PETITIONER:
EMPLOYEES STATE INSURANCE CORPORATION,BHOPAL
Vs.
RESPONDENT:
CENTRAL PRESS & ANR.
DATE OF JUDGMENT21/02/1977
BENCH:
BEG, M. HAMEEDULLAH (CJ)
GUPTA, A.C.
KAILASAM, P.S.
CITATION:
1977 AIR 1351 1977 SCR (3) 35
1977 SCC (2) 581
ACT
Employees State Insurance Act (Act 34 of 1948),
1948--Sections 45A, 75(1)(c), and 75(2) and 99A--Scope of
HEADNOTE
Section 75(1)(c) of the Employees State Insurance Act
1948 makes it obligatory on the Insurance Court to decide
"the rate of contribution payable by a principal employer in
respect of any employees" if such question or dispute
arises. Section 75(2) also provides that "the claim for the
recovery of contributions from the principal employer" shall
be decided by it.
The appellant-Corporation filed five applications under s.
75 of the Employees State Insurance Act before the Insurance
Court, Bhopal (Civil Judge First Class) for recovery from
the respondent of employees’ contributions payable under
s. 39 of the Act for different periods from 27-9-1959
onwards, working out the contribution payable on an
"ad hoc basis" by taking the wages at Rs. 100/- per
employee per month as indicated by the Central Govern-
ment by their notification SRO 224 dated 25-1-1957
issued in exercise of their powers under s. 99A of the
Act.The Insurance Court disallowed the claims on the ground
that the claims have been made on an "ad hoc basis". The
first appeals against that order were allowed by a single
Judge of the Madhya Pradesh High Court (Jabalpur Bench)
relying on s. 99A of the Act and on a further notification
dated 16-1-1968 issued by the Central Government under s.
99A. The Letters Patent Appeals filed by the respondent
were allowed by the Division Bench which held: (1) The power
of the Central Government of issuing directions is not
absolute and The directions cannot be inconsistent with the
Act (22). When under section 45A of the Act a special
procedure is prescribed regarding the method of calculation
of the employees’ contribution, no notification or order can
be issued by the Central Government prescribing any other
method on ad hoc basis which obviously becomes inconsistent
with the other provisions of the Act, namely, section 45A.
Remanding the matter to the Insurance Court, the Court,
HELD:
(1) The nature of the proceedings under the Employees
State, Insurance Act 1948 was not properly understood either
by the Employees Insurance Court or by the High Court when
the matter was taken before these authorities. [37D]
(2) The scheme of the Act is that the. Corporation itself
should, in a case where there is omission on the part of the
employer to maintain records in accordance with s. 44 of the
Act, determine the amount of contribution on the strength of
such information as it may collect, make a demand and upon
refusal come up before the Insurance Court under s. 75 of
the Act. The Court should give the Corporation a direction
to perform its duty where it considers that this should be
performed by the Corporation. It cannot decline to perform
its ,own duty because the Corporation has failed to dis-
charge its function.The Insurance Court is under a duty to
determine the basis of calculation itself.[36F-H]
(3) The notification of the Central Government under s. 99A
of the Act was intended to overcome difficulties in deter-
mining the wages of the employees.This provision cannot be
availed of for the purpose of supplying a defect or overcom-
ing a difficulty in adjudication of a dispute for which the
Employees Insurance Court is given ample powers under s.
75(1)(c) and 75(2). [37A-B]
36
JUDGMENT
CIVIL APPELLATE JURISDICTION Civil Appeals Nos.
325-329 1977.
(Appeals by special leave from the Judgment and Order
dated 1.12.1971 cf-the Madhya Pradesh High Court in
L.P.ANos. 13--17 of 1969).
L.N. Sinha, Sol. Genl. and Girish Chandra for the
appellant.
