THE HON’BLE SRI JUSTICE C.V.RAMULU CIVIL MISCELLANEOUS APPEAL No.703 of 2005 JUDGMENT: This Civil Miscellaneous Appeal, under Section 83 of the Employees State Insurance Act, 1948, is directed against the order dated 31.03.2005 passed in E.I.Case No.25 of 2002 on the file of the Employees Insurance Court and Chairman, Industrial Tribunal, Hyderabad, wherein the appeal filed by the appellant being aggrieved by the order dated 14.02.2000 passed by the Recovery Officer of the Employees State Insurance Corporation was dismissed. Appellant is M/s. Kristna Engineering Works situated at Enikepadu, Vijayawada, which is a registered partnership firm engaged in manufacturing Cast Iron, Castings etc., and the Respondents are the Employees State Insurance Corporation. It was the case of the appellant-petitioner, before the Employees Insurance Court (E.I.Court), that it is covered by the provisions of the Employees State Insurance Act, 1948 (for short ‘the E.S.I.Act’), and, as such, remitting the contributions regularly. For carrying out the work of scrap breaking, it engaged six workers on piece rate basis during April, 1997 to March, 1998 and each of them were paid more than Rs.6,500/- per month, and therefore, these six workers are excluded from the coverage of the provisions of the E.S.I Act. and need not be paid contribution as per E.S.I. Act. However, the respondent Corporation issued show cause notice dated 10.08.1999 calling upon it to show cause as to why an amount of Rs.52,178/- should not be determined as contributions payable by it for the period from April, 1997 to March, 1998 on the scrap breaking charges paid to six workers engaged for carrying out the work of scrap breaking during that period, and recover the same. It was also the case of the petitioner that pursuant to the show cause notice, it approached the Corporation, which directed it to produce the records, and in the meanwhile, an ex parte order dated 06.12.1999, under Section 45-A of the E.S.I Act, was passed by the Corporation demanding to pay an amount of Rs.52,178/- towards contribution for the period from April, 1997 to March, 1998 on the scrap breaking charges. It was the further case of the petitioner that pursuant to the said ex parte order dated 06.12.1999, it submitted an application to the respondent on 17.12.1999, requesting to give an opportunity of hearing, but without considering the said application, the recovery order vide letter dated 14.02.2000 was issued directing it to pay an amount of Rs.54,795/-. In the written statement filed before the E.I.Court, the respondent Corporation stated that their Inspector visited the petitioner factory on 18.11.1998 and also on 24.11.1998, and on verification of the ledgers, they found that the petitioner has spent Rs.8,02,705/- towards cast iron scrap breaking charges. It was stated that the petitioner gave a letter informing that they have engaged the specialized piece rate workers for the work of scrap breaking, but records could not be produced, and therefore, show cause notice was issued to the petitioner. It was also stated that since the petitioner failed to appear personally along with relevant records despite receiving the show cause notice, the recovery order was passed. The petitioner was examined as P.W.1 and Exs.P1 to P8 were marked. On behalf of the respondent Corporation, R.W.1 was examined and Exs.R1 to R8 were marked. After a detailed consideration of the entire material placed before it, the E.I.Court recorded the findings as under: “PW1 is the Accounts Manager of the petitioner. The admitted fact is that the petitioner is coverable under the provisions of the Act. PW.1 admitted that the petitioner has engaged six individuals for scrap breaking work. PW.1 further stated that they are getting more than 6500/- per month, and they are all casual labourers. Thus the contention of the petitioner is that those six scrap breaking labourers are on casual basis and receiving daily wages and engaged as and when the work is required and they are getting more 6500/- p.m. therefore those six employees are not coverable under the provisions of the Act. In the cross-examination, he admitted that petitioner is engaging some persons for specific purpose for specific work and specific amount is paid and it is on the contract basis and the contract wage varies from mound to mound depending upon its areas. He denied a suggestion that the contract labourers are not the piece rate workers and the piece rate workers are different. He deposed that they are not maintaining any attendance register, wage register record of those contract workers. He admitted that he attended the personal hearing but did not produce the records on 1st hearing and 2nd hearing. RW1 is an Inspector who has visited the petitioner establishment on 18.11.98 and 24.11.98. PW1 was present at the time of visit. PW1 admitted this fact. The evidence of RW1 discloses that he has verified the ledger and cash book for the year 1997-98 and noted that the contributions are not paid on omitted wages. He further deposed that the verification of ledgers and cash book discloses that the employer had paid Rs.8,02,705/- Cast Iron and Castings breaking charges during the above period and contributions are not paid. Hence RW1 prepared observation report which is Ex-R1, and Ex-R2 is the report of verification of ledger and cash books both the documents are prepared on 24.11.98 during the spot visit by RW.1 The letters given by the petitioner were also produced through him and they are marked as Ex- R4. In the cross-examination it was elicited that the petitioner is paying the contribution regularly. He further stated that he noted Rs.8,02,705/- as per the entries of the ledgers and it is towards breaking charges. He further deposed that Ex-P1 and P7 are not produced before him at the time of personal hearing. Ex-P1 is an annexure of ledger. It is not the original ledger. It is a typed sheet. The names of six persons are shown