S. B. Wad ( 1 ) THIS appeal is directed against the order of the E. S. I. C. Judge in ESIC/13/74. This order was passed on 8. 3. 76, dismissing the appellant s application under section 75 read with Section 77 of the Employees State Insurance Act, 1948. In the said application the appellant bad contended that the notices issued by the respondent Corporation on 10th May, 1974 under Section 40 and Section 73 (a) and the orders of the recovery of Rs. 7099. 80 and Rs. ll,210. 00 were invalid. These orders were issued to the Collector for the recovery of the amounts as arrears of land revenue. ( 2 ) NOTICE under Section 40 was issued for non-present of the contribution for the period between 1. 7. 69 to January 1974. Notice under section 73 (a) for the special centibution was for the period between 30. 9 69 to 30. 6. 73. Shri B. K. Kitbhlu started a proprietory concern for manufacturing optical instruments 1963. In July 1971 it was registered as a factory and small scale industry. In April 1973 the concern was converted into a Private Limited Company. It is an admitted fact that after April 1973 the Company has been paying the contribution under the Employees State Insurance Act, 1948. ( 3 ) THE contention of the appellant is that the present Company cannot be directed to make the payment of any contribution for the period between 1969 to July 1971 because it was not even registered as a factory. It is then submitted that it is not obligatory under the Act to register a concern as a factory for being covered by the Act. It is further submitted that before taking the action of directing the said recovery, the respondent Corporation ought to have served a notice under Section 44 of the Act to submit their returns, giving the necessary particulars regarding the establishment and the employees working in the establishment. The appellant further complains that the procedure followed by the respondent Corporation is in total breach of the principles of natural justice. ( 4 ) THE learned Trial Judge relied on the report of three Inspectors, viz. Shanti Lal, S. S. Malik and V. S Khurana, and came to the conclusion that the relevant records and documents were not furnished by the appellant. ( 4 ) THE learned Trial Judge relied on the report of three Inspectors, viz. Shanti Lal, S. S. Malik and V. S Khurana, and came to the conclusion that the relevant records and documents were not furnished by the appellant. The learned Judge further held that from the statement RW 2/2, prepared by Inspector S. S. Malik, it was proved that more than 20 workers were working with the appellant for the relevant period, and that the appellant establishment was covered by the said Act. The learned Judge then held that the respondent Corporation was right in proceeding under Section 45 (A), to proceed on an ad hoc basis, as the relevant records were not available. The learned Judge found that there was no error or illegality committed by the respondent Corporation in relying on the information available with them in passing the impugned notices and orders. The said findings are challenged by the counsel for the appellant before me. ( 5 ) PARA 2 of the notice under Section 73 (A) states that as "the amount of employer s special contribution due from you is not known to this office on account of non-submission of S-2 returns, you may please show cause as to why assessment should not be made on ad hoc basis after working out the total wages at Rs. 250. 00 per month per employee, in accordance with the Government of India Notification No. 50/929 dated 24. 3. 72". So also para 6 of the notice under section 40 stated, "please show cause as to why assessment should not be made by order as provided under Section 45 (a) of the Employees State Insurance Act, as you have failed to comply as indicated in para 2". Para 2 of the notice has merely stated that the contribution for the period between July 1973 to March 1973 has not been paid. Although the said paras of the said notices give an impression that they are normal show cause notice, (whereby if the proper cause is shown no action will he taken), there is a direction contained in para 6 and para 7 respectively, directing the appellant to make payment within 21 days and 15 days respectively, on pain of recovery as arrears of land revenue and prosecution under the Act. By his letter dated 30. 6. 74, the appellant showed cause to the notice. By his letter dated 30. 6. 74, the appellant showed cause to the notice. In the said letter the appellant had specifically stated that no notice under section 44 (2) was issued to him. He had also volunteered to submit the relevant records and papers for the proper determination on the question as to whether the appellant esablishment was covered by the Act and whether they were liable to pay any contribution. The respondent Corporation did not pass any order after the said letter showing the cause was sent. At least the same has not been furnished to the appellant. On 17. 74 the appellant received the notices from the Collector for the deposit of the said amounts on or before 4. 7. 74 and 6 7. 