1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO 3255 OF 1999 Business Combines Limited .. Petitioner V/s. 1. State of Maharashtra and others .. Respondents Shri. S.C. Naidu i/b M/s. C.R. Naidu & Co for the Petitioner Shri. A.P. Vanarse, A.G.P for the Respondent No. 1 Shri. H.V. Mehta for the Respondent No. 2 Shri. S.M. Dharap for the Respondent No. 3 Coram : S.A. Bobde, J. Date : 17th March, 2009. P.C.: 1. The Petitioner has challenged the impugned order under Section 45(a) of E.S.I.C Act 1948 passed by the Deputy Director, E.S.I.C. 2. The Petitioner is an employer within the meaning of E.S.I.C Rma WP1787499170309.sxw 2 Act. The E.S.I.C. Act was amended resulting in wage limit increased from Rs. 3,000/- to Rs. 6,500/-. This was done by notification dated 23.12.1996 brought into force w.e.f 01.01.1997. As a result, under the amendment, persons drawing salary up to Rs. 6,500/- would be treated as employee under this Act as against the earlier limit of Rs. 3,000/- and the employee and employer would both have to pay contribution under the E.S.I.C. Act. 3. The employees' union challenged the enhancement. The employees' union has challenged the amendment to the Act. The employees' union objected for exemption from the provisions of the Act and also challenged the enhancement before this Court in W.P. No 1999 of 1997. This Court heard the matter and directed that : a. Till disposal of application for exemption filed by the Petitioner, the Respondent Nos. 4, 5 and 6 shall not effect deduction from the salary of workers by making the provisions Rma WP1787499170309.sxw 3 of the Act applicable to them. This order was made applicable only to the workers earning more than Rs. 3,000/­ as wages as on 01.01.1997. b. Accepted an undertaking on behalf of the workmen' s union that if their application for exemption was dismissed, then they would have no objection to the deduction of amount from the salary of the workmen in reasonable installments. 4.. There is no dispute that eventually an application for exemption was dismissed sometimes in October 1998. Thereafter, the Deputy Director, State Insurance issued show- cause-notice dated 20.10.1998 and called upon the Petitioner to pay sum of Rs. 22,27,788.90 in respect of employees' who are drawing wages above Rs. 3000/- but less than Rs. 6500/- for the period from January 1997 to March 1998. After receiving reply and after giving an opportunity of personal hearing to the Petitioner, the Deputy Director passed an order directing the Petitioner to contribute sum of Rs. 22,27,788.90 for the period from January 1997 to March 1998 with interest. This order which was passed under Section 45(A) is challenged under this Rma WP1787499170309.sxw 4 Petition. 5. Shri. Naidu, learned counsel for the Petitioner submitted that the the Petitioner, during the aforesaid period were restrained from deducting employees' contribution under the aforesaid order of this Court, continued to pay to the extent of medical facilities to the Respondent and therefore, they cannot be made liable for paying contribution under E.S.I.C. Act. In other words, according to the learned counsel for the Petitioner, since the Petitioner paid the higher amount by way of medical facilities under an agreement, they cannot be directed to pay Employees' State Insurance contribution in respect of same workmen for the same period. The learned counsel relies on the judgment of Hon'ble Supreme Court reported in case of E.S.I.C. Vs Jardine Henderson Staff Association 2006­III­LLJ Pg 468 As a matter of fact, the Respondents have clearly denied that the Petitioners have extended medical facilities for the aforesaid period to their workmen. Rma WP1787499170309.sxw 5 6. In E.S.I.C. Vs Jardine Henderson Staff Association, the Division Bench of the Hon'ble High Court had set aside the judgment of single Judge holding that the enhancement of wage limit from Rs. 3000/- to Rs. 6500/- was illegal. While setting aside the judgment of learned single Judge, the Division Bench observed that there was stay to the application of enhancement before the learned singe Judge and the Division Bench directed that employers who had been granted stay to the order in their favour will implement the amendment only from the date of the judgment of the Hon'ble High Court dated 16.03.2004, though the amendment came into operation w.e.f 01.01.1997. It must be noted that the Respondent therein i.e the employer was directed to continue to provide existing medical facilities under the interim order as mentioned in Para 22 on Page 472. In these circumstances, the Hon'ble Supreme Court held that it was eminently just that the employer who had been directed to pay the medical benefits during the period of interim stay would not be shattered with the liability under the E.S.I.C Act for the same Rma WP1787499170309.sxw 6 period and it was open for the Hon'ble High Court to make the Petitioner liable from the date of its judgment upholding the enhancement rather than for retrospective period. It cannot be said that the present case is similar to the case in Jardine Henderson case. In the present case, party which had objected in this Court was the workers' union and not the employers i.e the Petitioner. There was no stay to the operation of notification giving effect to the enhancement. There was merely a direction to the Petitioner not to effect deduction from the salary of the workers. Equally important, in the present case, this Court had not