Supreme Court Sets Aside Allahabad HC Judgment That Held That Employees Of 'Nagar Nigam Allahabad' Are Not Covered Under ESI Act
The Supreme Court set aside an Allahabad High Court judgment which held that the employees of Nagar Nigam, Allahabad are not covered under the Employees’ State Insurance Act, 1948.
The issue for determination before the Supreme Court was whether the employees of Nagar Nigam’s Central Workshop were covered under the Employees' State Insurance Act, 1948 (the Act). The workshop, responsible for repairing and maintaining various vehicles, was argued by Employees State Insurance Corporation (ESIC) to be a ‘factory’ as defined under the Act, which required mandatory contributions under Section 40 of the Act.
Justice J.B. Pardiwala and Justice Sandeep Mehta observed, “If, at all, this situation had changed in the period subsequent to 1978 and before issuance of the notice under Section 45A of the Act of 1948, the respondent-Nagar Nigam would be required to demonstrate the same by providing appropriate evidence to the Authorized Officer in response to the said notice and establish that it was not covered under the definition of factory and that no manufacturing process was being undertaken in its premises.”
AOR Manish Kumar Saran represented the appellant, while AOR T. N. Singh appeared for the respondents.
The Allahabad High Court had allowed a petition filed by Nagar Nigam, holding that its employees were not covered under the Act. Consequently, the recovery notice was quashed and a refund of the amounts already recovered by ESIC was ordered.
“Neither in the pleadings of the writ petition nor in the counter affidavit filed on behalf of the respondent-Nagar Nigam in this Court, is there any indication that the respondent ever sought for or was granted exemption by the appropriate Government by exercising powers under Section 90 of the Act of 1948,” the Court remarked.
The Court noted that ESIC had issued notices to Nagar Nigam to show cause as to why the recovery of statutory contribution under Section 40 of the Act should not be effected from it. However, Nagar Nigam gave no response.
“Rather than interfering in the matter in exercise of the writ jurisdiction, the respondent-Nagar Nigam should have been relegated by the learned Single Judge to approach the Insurance Court by filing an application under Section 75(1)(g) of the Act of 1948.” the Court added.
The Court stated that since Allahabad Nagar Nigam had made regular contributions under the Employees' State Insurance Act from 1964 to 1978, it conceded that its workshop was covered under the definition of a factory where a manufacturing process was being carried on.
Consequently, the Court held that the High Court erred in entertaining the petition and interfering with the recovery notice while exercising the extraordinary writ jurisdiction conferred under Article 226 of the Constitution.
Accordingly, the Supreme Court allowed the appeal.
Cause Title: The Employees State Insurance Corporation Ltd. v. Nagar Nigam Allahabad & Anr. (Neutral Citation: 2024 INSC 441)
Appearance:
Appellant: AOR Manish Kumar Saran; Advocate Ananya Tyagi
Respondents: AOR T. N. Singh and Kausar Raza Faridi; Advocates Vikas Kumar Singh, Rajshree Singh and Sham Chand