IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.PADMANABHAN NAIR MONDAY, THE 10TH MARCH 2008 / 20TH PHALGUNA 1929 Ins.APP.No. 63 of 2004(A) ------------------------- IC.86/2001 of EMPLOYEES INSURANCE COURT, ALAPPUZHA .................... APPELLANT/APPLICANT: ------------------------------------- PLANTS (INDIA) MACHINERIES (P) LTD., REP. BY ITS DIRECTOR, JOSEPH PAUL MANAVALAN, INDUSTRIAL DEVELOPMENT PLOT NO.20, ANGAMALY, ERNAKULAM DT. 683 573. BY ADV. SRI.P.RAMAKRISHNAN SRI.C.ANIL KUMAR RESPONDENT/OPPOSITE PARTY: ------------- EMPLOYEES STATE INSURANCE CORPORATION, REP. BY ITS REGIONAL DIRECTOR, ROUND NORTH, THRISSUR -20. BY ADV. SRI.T.V.AJAYAKUMAR THIS INSURANCE APPEALS HAVING BEEN FINALLY HEARD ON 10/03/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: K. PADMANABHAN NAIR ,J. ------------------------------------------------- Ins.Appeal No.63 of 2004 ------------------------------------------------- Dated, this the 10th day of March, 2008 JUDGMENT Plants (India) Machineries (P) Ltd who is the petitioner in I.C.No.86/2001 on the file of the Employees' Insurance Court, Alappuzha is the appellant in this appeal. The respondent ESI Corporation demanded contribution from 6.11.1996 till 2000 on the ground that appellant's establishment is a continuation of M/s.Priya Industries who were running a factory in the very same premises. Appellant disputed its liability. The respondent insisted for payment of contribution. The appellant filed the petition under Sections 75 and 77 of the Employees State Insurance Act before the Employees' Insurance Court, Alappuzha for a declaration that it is not liable to pay contribution. The averments in the petition are as follows: The appellant approached the District Industries Center, Ernakulam for allotment of a plot. District Industries Center allotted a plot having an area of 56 cents with a vacant building comprised in Sy.No.132/17A of Kothakulangara South Village, Angamali. That plot was originally allotted to one Geetha Balakrishnan who was running a business unit by name M/s.Priya Industries. That establishment was engaged in the manufacture of control cubicles and M.S. fabricated items. On account of heavy loss that establishment was closed down in the year 1993. Subsequently the land and building were surrendered by that unit to District Industries Center. The said land Ins.Appeal No.63/2004 2 and building were allotted to the appellant and he had no connection what so ever with the former establishment and that appellant's establishment is not a continuation of the former establishment and hence it is not liable to pay any contribution from 7/1997 to 9/2000. The respondent Corporation filed a written statement contending that the appellant took over M/s.Priya Industries and started work with effect from 1.1.1996. It was averred that in addition to the employees directly appointed the appellant availed the service of employees of one C.V.Joseph who is a sub-contractor. The muster roll made available by him shows that more than ten employees were working under him in the establishment. It was also averred that when the respondent contacted M/s.Priya Industries they sent a reply stating that unit was taken over by the appellant. The appellant was allotted the same plot and building and it was the continuation of the establishment run in the name and style M/s.Priya Industries. The muster roll produced by the sub-contractor C.V. Joseph shows that there were nine employees during February and March, 1996 and 11 employees in April, 1996. So, at any rate, with effect from 1.4.1996 the establishment is liable to be covered. Insurance Court considered the evidence on record and found that establishment of the appellant is not a continuation of M/s.Priya Industries. But it was held that there were materials to show that appellant was engaging ten or more employees from 1.4.1996 and hence liable to pay contribution. It was also held that the total number of employees working under the appellant as well as C.V.Joseph put Ins.Appeal No.63/2004 3 together exceeded the minimum limit from 1.4.1996. Challenging that order this appeal is filed. 2. In Ext.P11 demand the respondent had claimed contribution from 7/1997 to 9/2000. It is specifically stated that contribution from 7/1997 to 9/2000 was not paid by the previous employer and the same should be paid. Ext.P11 contains the split up details of contribution payable for each and every month. In Ext.P11 the respondent claimed contribution only from 7/1997 but the Insurance Court had directed the ESI Corporation to determine the contribution due from the appellant with effect from 1.4.1996. In Ext.P13 there is a statement to the effect that the Area Inspector of the ESI Corporation reported that on 1.4.1996 there were 11 employees working for wages namely Thankappan, Krishnan, Ravi, Joy B., Joy A.O., Thomas, Haris, Venu, Andrews, Pareed and Girish. But it is not discernible from the records whether the respondent Corporation had made any demand for contribution from 1.4.1996 onwards. 