THE HON'BLE SRI JUSTICE R.SUBHASH REDDY WRIT PETITION No.1309 of 2004 Date:18.11.2009 Between: M/s. Sneha Motors Pvt. Limited. ..... PETITIONER AND The Recovery Officer and another. .....RESPONDENTS THE HON'BLE SRI JUSTICE R.SUBHASH REDDY WRIT PETITION No.1309 of 2004 ORDER: In this writ petition, the petitioner questions the recovery notice issued by the first respondent - Recovery Officer, Employees State Insurance Corporation, Hyderabad, dated 28.10.2003, vide proceedings No.52.Q/20586/38202/2003. The petitioner establishment was covered under the provisions of the Employees' State Insurance Act, 1948 (for short 'ESI Act'). The Inspector of the respondent Corporation visited the petitioner establishment on 13.02.2002 for verification of the records to examine the applicability of the scheme to it. During the said verification, it was found that the petitioner establishment had engaged fifteen persons and it was also engaged in the business of sales and repairing of vehicles of TVS and Suzuki brands with the aid of power. By recording a finding that the petitioner establishment satisfied the requirements of Section 2(12) of ESI Act, the respondent Corporation issued orders provisionally covering the establishment with effect from 01.02.2002, by sending a communication to that effect, vide letter dated 07.03.2002. A further inspection was held on 29.08.2002 for evaluating the final date of coverage as well as regular period of compliance. On the ground that the petitioner establishment engaged more than ten persons from 01.03.1999, the authorized officer certified for recovery of contributions under Section 45C to 45I of ESI Act and accordingly proceedings were issued on 15.10.2003. By the aforesaid proceedings, the authorized officer directed the recovery officer to recover an amount of Rs.1,54,440/- from the petitioner establishment towards arrears of contribution for the period commencing from 01.04.1999 to 31.03.2003. It is the case of the petitioner establishment that the certification dated 15.10.2003 and the recovery notice dated 28.10.2003 are contrary to the provisions of ESI Act and the regulations made thereunder, since there is no order assessing the liability for the period from 01.04.1999 to 31.03.2003, and therefore, the respondent Corporation cannot recover contribution amount pursuant to the certification under Section 45C to 45I of ESI Act. The Deputy Director of the respondent Corporation filed a counter-affidavit denying the various allegations made by the petitioner establishment. It is stated that the petitioner establishment was inspected by the Inspector of the respondent Corporation on 29.08.2002 for evaluating the final date of coverage as well as regular period of compliance, and that the petitioner establishment paid contributions from 2/2002 to 6/2002, but from the verification of the records, it was found that the petitioner establishment engaged more than 10 persons from 01.03.1999. The intimation of the final date of coverage was issued to the petitioner establishment on 31.01.2002 demanding the petitioner establishment to pay the contributions for the period from 01.03.1999 to 31.03.2001. It is further stated that though opportunity was given to the petitioner establishment by issuing notice in Form C-18, as the petitioner establishment did not respond to the same, the further demand was issued under Form C-19, and as such it cannot be said that there was no opportunity. Heard Sri Ch. Ravinder, learned counsel for the petitioner establishment and Sri B.G. Ravindra Reddy, learned standing counsel for the respondent Corporation. It is stated by the learned counsel for the petitioner establishment that there was no determination of the liability under Section 45A of ESI Act to recover the contribution for the period from 01.03.1999 to 31.03.2001, and as such, simply based on certification dated 15.10.2003, no recovery can be made, pursuant to the impugned notice dated 28.10.2003. The learned counsel placed reliance on the judgment of the Hon’ble Supreme Court in ESI Corpn. vs. C.C. Santhakumar[1]. On the other hand, it is submitted by the learned standing counsel for the respondent Corporation that when the records produced revealed that the petitioner establishment had engaged more than ten persons from 01.04.1999, the impugned notice demanding recovery is made. It was further submitted that there was no need to cause a separate order under Section 45A of ESI Act. In Santhakumar (supra), the Supreme Court, while considering the various provisions of ESI Act, held Section 45A of ESI Act provides for determination of contributions in certain cases. It was further held that when records were not produced by the establishment before the Corporation and when there was no cooperation, the Corporation has got the power to make assessment and determine the amount under Section 45A of ESI Act and recover the said amount as arrears of land revenue under Section 45B of ESI Act. It was also held that where the records are produced, the assessment has to be made under Section 75(2)(a) of ESI Act. As regards the case on hand, in the counter-affidavit filed by the respondent Corporation, there is no reference to any proceedings determining the liability of contributions for the period covering from 01.04.1999 to 31.03.2001. Further, it is also the case of the petitioner establishment that no opportunity was given to it. As there is no indication of passing of any order determining the liability in the counter-affidavit filed by the respondent Corporation, I deem it appropriate to give an opportunity to the petitioner establishment to raise such objections before recoveries are effected. For the aforesaid reasons, I set aside the impugned notice dated 28.10.2003 and the petitioner establishment is permitted to file objections by way of representation before the authorized officer of the respondent Corporation within a period of six weeks from today. On filing of such representation, the authorized officer shall consider the same and pass appropriate orders. It is made clear that if no representation is filed within the stipulated period, it is open to the respondent Corporation to take further steps, in accordance with law. It is represented that pursuant to the interim order passed by this Court on 23.01.2004 in W.P.M.P.No.1700 of 2004, the petitioner establishment already deposited an amount of Rs.77,220/-. In that view of the matter, it is made clear that the said deposit, if any, will be subject to the outcome of the orders to be passed by the authorized officer. It is further directed that no coercive steps shall be taken to recover the balance amount, till appropriate orders are passed by the authorized officer authority. The Writ Petition is allowed to the extent indicated above. No order as to costs. _____________________ R. SUBHASH REDDY, J 18th November, 2009 Note: Issue CC in one week. (B/o) GHN [1] (2007)1 SCC 584