Regional Director, Esic Vs. Revenue Divisional Commissioner, Central Division and ors. - Court Judgment

Excerpt:
- state financial corporations act, 1951 [63/1951]. section 29; [p.k. tripathy, a.k. parichha & n.prusty, jj] discharge of loan orissa forest act (14 of 1972), section 56 confiscation of vehicle - held, the authorities under section 56 of the orissa forest act, 1972 are not obliged to release the vehicle from the confiscation proceeding or to pay the sale proceeds of the vehicle after the order of confiscation in favour of orissa state financial corporation when such vehicles were purchased on being financed by the orissa state financial corporation and the loan had not been liquidated by the date of the seizure/confiscation of the vehicle. concept of first charge or second charge has no applicability when the vehicle is not otherwise disposed of to determine the liabilities of the loanee. on the other hand the vehicle having been found indulged in forest offences was made subject matter of a confiscation proceedings, and therefore, the procedure followed for confiscation of the vehicle and for its sale is punitive in nature and not with a view to give benefit to anybody including the department which initiated the confiscation proceeding. apart from that, the claim of the orissa state financial corporation as against its loanee (who had taken the vehicle on hire- purchase agreement) brings the loanee and the sureties within the default clause under the state financial corporation act, 1951 or the heirs and successors of such persons. procedure is provided in the act, 1951 and the rules thereof about the manner in which such loan is to be recovered, and in that context only the vehicle under the hire-purchase agreement is placed as the first charge. if such property is not available for any reason, then the loan is not automatically waived or the loanee and his sureties are not automatically redeemed of the liabilities to repay. the financial corporation is concerned with repayment of loan either from the property or persons offered as surety. thus, a vehicle, which is subject matter of confiscation proceeding under the act, 1872, being not available to the orissa state financial corporation for adjustment of the unpaid loan, that does not at all bring out an anomalous situation so as to defeat the right of the orissa state financial corporation. agreement between the orissa state financial corporation and the loanee is a pure and simple contract governed by the provisions of the contract act, 1872 read with the provisions in the act, 1951 and its rules. on the other hand, a confiscation proceeding under the act, 1972 is punitive in nature for commission of a forest offence. thus, by virtue of the provision in section 56 read with section 64 (2) of the act, 1972, the action taken for confiscation of the vehicle cannot be extended to grant protection of the loan advanced by orissa state financial corporation. by doing that it amounts to grant premium to the pick-pockets in as much as, by making payment of the confiscation amount in favour of the orissa state financial corporation the loan burden of the accused of the forest offence is reduced to the extent of the sale proceeds of the vehicle. in other words, on payment of the sale proceeds of the confiscation proceeding to the orissa state financial corporation towards discharge of the loan account of the accused of a forest offence, it would lead to a system to reward him by repayment of his loan. then it does not become a penalty nor the action become punitive, but it remains as a reward to the accused of forest offence. such a concept is totally not conceivable from any provision in the act, 1972 or the act, 1951. [air 2002 orissa 130 overruled]. -- state financial corporations act, 1951. section 29; discharge of loan orissa forest act (14 of 1972), section 56 confiscation of vehicle - held, the authorities under section 56 of the orissa forest act, 1972 are not obliged to release the vehicle from the confiscation proceeding or to pay the sale proceeds of the vehicle after the order of confiscation in favour of orissa state financial corporation when such vehicles were purchased on being financed by the orissa state financial corporation and the loan had not been liquidated by the date of the seizure/confiscation of the vehicle. concept of first charge or second charge has no applicability when the vehicle is not otherwise disposed of to determine the liabilities of the loanee. on the other hand the vehicle having been found indulged in forest offences was made subject matter of a confiscation proceedings, and therefore, the procedure followed for confiscation of the vehicle and for its sale is punitive in nature and not with a view to give benefit to anybody including the department which initiated the confiscation proceeding. apart from that, the claim of the orissa state financial corporation as against its loanee (who had taken the vehicle on hire- purchase agreement) brings the loanee and the sureties within the default clause under the state financial corporation act, 1951 or the heirs and successors of such persons. procedure is provided in the act, 1951 and the rules thereof about the manner in which such loan is to be recovered, and in that context only the vehicle under