BRITANNIA INDUSTRIES LTD Vs. REGIONAL DIRECTOR EMPLOYEES

JUDGEMENT

(1.) Invoking Article 226 of the Constitution of India, the petitioners herein have filed the present writ petition seeking for a writ of certiorari to call for the records in order No. TN/INS-VI/51/9236-09, dated August 11, 1992, and to quash the same.

(2.) In support of the writ petition, the petitioner herein has filed an affidavit wherein they have narrated all the facts and circumstances that forced them to file the present writ petition and requested this Court to allow the writ petition as prayed for. Per contra, on behalf of the respondent, a counter-affidavit has been filed rebutting all the material allegations levelled against them, one after the other, and ultimately they have requested this Court to dismiss the writ petition for want of merits.

(3.) The petitioner is a registered company and is manufacturing biscuits, bakery and other confectioneries and they employ about 1,040 number of workmen, and has its factory at Padi, Madras. The employees of the petitioner-company are covered under the Employees' State Insurance Act and contributions in respect of them have been paid regularly to the Employees' State Insurance Corporation. The respondent herein issued a notice No. TN/INS-51/9236-09, dated November 16, 1989, calling upon the petitioner to show cause as to why contributions should not be recovered in respect of payments made to certain contractors engaged by the petitioner for putting up construction of R & D centre canteen block and for maintenance and repair of buildings, vide show cause notice dated November 16, 1989. The respondent demanded a sum of Rs. 7,44,854.14 as contribution in respect of the employees engaged by the contractor for various purposes in the petitioner establishment. A reply dated December 13, 1990, was sent to the respondent denying the liability of the petitioner towards the contributions demanded under the show-cause notice dated November 16, 1989. The claims made against the petitioner in respect of the employees engaged through contractors related to the construction of the R & D Centre, which is a separate unit operating under its own factory licence and has got no functional nexus with the petitioner factory. That apart, the canteen block is not part of the activities of the factory since it came into existence only in August, 1988. Further, regarding the demand of contribution for the welfare centre, it is the case of the petitioners that the same has been constructed outside the factory premises and it is not part of any work, which is ordinarily part of the work of the factory or establishment. They also filed an application dated February 13, 1990, to implead the contractors to whom the job of the construction was entrusted to, and the application filed by the petitioner was allowed and notice was issued by the respondent to the three contractors calling upon them to appear for enquiry and to produce records. Pursuant to the notice issued by the respondent all the three contractors appeared before the respondent for enquiry and submitted records to show the details of the payment made to them under the building contract. The respondents, after conducting elaborate enquiry for more than a year and after perusing the records and all the documents filed by the petitioner and the contractors, issued his order under Section 45-A of the Employees' State Insurance Act dated June 18, 1991, determining a sum of Rs. 1,26,320 as contribution for the period December 1, 1985, to March 31, 1989, together with interest at 6 per cent. per annum till October 19, 1989, and 12 per cent. per annum from October 20, 1989, till the date of the order. In the said order dated June 18, 1991, issued by the respondent under Section 45-A of the Employees' State Insurance Act, the liability of each of the individual contractors was determined by the respondent himself. The petitioner herein without prejudice to any of the rights, paid a sum of Rs. 1,26,320 determined as contribution payable together with interest of Rs. 24,127.15 by the respondent by his order dated September 24, 1991. The respondent herein issued a notice dated September 24, 1991, calling upon the petitioner to show cause as to why damages should not be levied under Section 85-B (1) of the Employees' State Insurance Act for the delayed payment of ESI contribution, for which proceedings were earlier initiated. A detailed reply was sent by the petitioner denying their liability for any damages. According to them, even though the principal employer was liable to ensure that the employees of the contractors are covered under the Employees' State Insurance Act, no liability for any penal damages could be cast upon the petitioner under the provisions of the Employees' State Insurance Act. Further, according to them, since the contractors themselves have been made parties to the proceedings under Section 45-A of the Act, notices have to be issued to the contractors and proceedings for damages can be initiated only against them for the recovery of damages. However, the respondent has issued order dated August 11, 1992, levying a sum of Rs. 50,265 as damages for delayed payment of contribution under Section 85-B of the Employees' State Insurance Act. Aggrieved by the said order, the petitioners have come forward with the present writ petition.