JUDGMENT Hon’ble Rakesh Tiwari, J.—Heard Sri Samir Sharma, learned counsel for the petitioner and Sri Rajesh Tiwari, learned counsel for the respondents. 2. The short question before the Court is whether the State Employees Insurance Corporation is liable to refund the amount in respect of the employees of the workshop U.P. State Road Transport Corporation. 3. The Corporation has framed its service regulation known as U.P. State Transport Corporation Employees (other than officers) Service Regulation, 1981 which has come into force w.e.f. 19.6.1981. The Employees State Insurance Act, 1948 is applicable to the workshops of the Corporation which come within the definition of Factory as defined by Section 2(12) of ESI Act. The Corporation has been divided into three wings—(a) Operational wing (which relates to plying of Corporation buses) (b) Administrative wing and (c) Workshops (for maintenance and repair of Corporation buses). The employees who are working in all the three wings are transferable from one wing to the other. 4. It is stated that the employees of the petitioner-Corporation were not satisfied with the benefits as provided under the E.S.I. Act and were not getting any benefits as provided under the Act, hence dissatisfied with the benefits as provided under the Act, approached the Court through their employees unions by filing writ petitions with a prayer that the employees ‘contribution’ under the Act may not be deducted from their wages as the medical facilities provided under the Act were not satisfactory. The Court granted interim orders in several petitions. The interim order passed in writ petition No. 138 of 1995, Roadways Karamchari Sanyukt Parishad v. State of U.P. is quoted below : “Notice of the petition on behalf of opposite parties has been accepted by Sri S.K. Kalia, who is allowed four weeks’ time to file counter affidavit. The petitioner shall have 10 days time thereafter to file rejoinder affidavit.The application for interim relief shall be listed for further orders before the learned Single Judge after the expiry of the above indicated period. In the meantime deductions from salary of the members of the petitioners Union shall not be made." 5. The petitioner shall have 10 days time thereafter to file rejoinder affidavit.The application for interim relief shall be listed for further orders before the learned Single Judge after the expiry of the above indicated period. In the meantime deductions from salary of the members of the petitioners Union shall not be made." 5. Earlier interim order was passed in writ petition No. 647 of 1986, U.P. Roadways Employees Union v. State of U.P. and others; writ petition No. 12431 of 1995, Central Regional Workshop Karamchari Sangh v. State of U.P. and others and writ petition No. 2481 of 1993, U.P. Roadways Employees Union v. State of U.P. and others. 6. In view of the aforesaid interim order passed in various writ petitions, the employer could not deduct the employees share of contribution from their wages, hence same was not deposited with the Employees State Insurance Corporation. Though under Section 40 of the Act principal employer is duty bound to pay the contribution as defined under Section 2(4) of the Act. The petitioner could not deposit the amount due to the interim orders operating against it as it had been restrained by the Court from deducting any amount from the wages of its employees. Subsequently large number of cases has been decided by the Division Bench dismissing the petitions on the ground of alternative remedy under Section 75 of the Act. In the meantime neither the contribution was deposited by the Principal employees nor any benefits were given under the Employees State Insurance Act since 1985 ; that the Employees State Insurance Corporation again revived executing proceedings against the petitioner and issued recovery certificates amounting to Rs. 19,33,151/- which included the contribution under the Act, interest and damages payable to the respondent’s Corporation w.e.f. 14.1 .1986. This amount was also recovered by the ESI Corporation from the petitioner. 7. In the meantime the petitioner-U.P. State Road Transport Corporation, Gorakhpur also approached the State Government for grant of exemption from the provisions of the Employees State Insurance Act. Consequently vide order dated 5.5.2003 exemption was granted to the petitioner corporation from the provisions of the Employees State Insurance Act under powers conferred by Section 88 and Section 91-A of the Employees State Insurance Act with retrospective i.e. w.e.f. 14.1.1986 for which the recovery certificate for sum of Rs. 19,33,151 had already been issued and amount was accorded by the ESI Corporation. 8. 19,33,151 had already been issued and amount was accorded by the ESI Corporation. 