Symbiosis Institute of Management

Studies
(For- (MBA programme only)-Defence Personnel and Their Dependants)
Constituent of Symbiosis International University

DATE OF SUBMISSION: 4rd SEPTEMBER, 2018

Employment Related Laws

Assignment 2- ESI ACT

Submitted to: Mr. V.N Awati

Submitted by:

Indika Bhanu E-19

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Bangalore District Court
E.S.I. Corporation vs M/S.Suvik Industries on 30 April, 2015

This is the complaint filed u/s.200 of the Cr.P.C., by complainant/ESI Corporation represented
by the Inspector, ESIC, Bangalore against the accused persons with a prayer to punish the
accused for the offence u/s.85(a) which is punishable u/s.85(i)(b) of ESI Act, 1948

The factory M/s.Suvik Industries is covered under ESI Act having Code No.53-7287-67. A
communication regarding its coverage under the Act with request to comply with the provisions
of the Act was also sent in Form No.C-11 dated:9/28.2.88.

Sri-Vikram C. i.e., accused No.2 is the Managing Partner and Prl. employer of said Factory in
terms of Sec.2(17) of the said Act was in charge of the factory during the period of default and
was responsible for the conduct of business document viz., details of ownership
dated:20.10.2005.

Accused No.2 who is the Managing Director & Prl.employer of the said factory which has been
failed to pay any contribution in accordance with Sec.39 of the ESI Act for the wage period
from 10/2006 to 9/2007 as required u/s.40 of the ESI Act R/regulations 29 & 31 of ESI
(General) Regulations 1950.

ince accused No.2 has not paid the contribution a notice was issued in Form No.C-18
dated:02.04.2008 through registered post asking the accused No.2 to show cause to why the
contribution for the above said period should not be determined and an opportunity was also
provided for a personal hearing on 26/4, 28/4 & 06.06.2008, the said notice was served on him.

Accused neither availed the opportunity of personal hearing nor replied to the said notice.
Therefore, the ESI Corporation proceeded to pass orders u/s.45A of the said Act and
determined the contributions as Rs.64,350-00 for the wage period from 10/2006 to 09/2007,
the said order dated:23.05.2008 passed in terms of Sec.45-A of the Act was sent to the said
Prl.employer i.e., accused No.2 and A-1-M/s.Suvik Industries by registered post
acknowledgement and advised to pay the contributions within 15 days, the said orders has been
served on him on 23.5.2008 as per acknowledgments received. But accused No.2 did not
comply orders. So show cause notice dated:02.04.2009 was issued, asking him to show cause
why they should not be prosecuted u/s.85 for non-payment of contribution for the period from
10/2006 to 08/2007 till the issuance of show cause notice. The said show cause notice has been
served and acknowledgements received. The said prl.employer/accused No.2 has neither
shown any cause for the non-payment of contribution nor paid the contributions so far, he has
failed to pay the amount of Rs.64,350-00 towards contribution for the wage period 10/2006 to
09/2007 in accordance with S.39 & 40 of the Act with Regulations 29 & 31 of the said Act and
ESI (General) Regulations 1950 respectively, he has also violated Regulation 31 R/w.S.39 &
40 of the General Regulation 1950 & ESI Act 1948 respectively and thus committed offence
under clause(a) of S.85 punishable u/s.85(i)(b) of the ESI Act, 1948.

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On this complaint, the case has been registered, cognizance taken, accused secured, enlarged
on bail, copies of the complaint and other documents were furnished to him

Thereafter, heard the arguments. Perused the entire records, the points that arise for my
consideration are :

Point No.1: Whether the complainant proves beyond all reasonable doubt that accused No.2
being the Managing Partner and emloyer of A.1-M/s.Suvik Industries, Bangalore, covered
under ESI Act, having Code No.53-7287-679, has failed to pay contribution for the period from
10/2006 to 09/2007 in a sum of Rs.64,350- 00 in time. Thereby committed the offence u/s.85(a)
of ESI Act, which is punishable u/s.85(i)(b) of ESI Act.

My findings on the above said points are as under:

Point No.1: In the Affirmative, Point No.2: As per the Final orders for the following:
REASONS

P.w.1 Sri.N.S.Nagaraj Social Security Officer, ESIC (Legal), Bangalore has stated that A.1-
M/s.Suvik Industries, Bangalore, covered under ESI Act, with Code No.53-7287-67, accused
No.2-Vikram C., is the Managing Partner and Prl.Employer of A.1, he is in charge and
responsible for conduct of business of A.1 establishment, he has got ultimate control over the
day to day affairs of the establishment.