3. The respondent Corporation proceeded on the assumption that the appellant establishment is a continuation of erstwhile M/s.Priya Industries. But the evidence on record shows that M./s.Priya Industries was closed as early as in 1993 and the land and building were surrendered to District Industries Center and the same was allotted to the appellant. Ext.P3 is the mahazar of handing over of land and building. It shows that an area of 56.40 cents of land comprised in Sy.No.132/17 A Part of Kothakulangara South Village along with a building, Ins.Appeal No.63/2004 4 well and compound wall on four sides with gate , two coconut trees and three mango trees which stood in the plot was handed over to the appellant. There is nothing in Ext.P3 to show that machineries or the employees of the erstwhile employer were handedover to the appellant. The appellant is manufacturing hydraulic power pack units, hydraulic hot presses, heat exchangers, mini boils, pressure vessels, etc. and not the articles manufactured by M/s.Priya Industries. So the materials on record clearly established that it was a part of the industrial estate which was given on lease to M/s.Priya Industries which was closed in the year 1993 and the land and building were taken over by the District Industries Center, was allotted to the appellant to start an entirely different unit.By no stretch of imagination the establishment started by the appellant can be considered as a continuation of M/s.Priya Industries. The finding of the Insurance Court that the appellant is a fresh establishment and not a continuation of the earlier establishment is perfectly correct. 4. The next question arising for consideration is whether the finding of the E.I. Court that the appellant had employed more than 11 workers during April, 1996 and hence it is coverable from 1.4.1996 onwards is correct or not. In paragraph 6 of the order the E.I.Court had noted that some of the workers working in the establishment of the appellant were working under a contractor. Employees' Insurance Court itself found that though 15 employees were working under the contractor as per Ext.P15 series muster roll, it is not clear whether all Ins.Appeal No.63/2004 5 of them were working in the premises of the appellant's factory. 5. Learned counsel for the appellant has argued that the contractor was examined as PW2. He gave evidence to the effect that only a few of employees were deputed to the factory of the appellant and others were working for some other factory. He also admitted that in the muster roll he had noted the name of employees who were deputed to the establishment of appellant separately. Though the respondent had contended that he produced the inspection report in the court below, no report was produced in the court below. Ext.D1 is a letter written by the Area Inspector to the Regional Director of ESI Corporation. Of course, in Ext.D1 letter there is reference regarding the total number of employees working. But, as rightly held by the court below it is not clear as to whether all these workers of the contractor were working in the establishment of the appellant. The respondent claimed contribution on the assumption that the establishment of the appellant was a continuation of the earlier establishment. Crucial question arising for consideration in this case is whether there is any material to show that 10 or more employees were working on any particular day from 1.4.1996 till 9/2000. That matter was not properly considered and no positive finding entered. So I am of the view that the matter requires reconsideration. For that purpose the case has to go back. In the result, appeal is allowed. Judgment passed by the Employees' Insurance Court, Alappuzha in I.C.No.86/2001 is hereby set aside. The case is Ins.Appeal No.63/2004 6 remanded for considering the total number of employees engaged in the establishment of the appellant within the disputed period, i.e.m from 1.4.1996 to 9/2000. It is open to both parties to adduce evidence or amend the pleadings. Parties are directed to appear before the court below on 28.3.2008. Learned standing counsel for respondent ESI Corporation submits that in Ext.P13 there is a specific reference that on 1.4.1996 there were 11 employees and hence the respondent is entitled to claim compensation from 1.4.1996. That is also a matter to be considered by the court below. K. PADMANABHAN NAIR, JUDGE. cks