8. After grant of exemption the petitioner vide its letter dated 29.5.2003 requested the respondents E.S.I. Corporation for refund of the amount which was recovered from the petitioner. The representation of the petitioner-Corporation as well as reminder are said to be pending and unactioned till date. 9. Having failed to any response from the ESI Corporation, the petitioner filed writ petition 41116 of 2006, UPSRTC v. ESI Corporation which was disposed of by judgment dated 2.8.2006 directing the respondent ESI Corporation to decide the claim/representation within 8 weeks. Copy of the order in the aforesaid writ petition has been appended as Annexure 2 to the writ petition is as follows : “List revised. Heard learned counsel for the petitioner as well as learned counsel for the contesting respondents and perused the record. This is a writ petition for directing the respondent to refund the amount of Rs. 19,44,058/- to the petitioner­Corporation along with interest @ 10%. In the facts of the case, we direct the petitioner to file a fresh representation along with certified copy of this order as well as complete copy of the writ petition with all annexures before concerned Competent Authority within three weeks from today and on such a representation being filed, as stipulated above, the concerned Competent Authority shall decide the same within eight weeks of the receipt of the representation as contemplated above, exercising its unfettered discretion on the basis of record before him in accordance with relevant Rules, Government Order, Scheme/Policy, without being influence by any of the observations in this judgment since this Court has not entered into merits of the present case. Writ petition is finally disposed of subject to the above direction. No costs.” 10. Pursuant to the aforesaid order the UPSRTC submitted another representation on 19.8.2006 before the respondents ESI Corporation requesting for refund of the recovered amount on the ground that notification had exempted the applicability of the Act with retrospective effect from 14.1.1986 and on the ground that the employees of the petitioner-Corporation had not been given any benefit of the ESI Act during the aforesaid period. 11. 11. The Employees State Insurance Corporation vide order dated 8.3.2007 rejecting the representation of the petitioner-Corporation inter alia that refund/adjustment was not possible as there was no such provisions in the notification dated 5.5.2003 which is silent on this matter. Notification dated 5.5.2003 is quoted below : “Notification No. 1410/30-72003-5(55)-2002 Lucknow : Dated 5th May, 2003 Whereas the State Government is satisfied that the workshop Employees of UttarPradesh Rajya Sarak Parivahan Nigam are covered under Bureau of Public Enterprises/Medical Rules of Government. Now, therefore, exercise of power under Section 88 and 91-A of the said Act. The Governor after consultation with the Employees State Insurance Corporation, is pleased to exempt with effect from the date 14th January, 1986, the Uttar Predesh Rajya Sarak Parivahan Nigam from the operation of the said Act, subject to the following conditions : (1) The employer of the said establishment shall submit in respect of the period during which that establishment was subject to the operation of the said Act (hereinafter referred to as the said period) such returns in such form and containing such particulars answer due from it in respect of the said period under Employees State Insurance (General) Regulation, 1950. (2) Any Inspector appointed by the corporation under sub-section (1) of the Section 45 of the said Act or other official of the corporation authorised in this behalf shall for the purposes of— (i) verifying the particulars contained in any return submitted under sub-section (1) of Section 44 for the said period, or (ii) ascertaining whether registers and records were maintained as required by the Employees State Insurance (General) Regulation, 1950 for the said period, or, (iii) ascertaining whether the employees continue to be entitled to benefits provided by the employer in cash and kind being benefits in consideration of which exemption is being under this notification; or (iv) ascertaining whether any of the provisions of the Act had been complied with during the period when such provisions were in force in relation to the said establishment; be empowered to— (a) require the principal or immediate employer to him such information as he may consider necessary; or (b) enter any factory, establishment, office or other premises occupied by such principal or immediate employer at any reasonable time and require any person found incharge thereof to produce to such inspector or other official and allow him to examine such account books and other documents of wages or to furnish to him such information as he may consider necessary; or (c) examine the principal or immediate employer, his agent or servant, or any person found in such factory, establishment, office or other premises, or any person when the said inspector or other official has reasonable cause to believe to have been an employee; or (d) make copies of or take extracts from, any register, account book or other document maintained in such establishment, office or other premises." 