P.P.S. Janarthana Raja, J. 1. The Civil Miscellaneous Appeal is filed against the order of the learned Principal Judge, City Civil Court, Chennai (The Employees' State Insurance Judge, Chennai) dated 8.7.1996 made in E.S.I.O.P. No. 32/88. This appeal came up for hearing and this Court admitted the appeal on 09.06.2000 and formulated the following substantial questions of law:
(i) Whether the finding of the Lower Court that the respondent establishment was coverable only from 1.1.1984 can be sustained in law?
(ii) Whether the finding of the Lower Court that the amount determined by the respondent for the period subsequent to 1.1.1984 can be sustained in law?
2. Background facts in a nutshell are as follows:
The first respondent has been engaged in the business of printing. In the year 1978, it was divided as Bapuji Press and Bapuji Printers. The late G. Aramudham continued as Proprietor of Bapuji Press and his son Paul became the Proprietor of Bapuji Printers. Both Bapuji Press and Bapuji Printers functioned as independent legal entities with separate licence, accounts, etc. On the expiry of the said Aramudham, Bapuji Press was converted into a Partnership firm with effect from 15.06.1979 with three partners. The appellant unilaterally covered the press with effect from 01.04.1977 and allotted code number. The appellant also issued Form C-18 to show cause why order should not be passed under Section 45A of the ESI Act determining the contribution at Rs. 28,825.70 for the period from 01.04.1977 to 31.08.1985. The appellant has assumed Rs. 350/- per month per employee for the period from 01.04.1977 to 30.04.1984 and at Rs. 550/- per month per employee for the subsequent period and also at Rs. 880/- for the remaining period. The appellant also assumed 12 employees for calculating the contributions. The first respondent replied to the notice on 4th September 1986 and also met the Assistant Regional Director, ESI Corporation and submitted that the first respondent is not covered under ESI for the period prior to 01.01.1984 and they are only liable to pay contribution from 01.01.1984. The appellant passed order under Section 45A dated 07.11.1986 claiming contribution at Rs. 28,825.70 for the period from 01.04.1977 to 31.03.1985 plus interest of Rs. 1,849.65. Further, the appellant also issued another C-18 notice on 01.01.1987 for Rs. 3,207.42. The first respondent worked out the contributions payable from 01.01.1984 to December 1986 at the rate of 7.25% on the total wages paid to the employees for the said period and remitted Rs. 10,154.85 on 23.03.1987. But, however, the appellant passed another order dated 24.04.1987 under Section 45A claiming Rs. 3,202.47 towards contribution plus interest of Rs. 235.78 stating that the first respondent had not made any payment. Aggrieved by the orders passed by the appellant dated 07.11.1986 and 24.04.1987, the first respondent filed a petition under Section 75(2B) of the ESI Act before the City Civil Court at Madras. On pleadings, the Lower Court framed the following issues:
a) Whether there are grounds to set aside the order Under Section 45A dt. 7.11.86 claiming contribution of Rs. 28825/70 for the period from 1.4.75 to 31.3.85 plus interest of Rs. 1849/65 and also order dt. 24.4.87 for Rs. 3202/47 towards contribution for the period from 1.4.85 to 31.8.86 plus interest of Rs. 335/78?
b) To what relief?
After considering the oral and documentary evidence, the Lower Court held that the first respondent is not liable to pay any contribution for the period prior to 01.01.1984 and the contribution paid for the period 01.01.1984 to 31.08.1986 is proper and valid and the matter was disposed of accordingly. Aggrieved by the order, the present CMA is filed by the appellant.
3. Learned Counsel appearing for the appellant submitted that the establishment of the first respondent was covered under the provision of ESI Act with effect from 01.04.1977 on the basis of the survey conducted by one of the statutory Inspectors of the Department. He also further submitted that the Lower Court had not considered the facts and circumstances of the case and hence the order passed by the Lower Court is not in accordance with law and the same has to be set aside.
