respondent shall be liable. In that case, the facts were that the State of Andhra Pradesh in exercise of its powers under Section 1 (5) of the Act, extended the Act, amongst others, to cover road motor transport establishments whereon twenty or more persons were employed, or were employed for wages on any day of the preceding twelve months of the notification in areas mentioned in column (2) of the Schedule If similar road motor transport establishment was located in any other part of the State of Andhra Pradesh not covered by the listed areas in column (2) of the Schedule of the notification. In this judgment, the question raised before the Apex Court was whether notification issued by the State of Andhra Pradesh covers employees of Transport Corporation of India working in the Regional Office at FAO No.197 of 1986 4 Secunderabad and the employees working in its Branch Office at Bombay Branch. It is held by the Apex Court as under:- “Section 1(2) and 1 (4) to 1 (6) of the Act show that the “appropriate Government” is constituted by Parliament to be its delegate to uniformly apply the provisions of the Act to any other establishment or class of establishments as found fit for its applicability. Admittedly, in view of Section 2 (1) it was the State Government which was the”appropriate Government” for deciding the applicability of the Act to the appellant's concern. A conjoint reading of Section 2 (9), 2 (13) and 2 (17) clearly shows that if the head office or the registered office of the appellant is controlling its Bombay branch, an employee working in its Bombay branch can obviously be treated to be an “employee” working under the supervision of the principal employer or his agent. Consequently, one such “principal employer” like the appellant, having head office at Secunderabad in the State of A.P. Is covered by the sweep of the Act, automatically employees working in its branches, may be anywhere in India, including the branch at Bombay would get covered by the sweep of the Act. Once the provisions of the Act got applied to the appellant's establishment by virtue of the aforesaid notification issued by the State of A.P., the appellant becomes liable to be registered under the Act as per Section 2-A. Once the definition of the term “employee” as found in Section 2 (9) (i) read with the inclusive part part thereof, is read in juxtaposition with Section 38, it becomes clear that as the appellant's establishment namely road motor transport establishment is covered by the Act, all its employees, whether working in the head office or its at branch offices in any part of the country,including the State of Maharashtra, would get entitled to be insured as per the beneficial provisions of Section 38. When Section 40 (1) is read in the light of the definition of the term “immediate employer” as found in Section 2 (13) and the term ”principal employer” as found in sub-section 17 (iii) of Section 2, it would be clear that the appellant, being the principal employer of the employees at Bombay branch, cannot escape from its liability to pay contribution, in the first instance, even though the Bombay branch employees are employed by the FAO No.197 of 1986 5 immediate employer, being local agent of the appellant principal employer stationed at Secunderabad in A.P. In fact, there is no immediate employer in between the appellant on the one hand and its Bombay branch employees on the other” The first question that has been raised before this Court by the learned counsel for the appellant is thus answered that the employees of the respondents who are working at the places other than Head Office at Amritsar, are also covered by the Scheme of the Act and the employer/respondent is liable to contribute it's share to the Corporation under the Act. Adverting to the second question with regard to damages, learned counsel for the appellant has submitted that the finding recorded by the Court below that damages prior to contribution in November, 1977,could not be claimed in view of Regulations 31 (a), is illegal as the judgment in the case of Employees State Insurance (Supra) has been misconstrued by the Court below because prior to Nov 23,1977, it was not required to submit contribution cards by way of return but after Nov 23,1977, submission of contribution cards was a legal requirement to be deposited in the office within the time prescribed under Regulation 26 which was the essence of payment and be deemed a complete payment in the eyes of law. It was held in the Employees State Insurance Corporation's case (Supra) that “To conclude on question Nos. (3) and (4), it is held that prior to November, 23,1977, the cancellation of the stamps duly affixed on the contribution cards in accordance of the stamps duly affixed on the contribution cards in accordance with Regulation 34 was the essence of payment and once this had done the mere non-submission of the contribution cards to the appropriate office would not amount to a failure to pay the amounts due under the Act and Section 85-B would not be attracted to the situation. However, after the promulgation of Regulation 31-A on November 23,.1977, the submission of the contribution cards with the stamps thereon duly cancelled to the appropriate office within the time prescribed under Regulation 26 alone would become the essence of payment and be deemed a complete FAO No.197 of 1986 6 payment in the eyes of law. Consequently, the non-submission of contributions cards under Regulation 26 would amount to a failure to pay the amounts due and straightway attract the penal provisions of Section 85-B of the Act”. After appreciating the decision of this Court in Employees State Insurance case (Supra), I am of the considered view that the order of the learned trial Court dated 16.8.1985 is illegal and deserves to be set aside. In view of the above discussion, the present appeal is allowed. The petition filed by the respondent under Section 75 of the Act, is dismissed and consequently, the impugned order dated 16.8.1985 is set aside. February 03,2009 (Rakesh Kumar Jain) RR Judge Refer to Reporter -Yes.