EMPLOYEES STATE INSURANCE CORPORATION Vs. SEENULAL

JUDGEMENT

(1.) In these two appeals common questions of law arise for decision of this Court. The parties in these two appeals are also the same. The appellant issued show - cause notices to the respondent to show - cause, why criminal prosecution should not be initiated against him for non - payment of contributions under the Employees State Insurance Act for different periods in respect of the employees of the Co - operative Society of which the respondent was the then President. The respondent challenged the show - cause notices before the Employees Insurance Court, Alappuzha, which was adjudicated by the Employees Insurance Court as IC Nos. 6 and 7 of 2004. In the ICs, the respondent sought a declaration that the proposal to initiate criminal prosecution against the respondent as per the show - cause notice is unsustainable on the ground that the liability is only on the Co - operative Society of which he was the President at the relevant time and the respondent has no personal liability to pay the same. The EI Court, relying on the decision of the Division Bench of this Court in Suseelan v. State of Kerala reported in 2002 (1) KLT 226 , 2002 KHC 49 : 2002 (1) KLJ 16 : ILR 2002 (1) Ker. 236, held that insofar as the respondent is only the president of a Co - operative Society, he is not personally liable for the default of the society in payment of contributions under the ESI Act and declared that the proposal for prosecution of the respondent for the default as per the show - cause notices is unsustainable. The appellant is challenging the judgments of the EI Court.

(2.) The appellant raises two contentions. The first is that, initiation of prosecution proceedings is not one of the subject - matters enumerated in S.75 of the Employees State Insurance Act, in respect of which only a person can approach the EI Court under that Section. The second is that, what was issued to the respondent was not a demand for payment of contributions, for which only Suseelan's case applies, but a show - cause notice directing him to show - cause, why criminal prosecution should not be initiated against him for non - payment of contributions by the society, since he was a person in - charge of the affairs of the Society at the relevant time, as contemplated in S.86A of the Employees State Insurance Act. According to the appellant, the reliance by the EI Court on the decision in Suseelan's case is misplaced. It is submitted that, the issue in Suseelan's case was as to whether, the secretary of a Co - operative Society is personally liable to pay contributions payable by the society under the Toddy Worker's Welfare Fund Act, 1969. In that decision, while holding that the secretary of the society has no personal liability for payment of contributions under the Act, the Division Bench has specifically observed that, the question will be different in the case of the prosecution, for which under S.15 of Toddy Worker's Welfare Fund Act, 1969, separate provision is made, making every officer of the Co - operative Society personally liable for punishment along with the society. The EI Court lost sight of that part of the decision, even after quoting that part also in the judgment, insofar as the ratio of that part of the decision would be squarely applicable to the facts of this case in view of S.85 read with S.86A of the ESI Act, is the contention raised by the appellant.

(3.) In answer, the counsel for the respondent would contend that his applications are maintainable under S.75 of the Employees State Insurance Act. He relies on sub-section (d) of S.75(1) of the Employees State Insurance Act, in support of that contention, which according to him, gives powers to the EI Court to deal with the question or dispute as to the person who is or was the principal employer in respect of any employee. According to the counsel for the respondent, for initiating prosecution against the respondent, certainly the question as to, whether he is the principal employer would arise insofar as only the principal employer is liable to pay contributions under the Act. Therefore, the prosecution can also be initiated only against the principal employer. The respondent's application contending that he is not the principal employer of the society, can certainly be decided by the EI Court under S.75, is the contention. He also contends that, insofar as he is only the President of the Society, he has no personal liability in respect of the contributions payable by the society under the Employees State Insurance Act and therefore no prosecution would also lie against him for non - payment of contributions under the ESI Act.