SCA/30323/2007 1/46 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 30323 of 2007 For Approval and Signature: HONOURABLE MR.JUSTICE H.K.RATHOD Sd/- ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? YES 2 To be referred to the Reporter or not ? YES 3 Whether their Lordships wish to see the fair copy of the judgment ? YES 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? NO 5 Whether it is to be circulated to the civil judge ? NO ========================================================= EMPLOYEES STATE INSURANCE CORPORATION - Petitioner(s) Versus PIOMA INDUSTRIES - Respondent(s) ========================================================= Appearance : MR SACHIN D VASAVADA for Petitioner(s) : 1, MR DIPAK R DAVE for Respondent(s) : 1, ========================================================= CORAM : HONOURABLE MR.JUSTICE H.K.RATHOD Date : 06/05/2008 ORAL JUDGMENT 1. Heard learned Advocate Mr. Sachin D. Vasavada for the petitioner and Mr. Dipak R. Dave, learned SCA/30323/2007 2/46 JUDGMENT Advocate for the respondent. 2. RULE. Service is Rule is waived by learned Advocate Mr. DR Dave for the respondent. In the peculiar facts and circumstances of the case, matter is taken up for final hearing today itself. 3. It is a case of lapses committed by the officer of the petitioner ESI Corporation and, on that basis, petitioner is challenging order passed by the Lok Adalat dated 3th October, 2006 in ESI Application No. 23 of 2002. Arguments advanced by the learned Advocate Mr. Vasavada on merits before this Court is totally irrelevant and yet, this court has permitted him to argue on merits of the matter. Against the order passed by the Lok Adalat, appeal is not available. That is the view taken by the Hon'ble apex court. Limited scope to challenge the order passed in Lok Adalat. Writ petition before the High Court is limited remedy. Contention raised by the ESI Corporation is that the Insurance Inspector is not authorized to settle the matter with the respondent. How the respondent will be aware about this fact that the Insurance Inspector is not authorized. The averments made in this regard in para 3 being material, relevant averment made in para 3 of the petition is reproduced as under: “It is further submitted that the Petitioner also engaged the lawyer and deputed its Insurance Inspector to assist the lawyer as well as the ESI Court in the said SCA/30323/2007 3/46 JUDGMENT proceedings.” 4. Aforesaid averment made by the petitioner in para 3 of the petition makes it clear that the Insurance Inspector was authorized officer deputed by the Corporation in the proceedings pending before the ESI Court in ESI Application No. 23 of 2002. Settlement arrived at between the parties in Lok Adalat where Advocate Mr. IR Amarnani was engaged by the ESI Corporation. Whether the Advocate has signed the settlement or not, no details have been given by the ESI Corporation. Why Corporation remained silent about their Advocate, whether he has given any advise to the Insurance Inspector that such kind of settlement is permissible under the ESI Act or not? No details have been given in that regard by the petitioner before this Court. A Corporate Body which is a State Authority has acted in a manner with the private person that they are supreme and superior because they are authority and they are entitled to challenge any kind of binding orders in this High Court. ESI Corporation being the State Authority is supposed to know what is the rule of law. ESI Corporation is supposed to understand that they are also an authority working under the rule of law and law is binding to it. Knowing fully well that this court has no jurisdiction to examine merits, whole efforts were made by the lawyer before this court to highlight merits of the matter before this Court only with a view to cause prejudice to the main subject matter where challenge is against the order passed in SCA/30323/2007 4/46 JUDGMENT Lok Adalat. Insurance Inspector was deputed by the Corporation as per the averments made in para 3 and who was to assist the lawyer engaged by the corporation. Settlement is in hand writing. It is signed by the parties including the Insurance Inspector and order was also passed by the Lok Adalat Officer in terms of the settlement in presence of the parties. This settlement was drafted on 26th September, 2006. The same was signed by Advocate of Corporation dated 29th September 2006 on 2nd October 2006 and order was passed by Lok Adalat on 4th October 2006. The parties have signed settlement including Advocates. It was informed by the respondent to the ESI Corporation by letter dated 25h November, 2006 by RPAD addressed to the Regional Director, ESI Corporation, ESIC Bhawan, Ashram Road, Ahmedabad as per page 47 but these facts have been suppressed