IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD MONDAY, THE FOURTEENTH DAY OF MARCH TWO THOUSAND AND ELEVEN PRESENT THE HON'BLE SRI JUSTICE K.C.BHANU CIVIL MISCELLANEOUS APPEAL NO.1549 OF 2002 Between : Employees State Insurance Corporation Rep.by its Regional Director and another. ...APPELLANTS A N D N.K.Khader. …RESPONDENT THE HON'BLE SRI JUSTICE K.C. BHANU CIVIL MISCELLANEOUS APPEAL NO.1549 OF 2002 JUDGMENT: This Civil Miscellaneous Appeal, under Section 82(2) of the Employees State Insurance Act, 1948 (for short, ‘the Act’), is directed against the order, dated, 19.03.2001 in O.P.No.77 of 1994 on the file of the Principal Senior Civil Judge, Rajahmundry, whereunder and whereby, the Original Petition, filed under Section 73 read with Section 77 of the Act to declare that the respondent herein / petitioner hotel is not at all governed by the provisions of the Act, was allowed. 2. The appellants are respondents and the respondent is the petitioner in O.P.No.77 of 1994. For the sake of convenience, the parties are referred to as they are arrayed in the O.P. before the Court below. 3. The brief facts are that the petitioner has been running a hotel under the name and style of ‘Hotel Swagath’ at Rajahmunry. It is a proprietary concern. The petitioner has not engaged more than five employees in the said hotel. The petitioner hotel does not come under the provisions of the Act. In the first week of November, 1993, respondent No.2 visited the premises of the petitioner hotel on the ground that the petitioner hotel was governed by the provisions of the Act. The petitioner being an illiterate and innocent believed that the hotel covered by the provisions of the Act and allowed respondent No.2 in the premises. Later he came to know that the hotel is not covered under the provisions of the Act. One N.Mohana Krishna, who was accountant of the hotel stealthily, removed all the books in order to extract money from the petitioner. The said Mohan Krishna, influenced respondent No.2 and fabricated the documents showing that the hotel was registered with the respondents. The petitioner hotel never registered under the Act. The respondents issued notice, dated 22/27- 6-1994 to the petitioner hotel to produce the relevant records as required by them. Therefore, the petitioner filed the above O.P. 4. The respondents filed counter affidavit in the said O.P. While denying various allegations, it was stated that the petitioner employed more than five employees in the said hotel. Due to the ill-health of the petitioner, his son was looking after the business. Respondent No.2 visited the hotel of the petitioner on the ground that the hotel is governed by the provisions of the Act and therefore, respondent No.2 is entitled to demand to have inspection of the petitioner’s premises and records. It was also denied that Sri N. Mohan Krishna, who was writing the accounts of the petitioner’s business has removed all the account books etc., relating to the petitioner’s business and got influenced the 2nd respondent and brought into existence the false and fabricated records showing that the petitioner’s establishment got registered with the respondents. It was also stated that during the course of inspection, the petitioner’s establishment has fulfilled the requirements under the Act for employing more than 10 persons. It was also stated that during the course of inspection, the son of the petitioner present in the hotel and signed in the visit note, dated 20.7.1993. It was also stated that the respondents have got right and power under the Act to verify whether the petitioner’s unit falls under the provisions of the Act and the petitioner is bound to produce the relevant records during the inspection. Therefore, the respondents sought to dismiss the petition. 5. On the basis of above pleadings, the following points have been framed by the trial Court for trial: 1. Whether the provisions of the E.S.I.Act are applicable to the petitioner’s establishment? 2. Whether the petitioner is entitled to seek the relief as prayed for in the present petition? 3. To what relief? 6. During trial, the petitioner himself was examined as P.W.1 and got marked Exs.A.1 to A.5. On behalf of the respondents R.W.1 was examined and Exs.B.1 to B.7 were marked. 7. The trial Court after considering the evidence on record came to the conclusion that the petitioner has not employed more than ten persons, therefore, the petitioner establishment is not covered under the provisions of the Act and accordingly, allowed the petition. Challenging the same, the respondents have filed the present Civil Miscellaneous Appeal. 8. Learned counsel for the appellants/respondents contended that Ex.B3-preliminary inspection report, dated 20.07.1993, would clearly go to show that the Inspector found ten persons working in the hotel and, therefore, it would come under the provisions of the Act and consequently the petitioner is under obligation to pay contribution under the Act; that on flimsy grounds, the trial Court accepted the case of the petitioner; that it is for the petitioner who sought for declaration that the establishment was not covered under the provisions of the Act; that the burden is on the petitioner to show that he was having all relevant books for maintenance of the hotel and purposefully those books have not been filed into the Court; that an adverse inference can be drawn for non production of the documents; that the petitioner failed to establish the case and hence, he prays to set aside the impugned order. 