IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) THURSDAY, THE NINETEENTH DAY OF MARCH TWO THOUSAND AND NINE PRESENT THE HON'BLE MR JUSTICE GODA RAGHURAM WRIT PETITION NO : 21273 of 2006 Between: Cement Corporation of India Limited,Tandur, Ranga Reddy District, rep.by its Manager (Personnel and Administration) ..... PETITIONER AND 1 The Employees State Insurance Corporation, Regional office, 5-9-23, Hillfort road, Hyderabad-063 rep.by its Deputy Director 2 The Recovery Officer, Employees State Insurance corporation, Regional office,5-9-23,Hillfort Road, Hyderabad-063 .....RESPONDENT(S) Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to to issue a writ of certiorari or any other appropriate writ order or orders direction or directions to quash the order of the 1st respondent dated 25.9.2006 in No.AP/MEC/52-7374-46, and pass Counsel for the Petitioner:MR.V.SRINIVAS Counsel for the Respondent No.: MR.B.G.RAVINDER REDDY The Court made the following: THE HON’BLE SRI JUSTICE GODA RAGHURAM W.P.No. 21273 of 2006 19-03-2009 Oral Order: By the impugned order dated 25-09-2006 passed in purported exercise of power under Section 45-A of the Employees’ State Insurance Act, 1948 (for short ‘the Act’), the 1st respondent ordered: that the contributions totaling to Rs. 70,69,641-00 (Rupees Seventy lakhs sixty nine thousand six hundred and forty one only) for the period from 1-3-1986 to 19-1-1998 are finally determined and both the principal employers i.e., M/s. Cement Corporation of India Ltd., and M/s. The India Cements Ltd., are jointly and severally liable to pay the said amount immediately, as the recovery is being effected as per the orders issued already. Also I order that the contributions totaling to Rs. 49,835/- (Rupees Forty nine thousand eight hundred and thirty five only) for the period from 20-1-1998 to 31-1-1998 are finally determined and M/s. The India Cements Ltd., being the principal employer is hereby ordered to pay the said amount immediately, as the recovery is being effected as per the orders issued already. The last paragraph determines the liability of India Cements Ltd. The petitioner is not concerned or aggrieved therewith. The petitioner impeaches the determination in the penultimate paragraph of the order to the extent of joint and several liability of the petitioner (along with M/s India Cements Limited) is determined for Rs.70,69,641-00 for the period 01-03-1986 to 19-01-1998. This order has a meandering course of litigation. The relevant chronology of events begins with a notification issued by the appropriate Government on 01-03-1986 bringing the Cement Plant at Yerraguntla, Kadapa District (for short ‘the plant’) within the regulatory provisions of the Act. In view of this notification, the liability of the plant and its establishment to pay Employees State Insurance contributions as enjoined by the provisions of the Act, is not in dispute. Till 20-01-1998 the plant was under the control and management of the petitioner, a Government of India undertaking. After the plant was brought within the purview of the provisions of the Act, the petitioner represented to the Union Government to exempt it from the purview of the Act, in exercise of powers under Chapter-VIII of the Act. According to the petitioner it was providing medical benefits to its workers on par with the Central Government Rules; was having a full fledged dispensary with qualified Medical Officers and Paramedical staff; the entire cost of treatment and medicines to needy workmen and their dependents was also borne by the Company; the female employees were provided the maternity benefits and in respect of accidents occurring while on duty; and the management was bearing the medical expenses with full wages for the period of disablement. Thus it was affording superior medical facilities than available under the dispensation of the Employees State Insurance Corporation. Even without an exemption having been granted, the petitioner assumed that a mere application for an exemption immunizes it from the obligations to remit E.S.I. Contributions and does not appear to have filed returns nor furnished the registers as mandated under the provisions of the Act. One employees’ union filed W.P.No. 5246 of 1993 before this Court claiming that extending the provisions of the Act to the plant is unwarranted and sought exemption from the operation of the provisions of the Act. In that writ petition, on 29-04-1993 this Court granted an interim order directing the E.S.I. Corporation not to implement the ESI Scheme to the 2nd respondent-Company therein. The interim order continued till 10-11-1998 on which date the writ petition was disposed of directing