Sofa 'N' Furniture Vs. Regional Director, E.S.i. Corporation and Anr. (11.07.2007 - ORiHC) - Court Judgment

A.S. Naidu, J.

1. This is an appeal filed under Section 82(2) of the Employees' State Insurance Act, 1948 (hereinafter referred to as 'the Act'). The appellant seeks to challenge the judgment dated November 28, 1997 passed by the learned District Judge-cum-ESI Court, Cuttack dismissing ESI Misc. Case No. 8/1993.

2. The scenario of facts reveals that the appellant is a proprietorship firm registered under the District Industries Centre, Cuttack as a Small Scale Industry. On July 30, 1990 the concerned Inspector of the ESI Corporation (hereinafter referred to as 'the Corporation') inspected the establishment of appellant Sofa 'N' Furniture, verified its Wage Register for the period from June, 1989 to June, 1990 as also the Attendance Register for the period from November, 1988 to July, 1990 in presence of its proprietor Sri. Ramesh Chandra Padhi. After verification of the above registers and also other registers produced before him, the said Inspector came to know that the products manufactured by the appellant-establishment were being sold and marketed at a shop, namely, Durga Agency, Dolmundai, Cuttack of which Smt. Pratima Padhy, wife of aforesaid Sri Ramesh Chandra Padhy, was the proprietress. On the basis of inspection, the Corporation by its letter dated August 30,1990 called upon the appellant to comply with different provisions of the ESI Act. A Code Number was also allotted with instruction to the proprietor of the appellant-establishment to avail necessary assistance from local office of the Corporation at Rajabagicha.

3. Thereafter on February 27, 1991 and also on March 14, 1991 other officers of the Corporation once again inspected the appellant-establishment, but then the proprietor did not produce the relevant records for his verification. As there was no response from the proprietor of the appellant-establishment in spite of several letters and issue of show-cause notice, the Corporation in exercise of power under Section 45A of the ESI Act determined the contribution, at a tune of Rs. 17,049.00 towards employees' share of contribution for the period from June 1, 1998 to September 30, 1991 on the ground that in the factory situated at Khannagar, Cuttack more than ten persons had been engaged on wage for manufacture of steel furniture and Sofa during period in question and intimated the same to the appellant through; registered letter on the ground that the provisions of the ESI Act were not complied with. But the proprietor of the appellant refused to accept the same, and on the other hand he filed an application under Section 75 of the Act challenging the demand of the Corporation on the ground that the provisions of the ESI were not complied with and that only five workmen had been engaged by him at his Knannagar factory, but due to financial stringency the said unit was closed down with effect from June 30, 1989 and he had already surrendered its registration certificate. He denied the assertion that any officer of the Corporation ever visited the unit or about receipt of any ex parte order (demand) passed under Section 45A of the Act.

4. On the basis of the pleadings of the parties, the ESI Court framed seven issues. During hearing, the proprietor of the appellant concern got himself examined as P.W. I and exhibited three documents. The Corporation in support of its case got three witnesses examined and exhibited about 49 documents. After discussing the entire evidence in extenso the ESI Court came to the conclusion that during f the period in question the proprietor of the appellant had employed more than ten persons for manufacture work through use of power and the ESI Act was applicable to the unit. The ESI Court disbelieved the plea of the appellant that no notice had been served on it and it came to the conclusion that there was evidence to reveal that the Inspector of the Corporation had inspected the unit and verified the Wage Register, Attendance Register, etc. of the appellant establishment in presence of its proprietor Shri Padhy who in his own hand also endorsed as per Exhibit A admitting the correctness of the contents thereof. While dismissing the ESI Misc. Case, the Court below upheld the quantum of demand by the Corporation towards employees' contribution. Being aggrieved by the said judgment of the ESI Court, the present appeal has been filed.

5. While directing issue of notice in this appeal, in order to protect the interests of the parties, this Court had directed the appellant to deposit the entire demand amount as a condition precedent to stay realization of the same through certificate proceeding. Accordingly, an amount of Rs. 17.049.00 has been deposited before this Court which has been invested in Fixed Deposit account.

