The Society for Health and Rural, Education. V. The Union of India,

WP/8914/2020

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The case involves a Writ Petition filed by a Society challenging an order from the 2nd respondent, which demanded payment of Employees' State Insurance contributions amounting to Rs.34,42,965 for various periods. The Society, which undertakes sanitary works for the 3rd respondent corporation, argued that due to a lack of work, they had no employees for whom contributions were due. The 2nd respondent had calculated the dues based on extrapolated salaries of previously employed individuals. The court recognized the Society's difficulties, given its composition of members from weaker sections lacking legal and financial expertise, and thus set aside the demand, allowing for a re-evaluation based on actual records.

• Counselvise Citation: [2020] 140 COUNSELVISE.COM (IT) 735443 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 21-05-2020
• Assessment Year: misc
• Laws Referred To: Employees' State Insurance Act, 1948
• Result in Favour of: Applicant
• Court: HIGH COURT
• Department Lawyers: KUMAR
• Keywords: Employees' State Insurance; Show cause notice; Writ petition; Sanitary Works; Demand for Contribution
• Section: 45-A

Judgement Text

"THE HON’BLE SRI JUSTICE R.RAGHUNANDAN RAO WRIT PETITION No.8914 OF 2020 ORDER : The present Writ Petition is filed by the petitioner challenging the order of the 2nd respondent in order No.79000456510000304/3132020338, dated 13.03.2020. It appears that the petitioner is a Society, which undertakes Sanitary works of the 3rd respondent corporation. Earlier, the petitioner had been awarded for such sanitary works and had employed about 121 employees through whom the sanitary work was being done. The petitioner Society was also paying the Employees’ State Insurance contributions for all the 121 employees. Thereafter, the petitioner’s Society failed to obtain any sanitary work and claims that in view of there was no work, the employees of Society were allowed to leave. However, the 2nd respondent issued a show cause notice dated 09.12.2019, directing the petitioner to pay Employees’ State Insurance contribution for the period from 01.06.2015 to 31.03.2016, 01.10.2016 to 30.04.2019 and 01.10.2019 to 31.10.2019 and demanded a sum of Rs.34,42,965/- in the said show cause notice. In answer to the show cause notice and the demand for production of the Employee Register and other details of the employees, the authorised representative of the petitioner submitted the income tax returns and bank statements of the petitioner to show that the petitioner did not have work. Unfortunately, the petitioner Society does not have any 2 employees for whom the Employees’ State Insurance contribution had not been placed before the 2nd respondent. The 2nd respondent had thereafter taken into account of number of employees, who were earlier employed by the respondent and calculated the Employees’ State Insurance contributions on the basis of these members and on the basis of the salaries previously paid to these employees by extrapolating the said salaries to the present day. By virtue of the said exercise, the 2nd respondent raised a demand of Rs.34,42,965/- by order dated 13.03.2020 under Section 45 –A of Employees’ State Insurance Act, 1948. The learned counsel for the petitioner submits that on account of misunderstanding of the provisions by the petitioner Society which consists of members of weaker sections, who do not have full knowledge of law nor the experience to handle such issues, the said order came to be passed and the Society, which is for the benefit of the weaker sections is not in a position to bear such a huge demand apart from the facts that the said demand itself would not be payable once the actual facts are set out before the authority. Sri Kumar, the learned standing counsel for the Employees’ State Insurance Corporation submits that there is an effective alternative remedy available to the petitioners by way of an appeal and that there is no error in the said order in as much as the order was passed after giving adequate opportunity to the 3 petitioner to set out his case. In view of the above, Sri Kumar prays that the Writ Petition be dismissed. Keeping in view the fact that this is a Society setup by the members for the purpose of undertaking sanitary work of Kadapa Municipal Corporation and most of these members and the persons in management of the Society are handicapped in understanding the intricacies of Employees’ State Insurance provisions, it would be appropriate to set aside the order dated 13.03.2020 passed by the 2nd respondent. The said order dated 13.03.2020 shall be treated as show cause notice and the petitioner’s Society may place all the records relating to the employee strength of the Society before the 2nd respondent within a period of two (2) weeks from the date of receipt of this order. Upon such records being placed before him, the 2nd respondent after considering the grounds that may be raised by the petitioner Society shall pass orders within two (2) weeks of receipt of such records. Accordingly, the Writ Petition is disposed of. There shall be no order as to costs. Miscellaneous petitions, if any pending, shall stand closed in consequence. ________________________________ JUSTICE R.RAGHUNANDAN RAO Date : 21.05.2020 GR 4 THE HON’BLE SRI JUSTICE R.RAGHUNANDAN RAO WRIT PETITION No.8914 OF 2020 Date: 21.05.2020 GR 5 "