He has also deposed that A.1 establishment was covered, on the establishment submitted Form
No.01 on 12.1.1988 as per Ex.p.1, the coverage was intimated to A.2 in Form No.C-11
dated:23.2.1988 as per Ex.p.2, Form No.C-11 was served on A.1 through RPAD, A.2 was
regularly made contributions on behalf of A.1 along with attested copy of returns in Form No.6
as per Ex.p.3 for the months Oct-2003 to March-2004, Ex.p.4 to 6 are the attested copies of
three challans for having paid contributions for the period Oct-2003 to March-2004, A.2 had
also submitted ownership details on 20.10.2005 in which he has shown that A.2 is Managing
Partner of A.1 establishment who is responsible for day to day affairs of the establishment as
per Ex.p.7.

P.W.1 has also deposed that accused No.2 did not file returns and not paid contributions for
the period from Oct-2006 to Sept-2007, so they issued opportunity notice on adhoc basis in
Form-C-18 on 2/4/2008 calling accused No.2 to appear before Dy.Director, ESIC to say
whether he has paid contributions and filed returns fixing the date of hearing on 20.4.2008 as
per Ex.p.8, the same is served through RPAD both to A.1 & 2 on 4.4.2008 as per the postal
acknowledgements Ex.p.9 & 10, in spite

of it, accused No.2 did not appear to sent a letter on 20.4.2008 seeking adjournment till
6.5.2008 as per Ex.p.11, the matter was adjourned till 6.5.2008 & intimation was given to A.2
as per Ex.p.12, the acknowledgement for having served intimation is at Ex.p.12(a).

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P.w.1 has further stated tha accused No.2 did not appear, hence matter posted for orders on
29.5.2008, on that day, orders U/s.45A of ESI Act as per Ex.p.13 is passed fixing contributions
at Rs.64,350/- for the period from Oct-2006 to Sept- 2007, the orders has been sent to accused
No.1 & 2 through RPAD on the same day which is served on accused No.1 & 2 as per the
Postal Acknowledgements Ex.p.14 &15.

During the cross-examination, accused admits that he was the Managing Partner of the
company, his mother & sisters were partners. Of course, he has also says that one Mr.
Singarayar was looking after the day to day affairs of the company. No documents placed to
show that Mr. Singarayar was person looking after the day to day affairs of the company.
Moreover, S.2(17) of ESI Act, which reads as follows:

So the 'principal employer' means in any factory, 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. Here in this case, according to the case of the accused himself, his
father is owner of the factory, after his death he became the Managing Partner, his mother &
sister became the partners of the company. The accused being the Managing Partner is
obviously the employer as said in Sec.2(17) of the ESI Act. Further it is not the case of
accused that any other was principal employer. Thus the above referred case law is not
applicable to the case on hand.

30. But here in this case, the orders u/s.45A of the ESI Act, is passed where it is proved the
accused has failed to pay contributions for the period from Oct-2006 to Sept-2007 in a sum of
Rs. 64,250/-, the said order is not challenged & accused failed to pay contribution as per the
orders. Ex.P.3 is the document submitted by accused, according to which 22 workers were
working in the company. On the basis of information provided by the complainant as per
Ex.p.1, company was covered under ESI Act & code number was allotted. Thus the above
said judgement is not applicable to the case on hand.

Held:

2.The Criminal appeal is directed against the judgment and order dated 9th of November,
1998, whereby the Judicial Magistrate, First Class, Margao, acquitted the respondents
accused for the offences punishable u/s.85(i)(a) of ESI Act, 1948. The case of the
prosecution in a nutshell is that the complainant is a Local Office Manager of E.S.I.
Corporation.

This shows S.468 is not applicable to the offence of non- payment of contributions by
employers to P.F as it is continuing offence. Of course, this is in connection to EPF Act and
present case is ESI Act, but principle laid down is applicable to this case as in both the cases
on similar circumstances of failure to pay contributions penal proceedings will be launched.

Section 85(a) makes clear on failure to pay contribution under the Act the guilty is liable for
punishment. The word used under this Act emphasizes that the amount due in respect of the
contribution has to be made specific, in my opinion by issuing a show cause notice specifying
the amount payable for the relevant period of contribution. Unless the ESI Corporation
proves the fact of non-payment and the amount payable in accordance with the Act, no one

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can be punished without a fair trial. The said fact has to be examined on the basis of the
materials available before the court.

Thus, on overall reading of the provisions of the ESI Act where the contribution amount is
not paid, it enables the Corporation to pass appropriate orders u/s.45(A) and proceed to
recover the amount payable by the employer and also enable the Corporation to take penal
action against the employer. In the present case, absolutely, there is no evidence to show
whether the employer has paid any contribution for the period ending 1989, 1990 & 1991 so
as to hold that the liability still subsists. Unless the liability is established, no person can be
convicted irrespective of the civil proceedings that has been taken place.