6. The main pound on which the judgment is assailed is that the ESI, Court completely lost sight of the fact that the manufacturing unit of the appellant had been closed down with effect from June 30, 1989 and the appellant had surrendered its Sales Tax Registration certificate before the Sales Tax Officer of the concerned circle. The submission of Mr. Rath, learned Counsel appearing for the appellant, is that though a number of documents had been produced by the appellant in support of its stand before the ESI Court, the said Court neither framed any issue nor dealt with the said documents. Thus there was an error apparent on the face of record. According to him, the question as to whether the manufacturing unit of the appellant had been closed down with effect from June 30, 1989 was very vital, inasmuch once it was held that the said unit was not functioning, the entire demand raised by the Corporation against the appellant was to be set aside.

7.The submissions of Mr. Rath are strongly repudiated by Mr. Ray, learned Counsel appearing for the ESI Corporation. According to Mr. Ray, in the original petition filed by the appellant before the ESI Court it was never stated that the unit had been closed down from June 30, 1989 or the Sales Tax Registration Certificate had been surrendered before the authority concerned. At the stage of final hearing an attempt was made to introduce such a plea by way of amendment of the petition. The ESI Court after hearing the parties by order dated July 22, 1997 had rightly rejected the prayer for amendment mainly on the ground that the same was an after-thought. Being aggrieved by that order of rejection of the prayer for amendment, the appellant had approached this Court, vide O.J.C. No. 12159/1997 but this Court after considering the facts and circumstances of the case found that the said plea was belated and after-thought and dismissed the said OJC, thereby confirming the order dated July 22, 1997 of the ESI Court. Mr. Ray further submitted that an appeal before this Court is maintainable only on substantial question of law. In the case at hand, the dispute; being purely factual in nature, the appeal is liable to be dismissed in limine.

8. This Court heard the learned Counsel for the parties in extenso and perused the materials available on record including the evidence; adduced by the parties, both oral and documentary. Exhibit A is an endorsement of Sri Ramesh Chandra Padhy, proprietor of the appellant concern. He admitted therein the fact as to the concerned Inspector oft he Corporation; having visited the unit and verified the relevant registers in his presence. His endorsement further goes to reveal that the manufacturing unit was functioning in the year 1990. That apart, in cross-examination Sri Padhy also, admitted that there was consumption of electricity in the manufacturing process. The said statements coupled with the endorsement Exhibit A and other documents further fortifies that the unit was quite functioning in the year 1990 and that Sri Padhy had employed ten or' more persons in the manufacturing work.

9.The plea that the demand notice had not been served on Sri Padhy was disbelieved by the ESI Court. Exhibit B is the signature of Padhy on the Acknowledgement Due form. Sri Padhy had admitted the said signature to be his. Thus the plea that he was never intimated about the demand by the Corporation cannot be believed.

10. The only other ground on which the demand is assailed by Mr. Rath is that a number f documents had been filed by Sri Padhy before the ESI Court to establish his contention that the unit had been closed since 1989 and the Sales Tax Registration Certificate had been surrendered before the STO concerned, but the same were not admitted info evidence by the ESI Court. But then, as would be evident from the aforesaid discussion and the order of this Court passed in OJC No. 12159/1997, the amendment sought by the appellant before the Court below to introduce the same fact in its pleadings at belated stage was rejected. Thus there was no pleading that the Sales Tax Registration Certificate had been surrendered and/or the unit had been closed down. Law is well settled that any evidence contrary to the pleadings, and/or in absence of pleadings cannot be accepted. Thus this Court finds that the Court below did not commit any error.

11. The assessment relates back to the year 1991 Seventeen years have passed in the meanwhile. That apart, all the allegations levelled and the grounds taken resisting the demand, are factual in nature. The findings of fact arrived at by the ESI Court are neither perverse nor contrary to the evidence on record. The same also do not suffer from any infirmity or illegality. Thus this Court finds no reason to interfere with the impugned judgment after so many years and dismisses the appeal.

12. The amount deposited by the appellant before this Court which is lying in Fixed Deposit Account, with interest, accrued thereon, be remitted to the ESI Corporation on proper application after deducting the expenses for such remittance.