made any direction that they should continue to extend medical benefits. It is pertinent to note that in the case before their Lordships of the Hon'ble Supreme Court, the single Judge of the Hon'ble High Court has set aside the enhancement and the Division Bench had eventually upheld the enhancement and the question arose whether the Hon'ble High Court could have permitted the enhancement to be brought into force from the date of its judgment upholding the enhancement. No such issue arises in the present case. This Court merely directed that till Rma WP1787499170309.sxw 7 application for exemption is decided, the employer shall not make any deduction of the contribution from the workmen who have paid more than Rs. 3000/- as on 01.01.1997. It is, thus, not possible to accept the contention of the Petitioner that they are entitled to withhold the payment in view of the order of this Court dated 22.04.1997 in W.P. No. 1999 of 1997. 7. It was next contended by Shri. Naidu, the learned counsel for the Petitioner that the liability has been worked out by the Respondent / Deputy Director on purely ad-hoc manner without any factual basis on the actual wages which were received by the employees. The learned counsel for the Petitioner submitted that in fact, the Petitioner had furnished a statement showing the actual contribution that was liable to be made in respect of persons drawing salary between Rs. 3000/- to Rs. 6500/- on the basis of registers and records maintained under the provisions of Act. The Deputy Director, however, proceeded to decide without taking the statement into account. Shri. Mehta, the learned counsel for the Respondent however submitted that the calculation Rma WP1787499170309.sxw 8 is made on the basis of the Inspector's report who got information about the salary bill, wage bill, that is paid by the Petitioner to its employees who draw salary between Rs. 3000/- to Rs. 6500/-. According to Shri. Mehta, the learned counsel for the Respondent, after receiving such a report, the Deputy Director took that as a basis and determined the contribution payable as 6.5% on the gross wages. The learned counsel for the Respondent relies on Section 45(A) of the Act under which the Respondent is entitled to determine the amount of contribution quoting on the basis of information available to it. According to Mr. Mehta, the learned counsel for the Respondent, if the employer does not chose to submit the details, the State Insurance Authorities are entitled to base its judgment “on the basis of information available to it”. 8. Section 45(A) reads as under: “Determination of contributions in certain cases – (1) Where in respect of a factory or establishment no returns, particulars, registers, or records are submitted, furnished or maintained in accordance with the provisions of Sec. 44 or any Inspector or other official of the Corporation referred to in sub­sec (2) of Section 45 is (prevented in any manner) by the Rma WP1787499170309.sxw 9 principal or immediate employer or any other person, in exercising his functions or discharging his duties under Section 45, the Corporation may, on the basis of information available to it, by order, determine the amount of contributions payable in respect of the employees of that factory or establishment. (Provided that no such order shall be passed by the Corporation unless the principal or immediate employer or the person in charge of the factory or establishment has been given a reasonable opportunity of being heard.) (2) An order made by the Corporation under sub­section (1) shall be sufficient proof of the claim of the Corporation under Section 75 or for recovery of the amount determined by such order as an arrear or land revenue under Section 45­B (or the recovery under Section 45­C to Section 45­I).” 9. It is true that the determination of the contribution cannot be held by the employer by refusing to cooperate with the authorities and by not submitting the information necessary to calculate the contribution. In such cases, indeed, the authorities may decide the contribution on the basis of information available to them. In this case, unfortunately, the order does not disclose any basis on Rma WP1787499170309.sxw 10 which the Deputy Director calculated the contribution. In absence of any specific details about salaries of each employee submitted by the employer, the Deputy Director is indeed entitled to calculate on the basis of total gross wages but the total gross wages which have been taken into account must be clearly stated in the order. The Respondents' contention that their inspector had obtained the information as what were the total gross wages is not substantiated since the order does not refer to an amount of total wage bill allegedly reported by the inspector. It is, therefore, not possible to find out on what basis, said 6.55% has been calculated. In this view of the matter, the impugned order suffers from an error of law apparent on its face and is liable to be set aside. In the circumstances, the matter is remanded back to the Deputy Director of E.S.I.C Pune for fresh determination in accordance with law. 10. The Deputy Director shall decide the matter not later than six months from the date parties appear before it. Parties are directed to appear before the Deputy Director on 02.04.2009. Rma WP1787499170309.sxw 11 11. Order accordingly. 12. Recovery notice dated 02.06.1999 is quashed and set aside. (S.A. Bobde, J) Rma WP1787499170309.sxw