9. In spite of giving opportunity, none appears for the respondent herein. 10. I have perused the impugned order and also the material available on record. 11. Now the point that arises for consideration is whether the judgment of the trial Court is proper correct and legal. 12. The case of the petitioner is that during the course of inspection of the premises on 19.03.1993 and on 20.07.1993, the inspector found ten employees working in the establishment, thereupon a show cause notice was issued to the petitioner calling upon him as to why he should not be prosecuted. Aggrieved by the same, the petitioner filed the Original Petition seeking declaration that the petitioner’s hotel is not coverable under the provisions of the Act. 13. On the other hand, the respondents resisted the same stating that when the inspector visited the hotel, he found ten employees working in the hotel and that at the time of inspection all records were not produced by the owner of the establishment, therefore, it prayed to dismiss the same. 14. Admittedly, it is for the petitioner to establish that he has not employed more than ten persons at the time of inspection. If ten persons were working at the time of preliminary inspection by the inspector, then the establishment of the petitioner would cover under the Act, therefore, being the employer, the petitioner has to pay the contribution under the Act. P.W.1 is the owner of the establishment. He admitted that he was not present at the time when the inspector visited the establishment in the year 1993 as he went to Kerala. In his absence, his son was looking after the hotel business. Except stating that he has not employed more than five persons, the petitioner has not produced any relevant document to show about the persons, who are actually working as on the date of inspection. The documents i.e., daily register, attendance register and other registers, which are necessary for running an establishment, are exclusively in the custody of the petitioner. Admittedly, those documents have not been produced before the inspector. No explanation is forthcoming on behalf of son of the petitioner. He is the best person to speak about the aspects that were happened in the year 1993. But the petitioner’s son was not examined. 15. According to the petitioner, one Mohan Krishna, who was the accountant, took away the wage register, ledgers and all accounts and therefore, lodged a complaint with the police. Though the said complaint was marked, it was not shown that it was given to the police. It does not contain seal or stamp of concerned police station. He admitted that the records were not produced by his son at the time of inspection. Therefore, the evidence of P.W.1, who was not present at the time of preliminary inspection, cannot be taken into consideration for the purpose of deciding the issue, because admittedly he was not present in the year 1993 at the establishment as he went to Kerala and at that point of time his son is looking after the affairs of the establishment. The inspection of the premises in question on 20.07.2003 is not in dispute. The evidence of RW.1 would clearly go to show that he inspected the establishment and found ten persons employed. He prepared Ex.B2 visit note, in which the petitioner’s son has signed as owner of the hotel. In Ex.B.6 it is clearly mentioned that ten persons were working in the said hotel. Basing on Ex.B.6 enquiry report, the Corporation has issued the proceedings. Nothing has been elicited to discredit the testimony of R.W.1. 16. From the above evidence, it is clear that the petitioner failed to establish that he has engaged less than ten employees as on the date of preliminary inspection. Having come to the Court, it is for him to establish the said fact. But, he failed to examine his son and produce the relevant documents before the trial Court to show that he engaged less than ten employees. Therefore, the impugned order is not based on proper appreciation of evidence on record. The trial Court committed a great mistake in not considering the evidence on record in a proper perspective. It is for the petitioner, who has come to the Court saying that the hotel is not covered by the Act, to establish the said fact. When such is the case, the burden is on him to establish that he employed less than ten persons and that the provisions of the Act have no application. 17. Under these circumstances, instead of appreciating the evidence of petitioner, the learned Judge went on appreciating the evidence of the respondents and basing on some discrepancies, the case of the petitioner has been accepted. Therefore, the impugned order is liable to be set aside as it is not based on proper appreciation of evidence on record. 18. Accordingly, the Civil Miscellaneous Appeal is allowed setting aside the order, dated, 19.03.2001 in O.P.No.77 of 1994 on the file of the Principal Senior Civil Judge, Rajahmundry. There shall be no order as to costs. _______________ K.C.BHANU, J MARCH 14, 2011. YVL