IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 10.01.2011 CORAM: THE HON’BLE MR. JUSTICE K.CHANDRU W.P.No.30994 of 2007 The Coimbatore North Sarvodhya Singh rep.by its Secretary G.Velusamy No.255, Navab Hakkem Road Coimbatore .. Petitioner Vs. 1. State of Tamil Nadu rep.by its Commissioner and Secretary, Labour Department Fort St.George Chennai 9 2. The Deputy Director ESI Corporation Sub-Regional Office (Coimbatore) Coimbatore 641 012 3. The Recovery Officer ESI Corporation Sub-Regional Office (Coimbatore) Coimbatore 641 012 .. Respondents Prayer : Petition under Article 226 of the Constitution of India praying for a Writ of Certiorari to call for the records from the file of the 3rd respondent relating to Ref.No.56/A-14745 dated 7.8.2007 and quash the same. For Petitioner :: Mr.K.Kalyana Sundarama For Respondents :: Mr.R.Murali, G.A.for R1 Mr.A.Paramasivam for R2 & R3 O R D E R The petitioner is Coimbatore North Sarvodhaya Sangh represented by its Secretary. The petitioner has come forward to challenge an order dated 7.8.2007 issued by the respondent ESI Corporation. By https://hcservices.ecourts.gov.in/hcservices/ the impugned order, the petitioner was summoned by the Recovery Officer, asking them to show cause as to why the attachment and sale of immovable property should not be made, why the employer petitioner should not be arrested and kept in detention and why the receiver should not be appointed. 2. Pending the Writ Petition, an interim stay was granted by this Court on 24.9.2007. In the Writ Petition, on 5.10.2010 Notice of Motion was ordered and the interim stay ordered on 24.9.2007 was extended until further orders and the Miscellaneous Petition was closed. 3. On notice from this Court, the respondent ESI Corporation filed a counter affidavit dated 9.12.2010 sworn to by Mr.R.G.Rajendra Singh, Inspector of ESI Corporation, Madras dated 9.12.2010. In the counter affidavit filed, there is no reference to the petitioner establishment having obtained an exemption under Section 91-A of the ESI Act starting from 1.4.1991 to 31.3.2007. The last such order was issued by the State Government in G.O.(D) No.885, Labour Employment Department dated 28.12.2007. It is seen from the copy of the order produced by the learned counsel for the petitioner that the copies of the Government Order have been duly marked to the Director-General, ESI Corporation, Panchdeept Bhawan, Kotla Road, New Delhi-2 and the Regional Director, ESI Corporation, Chennai. In fact, in fact, in the order it is indicated that the Regional Director has been issued with four copies of the said Government Order. Notwithstanding the same, an affidavit filed by the respondents on behalf of the ESI Corporation dated 9.12.2010 is totally vague about the valuable order given to the petitioner by the Government. If only such order has been referred to by the respondents, it has been unnecessary to issue the impugned notice, threatening the petitioner with summons and asking them as to why he should not be arrested. 4. When the learned counsel for the petitioner took time and produced copies of the various exemption orders, it became clear that the affidavit filed by the ESI Corporation was not reflecting the records and therefore this Court directed the person who sworn an affidavit, namely Mr.R.G.Rajendra Singh, Insurance Inspector to be present before this Court. Accordingly, Mr.R.G.Rajendra Singh is present in the Court. When he was asked as to why such vague document was filed, he submitted that he got inputs from the Coimbatore Office and therefore he believed their words. He also stated that it is a mistake on the part of the ESI Corporation. Therefore, they could not have referred to the order of exemption. 5. The Deputy Director of ESI Corporation, Coimbatore Region is also present in the Court and she owe the responsibility for sending such Notice and she also stated that such things will not happen in future. Therefore, the respondents were directed to file a revised affidavit. https://hcservices.ecourts.gov.in/hcservices/ 6. Accordingly, today, when the matter is called, the Deputy Director (Legal), ESIC, SRO, Coimbatore had filed an affidavit dated 6.1.2011. In paragraph 3 of the affidavit, it is stated that in view of the summons issued to the petitioner, they have paid a sum of Rs.1,40,000/- on 7.8.2007 itself and it was thereafter only 16.9.2007, the Writ Petition was filed. But, however, in paragraph No.4, it was averred as follows: "4. I respectfully submit that Registry of this Hon'ble Court was sent the notice to the respondents herein and the same was received on 10.10.2007 by the respondents herein intimating the hearing by 22.10.2007. Thereafter the respondents made ready the draft counter. However, the Government of Tamilnadu has granted exemption under Section 87 r/w.Sec.91-A of the Act to the permanent employees of the petitioner for the period 1.4.1991 to 31.3.2007 in G.O.870 to 885 dated 28.12.2007. The same was also informed on 23.1.2008 about the grant of exemption to the petitioner herein and the copies of G.O.forwarded. However, the Sub Regional Officer, Coimbatore forwarded the counter statement on behalf of the respondents 2 and 3 on 9.11.2010 without furnishing the date of exemption given to the petitioner." 7. Though it was claimed that due to inadvertence such things happen, it is a serious matter wherein the employer was threatened with penal action and was forced to part with amounts, which in law is not otherwise bound to pay. But, however, the last of the order, namely G.O.885 Labour Employment Department dated 28.12.2007, which was the exemption granted for the period from 1.4.1991 to 31.3.2007, was issued with retrospective effect and therefore even before the exemption, the minutes were filed by the respondent Corporation. 8. In the light of the exemption order being granted by the State Government, the impugned Notice issued by the respondent is liable to be set aside. Accordingly, it stands set aside. Since the petitioner is enjoying a valid exemption upto 31.3.2007, in law they are not bound to pay any amount on that date. Therefore, whatever amount paid to the respondents cannot be held to be valid, as the above exemption order enure to the benefit of the employer. The entire amount collected to be refunded to the employer and the respondent cannot retain such amount. 9. A similar question came up for consideration before the Allahabad High Court vide its judgment in U.P.State Road Transport Corporation vs. ESIC reported in (2009) 1 LLN 247, wherein the Allahabad High Court has held that in such circumstances, ESI https://hcservices.ecourts.gov.in/hcservices/ Corporation is bound to return the amount collected in respect of the persons for whom the exemption order enures to their benefit. 10. In the light of the above, the Writ Petition stands allowed. The impugned order stands set aside. The respondent ESI Corporation is hereby directed to revise their demand of contribution in accordance with law and after due Notice to the petitioner. In the meanwhile whatever the amounts collected in contravention of the exemption G.O.referred to above, the respondents ESI Corporation shall return the amount to the petitioner within a period of eight weeks from the date of receipt of a copy of this order. There will be no order as to costs. The explanation offered by the officials of the respondents is hereby accepted and it is also indicated that in future such lapse should not take place. Sd/ Asst.Registrar /true copy/ Sub Asst.Registrar ajr To 1. The Commissioner and Secretary, Labour Department Fort St.George Chennai 9 2. The Deputy Director ESI Corporation Sub-Regional Office (Coimbatore) Coimbatore 641 012 3. The Recovery Officer ESI Corporation Sub-Regional Office (Coimbatore) Coimbatore 641 012 1 cc To Mr.K.Kalyanasundaram, Advocate, SR.2060 1 cc To Mr.A.Paramasivam, Advocate, SR.2416 W.P.No.30994 of 2007 JP (CO) RH (1.2.11) https://hcservices.ecourts.gov.in/hcservices/