TATA TEA LIMITED Vs. JOINT DIRECTOR, ESIC

JUDGEMENT

(1.) Heard the learned counsel for the appellant and learned counsel for the respondent No.1.

(2.) The factual matrix of the case of the respondent No.1-Employees State Insurance Corporation ('ESI' for short) is that on 11/6/2007, 22/6/2007 and 20/8/2007, the Insurance Inspector visited the appellant-establishment at Bangalore and noticed non-payment of contribution. Hence, issued a letter directing the appellant to produce the records immediately before the Insurance Inspector after fixing his prior appointment. On 19/11/2007, the appellant replied to the letter sent by the respondent No.1 and in view of non-satisfaction of reply, on 17/4/2008, the respondent No.1 issued a C-18 notice and in pursuance of the same, the appellant submitted a letter before the Deputy Director in person on 22/4/2008. The respondent No.1 passed an order dtd. 24/4/2009 under Sec. 45-A of the Employees State Insurance Act, 1948 ('ESI Act' for short) directing the appellant herein to pay the omitted contribution in a sum of Rs.2,40,320.00 for the period from 2004 to 2007. The same is challenged before the ESI Court and the ESI Court having considered the application filed by the appellant under Sec. 75 of the ESI Act, considered the grounds which have been urged and dismissed the E.S.I. Application No.7/2009. Being aggrieved by the said order of rejection, the present appeal is filed.

(3.) Learned counsel for the appellant would contend that the order passed by the respondent No.1 is arbitrary and without jurisdiction. The respondent No.2-White Cliff Tea Pvt. Ltd. is a separate Private Limited Company registered under the Companies Act, 1956 and having its registered office. The respondent No.2 has a separate ESI Code No.53-13809-82, under which it makes contribution to its employees. The appellant has entered into manufacturing agreements from time to time with respondent No.2 and those agreements were also produced before the Insurance Inspector at the time of inspection and clearly explained to him that appellant and respondent No.2 are different companies having no connection whatsoever and are two different legal entities. It is contended that respondent No.2, as per the manufacturing agreement, packs the tea for the appellant at its manufacturing facility at Hyderabad. The agreement between the appellant and respondent No.2 is on a principal basis as per Clause No.11 of the said manufacturing agreement. The appellant is not having any supervision of work and there is no relationship of principal employer and a contractor. That apart, respondent No.2 is not a contractor as per the Contract Labour under the Contract Labour (Regulations and Abolition) Act. It is contended that appellant pays respondent No.2 only packing charges as per the agreement based on the quantity packed and fixed charges as administration expenses. The packing charges are also annexed to the manufacturing agreement. It is further contended that no labour invoice is raised by respondent No.2 on the appellant. As per Clause No.1.5 of the manufacturing agreement, invoice means invoice raised for manufacturing activity only. It is submitted that respondent No.2 has a separate factory licence for its facility at Hyderabad. It is submitted that despite explaining the facts very clearly time and again, the ESI Corporation, only to harass the appellant has passed the order under Sec. 45-A of the ESI Act and the same is without jurisdiction.