the hire-purchase agreement is placed as the first charge. if such property is not available for any reason, then the loan is not automatically waived or the loanee and his sureties are not automatically redeemed of the liabilities to repay. the financial corporation is concerned with repayment of loan either from the property or persons offered as surety. thus, a vehicle, which is subject matter of confiscation proceeding under the act, 1872, being not available to the orissa state financial corporation for adjustment of the unpaid loan, that does not at all bring out an anomalous situation so as to defeat the right of the orissa state financial corporation. agreement between the orissa state financial corporation and the loanee is a pure and simple contract governed by the provisions of the contract act, 1872 read with the provisions in the act, 1951 and its rules. on the other hand, a confiscation proceeding under the act, 1972 is punitive in nature for commission of a forest offence. thus, by virtue of the provision in section 56 read with section 64 (2) of the act, 1972, the action taken for confiscation of the vehicle cannot be extended to grant protection of the loan advanced by orissa state financial corporation. by doing that it amounts to grant premium to the pick-pockets in as much as, by making payment of the confiscation amount in favour of the orissa state financial corporation the loan burden of the accused of the forest offence is reduced to the extent of the sale proceeds of the vehicle. in other words, on payment of the sale proceeds of the confiscation proceeding to the orissa state financial corporation towards discharge of the loan account of the accused of a forest offence, it would lead to a system to reward him by repayment of his loan. then it does not become a penalty nor the action become punitive, but it remains as a reward to the accused of forest offence. such a concept is totally not conceivable from any provision in the act, 1972 or the act, 1951. [air 2002 orissa 130 overruled]. - act had failed, a further liability against the opp. such objection was sustained by the certificate officer and the certificate proceeding was dismissed against which the petitioner moved in appeal and thereafter in revision but having failed before all the forums, has come before this court. act relates to the question as to whether there has been any failure on the part of the employer as enumerated in that section and any finding reached in the proceeding would be valid only so far as the facts of that particular case are concerned. a person against whom a liability has been determined and who has failed to pay the same, may contend successfully that he is not liable to pay the contribution because so far as the facts of the case are concerned, his liability was not established. it may so happen that the prosecution failed to establish that it was a factory having employed the requisite number of workmen to bring it within the fold of the mischief of the e. misra is also well founded.l.rath, j.1. proceedings initiated under the orissa public demands recovery act, 1962 (hereinafter referred to as 'the o.p.d.r. act') at the instance of the petitioner for realisation of the dues determined by him from the opposite party no. 4 having been thrown out by the authorities under the o.p.d.r. act, the petitioner has come before this court.2. the facts stated in a nutshell are that certain dues were determined under section 45a by the petitioner under the employees' state insurance act, 1948 (hereinafter referred to as 'the e.s.i.act') as being payable by the opposite party no. 4 in respect of contributions of himself and employees, but since the dues remained unpaid they were purported to be collected as arrears of land revenue in accordance with the provisions of section 45b of the e.s.i. act. the certificate proceedings was resisted by the opposite party no. 4 taking the stand that in a complaint case instituted against him by the petitioner (registered as 2(c) c.c.case no. 376 of 1977) before the sub-divisional judicial magistrate, cuttack, on account of the non-payment of dues, it had been held by the court that the petitioner was not the owner of an establishment liable under the e.s.i. act to pay the contributions. on such premises it was contended that since the prosecution launched under section 85 of the e.s.i. act had failed, a further liability against the opp. party no. 4 could not be raised and enforced. such objection was sustained by the certificate officer and the certificate proceeding was dismissed against which the petitioner moved in appeal and thereafter in revision but having failed before all the forums, has come before this court.3. mr. misra, the learned counsel appearing for the petitioner, has urged that a finding reached by the sub-divisional judicial magistrate in a prosecution under section 85 of the e.s.i. act is not determinative of the question of the status of the opposite party no. 4 as an establishment under the e.s.i. act and is only relevant so far as the question of punishment to be imposed or not for violation of the provisions of the e.s.i. act is concerned. it is his submission that the question whether an institution is an establishment under the e.s.i. act or not in the context of its liability to