the Government of India to consider the exemption application of the petitioner. Even thereafter there is nothing on record to suggest that the petitioner had furnished registers or submitted returns or particulars with regard to the ESI contributions for the period 01-03-1986 up to date. In 1996, it would appear the petitioner went into economic and managerial distress and became a sick industrial unit. A case No. 501 of 1996 came to be registered before the Board of Industrial and Financial Re-Construction (BIFR). As per the determination by the BIFR the petitioner was allowed to sell the plant to another private company M/s. India Cements Limited after obtaining approval of the Government of India. Pursuant to the approval of the Government of India, in October, 1997 and on entering into a memorandum of understanding dated 10-12-1997 with the Government of India, M/s. India Cements Limited took possession of the plant on 20-01-1998 and became liable for compliance with the provisions of the Act, thereafter. For the period prior to 20-01-1998 however, in view of the fact that the interim orders granted in W.P.No.5246 of 1993 (filed by the workers union) stood dissolved with the disposal of the writ petition on 10-11-1998, the liability of the petitioner for payment of ESI Contributions as also the liability to furnish registers, records and to submit returns, stood revived. Though the writ petition is silent as to whether any earlier orders under Section 45-A of the Act are passed, in paragraph Nos.4 to 7 of the additional counter affidavit dated 25-02-2009, it is pleaded that several orders under Section 45-A of the Act had been passed for different periods against the petitioner. Such orders had been passed on 09-03- 1990; 12-10-1990; 30-10-1991; 31-03-1992; 29-12-1999 and 27-04-2001. The specific plea in this regard is that the employees’ union had filed E.I.Case No. 19 of 1986 seeking exemption to the plant from the provisions of the Act. The petitioner and the ESI Corporation were respondents to E.I. Case No. 19 of 1986. Employees Insurance Court dismissed the application by the order dated 15-11-1987 holding that the provisions of the Act cannot be avoided on the plea that there are certain defects in availing the facilities under the Act. After the dismissal of the E.I. Case No. 19 of 1986, the counter states, the petitioner was issued a notice on 12-02-1990 with regard to the contributions for the period 01-03-1986 to 30-09-1989 after affording a personal hearing to the petitioner on 23-02- 1990 which was not availed, an order under Section 45-A of the Act was passed on 09-03-1990. Another notice was issued in August, 1990 with regard to the contributions for the period 01-10-1989 to 31- 03-1990. An order under Section 45-A of the Act was passed on 12-10-1990; another order after due process was passed for the period 01-04-1990 to 30-09-1990; and yet another order on 30-10-1991 for the period 01-10-1990 to 31-03-1991. By an order dated 31-03-1992 assessment was made for the period 01-04-1991 to 31-12-1991 and by another order dated 29-12-1999 for the period 01-01-1992 to 31-07-1999. By the order dated 27-04-2001 assessment for the period 20-01-1998 to 30-09-2000 was made. There was no payment pursuant to any of the aforementioned several orders under Section 45-A of the Act either by the petitioner or by M/s. India Cements Limited. On 10-10-2001 a prohibitory order was issued by the ESI Corporation against M/s India Cements Limited for recovery of the contributions due for the period 1986 to 1998. Challenging this prohibitory order dated 10-10-2001 M/s. India Cements Limited filed W.P.No. 21531 of 2001, inter alia on the ground that it applied for exemption from the provisions of the Act (Under Section 87 of the Act) for the period 01-02-1998 to 31-01-2001 and even while this application is pending, the prohibitory order was issued. This writ petition No. 21531 of 2001 was disposed of by this Court by the order dated 14-10-2003. During the pendency of the writ petition, the State Government in G.O.Rt.No. 2501, Labour Employment Training Factories (IMS) Department dated 22-11-2002, exercising the power under Section 87 of the Act exempted M/s India Cements Limited from the purview of the Act for the period 01-02-1998 to 31-01-2001. Insofar as the period anterior to 01-03-1986 is concerned, the liability, of the petitioner, M/s India Cements Limited or both jointly and severally was in existence. Hence in disposing of W.P.No. 21531 of 2001 this Court directed the official respondents i.e., the executing agencies under the Act to consider whether it is appropriate to proceed for recovery of the amounts for the