by the Corporation while making specific averments in the memo of petition that the petitioner corporation is not aware about this settlement order passed by the Lok Adalat and, therefore, immediately it was not challenged by the petitioner corporation before this Court. Paragraph 4(1) of the petition being material, same is reproduced as under: “4(1): Petitioner Corporation further submits that the fact about the said illegal settlement came to know recently i.e. In the month of June 2007 and the present Petitioner Corporation immediately applied for the certified copy of the same. It is further submitted that after getting the SCA/30323/2007 5/46 JUDGMENT order from the ESI Court, Petitioner Corporation carried out the investigation about the fradulent settlement and completion of the proceedings before the ESI Court. Petitioner Corporation submits that the delay has taken place to the present petition only because of its own Insurance Inspector, who did not intimate about any development of the case much less the development settlement, illegal and fraudulent to the Legal Officer as well as authorized officer of the Petitioner Corporation. Petitioner Corporation humbly submits that delay has taken place in filing present writ petition only because of unawareness about the fact of the order passed by ESI Court in ESI Application No. 23 of 2003 on the basis of fraudulent and illegal settlement which was enforced on Petitioner in connivance of the concerned Insurance Inspector. Petitioner Corporation craves leave to refer and rely upon the records of trial court i.e. Entire record of case no. 23/02 and will produce at the time of hearing of the present petition.“ 5. Bare perusal of the aforesaid para 4(1) of the petition goes to suggest that the ESI Corporation came to know recently in the month of June, 2007 whereas the record suggests something else against the Corporation. Why the Corporation is making such efforts with the help of the lawyer? Whether the Lawyer wants to become smart or whether the Corporation wants to become smart with the Court? SCA/30323/2007 6/46 JUDGMENT Knowing fully well that the respondent has addressed a letter dated 25th November, 2006 received by the Corporation on 28th November, 2006 and xerox copy of letter as well as acknowledgment thereof are on record and yet, petitioner corporation is making such averments in para 4(1) of the petition. No rejoinder to the reply filed by the respondent has been filed by the Petitioner Corporation in this regard denying receipt of letter dated 25th Nov. 2006 on 28th November, 2006 and, therefore, according to my opinion, averments made in para 4(1) are contrary to the record and, therefore, same cannot be believed by this Court. 6. Lok Adalat has passed order where the parties have agreed to the terms of settlement and relying upon this settlement signed by both the learned advocates, lok adalat has passed order dated 2nd October, 2006. Whether the Insurance Inspector is authorized or not; whether he is empowered or not; whether rules permit or not and only some of the authorities alone have been described as authorized officer or not, how the respondent has any concern with it when the deputed Insurance Inspector has signed the consent terms before the lok adalat in the proceedings wherein advocate was also engaged by the corporation. Why the Corporation has not taken care at the time of sending Insurance Inspector in Lok Adalat by giving him specific and clear direction not to settle the dispute because you have no power under the Act and you are not authorized officer. It is not SCA/30323/2007 7/46 JUDGMENT the case of the corporation that at the time when the insurance inspector was sent to the Lok Adalat, at that time, he was specifically asked in writing that he has not to sign any settlement, he has not to agree with any settlement with any party, he has merely remain present and assist the lawyer without taking any initiative for any settlement or compromise. No such thing was given to the Insurance Inspector in writing by the petitioner corporation. Everything was presumed by the lawyer of the petitioner while drafting the petition that the respondent must know that who is authorized officer under the provisions of the ESI Act and who has been given power to sign the settlement. These are the facts naturally not necessary to be known by the respondent. Insurance Inspector on behalf of the ESI Corporation on each and every occasion was remaining present in the proceedings and also signed the settlement on behalf of the corporation. How the respondent could create any doubt against such an officer of the corporation who was appearing for the corporation on each and every occasion and who was assisting the lawyer on each and every occasion