U.T. Shah, J.
1. In this petition the petitioners are challenging the order passed under Section 45-A of the Employees' State Insurance Act, 1948 (The Act) by the Deputy Regional Director calling upon the petitioners to pay a sum of Rs. 2,09,914/- being the contribution for the period from May, 1981 to July, 1985 alongwith interest amounting to Rs. 50,379.
2. The petitioners are a company incorporated under the Companies Act, 1956 having its registered office at Mahatma Gandhi Road, Secunderabad - 500 003, Andhra Pradesh and Regional Office at Transport House, 128/B, Poona Street, Bombay 400 009, as well as various other branches all over India and in the State of Maharashtra, The Respondent No. 1 is the Employees' State Insurance Corporation (the Corporation) and the Respondent No. 2 is the Deputy Regional Director (DRD) appointed under the Act.
3. Vide his letter dated July 29, 1986, the Regional Director of the Corporation, Maharashtra State enquired of the petitioners as to why the provisions of the Act should not be applied in their case in respect of their regional office in the State of Maharashtra. Further, the petitioners were intimated that they were in arrears of contribution for the period from May, 1981 to November, 1985. The Regional Director has also worked out rough calculation of the contribution of Rs. 2,37,573/-payable by the petitioners for this period. It may be mentioned that the figure of Rs. 2,37,573/- has been worked out at 7% of the total wages of Rs. 33,93,902/-. The petitioners were asked to explain the position and also to show cause why an order under Section 45-A of the Act, should not be passed.
4. On August 27, 1985, the petitioners wrote a letter to DRD of the Corporation having regional office in Maharashtra resisting the proposed action of the Regional Director, Maharashtra. It was stated in this letter that since the Road Transport Organisation is not covered by a notification issued under Section 1(5) of the Act, the petitioners are not liable to make any contribution as contemplated under the Act, in respect of the employees working in Bombay or in branches in the State of Maharashtra. The petitioners also stated that just because the Regional Director of the Corporation at Trichur in Kerala State has come to the conclusion that the petitioners' establishment in their State would come (sic.) under the Act, it would not automatically be necessary that the provisions of that Act would also be applicable in respect of the employees working in the Bombay region or in the State of Maharashtra. In the said letter, the petitioners took up a stand that unless by a notification issued under Section 1(5) of the Act Road Transport Organisation is covered, they were liable to make contribution in respect of the employees working in the Bombay region or in any other part of the State of Maharashtra, Thereafter, referring to Section 2(9) of the Act, the petitioners stated that the Corporation can take shelter under that Section only if the Act is extended to the State of Maharashtra under Section 1(5) of the Act and establishment like Road Transport Organisation is covered by a notification under that Section. It was also stated that the petitioners were not having any factory or garage in Bombay. Distinguishing the facts obtaining in the judgment of Andhra Pradesh High Court in the case reported in 49 FIR 135, the petitioners submitted that the provisions of the Act would not be applicable to cover their employees working in the Bombay Region or in any part of State of Maharashtra. However, without prejudice to their contentions, the petitioner's stated that they would make contribution under protest in respect of their employees in Bombay region with effect from August 1, 1985 subject to their right and contentions that they were not liable to make any contribution in respect of the employees working in the Bombay region. It may be stated that in the said letter the petitioners have stated that the amount of Rs. 2,37,573/- worked out by the authority may not be correct and in order to verify the same, petitioners requested that the break-up of the same should be furnished to them.
5. On October 29, 1986, the petitioners once again wrote a letter to DRD Regional Office, Maharashtra, of the Corporation reiterating their stand that unless the provisions of the Act are made applicable to the State of Maharashtra under Section 1(5) of the Act, more particularly, in respect of the Road Transport Organisation, the petitioners would not be liable to make any contribution in respect of the employees working in the Bombay region.
6. Thereafter, for almost two years nothing has happened. On September 8, 1988, DRD of the Corporation passed an order under Section 45-A of the Act and called upon the petitioners to contribute Rs. 2.09,9147- for the period from 5/ 81 to 7/85 plus interest amounting to Rs. 50,379/- by September 7, 1988.