pay contribution is one which falls to be decided by the corporation under section 45a and that if a dispute in that regard arises, it has only to be resolved by the employees' insurance court under section 74 from whose decision an appeal lies to this court under section 82. that being so, the findings of the sub-divisionl judicial magistrate would have no universal application and would not amount to ouster of jurisdiction of the employees' insurance court or that of the corporation under section 45a. a futher submission is raised that once the liability of the opposite party no. 4 has been determined by the corporation, it has to be collected as provided under section 45b as arrears of land revenue and that in view of the provisions of section 75(3), ousting the jurisdiction of the civil court to determine such question, it must be held that the objection, as was raised by the opposite party no. 4 before the certificate officer, was not available to be advanced.4. a determination by a criminal court in a proceeding under section 85 of the e.s.i. act relates to the question as to whether there has been any failure on the part of the employer as enumerated in that section and any finding reached in the proceeding would be valid only so far as the facts of that particular case are concerned. a person against whom a liability has been determined and who has failed to pay the same, may contend successfully that he is not liable to pay the contribution because so far as the facts of the case are concerned, his liability was not established. it may so happen that the prosecution failed to establish that it was a factory having employed the requisite number of workmen to bring it within the fold of the mischief of the e.s.i. act. while in such background the criminal court may hold it not to be liable and not to suffer any punishment, yet in a subsequent case the very factors the absence of which led to an acquittal may be established and a verdict of guilt may be returned. section 75 provides for the matters which are to be decided by the employees' insurance court and sub-section (1)(g) thereof states that any other matter which is in dispute between a principal employer and the corporation, or between a principal employer and an immediate employer, or between a person and the corporation or between an employee and a principal immediate employer, is to be decided by the employees' insurance court. 'principal employer' has been defined in section 2(17) to mean, inter alia, so far as a factory is concerned, the owner or occupier of the factory and includes the managing agent of such owner or occupier, the legal representative of a deceased owner or occupier, and where a person has been named as the manager of the factory under the factories act, 1948, the person so named. thus the dispute between the principal employer which term, in this case will also include the opposite party no. 4, and the corporation as regards his liability determined under section 45a would also be recognizable by the employees' insurance court, a conclusion which is also supported by a decision of the karnataka high court in (1982-i-llj-48) (hegde & golay ltd. v. employees' state insurance corporation) once such a determination is made by the employees insurance court a dispute having been raised before it, both the corporation and the employer would be bound by the same subject to the decision reaching finality after appeal to this court. in the absence of such a decision, the decision of the s.d.j.m. would not be determinative of the issue and would not oust the jurisdiction of the corporation to levy a liability.5. the other submission raised by mr. misra is also well founded. section 8 of the o.p.d.r. act provides that a certificate debtor can deny his liability only on the ground of either the certificate dues having been either fully or partly paid or that he is not the certificate debtor as named in the certificate. he also may resist the certificate on other grounds, provided the question of his liability to pay is not barred otherwise from the scrutiny of the civil court. section 75(3) of the e.s.i. act mandates that no civil court shall have jurisdiction to decide or deal with any question or dispute or adjudicate on any liability which by or under the e.s.i. act is to be decided, inter alia, by the employees' insurance court. the jurisdiction of the civil court being thus ousted, it must be held that no such objection, as was purported to be advanced by the opposite party no. 4 was available to be advanced in the certificate proceeding and that the only objection that could be raised was of the certificate dues having been paid either in full or in part or that it was a case of mistaken identity so far as the opp. party no. 4 was concerned. thus both the contentions raised by mr. misra succeed.6. in the result, the writ petition is allowed and the impugned orders passed by the authorities under the o.p.d.r. act as in annexures 1, 2 and 3 are quashed. the case is remanded to the certificate officer to proceed with the certificate afresh. the case being already an old one, the certificate officer is directed to dispose of the case within three months from the date of receipt of the writ from this court. hearing fee is assessed at rs. 300/-.k.c. jagadeb roy, j.i agree.