period anterior to 01-02-1998; and to issue notice to the parties liable for the dues under the Act and after considering the responses to such notices including the petitioner i.e., M/s India Cements Limited, pass appropriate orders in accordance with law, for the period anterior to 01-02-1998. The petitioner and M/s. India Cements Limited, are jointly and severally liable for the dues under the Act, for the period prior to 01-02-1998, in view of the provisions of the Sections 93-A of the Act. Section 93-A of the Act reads as under: 93-A. Liability in case of transfer of establishment:- - Where an employer, in relation to a factory or establishment, transfers that factory or establishment in whole or in part, by sale, gift, lease or license or in any other manner whatsoever, the employer and the person to whom the factory or establishment is so transferred shall jointly and severally be liable to pay the amount due in respect of any contribution or any other amount payable under this Act in respect of the periods up to the date of such transfer: Provided that the liability of the transferee shall be limited to the value of the assets obtained by him by such transfer. In the light of the aforementioned chronology of events, the appropriate course for the 1st respondent-Corporation ought to have been to proceed from the stage subsequent orders under Section 45-A of the Act already passed for the periods 01-03-1986 to 30-09-2000 which cover the period up to 01-02-1998 (thereafter M/s. India Cements Limited had obtained exemption from the application of the provisions of the Act) by the order of the State Government in G.O.Rt.No. 2501, Labour Employment Training Factories (IMS) Department dated 22-11-2002). The 1st respondent-Corporation should appropriately have intimated the petitioner and M/s India Cements Limited of the liability having been determined under the earlier orders issued under Section 45-A of the Act and after giving M/s. India Cements Limited an opportunity (as directed in W.P.No. 21531 of 2001), proceeded to determine the joint and several liability of the petitioner and M/s. India Cements Limited in respect of the amounts so determined qua the provisions of Section 93-A of the Act. Instead of so doing, the 1st respondent proceeded to issue a notice dated 10-07-2006 to the petitioner and to M/s. India Cements Limited, as though it was making an assessment afresh. The notice dated 10-07-2006 called upon the petitioner and M/s. India Cements Limited to be present on 10-08-2006 to enable the 1st respondent to take a decision under Section 93-A of the Act. Eventually the 1st respondent passed the impugned order dated 25-09-2006 wherein the chronology of events including the sale of the plant to M/s. India Cements Limited was recited and on applying the statutory provisions of Section 93-A of the Act, the 1st respondent determined that the cumulative liability under the provisions of the Act is in an amount of Rs. 70,69,641-00 for the period 01-03-1986 to 19-01-1998 jointly and severally on the petitioner and M/s. India Cements Limited. The 1st respondent records as though the impugned order dated 25- 09-2006 is one under Section 45-A of the Act. If the 1st respondent had already passed the several orders under Section 45-A of the Act for the period 01-03-1986 onwards, there was no residuary power available under the provisions of the Act in the 1st respondent to pass a fresh order under Section 45-A of the Act. The 1st respondent is rendered functus officio. Having earlier passed orders of assessment, the 1st respondent could not have revisited jurisdiction under Section 45-A of the Act without a jurisdiction to revise his orders being conferred by the specific provisions of the Act. No such provision is brought to the notice of this Court by either of the parties. It requires to be noticed that the operative portion of the impugned order (the penultimate paragraph which alone the petitioner is aggrieved by), clearly states that the contributions determined are as per the orders issued already, though inadvertently the 1st respondent states as though it is a final determination. The fact of the matter is that the liabilities under the provisions of the Act had already been determined under Section 45-A of the Act in several orders to which reference has already been made (earlier in the judgment). Sri Vedula Srinivas, learned counsel for the petitioner would contend that to mulct the petitioner with liability for contributions under the Act, at this distance of time is inequitable since its erstwhile employees (while the plant was under its operation and control) did not avail any medical or other facilities