before the ESI Court. Lapse has been committed by the corporation by not taking proper care and the insurance inspector has signed the settlement on behalf of the corporation and now, the corporation is making hue and cry for hiding the lapse committed by it through its highest officer and, therefore, present petition has been filed before this court as if the Lok Adalat has no meaning. Submissions made by SCA/30323/2007 8/46 JUDGMENT the learned Advocate Mr. Vasavada are required to be considered. It has been submitted by him that the respondent is liable to make the payment as per the recovery certificate issued by the authorized officer under section 45C to 45I and there is no provision available for settlement or bargaining under the Act and, therefore, such settlement before the Lok Adalat is bad and illegal and if any such settlement is arrived at before the Lok Adalat, then, person who has signed it was having no authority in law and, therefore, such settlement has to be considered as illegal and contrary to the provisions of the ESI Act. He relied upon the decision of this Court in the matter of Dineshkumar G. Chavda and others versus State of Gujarat and others reported in 2007 III CLR 533 wherein he highlighted Head Note in Yellow Colour. Same is, therefore, reproduced as under: “The appointment of the petitioners are contrary to the provisions of Sec. 50 of the Gujarat Municipalities Act.” 7. How this judgment is helpful to the petitioner, that has not been canvassed by the learned Advocate Mr. Vasavada before this Court. Lawyer practicing before the High Court is throwing judgment before the Court as if it is the burden of the Court and not the burden of the advocate citing it. It appears that he has merely cited the judgment without ascertaining as to whether it is applicable to the facts of the present case or not. He is citing the decisions with SCA/30323/2007 9/46 JUDGMENT an impression that the court will consider it and will decide whether it is relevant in the facts or not and therefore, without taking any pains in that regard, he is citing the decision before this court. No pain has been taken by him to verify as to how this judgment is relevant to the issue which is pending before this court and how it is binding to this court. No pain whatsoever has been taken by the advocate before citing the decision and mechanically cited the decision as if that judgment is binding to this court without disclosing the facts and ratio laid down in that judgment. Apart from that, this court has accepted the copy of the judgment where yellow marking has been made by him but this judgment is going to show about powers of appointment. It has been held therein that the selection committee can only recommend names of selected candidates. Power of appointment is vested with the Chief Officer and not with the President of Nagarpalika. Decision laying down such law regarding powers of appointment in Nagarpalika has been cited by learned lawyer in a proceedings while challenging order passed by the Lok Adalat based on the consent terms arrived at between the parties. Therefore, same is not applicable to the facts of the present case because in this case, insurance inspector was deputed by the Corporation as an authorized officer to assist the lawyer appearing before the ESI Court and to remain present before the court with advocate on each and every occasion in pending matter. It is, therefore, clear that the insurance inspector appearing before the ESI Court to SCA/30323/2007 10/46 JUDGMENT assist the lawyer was not unauthorized officer but he was authorized officer on the basis of his deputation by the petitioner corporation as admitted by the petitioner as ref erred to above. Therefore, it is not open for the petitioner to raise the contention that he was not authorized officer. It is also required to be noted as to whether the corporation has taken any steps against the lawyer who was engaged by the corporation or not. Corporation is required to answer as to why he allowed for such settlement of such dispute which is contrary to the provisions of law. Lawyer committed lapse. Insurance Inspector committed lapse and based upon the consent of the parties, Lok Adalat passed order in terms of settlement which the petitioner is challenging in this petition as if the High Court is an appellate authority. Such an approach on the part of the corporation in acting upon advise from the lawyer to challenge it before the High Court also accepted blindly without considering legal aspects of the matter is required to be deprecated. According to my opinion, settlement was signed by the Insurance Inspector in presence of the lawyer and accordingly Lok Adalat has recorded the settlement. At this stage, facts stated in the reply