7. On the receipt of the said order, the petitioners filed the present petition challenging the action of the authority under the Act. The learned Counsel for the petitioners took me through the relevant provisions of the Act more particularly Section 1(5), Section 2(9), Section 45-A, Section 75 etc., to urge that the respondents have precipitated the matter instead of following the procedure laid down in the Act more particularly under Section 75 of the Act. In this connection, he stated that since the petitioners had all along co-operated with the Corporation, there was no justification on the part of the Corporation to pass an order under Section 45-A and called upon the petitioners to contribute Rs. 2,09,914/- plus interest amounting to Rs. 50,379/. - The line of arguments of the learned counsel for the petitioners was as under :
(i) Since the provisions of the Act have not been extended to the State of Maharashtra as contemplated under Section 1(5) of the Act in respect of the activity in which the petitioners are engaged, the petitioners were not liable to make any contribution under the Act in respect of the employees working in the Bombay region or anywhere in the State of Maharashtra. He invited my attention to Exh. A of the petition containing a notification issued by the State of Maharashtra under Section 1(5) of the Act stating that the provisions of the Act would be applicable with effect from November 12, 1988 in respect of certain establishments and certain areas named therein. In para 3 of the notification the establishments mentioned are :
(1) Hotels (2) Restaurants (3) Shops (4) Cinema including pre-review theatre and (5) News papers establishments. (ii) Inviting my attention to Section 2(9) of the Act, the learned Counsel for the petitioners submitted that the respondents cannot take shelter under the said section unless and until the Act is made applicable to the establishments like the one in which the petitioners are engaged.
(iii) Even assuming for the sake of arguments that the petitioners case can be brought within the purview of Section 2(9) of the Act, the learned counsel for the petitioners went on to submit that the provisions would be applicable only when there is total inter-dependence between the registered head office in Secunderabad and regional offices at Trichur and Bombay. In this connection, he submitted that since the head office at Secunderabad and regional offices at Trichur and Bombay can exist independently of each other, the petitioner's case cannot be roped in under Section 2(9) of the Act.
(iv) Relying on the decision of this Court in the case of Employees' State Insurance Corporation v. Asian Paints India Ltd. : (1982)IILLJ416Bom , he further submitted that since DRD was not empowered to pass an order under Section 45-A of the Act, the order so passed by him was clearly bad in law and should be struck down. In this connection he invited my attention to para 4 of the said judgment and pointed out that this Court had considered certain notification produced before it.
(v) Relying on the decision of the Delhi High Court in the case of R.S. Ganesh Das Dhomi Mal v. Employees State Insurance Corporation 1988 (56) FLR 111 the learned Counsel for the petitioners submitted that the proper course for the respondents was to follow the procedure laid down in Section 75 of the Act instead of hurriedly passing an ad hoc order under Section 45-A of the Act.
(vi) Finally, relying on yet another decision of this Court in the case of K.T. Rolling Mills Pvt. Ltd. v. R. N. Gandhi and Ors. : (1994)ILLJ66Bom dated November 19, 1992, the learned counsel for the petitioners submitted that since there was an inordinate delay in taking action against the petitioners and passing an order in the year 1988 in respect of the period from May 1981, to July 1985 the said action of the Corporation was not at all commendable and the order passed on September 8, 1988 deserves to be struck down on the ground of delay.
8. It may be mentioned that the learned Counsel for the petitioners had also invited my attention to various regulations passed under the Act with a view to impress upon me that even though the Act is of an all India nature, the provisions of the same would not automatically be applicable in each State unless and until necessary notification is issued by each State as contemplated under Section 1(5) of the Act. According to him, the regulations would clearly show that it is quite possible that the provisions of the Act may be applicable in certain parts of India and may not be applicable in other parts. Therefore, according to him, the mere fact that the Regional Director of Trichur, Kerala State held that the provisions of the Act would be applicable to the petitioner's case, that would not be sufficient to cover the employees of the petitioner working in the Bombay region unless and until a notification to that effect is issued under Section 1(5) of the Act by the State of Maharashtra. He, therefore, strongly urged that the order dated September 8, 1988, passed by the second respondent should either be cancelled or be withdrawn.
