The appellant is challenging a judgment dated June 8, 1999, by the ESI Court, which dismissed their application under Section 75 of the Employees’ State Insurance Act, 1948 (ESI Act), against an order from the Employees’ State Insurance Corporation (ESIC) dated April 17, 1990. The ESIC determined ESI contributions amounting to Rs. 23,886 and interest of Rs. 4,440 for the period between November 1977 and December 1985. The appellant contends that they did not employ more than ten workers before February 1986, disputing the inclusion of two individuals, Mr. V. P. Sampat and Mr. M. V. Joshi, as employees. The ESI Court ruled they were employees based on cash book entries, not wage registers. This ruling was found to be perverse by the appellate court, which quashed the ESIC order, stating the establishment did not employ ten or more workers during the notice period and thus was not covered by the ESI Act.

Main Content with Headings

1. Introduction

By the present appeal, the appellant is challenging the judgment dated June 8, 1999, by the ESI Court, which dismissed the application filed by the appellant under Section 75 of the Employees’ State Insurance Act, 1948 (ESI Act), challenging the order dated April 17, 1990, passed by the Employees’ State Insurance Corporation (ESIC), Pune, under Section 45-A of the ESI Act.

2. Facts Leading to the Appeal

The appellant-establishment, engaged in the manufacturing of packing boxes, plywood reels, and strip drums, complied with the ESI Act by paying contributions from February 1986. The appellant contends they never engaged ten or more employees prior to February 1986. Following an inspection and subsequent correspondence, the ESIC determined contributions for the period between November 1977 and December 1985, asserting that the establishment employed more than ten workers during that period.

3. Disputed Employees

The core issue is whether Mr. V. P. Sampat and Mr. M. V. Joshi were employees during the notice period. If they were considered employees, the establishment would be covered by the ESI Act. If not, the establishment would not be covered.

4. ESI Court Findings

The ESI Court concluded that Mr. Sampat and Mr. Joshi were employees based on cash book entries, despite their names not appearing in the wage register. The court inferred this was to avoid ESI compliance and upheld the ESIC order.

5. Appellant's Contention

The appellant argues that Mr. Sampat and Mr. Joshi were part-time professionals for accounts and statutory compliances, not employees. They challenge the ESI Court's finding as perverse and based on assumptions without supportive evidence.

6. Evidence Review

• Mr. Mahdeo W. Joshi’s Testimony: He visited the appellant company once a month for compliance work and was never an employee. He mentioned that Mr. Sampat, who was deceased, also provided accounting services.
• Inspector Mr. Vishnu Prabhu Kadam’s Testimony: He found cash book entries for Mr. Sampat and Mr. Joshi but no record in the wage register. He did not recall seeing Mr. Joshi at the premises.
• Inspector Mr. Shamsunder Deoraj Juneja’s Testimony: Confirmed cash book entries for Mr. Joshi and Mr. Sampat but did not find them at the premises during his visits.

7. Court's Conclusion

The appellate court found the ESI Court’s inference that the cash book entries indicated employment to avoid ESI coverage was unfounded and unsupported by evidence. The finding that Mr. Joshi and Mr. Sampat were employees was deemed perverse.

8. Judgment

The appellate court ruled that the establishment did not employ ten or more workers during the notice period and was not covered by the ESI Act during that time. The ESIC order dated April 17, 1990, was quashed.

9. Appeal Outcome

The appeal was allowed, and the impugned ESIC order was set aside.