MESSRS. K.C.S. DHANUSKODI NADAR AND SONS & CO. Vs. EMPLOYEES STATE INSURANCE CORPORATION BY ITS REGIONAL DIRECTOR, MYLAPORE, MADRAS

JUDGEMENT

(1.) The petitioners pray for issue of a writ of mandamus or any other appropriate writ, direction or order to forbear the respondent, the Employees' State Insurance Corporation, represented by its Regional Director, from recovering the contribution of Rs. 1054 under the provisions of S. 73 (d) of the Employees State Insurance Act, hereinafter referred to as the Act. The petitioners, a partnership firm, had a factory for the fabrication of tin containers. The factory was closed down on 24th September, 1958. The entire staff was disbanded and of course the petitioners ceased to run the factory. Under the Government of India Notification, dated 16th February, 1952, issued under S. 73 (E) of the Act, all the principal employers in the Madras State were required to furnish information to the Regional Director, Employees State Insurance Corporation (hereinafter referred to as the Corporation) so that the requisite action for coverage of the employees for the amenities provided under the Act may be taken. The petitioners furnished the particulars in Form S.C. 1 only on 5th January, 1959. The petitioners were informed by the Regional Director of the Corporation that their factory was covered by the Act on and from 1st July, 1958. The factory was inspected by the Insurance Inspector on Several dates, 29th May, 1959, 10th September, 1959 and 11th September, 1959 and he reported that it fell within the provision of the Act on and from 1st May, 1957. The petitioners were asked to produce certain records by the Director but they failed to do so. In spite of the best efforts taken by the Director the petitioners persistently defaulted in not producing any of the records called for. Even a threat of prosecution did not persuade the petitioners to comply with the directions of the Director. It however appears that the petitioners made payments of Rs. 22 and Rs. 44 on 15th April, 1959 towards the Employers' Special Contribution and Employees' Contribution respectively. But the payment was not made as a result of any determination by the authority regarding the quantum of contribution payable by the petitioners.

(2.) The petitioners did not at any time deny that the factory was within the Act on and from 1st May, 1957. The petitioners made a statement in their return dated 5th January, 1959, that was only on and from 1st July, 1958, twenty persons or more worked in the factory premises. It must be mentioned that if a factory employed less than 20 persons, it would not be within the ambit of the Act. It was on the basis of this information that the petitioners' factory was provisionally treated as being under the Act only from 1st July, 1958. The Director came to know subsequently that the petitioners' factory was within the Act for a long period even prior to 1st July, 1958. The Inspector found that the factory licence of the petitioners dated 1st July, 1957, had authorised them to employ fifty men. The petitioners were called upon to substantiate their statement that 20 persons or more were entertained in the staff only from 1st July, 1958, but they failed to do so. The report of the Inspector of Factories, I Circle, Madras -2, showed that according to the records available in his office 29 persons were found working on 16th May, 1956, 23 persons on 19th December, 1957, in the petitioners' factory. The Director therefore concluded quite properly that the petitioners' factory became covered by the Act from 1st May, 1957. Indeed the conduct of the petitioners in withholding all relevant documents from the Director on the pretext that they were not available would indicate that their version of employment of 20 and more persons only from 1st July, 1958, could not be true.

(3.) By notice dated 20th January, 1960, from the Director the petitioners were requested to produce the records of their factory within 15 days of the receipt of the notice. It was specifically mentioned in that notice that action would be taken under S. 73 (d) of the Act for recovery of the dues calculated on ad hoc basis, without any further notice if the petitioners failed to produce their records. The Director had jurisdiction to make an ad hoc levy in view of the notification in S.R.O. 224, dated 19th January, 1957. It is under these circumstances that the petitioners have been called upon to pay the sum of Rs. 1054. The petitioners having failed to pay the contribution, action under the Rent Recovery Act as prescribed by the Act has been resorted to by the statutory authorities.