9. The learned counsel for the Corporation, on the other hand fully supported the order passed by DRD on September 8, 1988, under Section 45-A of the Act calling upon the petitioners to contribute Rs. 2,09,914/- for the period from May 1981 to July 1985 alongwith the interest amounting to Rs. 50,379/-. Inviting my attention to Section 2(9)(i) of the Act, the learned Counsel for the respondents submitted that in view of the expression 'elsewhere' at the end of Clause (i) the petitioners were clearly liable to contribute in respect of the employees working in Bombay region. According to him, it is not necessary that in order to bring the petitioner's case within the purview of the Act, in respect of the Bombay region, a notification as contemplated under Section 1(5) of the Act should be issued by the State of Maharashtra.
10. Placing reliance on a decision of Andhra Pradesh High Court in the case in E.S.I.C. v. South Eastern Railways : (1983)IILLJ396AP the learned Counsel for the respondents submitted that since the control and management of the Bombay region office was with the registered office at Secunderabad and since the Act was applicable in the State of Andhra Pradesh, the respondents were fully justified in calling upon the petitioners to make contribution in respect of other employees working in Bombay region.
11. Placing before me a copy of the Gazette of India dated May 2, 1981, the learned Counsel for the respondents pointed out that by a resolution passed by the Corporation at its meeting on December 14, 1980, various officers including DRD, were empowered to pass order under Section 45-A of the Act. According to him, since this particular notification was not placed before this Court in the case of Asian Paints Ltd (supra), the Court had inadvertently held that DRD has no power to pass an order under Section 45-A of the Act. In this connection, he stated that it would be an anomaly that officers below the rank of DRD have been given powers to pass an order under Section 45-A of the Act while the officer of the rank of DRD would be excluded to pass such orders. However, in view of the Gazette notification dated May 2, 1981 which was issued prior to the judgment of this Court in Asian Paints Ltd. (supra) on July 31, 1981, no adverse inference should be drawn against the Corporation as DRD had a power to pass order under Section 45-A of the Act.
12. As regards the so called delay in passing the order on September 8, 1988, the learned counsel for the respondents took me through the petition as well as annexures thereto to impress upon me that there was no delay and in fact, sufficient latitude was given to the petitioners to show cause why their case regarding employees working in the Bombay region cannot be brought within the purview of the Act. As regards the demand raised by the DRD, the learned Counsel for the respondents pointed out that under Section 45-A of the Act, he had to make an ad hoc calculation for want of necessary details furnished by the petitioners. Again, according to him, contribution of 7% of the total wages amounting to Rs. 33,93,902/- is quite fair and reasonable and cannot be said to be excessive. Further, it is pertinent to note that the petitioners themselves have started contributing from August 1, 1985 though under protest. This action of the petitioners, according to the learned counsel for the respondents clearly showed that the petitioners could find some justification in the action of the authority under the Act calling upon them to make contribution in respect of the employees working in the Bombay region. It may be mentioned that the learned Counsel for the respondents also referred to the various reported decisions which were referred to and relied upon by the petitioners and pointed out that the ratio laid down in each of those decisions would not be applicable in the instant case as the facts situation obtaining in the instant case is quite different than the one considered in the reported cases. Finally, the learned Counsel for the respondents submitted that the fact that no notification is issued under Section 1(5) of the Act covering Road Transport Organisation would not be fatal in view of the definition of 'employees' contained in Section 2(9) of the Act, more particularly Clause (i) of the said Section which has a very wide connotation and amplitude. He, therefore, strongly urged that the order passed by DRD should be upheld.
13. I have carefully considered the submissions made by the parties and at the outset, I must state that both the counsel for the petitioners as wel I as for the respondents have argued so forcefully and persuasively that it is not easy to take a decision. However, the job of the Court is to interpret the provisions of the Act to the best of its understanding and knowledge.
