IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE THOTTATHIL B.RADHAKRISHNAN THURSDAY, THE 5TH OCTOBER 2006 / 13TH ASWINA 1928 MFA.No. 1361 of 1996(D) ----------------------- IC.7/1993 of EMPLOYEES INSURANCE COURT, ALAPPUZHA .................... APPELLANT: -------------------- THE REGIONAL DIRECTOR, E.S.I. CORPORATION, THRISSUR. BY ADV. SRI.P.SANKARANKUTTY NAIR RESPONDENTS: ---------------------- OLIVINE INDUSTRIES, MINI INDUSTRIAL ESTATE, IRIMPANAM, COCHIN-682 309, REPRESENTED BY ITS MANAGING PARTNER, SHIRLY OLIVER. BY ADV. SRI.M.V.JOSEPH THIS MISC. FIRST APPEAL HAVING BEEN FINALLY HEARD ON 05/10/2006, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Thottathil B. Radhakrishnan, J. =================================== M.F.A.No.1361 of 1996 =================================== Dated this the 5th day of October, 2006. JUDGMENT This appeal is by the Employees' State Insurance Corporation, hereinafter referred to as the “Corporation”, for short against the decision of the Employees' Insurance Court, hereinafter referred to as the “E.I.Court”, for short, on I.C.No.7 of 1993. 2. The respondent establishment is a factory engaged in the manufacture of welding transformers. Based on the competent inspector's report, the Corporation took the view that the establishment was covered under the staute from 1-4-1986 and demanded contribution from 26-6-1986. That prompted the establishment filing I.C.No.9 of 1990 before the E.I.Court. The said application was allowed by the E.I.Court by judgment dated 6-12-1991. 3. In the meanwhile, the establishment applied to the Corporation conceding its liability for being MFA1361/1996 -:2:- covered from 2-4-1991 and sought for the necessary forms and other procedures to be followed for covering the establishment with effect from 2-4-1991. The facts of this case would disclose that the Corporation also has or had lethargic employees, since in spite of repeated reminders, due action was not promptly taken on the request of the establishment. However, the learned counsel for the Corporation points out that action was not taken only because I.C.No.9 of 1990 was pending before the E.I.Court. This appears to be a plausible explanation, though it would have been open to either the establishment or the Corporation to seek indulgence of the E.I.Court to dispose of I.C.No.9 of 1990 earlier or to seek clarificatory orders regarding the pendency of I.C.No.9 of 1990 on any proceedings relating to the request of the establishment on its agreeing to be covered from 2-4-1991. After the disposal of I.C.No.9 of 1990, coverage followed with effect from 1-4-1991 and this led to I.C.No. 7 of 1993 from which this appeal arises. The E.I.Court found that the establishment was not covered during any period before 1-4-1991 and that it is not in MFA1361/1996 -:3:- controversy that even during the pendency of I.C.No.9 of 1990, the establishment had been writing letters to the Corporation expressing readiness to be covered with effect from 1-4-1991. Noticing so in paragraph 4 of the impugned judgment, the E.I.Court essentially found that the expression of readiness of the appellant to be covered under the Act with effect from 1-4-1991 was apparently not acted upon and further steps were not taken under Regulation 10-B(d) of the General Regulations, which provides that, upon receipt of a completed Employers Registration Form, the appropriate office, if satisfied that the factory is an establishment to which this Act applies, shall allot the employer's code number. On that premise, the E.I.Court has, ultimately, by the impugned order, held that the coverage could be only from 6-12-1991, the date on which the E.I.Court had decided I.C.No.9 of 1990, which, as already noticed above, was a litigation relating to the period ending 31-3-1989. 4. On the basis of the aforesaid fact situation, the learned counsel for the Corporation urged before me MFA1361/1996 -:4:- that the E.I.Court had acted illegally and without jurisdiction in as much as it could not have fixed a date of its judgment as the cut off date on which the establishment could fall to be covered under the Act and that the coverage is a statutory incidence and is not dependant upon any delay in the matter of issuing the code number even if it is assumed, without conceding that, there was delay in issuing the code number. He would at once add that, according to the Corporation, the inaction on the request of the establishment by expression of its readiness to be covered with effect form 1-4-1991 was only because of the pendency of I.C.No.9 of 1990, which was decided only on 6-12-1991. 5. Per contra, the learned counsel for the contesting respondent urged that the establishment could not effect appropriate deduction from the salaries of the workmen during the relevant period and the benefit of the Act had not been extended to any of the employees, who would have been entitled to get such benefit, had the establishment been given a code number MFA1361/1996 -:5:- and the contributions paid by the establishment on its basis from 1-4-1991. It is further pointed out that the establishment had paid off the medical expenses for the workmen and that there are materials evidencing such payment. 6. Having heard the learned counsel for the parties, the substantial question of law that arises for decision is as to whether the establishment having admitted its liability for being covered with effect from 1-4-1991 and with its readiness to be so covered, was it open to the E.I.Court to postpone the incidence of the statute with effect from the date of its delivering verdict on I.C.No.9 of 1990 pending between the parties? 7. The statutory liability under the Act comes into play on the happening of the necessary things, which would lead an establishment to coverage under the Act. Such insistance is the effect of law and does not depend upon any order for coverage being issued by any officer of the Corporation or by the allotment of the MFA1361/1996 -:6:- code number. Under such circumstances, the postponement of the effect of incidence of the statute, which includes the liability to contribute, is impermissible. 8. I.C.No.9 of 1990 related only to the period ending 31-3-1989. A decision on that issue was irrelevant to decide as to whether the establishment was liable to be covered from 1-4-1991. The establishment had volunteered that it be covered from 1-4-1991. So much so, I do not find any basis for letting the coverage to run only from the date of the judgment in I.C.No.9 of 1990. 9. Be that as it may, the learned counsel for the establishment strongly urged that there is material on record before the E.I.Court to hold that the medical expenses of the workmen were paid by the establishment. However, the impugned order does not reflect any such material, having been considered or admitted in evidence by the E.I.Court. Under such circumstances, the said argument necessarily fails. MFA1361/1996 -:7:- 10. The learned counsel for the establishment, however, urged that some of the workmen, who could have availed the benefit of coverage from 1-4-1991 would have lost the benefit by reason of the delay in the matter of allotment of the code number. It is clarified that if there is any such workmen, who would have had any claim before the Corporation, it is open to them to raise such claims and the Corporation will take appropriate decision in that regard. In view of the aforesaid, the impugned order is set aside and it is declared that the establishment is liable to be covered from 1-4-1991. However, having regard to the peculiar facts and circumstances, it is directed that it will not be mulcted with the responsibility by way of interest or damages for delay in payment of the contribution. It is further clarified that the waiver of interest or damages directed above is issued, having regard to the peculiar facts and circumstances of the case and the fact that the applicant had made repeated representations for MFA1361/1996 -:8:- voluntary coverage and such direction is not intended to be relied on as a precedent. No costs. Thottathil B.Radhakrishnan, Judge. sl. MFA1361/1996 -:9:- Thottathil B. Radhakrishnan, J. =================================== M.F.A.No.1361 of 1996 =================================== JUDGMENT Dated:5-10-2006