1989 Amendment To ESI Act Cannot Be Applied Retrospectively: Punjab & Haryana HC
The Punjab & Haryana High Court has held that the 1989 amendment to Employees's State Insurance Act, 1948 cannot be applied retrospectively and thereby demand notices cannot be issued for incidents prior to 1989.
The Court was considering an Appeal filed against judgment passed by Sub Judge, 1st Class exercising powers as ESI Court under ESI Act, 1948 whereby the petition filed under Section 75-78 of the ESI Act, 1948 by the respondent was allowed.
The single-bench of Justice Pankaj Jain observed, "Prior to Amending Act of 1989, the mandate of the statute was that the factory means any premises including the precincts employing 20 or more persons. In the present case, number of persons employed being less than 20, the premises of the respondent would not fall within the ambit of ‘factory’ as adumbrated under Section 2(12) prior to Amending Act of 1989. The plea raised by counsel representing the appellant invoking Section 1(6) is also misplaced. Bare reading of Section 1(6) leads to the inference that the same governs those premises which were covered under the ESI Act prior to Amending Act of 1989."
The Appellant was represented by Advocate Adarsh Malik while the Respondent was represented by Advocate Kunal Mulwani.
Recovery Certificate under Section 45-A was issued and attachment proceedings were initiated against the respondent through Assistant Collector 2nd Grade for recovery of Rs.6690-95 paise. Respondent challenged the demand before ESI Court.
Counsel for the Respondent claimed that the demand raised by the ESI Corporation was based on ad-hoc assessment without any survey. It was contended that the demand was raised w.r.t. 132 KV Sub Station, Phagwara and the same does not fall within the purview of ESI Act as the strength of the staff is only three in number. The staff employed for maintenance like Mali, Sweeper at the Sub Station are on the roles of XEN D/S and not on the roles of KV Sub Station. It was thus claimed that the respondent was not liable to pay any amount towards ESI contribution.
On the other hand, Counsel for the Appellant cliamed that from report it is clear that all the employees were working at 132 K.V and the Sub Station was being paid by the respondent. It was thus averred that employees are covered under the ESI Act and the Rules made therein.
The Court accepted the contentions of Counsel for the Respondent and observed, "Finding of fact recorded by the Commissioner regarding number of workmen employed with the respondent cannot be faulted as it has been proved that the maximum sanctioned strength was 15. In terms of provision prior to 1989, the determinating factor for any premises to come within the perview of ‘factory’ for the purpose of ESI Act, was not only the manufacturing purpose but also the number of persons employed."
Cause Title: Employees State Insurance Corporation vs. Punjab State Electricity Board
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