filed by the respondent are required to be considered. Therefore, facts stated in para 3 of the reply are reproduced as under: “3.1 The present respondent is original applicant before the learned ESI Court. SCA/30323/2007 11/46 JUDGMENT Application came to be filed under Section 71(1)(g) and section 45(C) to 45(I) of the ESI Act. It was the case of the respondent before the learned ESI Court that the petitioner Corporation has claimed contribution on all the payments made by the applicant establishment to the agencies, contractor, security services, building materials, maintenance charges, payments made to excluded employees, etc., and an amount of such claim on which the contribution was asked, come to Rs. 1,14,548/-. It is required to be noted that for the year 1998-99 and 1999-00, claim was made from the respondent. It is submitted that the claim raised by the petitioner Corporation was absolutely illegal. The applicant had produced several documents on record to show that there was contract given to M/s. Riddhi Engineering and Fabrication alongwith all materials and even the bills of the said contractors were produced below Exh. 15/1 to 15/4. The said work was done through contractor's employees and not from the employees of the respondent. It was the claim of the respondent that for the purpose of repairing of the building of the respondent, the said contract was given and the said work was not having any nexus with the work of the respondent and, therefore, there arises no question of payment on the said amount. Similarly, the respondent produced Notification of the Central Government inter-alia containing that when the work of loading and unloading has SCA/30323/2007 12/46 JUDGMENT been done by the contractor truck operator themselves, there arises no question of deducting the contribution on the said amount. The bills were produced of Honest Labour Contractor below Exh 15 list to show that for the loading and unloading work, payments were made and the work was done by the Honest Labour Contractor for which company shall not have to pay any contribution. The amount of contribution demanded on the security charges could not have been legally claimed by the petitioner Corporation since the security guards were deployed by the security agency. The security guards were not the employee of the respondent. Even the said security agencies were covered under the ESI Act and they deposit the amount of contribution directly to the ESI and, therefore, the respondent can not be asked to pay amount of contribution. Even documents were produced on record of the ESI Court to prove that Docsun Security Services have deposited an amount of contribution for the period of 1/10/1998 to 31/3/2000. Similarly, one another Mangal Security Services had also deposited an amount of ESI contribution. 3.2 It is submitted that demands, which were raised by the Corporation was not legally tenable and improper and detail explanation was given before the learned ESI Court by the respondent. A copy of written arguments filed before the learned ESI Court is annexed SCA/30323/2007 13/46 JUDGMENT herewith and marked as ANNEXURE-R1 with this reply for the kind perusal and ready reference of this Honourable Court. It is submitted that the petitioner has in detail narrated its case before the learned ESI Court by submitting written arguments on 21/6/2005. Instead of repeating the contents thereof, petitioner craves liberty to refer to and rely upon the same at the time of hearing of this petition. The said written arguments may kindly be considered as part and parcel of this reply. 3.3 It is submitted that realizing the case of the respondent, the petitioner agreed to place the case before the Lok Adalat, which has been constituted as per the Legal Services Authorities Act. 3.4 It is submitted that before the Lok Adalat settlement has been arrived at and it has been recorded also before the Lok Adalat. It is submitted that certain amount was agreed to be paid by the respondent to the petitioner and the said amount was written down in separate schedule and was agreed to be paid by the respondent within 15 days from the date of copy of order. It is submitted that whether the Inspector, who remained present before the Lok Adalat was having any authority or not is of no consequences so far as the respondent is concerned and the respondent has been made to believe that the ESI Corporation has been represented by the SCA/30323/2007 14/46 JUDGMENT said Inspector. In all earlier Court proceedings, the said Inspector had appeared on behalf of the petitioner Corporation. It is submitted that the settlement took place before the Lok Adalat on 4/10/2006 and accordingly, the order has been passed by the learned ESI Court on the basis of the said settlement