35
EMPLOYEES STATE INSURANCE CORPORATION,
BHOPAL
I'.
CENTRAL PRESS & ANR.
_Febrnary_ 21, 1977
[M. H. BEG, C. J., A. C. GUPTA AND P. S. KAILASAM, JJ.]
_E1nployees State Insurance_ _Act_ _(Act_ 34 _of_ 1948), _1948-Sections_ _45A,_
75(I)(c), and 75(2) _mid 99A.,-Scope of._
A
B
### • '
## \.
Section 75(1)(c) of the Employees State Insurance Act 1948 makes it obligatory on the Insurance Court to decide "the rate of contribution payable by
a principal employer in respect of any employees'', if such question or dispute C
arises. Section 75(2) also provides that "the claim for the recovery of contributions from the principal employer'" shall be deckh:d by it.
1'he appellant .Corporation filed five applicatLJns under s. 7 5 of the En1ployces State Insurance _Ac(_ before the Insurance Court, Bhopal (Civil Judge
First Class) for recovery from the respondent of employees' contributions pay·
able under s. 39 of the Act for different periods from 27·9·1959 on·
wards, ¥.'orking out the contribution payable on an "ad hoc basis"
by taking the wages at Rs. 100/· per erpployce per month as _D_
indicated by the Central Government by their notification SRO 224
dated 1'5·1·1957 issued in exercise of their po·n>ers under s. 99A of the Act.
The Insurance Court disallowed the claims on the ground that the claims have
been made on an "ad hoc basis". The first appeals against that order V.'ere
allowed by a single Judge of the Madhya Pradesh High Court (Jabalpur Bench)
relying on s. 99A of the Act an<l on a further notification dated 16·1·1968
issued by the Central Government under s. 99A. The Letters Patent Appeals
filed by the respondent were allo, .. ved by the Division Bench which held : ( 1)
'fhe power of the Central Government of issuing directions is not absolute and E
the directions cannot be inconsistent with the Act (22). When under section
45A of the Act a special procedure is prescribed regarding the method of cal·
culation of the employees' contribution, no notification or order can be issued
by the Central Government prescribing any other method on ad hoc basis which
obviously becomes inconsistent ·with the other provisions of the Act, namely,
section 45A.
Remanding the matter to the Insurance Court, the Court,
HELD:
_(_ 1) The nature of the proceedings under the Employees State Insurance Act
1948 was not properly understood either by the Employees Insura·nce Court or
·by the H'igh Court when the matter was taken before these authorities. [37D]
(2) The scheme of the Act is that the Corporation itself should, in a case
where there is omission on the part of the employer to maintain records in
accordance with s. 44 of the Act, ·determine the amount of contribution on
the strength of such information as it may collect, make a demand and upon
refusal come up before ·the Insurance Court under s. 75 of the Act. The Court
should give the Corporation a direction to perform its duty where it considers
that this should be performed by the Corporation. It cannot decline to per·
form its own duty because the Corporation has failed to discharge its function.
The Insurance _Court is under a duty to determine the basis of calculation itself.
[36F-H]
F
G
(3) The notification of the Central Govern1nent under s. 99A of the Act ff
was intended to overcome difficulties in determining the wages of the employees.
This provision cannot be· availed of for the purpose of supplying a defect or over·
coming a difficulty in adjudication of a dispute for which the Emplovees Insu·
ranee Court is given ample powers under s. 75(1)(c) and 75(2). [37A-B]
36 SUPREME COURT REPORTS [1977] 3 S·C.R.
**A** CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 325-329
of 1977.
(Appeals by special leave from the Judgment and Order dated
l.12.1971 of the Madhya Pradesh High Court in LP.A. Nos. 13-17
of 1969).
, -----~
# J
**B**
## **c**
**D**
**E**
**F**
**G**
**H**
_L._ _N._ _Sinha, Sol. Genl._ and _Girish Chandra_ for the appellant.
_J._ _P._ _Go}al_ and _Shreepal Singh,_ for the respondent.