14. The Act with which we are concerned, is an All India Act like so many other statutes which are also applicable throughout India. However, in each of such statutes a provision is made under which particular State can issue a notification and make applicable the provisions of the said Statute in that State. Under the Act with which we are concerned, Sub-section (5) of Section 1 provides for such a situation. Therefore, unless and until the State Government issues a notification in the official Gazette to extend the provisions of the Act, the Act would not be applicable in the State. The State of Maharashtra has in fact issued such a notification making the provisions of the Act applicable with effect from November 12, 1978, in respect of certain classes of establishments and certain areas. Since the petitioners are not engaged in any manufacturing activities, the establishments enumerated at items 1 and 2 of the said notification need not be looked into. Item No. 3 of the said notification enumerates certain establishments to which the provisions of the Act have been made applicable, these establishments are (i) hotels, (ii) restaurants, (iii) shops, (iv) Cinema including preview theatres and (v) news paper establishments. It would be clear from this notification that the Road Transport Organisations have not been specifically mentioned.
15. On behalf of the respondents it was argued that by virtue of Section 2(9)(1) of the Act, the petitioners would be liable to contribute in respect of their employees working in the Bombay region. The said Section defines 'employees' to mean any person employed for wages or in connection with the work of a factory or establishment to which this Act applies. Reading this definition along with notification issued under Section 1(5) of the Act, it is quite apparent that the Road Transport Organisations have not been brought within the purview of this Act. It was argued on behalf of; the respondents that the last word 'elsewhere' appearing in Section 2(9)(i) of the Act would cover a situation whereby the provisions of the Act would be applicable irrespective of the fact whether a notification under Section 1(5) of the. Act has been issued or not and whether the establishment like that of the petitioners is enumerated in such notification, if issued. I am unable to accept this submission made on behalf of the respondents. I have come to this conclusion, as the Act is no doubt an All India Act but the functionaries under the Act are functioning region-wise. Each State has an establishment under the Act, having entire hierarchy from the Regional Director down to the smallest staff. If we were to accept the stand taken on behalf of the respondents, then any regional office of the Corporation anywhere in India would have authority to decide whether the provisions of the Act would be applicable to an entity outside the State in which the office of such functionary is situated. In fact, that is what has happened in the instant case. It appears that DRD in the State of Kerala was of the view that the petitioners were liable to contribute in respect of the employees working in the various regions and branches. He may have come to that view as it could be gathered from various decisions cited at Bar that under Section 1(5)of the Act, the provisions of the said Act were extended in the State of Kerala covering various establishments including Road Transport Organisation. Again, from the reported decisions cited at Bar, the provisions of the Act were made applicable in the State of Andhra Pradesh by a notification issued under Section 1(5) of the Act. Even in the State of Maharashtra also, a notification under Section 1(5) had been issued but Road Transport Organisation have not been roped in as one of the establishments to which the provisions of the Act would apply. In this view of the matter, even though DRD had power to pass an order under Section 45-A of the Act, the order passed by him was bad in law in as much as the provisions of the Act have not been extended under Section 1(5) of the Act to an establishment like the petitioners in the present case.
16. In view of my aforesaid conclusion, it is not necessary to deal with an issue raised on behalf of the petitioners that there was inordinate delay in passing the order in September 1988 in respect of the period from May, 1981 to July, 1985. I have carefully gone through the decision relied upon by the petitioners in this regard. However, on the facts and circumstances obtaining in the instant case, it is difficult to find any fault with the respondents for the delay, if at all, in passing the order under Section 45-A of the Act. In my view the respondents had given sufficient latitude to the petitioners to explain their case and the delay has occurred only due to that and not due to any inaction on the part of the respondents.
17. For the reasons stated above, I set aside the order dated September 8, 1989, passed by DRD calling upon the respondents to contribute Rs. 2,09,914 /- for the period from 5/81 to 7/85 alongwith interest amounting to Rs. 50,379/-.
No order as to costs.