E S I C Vs. C C SANTHAKUMAR

JUDGEMENT

(1.) All these appeals involve identical questions and are, therefore, taken up together for disposal. Some of the appeals are by the Employees State Insurance Corporation (in short the Corporation) while some others are by the employers. The Corporation questions correctness of the judgment rendered by the Full Bench of the Kerala High Court while the employers question correctness of the judgment rendered by a Division Bench of the Madras High Court.

(2.) Basic question before the two High Courts were as follows :- Proviso to Section 77(1A)(b) of the Employees State Insurance Act, 1948 (in short the Act) provided limitation of 5 years for claiming contribution and restricts the Corporations right from recovering the arrears of contribution as arrears of land revenue under Section 45 (B) in pursuance of an order under Section 45(A) of the Act. The Corporation claimed ESI Contributions as arrears from various employers. Assailing those orders, some of the employers moved the Employees State Insurance Court (in short the E.S.I. Court) in the State of Kerala. The employers in the State of Tamil Nadu, however, filed writ petitions before the Madras High Court. The Writ Petitions were dismissed by learned Single Judge. Writ appeals filed before the High Court did not bring any result. The judgment of the Division Bench affirming that of learned Single Judge is the subject matter of challenge in some of the appeals. Corporation on the other hand has questioned the correctness of the judgment of the Full Bench of the Kerala High Court, which held that the limitation prescribed under Section 77 restricting the claim for a period of five years clearly indicated by the fact that the contribution for a period of more than five years cannot be claimed by the Corporation. With reference to the proviso to Section 77(1A)(b) it was held that a period of limitation has to be read into the provision; otherwise the employers would be greatly handicapped and would not be in a position to establish its case as regards the number of employees working under it. In such a situation the employer would be left defenceless. With reference to Regulation 66 of the Employees State Insurance (General) Regulations, 1950 (in short the Regulation) it was held that the maintenance of the register in terms of Regulation 66 was for a period of 5 years. That being so, it is clear that the complaint is confined to a period of 5 years and the employer is not bound to preserve its records for the periods prior to that. The Madras High Court on the other hand held that the language of Section 77(1A)(b) is very clear and it did not provide for any period of limitation for raising the demand or making the assessment. Learned counsel for the employers supported the view of the Kerala High Court. It was submitted that any other view would make the provisions confiscatory; it would also lead to an absurd result that the Corporation can theoretically make a claim even after decade, thereby causing prejudice to the employers. It was submitted that even if it is conceded for the sake of argument that Section 77(1A)(b) does not provide for a period of limitation the concept of claim being raised during a reasonable period of time is inbuilt, otherwise the action would be arbitrary. That being so it was submitted that the view expressed by the Kerala High Court should be accepted and not that of the Madras High Court.

(3.) Per contra, learned counsel for the Corporation submitted that the Kerala High Court failed to take notice of the fact that Section 77(1A) operates in different background and has no relation to a dispute raised by an employer to the demand raised for contribution by the Corporation. It was pointed out that the employers in the State of Tamil Nadu instead of moving the E.S.I. Court directly filed writ petitions without availing the alternative remedy available. Since factual disputes were involved regarding the actual number of employees, the writ petitions were not maintainable and the High Court has rightly clarified the position in law though it could have thrown out the writ petitions on the ground that alternative forum of redressal was available.