74 respectively. Because of the threat of recovery of the amount as land revenue, the appellant deposited the said amount with the Collector. ( 6 ) HAVING gone through the plaint, the written statement, the documents on record and the orders passed by the respondent Corporation, it is clear that the entire procedure followed by the respondent Corporation is contrary to the principles of natural justice and is illegal. If the said notices under section 73 and Section 40 are to be treated as show cause notices, no action should have been taken by the respondent Corporation without considering the cause shown by the appellant, The notices ought to have provided for a reasonable time within which reply to show cause notices was to be filed. The said notices do not mention any time limit. After the cause was shown it is further obligatory on the respondent Corporation to pass a speaking order showing what material has been concealed therefrom and. stating why the appellant establishment was covered by the Act and on what basis and in what amount the contribution was asked from the appellant. As stated earlier, the two notices directed to appellant to make immediate payments. However. the notices did not mention any specific amount that should be paid by way of contribution. Without waiting for the cause to be shown or without considering the letter showing the cause, the respondent Corporation took a unilateral decision and directed the Collector to recover the said amount. However. the notices did not mention any specific amount that should be paid by way of contribution. Without waiting for the cause to be shown or without considering the letter showing the cause, the respondent Corporation took a unilateral decision and directed the Collector to recover the said amount. The appellant got knowledge of the exact amount of contribution as well as of the fact of their being covered under the Act only through the notice of the Collector for payment. In the letter showing the cause dated 30. 6. 74, the appellant bad expressed his readiness to produce the entire relevant record and documents. But, the Corporation did notcall upon the appellant to produce the record. The show cause notices were thus treated as an empty formality by the Corporation authorities and the amounts were recovered from the appellant by illegal use of the coercive methods under the Act. ( 7 ) BEFORE any action is taken under 45 (A), or 73 (A), it is necessary to ascertain with the help of proper evidence the exact number of workers working in the establishment at the relevant time. In the plaint, the appellant has alleged that no notice under Section 44 was served on them. This was also a specific ground taken by them in reply to the show cause notice. The fact that no show cause notice was issued under Section 44 has not been denied by the respondent Corporation in their written statement. However, it is simply asserted that since the requirement of Section 44 was not complied with by the appellant, action under Section 45a was taken. In other words, the respondent Corporation subscribed to the position that action under section 45 (A) can be followed only after compliance of Section 44, Section 44 of the Act states, "where in respect of any factory or establishment the Corporation has reason to believe that a return should have been submitted under sub-section (1) but has not been so submitted, the Corporation may require any person in charge of the factory or establishment to furnish such particulars as it may consider necessary for the purpose of enabling the Corporation to decide whether the factory or establishment is a factory or establishment to which this Act applies. " Section 45 (A) enables the corporation to proceed on the basis of the "information available to it", when the information as required by section 44 is not furnished. If an establishment is not called upon to produce the records and particulars as envisaged by Section 44 (2) by a notice, no action can be taken under section 45 (A) of the Act. This is so on a plain reading of Section 45 (8) where Section 44 is specifically mentioned. Sections 44 and 45 (a) together incorporate the sound principle of natural justice that no adverse or pre-judicial action should be taken unless the person has been given an opportunity and is beard. Breach of these provisions is another reason why the impugned orders are invalid in law. ( 8 ) THE Trial Court erred in relying on the reports of the Inspectors. RW. 2/2 is a hand-written statement, prepared by the Inspector with a number of erases at points. It is alleged by the Inspector that the report was prepared in the presence of the appellant. However, be did not obtain the signatures of the appellant. If the report was prepared on the basis of the attendance register, vouchers and the other records, as is asserted by the Inspector, the repeated allegation that the appelant did not cooperate in the production of the record is erroneous and has to be rejected. ( 9 ) FOR the reasons stated above, the impugned order, the show cause notices and the orders of the Collector, directing the appellant to make the payment of the said amount are illegal and are set aside. The respondent Corporation is directed to refund the amount which the appellant has deposited with them, within one month from today. The respondent Corporation is further directed to issue a fresh notice to the appellant under section 44 of the Act, give them an opportunity to produce the relevant record and after hearing them pass a fresh order. The order should be a reasoned order. ( 10 ) THE appeal is allowed with costs.