Case Note & Summary
The appeal was filed by the Employees State Insurance Corporation (ESIC) under Section 82 of the Employees State Insurance Act, 1948 against the order of the Employees Court (Industrial Court), Amravati in E.S.I. Petition No. 1/2004 dated 04/04/2008. The respondents, partners of M/s. Neelam Hotel and Food Products, purchased the hotel premises from the previous owners (Mamrade brothers) by registered sale deed dated 14/06/2001 and started business afresh on 05/11/2001 with new employees. They claimed that they requested ESIC to provide an account number to deposit contributions, but despite repeated correspondence, no code number was allotted. Instead, ESIC issued a notice on 29/03/2004 demanding contribution of Rs.70,549/- for the period from November 2001 to March 2003. The respondents challenged this demand before the Employees Court, which set aside the demand on the ground that the respondents were not given a code number and therefore could not deposit contributions. The ESIC appealed. The High Court framed the substantial question of law: whether Section 2A read with Regulation 10B of the ESI Act is mandatory. The Court held that Section 2A is mandatory and once the Act applies to an establishment, it is covered automatically. The employer is bound to obtain registration and comply with the Act. The failure of the Corporation to allot a code number does not absolve the employer from liability to pay contribution. The Court allowed the appeal, set aside the order of the Employees Court, and remanded the matter for fresh consideration on merits.
Headnote
A) Employees State Insurance Act - Coverage of Establishment - Section 2A read with Regulation 10B - Mandatory Nature - The issue was whether Section 2A and Regulation 10B of the ESI Act are mandatory - The Court held that Section 2A is mandatory and once the Act applies to an establishment, it is covered automatically - The employer is bound to obtain registration and comply with the Act - Failure of the Corporation to allot a code number does not absolve the employer from liability to pay contribution - The provision is mandatory and not directory (Paras 1-10).
Issue of Consideration
Whether Section 2A read with Regulation 10B of the Employees State Insurance Act, 1948 is mandatory?
Final Decision
Appeal allowed. Order of the Employees Court dated 04/04/2008 set aside. Matter remanded to the Employees Court for fresh consideration on merits in accordance with law.
Law Points
- Section 2A of ESI Act is mandatory
- Regulation 10B is mandatory
- coverage of establishment is automatic upon application of Act
- employer must obtain registration
- failure to allot code number does not affect liability