12. The order dated 8.3.2007, which is impugned in the writ petition is being assailed on the following grounds : “1. The order dated 8.3.2007 is absolutely illegal, arbitrary, erroneous and perverse. The respondent No. 1 has erroneously relied upon the provisions of Regulation 40 of the ESI (General) Regulations, while coming to the conclusion that the application has not been filed by the petitioner Corporation in accordance with the provisions of the said Regulation. In fact Regulation 40 of the ESI (General) Regulations only relates to refund of contributions ‘erroneously’ paid, whereas in the present case, the contributions have been recovered from the petitioner Corporation. In fact Regulation 40 of the ESI (General) Regulations only relates to refund of contributions ‘erroneously’ paid, whereas in the present case, the contributions have been recovered from the petitioner Corporation. Hence the said Regulation is not applicable to the facts and circumstances of the present case. 2. The petitioner-Corporation has been granted exemption from the provisions of the Employees State Insurance Act, 1948 under Sections 88 and 91-A of the Act, with retrospective effect, w.e.f. 14.1.1986 by means of the notification dated 5.5.2003. Hence no recovery of any ‘contribution’ or interest under the Act, could be made from the petitioner-Corporation after 14.1.1986. 3. In view of the interim orders granted by this Court in various writ petitions filed by the Union of the employees of the petitioner-Corporation and also the writ petition filed by the petitioner-Corporation since the year 1985, no contribution could be deducted by the petitioner-Corporation from the salary of its employees under the Employees Insurance Act and nor could it be deposited with the Employees State Insurance Corporation. Moreover, in view of the interim orders, the ‘contribution’ under the Act also could not be recovered by the Employees State Insurance Corporation initially. Further more the Employees State Insurance Corporation also did not provide any benefit whatsoever under the Employees State Insurance Act, in view of the above circumstances, to any employee of the petitioner-Corporation, since the year 1985. Keeping in view of the aforesaid facts the exemption has been granted to the petitioner-Corporation from the provision of the Act w.e.f. 14.1.1986. Thus in these circumstances any amount of contribution/interest which” had been recovered by the Employees State Insurance Corporation from the petitioner­Corporation for any period beyond 14.1.1986 was absolutely illegal and hence the amount so recovered is liable to be refunded to the petitioner-Corporation with interest. 4. The order dated 8.3.2007 is absolutely illegal, arbitrary, erroneous and perverse. The respondent No. 1 has erroneously relied upon the provisions of Regulation 40 of the ESI (General) Regulations, while coming to the conclusion that the application has not been filed by the petitioner-Corporation in accordance with the provisions of the said Regulation. In fact Regulation 40 of the ESI (General) Regulations only relates to refund of contributions ‘erroneously’ paid, whereas in the present case, the contributions have been recovered from the petitioner-Corporation. Hence the said Regulation is not applicable to the facts and circumstances of the present case. In fact Regulation 40 of the ESI (General) Regulations only relates to refund of contributions ‘erroneously’ paid, whereas in the present case, the contributions have been recovered from the petitioner-Corporation. Hence the said Regulation is not applicable to the facts and circumstances of the present case. 5. In the impugned order, the respondent No. 1 has admitted the amount as being recovered is a total of Rs. 19,33,151/- but has rejected the claim for refund for the reason that “it would cause serious strain on the finances of the Scheme”. The respondent ESI Corporation was fully aware of the implications of the notification dated 5.5.2003 (granting exemption to the petitioner-Corporation from the provisions of the ESI Act with retrospective effect from 14.1.1986) and the effect of which was obvious i.e. refund of any contribution recovered from the petitioner-Corporation relating to the period after 14.1.1986. Hence the ESI Corporation is now stopped from taking a contrary stand." 13. It is urged by Sri Samir Sharma, learned counsel for the petitioner that the respondent No. 1 has clearly erred in relying upon the case law which is not applicable to the facts and circumstances of the present case as the contribution recovered from the petitioner­Corporation, pertained to the period subsequent to 14.1.1986 (i.e. when the petitioner-Corporation has been exempted from the applicability from the provision of the ESI Act). 14. While passing the impugned order the respondent has although relied upon the provisions of Section 91-A of the Act but had failed to consider the effect of the provisions of Section 88 of the ESI Act by which the exemption has been granted to the Corporation with retrospective effect. Yet, it justifies the recovery of contributions under the ESI Act from the petitioner-Corporation for the period beyond 14.1.1986 on non existent grounds. Thus the impugned order is perverse, arbitrary, unreasonable and against the material on record. Section 90-A has become redundant. 15. He submits that the claim for refund has been rejected on the ground that there was no provision for refund under the ESI Act “in respect of employees who have been exempted with retrospective effect.” In that respect he has relied upon the Notification dated 5.5.2003, by which the petitioner-Corporation has been exempted from the provisions of the Act and not the employees. Therefore according to him the said reasoning given in the order is absolutely misleading and untenable. 