J. P. Gopal and Shreepal Singh, for the respondent.
The Judgment of the Court was delivered by
BEG, C.J.--This appeal by special leave arises out
of the proceedings initiated on 12.7.1961 by the appellant
Corporation, under section 75 of the Employees’ State Insur-
ance Act 1948 (hereinafter referred to as the Act),claiming
contribution from the respondents for various periods
between. 27.9.1959 and 31.3.1965, which they are liable to
pay under section 40 of the Act.
It appears that the respondents-employers failed to.
maintain the registers or records and to submit returns of
wages paid as required under section 44 of the Act.
Hence, the Insurance Court, which was called upon to adju-
dicate under Section 75(1)(c) of the Act, on the matter in
dispute, found itself under to decide, the question in
issue. It dismissed the application on the "round that
there was no provision for deciding such a dispute on an
"ad hoc basis." We fail to understand what is precisely
meant by "ad hoc basis" Section 75(2) of the Act provides
inter alia, that a claim for the respondent We find that
recovery of contributions shall be decided by the Employees’
Insurance Court. Not only as the mandatory duty cast upon
it to decide such disputes, but it is armed with the powers
of a Civil Court, including summoning and enforcing the
attendance of witnesses, compelling the discovery and
production of documents and material objects, under
section 78 of the Act.
The powers of the Corporation are given in Section 45A
of the Act, introduced by Act 44-of 1966, whereby the Corpo-
ration may, on the basis of the information available to.
it, determine the amount of contributions payable and make
necessary demands. Apparently, the scheme of the Act, after
the amendment, is that the Corporation itself should, in a
case where there is omission on the part of the employer to
maintain records in accordance with Section 44 of the Act,
determine the amount of contributions on the strength of
such information as it may collect. It can then make, the
demand. If the employer refuses to comply with the demand
so made, the matter can come up before the Employees’ Insur-
ance Court under Section 75 of the Act. The Court should
give the Corporation a direction to perform its duty where
it considers that this should be performed by the Corpora-
tion. It cannot decline to perform its own duty because
the Corporation has failed to discharge its functions.
The matter having Come up before that Court, the claim by
the Corporation was rejected erroneously merely on the
ground that there
37
was difficulty in determining the basis of wages in a par-
ticular factory so as to enable a calculation of the amount
of contributions to be made by the employer. It seems that
the notification of the Central Government under section 99A
of the Act, also, introduced by Act 44 of 1966, was intended
to overcome such a difficulty in determining the wages of
the employees. After having considered the provisions of
section 99A of the Act, we doubt whether this provision can
be availed of for the purpose of supplying a defect or
overcoming a difficulty in adjudication of a dispute. for
which the Employees’ Insurance Court is given ample powers.
Moreover, the Corporation has itself to collect the
information initially and make a provisional demand on the
basis of that information under section 45A in such a case.
The learned single Judge, before whom the matter went up
in appeal, thought that the notification of the Central
Government fixing wages, presumably on the strength of some
notion as to what prevailing wages in such cases are, could
be. used for this purpose. The Corporation itself should
have gathered information under section 45A. The Employ-
ees’ Insurance Court should be apprised of this information.
and is under a duty to determine the basis of calculation
itself. It cannot expect the Central Government to over-
come such a difficulty by an order or direction under sec-
tion 99A of the Act. We think that the nature of the pro-
ceedings was not properly understood either by the Employ-
ees’ Insurance Court or by the High Court when the matter
was taken before these authorities. Hence, the Division
Bench, which accepted the appeal from the decision of the
single judge had, while invalidating the notification under
section 99A of the Act, failed to give a direction that the
Employees’ Insurance Court should itself perform its
duties.
In the light of the foregoing statement of the legal
position, we allow this appeal, set aside the. judgments of
the Division Bench as well as of the learned single Judge
and orders of the Employees Insurance Court. We remand the
matter to the Employees’ Insurance Court for determination
in accordance with law as explained by us above.
Parties will bear their own costs.
S.R. Appeal allowed and case
remanded.
38