FAO No.747 of 1985 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH FAO No. 747 of 1985 Date of decision: 19.12.2008 Employees' State Insurance Corporation …..APPELLANT Versus Shri Textile Mills, Kashmir Road, Amritsar …..RESPONDENT CORAM: HON’BLE MR JUSTICE T.P.S.MANN PRESENT: Mr Ajay Pal Singh, Advocate for Mr B.S.Bhalla,Advocate for the appellant. Mr D.R.Mahajan, Advocate for respondent. T.P.S.MANN, J. The petition under Section 75 of the Employees' State Insurance Act, hereinafter referred to as “the Act” filed by the respondent-firm for quashing certificate dated 10.5.1979 issued by appellant-Corporation for recovering an amount of Rs. 5,664.95 was accepted by Judge, Employees State Insurance Court, Amritsar vide order dated 28.2.1985, which order is now under challenge in the present appeal filed under Section 82 of the Act. On the ground that the respondent firm had employed 10 or more persons for the purposes of manufacturing woollen cloth, the FAO No.747 of 1985 -2- Corporation issued recovery certificate assessing an amount of Rs.5,664.95 on adhoc basis as State Insurance contribution, which included interest as well for the period 8/76 to 6/78. The firm, however, claimed that it was not covered by the Act. Moreso, it had even deposited a total amount of Rs. 2,961.70 on various dates. Accordingly, the firm filed the petition under Section 75 of the Act and challenged the recovery of the amount as no amount could be recovered by the Corporation. The factum of deposit of Rs.2,961.70 was, however, denied by the Corporation. On the basis of the pleadings of the parties, learned Court below framed the following issues: 1. Whether the applicant management had deposited the amount in question? If so, to what effect? OPA 2. Whether the recovery certificate is illegal, without jurisdiction and void? If so, to what effect? OPA 3. To what amount the contribution is due for the period in question? 4. Relief. After going through the record and hearing learned counsel for the parties, learned Court below held that the firm was not covered by the provisions of the Act and therefore, not liable to pay the contribution. The main issue in the appeal is as to whether from 8/76 to 12/77 the respondent firm had employed less than 10 employees or more. FAO No.747 of 1985 -3- In case, it had engaged less than 10 employees, it could not have been covered under the Act. In case, the Corporation could establish that the firm had engaged 10 or more employees, the firm could not avoid the liability under the Act. In para-7 of the written statement, the Corporation had stated that it had issued recovery order for the amount of Rs.5,664.95 for the period 8/76 to 8/78 after looking to the ledger maintained by the firm. The assessment was made on adhoc basis as claimed by the Corporation. In his statement, as AW-1 Bharat Bhushan, partner of the firm deposed that during the period from 8/76 to 12/77, the employment strength was less than 9. The firm employed 10 workers only in 1/78. Power was installed in the factory. He also stated in his examination-in- chief that ESI Inspector visited the factory on 12.10.1978 and checked the record. He also signed the register for the months of 8/76 to August, 1978, besides seeing the cash book and ledger. On the other hand, the Corporation examined RW-1 Ved Parkash Trikha, ESI Inspector, who deposed that he conducted survey of the firm on 20.12.77. During the survey, attendance register from 1.12.77 was produced by the Accountant of the firm. RW-1 Ved Parkash Trikha, accordingly, submitted his report Ex. R-1 to the Regional Office. According to his report, the firm was coverable provisionally from 1.12.77. He went for inspection again on 12.10.78. After checking the record from August 76 to August 78, he submitted his report Ex.R-2. As per the said report, the firm became permanently coverable under the Act with effect from FAO No.747 of 1985 -4- 1.8.76. In his cross-examination RW-1 stated that when he visited the premises of the firm on 20.12.77, he was told that the record was not available excepting the attendance register for one month i.e. December, 1977. A suggestion was put to him that he did not go to the premises of the respondent firm on 12.10.78 but he denied the same. He went on to state that he went inside the factory to count the number of employees working there, though he did not record statement of any employee to the effect that he was working in the factory earlier. A perusal of survey report Ex.R-1 would reveal that the firm failed to produce any record except the attendance register. However, the Insurance Inspector received a request of the employer that his factory may be covered with effect from 1.12.77. Accordingly, the Insurance Inspector reported that the factory may be covered provisionally with effect from 1.12.77. Report Ex.R-2 prepared by Insurance Inspector on 12.10.78 at the time of inspection shows that the Insurance Inspector went through the books of the firm and noticed that there were 10 persons employed for wages in the month of August, 1976. On the basis of the aforementioned documents, the Insurance Inspector reported to the Assistant Regional Director of the Corporation vide letter dated 17.1.1978 (Ex.R-3) that number of employees employed for wages by the firm on the date of survey was eleven. In view of the above, it has to be held that the firm had employed 10 or more persons during the relevant period. The report submitted by the Insurance Inspector was not in the form of opinion but based on the actual survey/inspection of the premises of the firm. Once it FAO No.747 of 1985 -5- is held that the firm had hired 10 or more persons, it stood covered under the Act for paying the amount of State Insurance contribution. In that regard, the Corporation had issued recovery certificate dated 10.5.79 so as to recover Rs.5,664.95 from the firm. Resultantly, the appeal is allowed, impugned order passed by the Employees' State Insurance Court on 28.2.1985 is set aside and the petition filed by the firm under Section 75 of the Act is dismissed. No order as to costs. December 19, 2008 (T.P.S.MANN) Pds. JUDGE