EMPLOYEES STATE INSURANCE CORPN Vs. BALARAMAN

JUDGEMENT

(1.) Employees' State Insurance Corporation challenges the judgment of the Employees' Insurance Court in I.C. No. 93/89. A Tile Factory owned by one Francis was attached by the Civil Court at the instance of his creditors. The Sub Court, Irinjalakuda appointed a Receiver. The respondent herein took the possession of the factory on lease arrangement from the Court Receiver. Prior to his taking over, for two years the factory was not working. After the renovation when the factory started functioning he engaged more than the required employees and started the coverage of the employees under the E.S.I. Scheme. Contributions were regularly paid. Thereafter he purchased the factory in Court auction. The ownership was vested in a partnership firm in which respondent was the Managing Partner. Then the factory was sold by him in 1985 to M.D. John & Sons and they are running the factory now. But contribution was demanded for the period from 5.7.1975 to 26.11.1977 by letter dated 4.10.1989 (Ext. D4). The respondent filed a representation questioning the above demand on the contention that he was not running the factory during the relevant time. It was contended that he got possession from the Court Receiver and therefore he is not liable to pay the arrears of contribution even if there are arrears of contribution payable by the previous owner. It was again contended that the demand for provisional contribution was made after 12 years of the period in question and therefore it is barred by limitation. Finally it was contended that in 1985 he sold the establishment and therefore if at all a demand will lie, that will lie against the present employer. The Employees Insurance Court accepted all the three contentions and allowed the application with cost.

(2.) The main contention taken up before this court is that under S.93A of the Employees' State Insurance Act, when transferee received the factory by sale, lease or gift, he is liable to pay the contribution. S.93A of the ESI Act reads as follows:

(3.) It is stated that the respondent had transferred the establishment again in 1985 and the demand was made only in 1989, after the transfer. If the contention of the Corporation is correct, as per the very same S.93A, it is for the Corporation to demand contribution from the present employer. But even after the name was pointed out in the pleadings by the respondent, Corporation did not make any demand against the present employer. Since respondent was not in possession of the establishment from 5.7.1975 to 26.11.1977 and he was not running the establishment as that time or at present, he is not liable to pay contribution for the above period.