Case Note & Summary
The Employees' State Insurance Corporation (ESIC) appealed against an order of the Employees' Insurance Court at Nagpur in Insurance Case No.6/1988. The original respondent, Sharad Damodar Shrangarpawar, was the Managing Director of M/s. Vikrant Exchange Engine Company Pvt. Ltd., Nagpur. He submitted his resignation on 10.11.1986, which was accepted by the Board of Directors on 08.04.1987. The ESIC had passed orders of recovery under the Employees' State Insurance Act, 1948, for unpaid contributions, treating the respondent as liable. The Employees' Insurance Court, exercising power under Section 75(1)(g) of the Act, set aside those recovery orders, holding that the respondent was neither the owner nor the occupier of the factory merely because he was the Managing Director. The court relied on the decision of the Bombay High Court in ESIC v. G.N. Mathur (1991 LLN Vol.I, 1189). The ESIC appealed, arguing substantial questions of law. The High Court heard the appellant's counsel, Smt. B.P. Maldhure, who urged that the resignation was given on 10.11.1986 and accepted later, but the court found no merit. The High Court dismissed the appeal, affirming that a Managing Director is not automatically the owner or occupier under the ESI Act. The appeal against respondent no.1 had abated due to his death, and against respondent no.2 was dismissed in default. The judgment was delivered on 09.10.2014 by Justice R.K. Deshpande.
Headnote
A) Employees' State Insurance - Recovery of Contribution - Managing Director as Occupier - Section 75(1)(g) Employees' State Insurance Act, 1948 - The issue was whether a Managing Director who resigned before the recovery orders could be held liable as owner or occupier - The court held that merely being Managing Director does not make one owner or occupier, relying on ESIC v. G.N. Mathur - The appeal was dismissed (Paras 1-3).
Issue of Consideration
Whether a Managing Director of a factory can be treated as owner or occupier for recovery of ESI contributions under the Employees' State Insurance Act, 1948.
Final Decision
Appeal dismissed. The order of the Employees' Insurance Court setting aside recovery orders is upheld.
Law Points
- Managing Director not owner or occupier
- Section 75(1)(g) ESI Act
- ESIC v. G.N. Mathur precedent
