KARNATAKA FOOD PACKERS Vs. REGIONAL DIRECTOR ESI

JUDGEMENT

(1.) The following three questions have been referred by the Division Bench for our opinion:"(

(2.) The appellant -- Karnataka Food Packers -- has preferred this appeal against the order dated 29-5-1982 passed by the Employees State Insurance Court, Mangalore, in ESI Application No. 28/1983. The said application was filed by the appellant under Section 75 of the Employees State Insurance Act, 1948, (for short 'the Act'), challenging the notice issued by the Regional Director, Employees State Insurance Corporation (for short 'the Corporation'), calling upon the appellant to cover the factory in question under the E.S.I, scheme for the period 1-7-1979 to 30-6-1982. The challenge was mainly on two grounds, namely: (i) the business of processing, packing and exporting of shrimps carried on by the appellant is a seasonal business and, therefore, it is not covered by the Act, and (ii) at any rate, during the period 1-7-1979 to 30-6-1982, no service was rendered by the Corporation to the employees of the appellant; equally no benefit was claimed by the employees from the respondent; the respondent-Corporation had not spent any amount on the employees of the appellant; and therefore, having regard to the provisions contained in Section 68 of the Act the Corporation was not entitled to claim the amount there being no quid pro quo. It may at this stage be stated that for the period subsequent to 30-6-1982 the coverage of the appellant's factory is not questioned. The ESI Court raised the following issues: (i) Whether the applicant is a seasonal factory? (ii) Whether the applicant is liable to be covered as from the time demanded by the respondent? (iii) What order? In answering issue No. 1, it held that the appellant's factory was not a seasonal factory. Issue No. 2 was answered holding that the appellant would be liable to be covered. In that view, the application was dismissed and the notice was upheld.

(3.) When this appeal came up before a Division Bench consisting of K.A. Swami and Vithal Rao, JJ., the Division Bench thought fit to raise an additional issue and have the same decided by the ESI Court and a finding recorded thereon. Accordingly, by an order dated 18-2-1988, an additional issue was framed viz. "Whether the Corporation was in a position to render services as contemplated under Chapter V of the Act as on 1-7-1979?" and a finding was called for. The ESI Court submitted its finding on that additional issue on 13-7-1988 holding that the Corporation was in a position to render service as on 1-7-1979 as envisaged under Chapter-V of the Act. On receipt of this finding, the appeal was heard afresh, and in the light of the contentions raised by the parties, two questions of law were posed for determination as follows: "1) In the facts and circumstances of the case, whether in law, the appellant is liable to pay the amount of contribution under Chapter IV of the Act from 1-7-1979 to 30-6-1982? (2) If so, in the facts and circumstances of the case, whether Section 68 of the Act is attracted to determine the amount payable by the appellant?" The Division Bench held that as on 1-7-1979 the appellant employed more than 20 workers and, therefore, it was a factory and as such it ought to have covered its workers under the Act from that date. On this factual position, after referring to the case law, the Division Bench found that the observations made by a Division Bench of this Court in HIND ART PRESS v. ESI [1989 (59 )FLR778 ], ILR1989 KAR 2001 , 1989 (2 )KarLJ227 , (1990 )II LLJ195 Kant ran counter to the decision of the Supreme Court in GASKET RADIATORS PVT. LTD. v. ESIC. AIR1985 SC 790 , [1985 (50 )FLR426 ], (1985 )I LLJ506 SC , 1985 (1 )SCALE337 , (1985 )2 SCC68 , [1985 ]2 SCR1085 , 1985 (17 )UJ588 (SC ) The Division Bench found difficulty in agreeing with the view expressed in Hind Art Press case [1989 (59 )FLR778 ], ILR1989 KAR 2001 , 1989 (2 )KarLJ227 , (1990 )II LLJ195 Kant on the scope and ambit of Section 68 of the Act, and in view of this disagreement has referred the aforementioned three questions to a larger Bench of three Judges for opinion.