4. In spite of notice, there is no representation on behalf of the respondents.
5. Heard the counsel. On behalf of the first respondent, one Stephen was examined as P.W.1 and documents Ex.A1 to Ex.A9 were marked. On behalf of the ESI Corporation, witnesses R.W.1 to R.W.3 were examined and documents Ex.B1 to Ex.B6 were marked. R.W.1 is one Bhavani. R.W.2 is one Veerappan, Inspector in the ESI Corporation. R.W.3 is one Swaminathan. Ex.A1 is Form C-18 notice. Ex.A2, A3 and A6 are the letters sent by the first respondent to the appellant. Ex.A4 is the impugned order. Ex.A5 is the State Bank of India Challan for Rs. 10154/85. Ex.A8 is the Form C-19 claim order. Ex.A9 is the letter from the appellant to the first respondent. Ex.B1 is the copy of Form C-11 sent to the first respondent. Ex.B2 and B3 are the Enquiry Reports of Insurance Inspector of ESI Corporation. Ex.B4 is the Preliminary Inspection Report. Ex.B5 and B6 are the letters received from the first respondent. After considering these oral and documentary evidence, the Lower Court had given a factual finding in Paragraphs 12 and 13 of its order as under:
12) It is necessary to find out whether the petitioner's press was covered under Act even prior to 1.1.84 as pointed out by the Corporation or it is covered under Act only from 1.1.84 as stated by the petitioner. The burden is only upon the Corporation to show that more than 10 persons were working from 1.4.77 for the purpose of coverage. Admittedly the petitioner in the pleading and PW1 in the course of evidence, admitted that the coverage from 1.1.84 and on the basis of the actual wages a sum of Rs. 10154/85 was remitted in challan on 23.3.87 and admittedly communicated to the Corporation on 10.4.87. There is no satisfactory evidence on the side of RW1 to RW3 to show that actually more than 10 persons were employed. Ex.B4 dt. 13.12.82 is the first preliminary inspector report given by RW1 and inspection was made only on 13.12.82. But, however the coverage has been recommended from 1977 onwards. She had perused the attendance register as well as the wages register and the particulars of the employment of the persons extracted from the attendance register are also furnished therein. At no point of time, there is any indication to show that more than 10 persons were employed. Even in the course of cross examination, RW1 admitted that she has not enquired with any workers. She also admitted that she had perused the wages register and ascertained the wages paid to the workers from 1977. Further, she was not bold enough to extract the wages paid, in her report. This being so, the order passed by the Corporation, Under Section 45A on the assumed wages, prima facie appears to be arbitrary and illegal.
13) RW2 had inspected the premises on 20.3.85 and RW3 had inspected the press on 4.9.86. RW2 had also not chosen to examine any employee and his report also did not indicate positively that more than 10 persons were employed prior to 1.1.84. The evidence of RW2 also indicated that seven workers were employed and apart from that there is no material to come to the conclusion that more than 10 persons were employed prior to January 1984. There is ample material to come to the conclusion that the Corporation has passed an order on assumed wages and the Corporation has not taken into consideration the representation sent by the petitioner under A6. As adverted to, the petitioner claiming coverage from 1.1.84 has remitted a sum of Rs. 10154/85 on 23.3.87 and sent a copy of the challan along with a letter dt. 10.4.87. The respondent, having received the same, has passed an order Under Section 45A dt. 24.4.87. But there is no reference about the payment made by the petitioner earlier and also the letter dated 10.4.87, this is a strong circumstance to infer that the Corporation has passed the order mechanically without application of mind. It is not the duty of the petitioner to establish that less than 10 persons alone were employed prior to 1984 to claim exemption from coverage. The burden placed on the Corporation has not been satisfactorily discharged and there is no record to come to the conclusion that more than 10 persons were employed prior to 1984 in the Petitioner's press.
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In the result, the petition is allowed and the order passed Under Section 45A dated 7.11.86 and 24.4.87 are set aside and the petitioner is not liable to pay any contribution for the period prior to 1.1.84 and the contribution already paid by the petitioner for the period 1.1.84 to 31.8.86 is proper and correct.
From a reading of the above, it is clear that there is a factual finding given by the Lower Court that the first respondent establishment is not liable to pay any contribution for the period prior to 01.01.1984 and they are only liable to pay contribution for the subsequent period. The factual finding given by the Lower Court is based on valid materials and evidence and I find no error or illegality in the order of the Lower Court so as to warrant interference. Counsel for the appellant is also unable to furnish any documentary evidence or compelling reason to take a different view from the Lower Court. It is a pure question of fact and the order of the Lower Court is not a perverse one. Therefore the questions referred to above, are answered in favour of the first respondent.
6. Under the circumstances, the impugned order passed by the learned Principal Judge, City Civil Court, Chennai (The Employees' State Insurance Judge, Chennai) dated 8.7.1996 made in E.S.I.O.P. No. 32/88, is confirmed. Accordingly, the Civil Miscellaneous Appeal is dismissed. No costs.