THE HON'BLE MR JUSTICE L.NARASIMHA REDDY C.M.A.No.317 of 2010 JUDGMENT: The appellant is an industrial undertaking covered by the provisions of the Employees State Insurance Act (for short ‘the Act’). It has been paying contributions from time to time. Through letter, dated 31.03.2003, it paid two sums viz., 39,959/- and 40,000/- vide cheques dated 15.02.2003 and 28.02.2003 respectively. The respondent issued a letter, dated 31.03.2003, demanding the petitioner to pay a further sum of Rs.1,09,568/-. When the appellant represented that there are no dues, the respondent accepted the amount of Rs.79,959/- and issued a letter dated 17.04.2003 stating that the matter relating to a demand of further amount is kept in abeyance. Thereafter, the appellant received an order of attachment, dated 21.03.2005 passed under Section 45- G of the Act. Aggrieved thereby, the appellant filed E.S.I.O.P.No.2 of 2007 in the Court of Principal Senior Civil Judge, Vijayawada under Sections 75, 76 and 77 of the Act. Several grounds were urged stating that the amounts were already paid and that no opportunity was given to explain payment of contributions from time to time. The case was opposed by the respondent. The trial Court dismissed the O.P. through order, dated 18.01.2010. Hence, this appeal under Section 82 of the Act. Heard the learned counsel for the appellant and the learned counsel for the respondents. The appellant is already covered by the provisions of the Act. The dispute is only about the arrears of contribution. The Act and the Rules made thereunder prescribe the procedure to be followed in the matter of recovery of arrears. An attempt was made by the respondent to recover the arrears from the appellant by serving a letter, dated 31.03.2003. In response to the same, the appellant not only made payments but also submitted a representation, dated 21.03.2003. Taking the same into account, the respondent not only accepted the amount of Rs.79,959/- but also stated that the demand as regards the further amount is kept in abeyance. To this effect letter dated 17.04.2003 was issued and the same was marked as Ex.B.33. The record does not disclose that the respondent has either revoked the order, dated 17.04.2003 or reiterated its demand. Straight away, proceedings were issued under Section 45-G of the Act. Such a course cannot be countenanced in law. It must not be forgotten that the very scheme under the Act is a social welfare measure. It is not even a sovereign function. An industrial undertaking cannot be penalized nor treated as an enemy. The generosity extended by the respondent while issuing Ex.B.33 was not carried forward and straight away, punitive proceedings were initiated. Even now, the respondent can issue fresh demand notice duly taking into account the letter, dated 17.04.2003-Ex.B.33, duly giving opportunity to the appellant to explain. Hence, the C.M.A. is allowed and the order under appeal is set aside. The order that is challenged in the O.P. is also set aside. It is left open to the respondent to issue fresh notice duly furnishing the details of the arrears with reference to time and it shall be open to the appellant to make representation within 15 days thereafter. The nature of the further proceedings would depend upon the outcome of the notice and reply. There shall be no order as to costs. __________ 20.08.2010 JSU THE HON'BLE MR JUSTICE L.NARASIMHA REDDY C.M.A.No.317 of 2010 Date: 20.08.2010 JSU