Case Note & Summary
The petitioner, SBI General Insurance Company Limited, challenged an order dated 29 December 2023/1 January 2024 passed by the Assistant Director, Authorized Officer, Employees' State Insurance Corporation under Section 45A of the Employees' State Insurance Act, 1948 (ESI Act). The impugned order determined a total contribution of Rs. 2,37,20,249/- payable by the petitioner for the financial years 2015-16 and 2016-17. The order was based primarily on two interim reports dated 2 June 2021 and 30 November 2021 submitted by the Social Security Officer. The petitioner contended that these interim reports were never supplied to it before the passing of the order, and its say was not called on those reports, resulting in a violation of principles of natural justice. The petitioner filed a writ petition under Article 226 of the Constitution of India seeking quashing of the order. The respondents argued that the petitioner had an alternative remedy by way of appeal under Section 45AA or by approaching the Employees Insurance Court under Sections 75 and 77 of the ESI Act, and relied on the Supreme Court decision in State of Maharashtra v. Greatship (India) Limited to contend that the writ petition should not be entertained. The court examined the impugned order and noted that paragraphs 6 and 10 of the order explicitly referred to the interim reports and that the reasons recorded in the order showed that the authority had relied on those reports to determine the contribution. The court held that the authority, exercising quasi-judicial powers, could not pass an order on the basis of material which was only known to the authorities and not disclosed to the petitioner. Relying on the Supreme Court decisions in Whirlpool Corporation v. Registrar of Trade Marks and T. Takano v. Securities and Exchange Board of India, the court concluded that the impugned order was passed in violation of principles of natural justice and that the writ petition was maintainable despite the availability of alternative remedy. The court quashed the impugned order and remitted the matter to the authority for fresh consideration, directing that copies of the interim reports be supplied to the petitioner and that adequate opportunity of hearing be given.
Headnote
A) Administrative Law - Principles of Natural Justice - Quasi-Judicial Orders - Disclosure of Material - An order under Section 45A of the Employees' State Insurance Act, 1948 passed on the basis of interim reports of the Social Security Officer without supplying copies thereof to the employer and without affording an opportunity to rebut the same is violative of principles of natural justice. The authority cannot rely on material known only to it. (Paras 6-10, 12) B) Constitutional Law - Writ Jurisdiction - Alternative Remedy - Maintainability - A writ petition under Article 226 of the Constitution of India is maintainable despite the existence of an alternative statutory remedy if the impugned order is passed in violation of principles of natural justice, as held in Whirlpool Corporation v. Registrar of Trade Marks, (1998) 8 SCC 1. The decision in State of Maharashtra v. Greatship (India) Limited, (2022) SCC OnLine SC 1262, which dealt with a different factual scenario, does not bar such a petition. (Paras 4(e), 5, 12) C) Employees' State Insurance Act, 1948 - Section 45A - Assessment of Contributions - Procedure - Before passing an order under Section 45A determining contributions, the authority must supply to the employer all reports and material proposed to be relied upon, including interim reports of the Social Security Officer, and must call for and consider the employer's explanation. Failure to do so renders the order unsustainable. (Paras 6-10, 12)
Issue of Consideration
Whether an order under Section 45A of the Employees' State Insurance Act, 1948 passed without supplying copies of interim reports of the Social Security Officer to the employer and without calling for the employer's say on those reports is violative of principles of natural justice, and whether the writ petition is maintainable despite availability of alternative statutory remedy.
Final Decision
The impugned order dated 29 December 2023/1 January 2024 is quashed and set aside. The matter is remitted to the Assistant Director, Authorized Officer, Employees' State Insurance Corporation for fresh consideration. The petitioner shall be supplied with copies of the interim reports dated 2 June 2021 and 30 November 2021, and shall be given adequate opportunity of hearing. The authority shall pass a fresh order in accordance with law.
Law Points
- Principles of natural justice
- Quasi-judicial authority must disclose material relied upon
- Writ maintainable despite alternative remedy if order is in violation of natural justice
- Section 45A ESI Act assessment must be based on material supplied to employer