The Juugment of the Court was delivered by
BEG, C.J.-This appeal by special leave arises out of the proceedings initiated on 12.7.1961 by the appellant Corporation, under section 75 of the Employees' State Insurance Act, 1948 (hereinafter
referred to as the Act), claiming contributions from the respondents
for various periods between, 27.9.1959 and 31.3.1965, which they are
liable to pay under section 40 of the Act.
It appears that the respondents-employers failed to maintain the
**registers or records and to submit** **re_turns** **of wages paid** **as** **required**
under sectivn 44 of the Act. Hence, the Insurance Court, which was
called upon to adjudicate under Section 75 (I) ( c) of the Act, on the
matter in dispute, found itself unable to decide the question in issue.
It dismissed the application on the ground that there was no provision
**for deciding such a dispute** **on** **an** **"ad** **hoc** **basis."'** **We** **fail** **to**
ur.derstand what is precisely meant by "ad hoc basis." We find that
Section 75 (2) of the Act provides, _inter alia,_ that a claim for the recovery of contributions shall be decided by the Employees' Insurance
Court. i\ot only as the mandatory duty·cast upon it to decide such
disputes, but it is armed with the powers of a Civil Court, including
sununc,ning and enforcing the attendance of witnesses, compelling the
discovery and production of documents and material objects, under
**section 78** **of** **the Act.**
The powers of the Corporation are given in Section 45A of the
Act, infroduced by Act 44 of 1966, whereby the Corporation may,
on the baoIS of the information available to it, determine the amount
of contributions payable and make necessary demands. Apparently,
the scheme of the Act, after the amendment, is that the Corporation
itself should, in a case where there is omission on the part of the
employer to maintain records in accordance with Section 44 of the
Act,· determine the amount of contributions on the strength of such
information as it may collect. It can then make the demand. If
the employer refuses to comply with the demand so made, the matter
can come up before the Employees' Jnsurance Court under ~,ection
75 of the Act. The Court should give the Corporation a direction
to perform its duty where it considers that this should be performed
by the Curporation. It cannot decline to perform its own duty
because the Corporation has failed to discharge its function.
The. matter having come up before that Court, the claim by the
Corporation was rejected erroneously merely on the ground that there
___ .,.,
.,
E.S.I. CORP. V. CENTRAL PRESS _(Beg,_ C.J.) 37
was difficulty in detennining .the basis of wages in a particular factory **A**
so as tc c,,;,ble a calculation of the amount of contributions to be made
by the employer. It seems that the notification of the Central Government under section 99A of the Act, also introduced by Act 44 of
1966, was intended to overcome such a difficulty in determining the
v:ages of the ePooloyces. After having considered the provisions oi
section 99A of tho Act, we doubt whether this provision can be availed
of for the 1mrpose of supplying a defect or overcoming a difficulty in **B**
adjudication of a dispute for which the Employees' Insurance Court
is given ample powers. Moreover, the Corporation has itself to
collect the ;nformation initially and make a provisional demand on
the basis of that information under section 45A in such a case.
The learned single Judge, before whom the matter went up in
## appeal, thought that the notification of the Central Government fixing c
wages, presumably on the strength of some notion as to what prevailing wag>s i;; such cases arc, could be used for this purpose. The
Corporation. itself should have gathered information under section
45A. T:1e Employees' Insurance Court should be apprised of this
information and is under a duty to detennine the basis of calculation
itself. It cannot expect the Central Government to overcome such a
diJ:icully by an order or direction under section 99A of the Act. We **D**
think that the nature of the proceedings was not properly understood
either by the Employees' Insurance Court or by the High Court when
the matter was taken before these authorities. Hence, the Division
Bench, w;,ich accepted the appeal from the decision of the sii:igle
Judge haJ, W'h1le invalidating the notification under section 99A of the
Act, failed tL give a direction that the Employees' Insurance Court
should itself perform its duties. E
In the light of the foregoing statement of the legal position, we
allow this appeal, set "~side the judgments of the Division Bench as
well as of the learned single Judge and orders of the Employees
Insurance Court. We remand the matter to the Employees' Insurance
Court for determination in accordance with law as explained by us
**above.**
Parties will bear their own costs.
S.R. _Appeal allowed and_ _case_ _remanded._
F