16. Therefore according to him the said reasoning given in the order is absolutely misleading and untenable. 16. Learned counsel for the petitioner then submits that the reasoning given in the order that because the amount had already been recovered by the ESI from the petitioner as such employees could be insured by the ESI Act for corresponding benefit period is wholly erroneous and untenable as employee could not be insured from retrospective effect and it is not a sure of the ESI Corporation to usurp the money of the petitioner. 17. Learned counsel for the respondents Sri Rajesh Tiwari had submitted that in the earlier writ petition facts are different and the amount had been recovered while the writ petition was pending wherein the petitioner, before filing of the writ petition and even before notification dated 5.5.2003 was issued recovery has been made. He submits that in similar notification issued under the ESI Act with regard to different Corporations, there is a specific provision prohibiting refund of the recovered amount if any, whereas there is no such provision in the notification dated 5.5.2003 relating to the petitioner-Corporation. Hence in absence of any such clause in the notification the intention of the State Government is clearly indicated that the amount so recovered was to be refunded. 18. In rebuttal learned counsel for the petitioner has submitted that the very fact that the notification is silent about the refund and exemption has been granted to the petitioner-Corporation with retrospective effect from 14.1.1986. The respondent ESI Corporation is liable to refund the recovered amount as it has been exempted with retrospective effect. He has relied upon the judgment rendered in writ petition No. 14967 of 2003, U.P. State Road Transport Corporation v. State of U.P. and others, 2006(4) ESC 2655 (All). 19. It is stated that even otherwise the recovery of interest made by the Employees State Insurance Corporation on the contribution was absolutely illegal, arbitrary and erroneous as the same could not be deposited by the petitioner-Corporation due to operation of the petitioner in view of the interim orders passed in various petitions stated above. Hence after issuance of notification petitioner is liable to refund the amount from ESI Corporation with interest at the rate of 15%. Hence after issuance of notification petitioner is liable to refund the amount from ESI Corporation with interest at the rate of 15%. 20 Having considered the submission made by the parties it is not disputed that the workmen of the company are aggrieved by the ESI Act and the action of the respondent ESI Corporation. The exemption notification could not have been issued unless the ESI Corporation has been heard. It appears that the same has been issued after hearing the parties. It is true that corporation could not deposit any contribution for no faults as they were complying with the interim order passed in various writ petitions as stated above by which they were restraining from deducting and subsequently depositing the contribution under the Act with the respondents, ESI Corporation. 21. It also appears that since 1985 no benefits have been given by the respondents to the employees of ESI Corporation as no contribution under the ESI Act was deducted by the petitioner Corporation. The recovery proceedings initiated by the petitioner pertains to recovery of contribution interest, damages for the period subsequent to the date of which the notification dated 5.5.2003 has become effective w.e.f. 14.1.1986, hence any amount recovered by the ESI Corporation after 14.1.1986 has to be refunded by the ESI Corporation to the petitioner as they were not liable to any contribution under the ESI Act w.e.f. 14.1.1986 i.e. from the date of exemption of the petitioner-Corporation. 22. It appears from the details given in Annexure 3 to the writ petition that out of total amount recovered from petitioner amounting to Rs. 19,33,151 is only a very small part pertains to recovery prior to 14.1.1986. The respondents ESI Corporation is not given any detail. Therefore, ESI Corporation will refund Rs. 19,33,151 w.e.f. 14.1.1986 after deducting any amount which was due towards contribution etc. prior to 14.1.1986. 23. In view of the facts made above impugned order dated 8.3.2007 passed by the ESI Corporation refusing to refund the amount of recovery made for the period 14.1.1986 onwards is illegal and is quashed. 24. The writ petition is accordingly allowed and it is directed that the aforesaid amount recovered by the ESI Corporation w.e.f. 14.1.1986 shall be paid/refunded it to the petitioner within a period of one month from today alongwith admissible interest @ 12% per annum which has charged damages etc. 24. The writ petition is accordingly allowed and it is directed that the aforesaid amount recovered by the ESI Corporation w.e.f. 14.1.1986 shall be paid/refunded it to the petitioner within a period of one month from today alongwith admissible interest @ 12% per annum which has charged damages etc. i.e. same rate of interest/penal interest has been charged by it when the amount was recovered from the petitioner by it. 25. No order as to costs. ————