from 4/97 to 3/98. They have received different amounts as per the typed sheet. Those employees are not examined as witnesses to prove that they received the amount more than 6500/- per month. The original registers are not produced to prove that those six employees have received the said amount. Ex-P7 are sheets and the original ledger. Separate sheets are prepared for every month writing the names of some employees and the amount received by them. None of those employees are examined before the Court to prove that they have really worked with the petitioner for scrap breaking and they received the said charges during the said period. Therefore I am unable to accept Ex-P1 and P7. The wages registers and the attendance registers of those employees are not produced. Thus, Ex-P1 and P7 is not helping the petitioner to establish that those six employees have drawn more than 6500/- per month. The perusal of Ex-P1 and P7 are disclosing that different amounts are paid for different months and they are not uniform. Ex-P8 is General ledger. It is silent that how the charges are paid to these six employees. Ex-P4 is letter addressed by the petitioner to the corporation and it is dated 17.12.1999. In Ex-P4 nothing is mentioned about employing six persons for scrap breaking and they have received more than 6500/- per month. This fact is totally omitted in Ex-P4. For the first time in this Court the plea is taken that those employees are paid more than 6500/-. The petitioner has neither produced any record to show that they have employed only six employees for scrap breaking and each employee is paid more than 6500/- when an opportunity was given to the petitioner to produce the records and when the petitioner appeals before the authorities they did not produce the records. I am unable to understand the reasons for non production of records before authorities. If the records are really maintained by them. The petitioner did not choose to appear before the concerned authorities subsequently. Therefore, it is a clear case that the petitioner did not avail the opportunity for personal hearing by producing all the relevant records at the 1st instance. After the assessment order is passed, the petitioner challenging the same by producing same records prepared on white papers and without producing the original ledgers.” Thus, by recording the aforesaid findings, the E.I.Court ultimately, dismissed the application of the petitioner by the impugned order dated 31.03.2005. Aggrieved thereby, this civil miscellaneous appeal is filed. Learned counsel for the appellant strenuously contended that it was the case of the appellant all through that no wage register or attendance register was maintained for the specialized labourers engaged on piece rate basis for the work of breaking up of the scrap and separate ledgers were maintained and computarised sheets of those ledgers were marked. He also submits that the ledgers produced by the appellant reflected the total amount paid against each piece of work entrusted to the six workers engaged during the period from April, 1997 to March, 1991. Further, Ex.P7 shows that each of those six workers shared each piece rate amount equally among themselves, and a statement was also filed before the E.I.Court to show that each of those six workers were paid more than Rs.6,500/- per month during April, 1997 to March, 1998. Per contra, learned counsel appearing for the respondent Corporation supported the impugned order. Filing of the statements showing the works allotted to the workers and the computer sheets of the ledger are not in dispute. The only ground on which the case of the petitioner was not accepted was that the original ledgers were not filed and the wage register and attendance register were not maintained. It is unfortunate to note that these are the main grounds which the E.I. Court observed and, ultimately, dismissed the E.I. Case. It is to be noticed that when the work is allotted to the workers engaged on piece rate basis, there is no necessity of maintaining the attendance register or wage register in respect of such workers, since the number of working days is not the criteria for such workers to complete the work entrusted to them, but the piece of work and the rate fixed against such particular piece of work are relevant. Even in the case on hand, against each piece of work, the amounts were paid and they are all tallied with Ex.P7, which shows that the said six workers shared each piece rate amount equally among themselves, and further it also tallied with Ex.P1-Statement showing the amounts shared by each individual worker. Ex.P7 also contains the signatures of those six workers for the entire period of their work. Though these documents were placed before the E.I.Court, they are not properly appreciated and perverse findings were recorded and, therefore, it can be said that the substantial question of law arose for consideration. Thus, considering all these circumstances, I am of the considered opinion that it cannot be said that the said six workers, who worked during the period from April, 1997 to March, 1998 with the petitioner for carrying out the work of scrap breaking, are covered under the provisions of the E.S.I. Act for the purpose of contributions and, therefore, the impugned order needs to be interfered with by this Court in exercise of jurisdiction under Section 82 of the Employees State Insurance Act, 1948. For the aforesaid reasons, the ex parte order dated 06.12.1999 issued by the 1st respondent and the consequential recovery order dated 14.02.2000 issued by the 2nd respondent, as confirmed by the E.I. Court in its order dated 31.03.2005 passed in E.I. Case No.25 of 2002, are set aside. Further, it is made clear that if the appellant deposited any amounts during pendency of this appeal, it is permitted to withdraw the same. Accordingly, this Civil Miscellaneous Appeal is allowed. No order as to costs. _____________ C.V.RAMULU,J 26.08.2010 v v