from the ESI Corporation. It is also contended by the petitioner that in view of the interim order dated 29-04-1993 in W.P.M.P.No. 6679 of 1993 in W.P.No. 5246 of 1993 filed by the Employees’ Union, the petitioner was not liable to furnish the records and registers nor submit returns under the provisions of the Act nor was it liable to pay contributions. The order dated 29-04-1993 in W.P.No. 5246 of 1993 directed the ESI Corporation not to implement the ESI Scheme to the petitioner-Company at Yerraguntla pending further orders. Whether such an order liberates or immunizes the petitioner from the statutory obligation under Section 45-A of the Act to submit returns, furnish registers and documents need not be gone into this writ petition. Suffice it to record that after the disposal of W.P.No. 5246 of 1993 on 10-11-1998 there was neither an impedement nor any immunity whatsoever to the petitioner from the liability to submit returns and to furnish the registers and documents as mandated by Section 44 of the Act. In the context of the unavoidable statutory obligations under the several provisions of the Act including the specific obligation ‘jointly and severally’ enjoined on the petitioner and the successive management M/s. India Cements Limited as well qua the provisions of Section 93-A of the Act, the petitioner ought to have submitted the returns and furnish the documents and particulars immediately after the disposal of W.P.No. 5246 of 1993 i.e., immediately after 10-11-1998. It is not clear whether the petitioner did that. At any rate, since the orders under Section 45-A of the Act had already been passed and in the absence of any specific challenge to these several orders passed earlier under Section 45-A of the Act, it has to prima facie presume that those orders were legitimately passed under Section 45-A of the Act and the liability of the petitioner as to recovery of the amounts determined due from it ‘jointly and severally’ with M/s India Cements Limited, cannot be avoided. As already analyzed no fresh order in respect of the same assessment period could be passed under Section 45-A of the Act by the 1st respondent. Once an order of assessment is passed for a particular period under Section 45-A of the Act, the 1st respondent is rendered functus officio and may pass an order of assessment again for the same period only if the earlier order is set aside by the competent authority and the matter remanded to the 1st respondent for de novo assessment. There being no such appellate interference with respect to the earlier orders passed under Section 45-A of the Act, the exercise by the 1st respondent in the impugned order dated 25-09-2006 cannot be construed as an exercise referable to the powers under Section 45-A of the Act. The heading of the order thus appears to be on a misapprehension of the scope of the power of the 1st respondent. In any event, the penultimate paragraph of the order impugned clearly recognizes existence and operation of earlier orders and in this paragraph it is clarified that determination of the liability of Rs.70,69,641-00 on the basis of earlier orders and is a liability joint and several of the petitioner and M/s. India Cements Limited as well. No sinister or fatal significance need be attributed to the 1st respondent’s order dated 25-09-2006. As the petitioner has already suffered orders under Section 45-A of the Act for the period 01-03-1986 to 19-01-1998 and as its liability for those amounts is unavoidable in view of the provisions of Section 93-A of the Act, this Court is not inclined to invalidate the 1st respondent’s order dated 25-09- 2006 on the technical ground that the 1st respondent has, on a misunderstanding or misapprehension, recorded this order as one under Section 45-A of the Act. Sri Vedula Srinivas, learned counsel for the petitioner would rely on the decision of the Supreme Court in ESI Corporation v. CC. Santhakumar (2007) 1 SCC 584 for urging that the impugned order dated 25-09-2006 is incompetent as no power under Section 45-A of the Act could have been exercised by the 1st respondent since the ingredients for the exercise of power under Section 45-A of the Act are not recited in the order nor are present in the circumstances of the case. Sri Srinivas, would contend that appropriate assessment of the petitioner’s liability (for dues under the Act) ought to have been under Section 75 of the Act by the Employees State Insurance Court, though it were a dispute relating to the liability to pay the employer’s contribution. The relevant scope of Section 45-A and Section 75 of the Act had fallen for consideration of the Supreme Court in the ESI Corporation case (1 supra). The