on 13/10/2006. It is at this stage required to pay certain amount of contribution, so as to resolve the disputes, which was pending since long and looking to the litigation cost also, the respondent decided to make the payment of certain contribution. The said amount was not legal liability of the respondent. However, the respondent has entered into the settlement and accordingly, decided to make the contribution. It is submitted that as per the said order, the respondent was to deposit Rs. 54,184/- towards contribution. However, at the time of grant of stay as per the order of the learned ESI Court, the respondent had already deposited Rs. 55,000/- vide challan dated 27/2/2002 and, therefore, the respondent requested to the petitioner Corporation to refund an amount of Rs. 816/- by its letter dated 25/11/2006. A copy of said letter dated 25/11/2006 alongwith acknowledgment sleep is annexed herewith and marked as ANNEXURE-R2 with this reply. It is submitted that till the date the petitioner Corporation has failed to comply with the order of the learned ESI Court and has not refunded the amount of Rs. 816/-. SCA/30323/2007 15/46 JUDGMENT 3.5 Now the petitioner has approached this Honourable Court on the ground that the learned Inspector, who has entered into the settlement, was not authorized officer of the petitioner Corporation. It is submitted that as per the proceedings of Section 21 and 22 of the Legal Services Authorities Act, award made by the Lok Adalat will become final and cannot be challenged before any Court. It is absolutely incorrect that the settlement was illegal or fraudulent. The petitioner Corporation has deliberately not pointed as to what was the investigation, which they have alleged to have been carried out after the order and the conclusion of the said investigation. This Hon'ble Court may be pleased to direct the petitioner Corporation to place on record the investigation report, which the Corporation has stated to have been carried out as per the averments made in para 4 of the petition. 3.6 The petitioner has made false statement to the effect that the petitioner Corporation has come to know about the settlement only in June, 2007. It is submitted that the Regional Director was already aware with regard to the order passed on 13/10/2006 by ESI Court, which was forwarded by the respondent alongwith its request letter dated 25/11/2006. Thus, the petitioner Corporation has gone to the extent of making false averments before this Hon'ble Court. It is SCA/30323/2007 16/46 JUDGMENT most respectfully and humbly prayed that for making false averments on oath before this Hon'ble Court, deponent of this petition may kindly be appropriately deal with. It is submitted that because of extraneous consideration, this petition has been filed so as to harass the respondent company. It has not been appreciated by the petitioner Corporation that though there were several disputes with regard to the contribution to be paid by the respondent and legally the respondent company was not liable to make certain payments, as a good gesture so as to avoid undue litigation, settlement was reached by the respondent and even after the settlement in Lok Adalat, harassment has been continued and now this petition has been filed by the petitioner Corporation. It is submitted that this petition is nothing but an abuse of process law. By making false averment the petitioner has explained delay but only on the ground that the false explanation has been given by the petitioner, this petition may kindly be rejected. 3.7 It is submitted that even during the proceedings under section 45(C) to 45(I) of the Act, absolutely illegal order was passed and that too without hearing the respondent. The order was passed in violation of principal of natural justice. It is submitted that except alleging that there was fraudulent settlement, nothing has been placed on record by the petitioner SCA/30323/2007 17/46 JUDGMENT Corporation with regard to substantiate its claim of fraudulent settlement. The respondent would obviously not concern as to whether the person signing the settlement is authorized officer of the Corporation or not? In fact, when all throughout the said officer has taken participation in the proceedings before the learned ESI Court, there were all reasons for the respondent to believe that the said person is authorized person and therefore, the settlement took place before the Lok Adalat. The grounds urged by the petitioner are not legally tenable. The petitioner has not approached either Lok Adalat or before the learned ESI Court with their alleged case of fraud. Straightway petition before this Hon'ble Court under Art 226 of the Constitution of India would not be maintainable in eye of law inasmuch as the factual aspect