Supreme Court clarified that Section 45-A of the Act provides for determination of contributions in certain cases where records are not produced by the establishment before the Corporation or where there is no Corporation. In fact, Section 45-A of the Act empowers a best judgment assessment of the liability under the provisions of the Act of a factory or establishment in circumstances where no returns, particulars, registers or records are submitted, furnished or maintained in accordance with the provisions of Section 44 of the Act, or where there is obstruction to an officer or official of the Corporation. The Supreme Court held that where records are produced the assessment has to be under Section 75 (2) (a) of the Act and not under Section 45- A of the Act. Apart from the binding nature of the pronouncement of the Apex Court, there can be no quarrel on the principles either with the proposition. It is not the petitioner’s case that it had produced the registers or records and therefore the assessment ought to have been only under Section 75 of the Act by the Employees State Insurance Court and no power of assessment under Section 45-A was available. There is neither a pleading to that effect in the writ petition nor is there an assertion in the oral argument. What is contended by Sri Srinivas, the learned counsel is that the indicia or ingredients for exercise of power under Section 45-A of the Act, should be recited in the order. This contention does not commend acceptance by this Court. Whenever an order is passed by a public authority, the order need not recite the authority for passing the order. It would suffice if the order deals with the merits of the case after following the due process and recording reasons for its conclusions. There is also a presumption of validity of orders passed by public authorities. The impugned order passed by the 1st respondent is by a public and statutory authority and it has to be presumed prima facie that the order is completely made. The burden to show that it is otherwise is on the petitioner, who seeks to impeach it. Such impeachment by the petitioner may also be on the ground of incompetent exercise of jurisdiction by the 1st respondent qua the provisions of Section 45-A read with Section 75 of the Act. The petitioner has not chosen to impeach the impugned order by any specific plea that notwithstanding the petitioner having submitted returns or producing registers, the 1st respondent has in erroneous exercise of powers proceeded to pass the impugned order, u/Sec. 45-A of the Act. This Court has already analyzed and concluded that the impugned order is not the one under Section 45-A of the Act though it is termed as such. Several orders under Section 45-A of the Act had already been passed earlier for the periods 01-03-1986 to 19-01-1998 and the 1st respondent had no residuary power to pass a fresh order under Section 45-A of the Act. The impugned is a summation of the earlier orders under Section 45-A of the Act and contains a clear statement that qua the statutory mandate of Section 93-A of the Act, the liability for payment of earlier determined amount, jointly and severally inheres on the petitioner and on M/s. India Cements. On the aforesaid analysis no case is made out by the petitioner for interference with the impugned order, dated 25- 09-2006. Sri Vedula Srinivas, learned counsel for the petitioner made a fervent plea that the petitioner be preserved the liberty of challenging the earlier orders made under Section 45-A of the Act. Nothing in this order shall be construed as a pronouncement on the validity of the earlier orders passed under Section 45-A of the Act, except insofar as the observations herein set the principles and circumstances in which the power to make an assessment under Section 45- A of the Act is available. The petitioner if so advised is at liberty to challenge the earlier orders under Section 45-A of the Act in accordance with law subject to latches, delay and limitation. When such challenge is presented, the appropriate forum or Court would consider the same on its own merits. As at present since the earlier orders under Section 45-A of the Act had not been challenged by the petitioner, the respondents are at liberty to pursue appropriate measures under the Act for the recovery of amount already determined due and under those orders read along with the impugned order wherein the joint and several liability of the petitioner and M/s. India Cements Limited for the amount of Rs.70,69,641-00 has been spelt out. The writ petition is disposed of with the observations as above. No costs. ____________________ GODA RAGHURAM, J Dated: 19-03-2009 Pvks