JUDGMENT : Heard Sri Rajiv Ranjan, learned counsel for the petitioner, Sri Rajan Raj, advocate for the respondent No. 2 to 4 and J.C. to G.P.-III for the respondent State. 2. The petitioner in this writ application has challenged the order dated 25.11.2005 (annexure-6) issued by the Recovery Officer, Employees State Insurance Corporation (Respondent No. 4) whereby an amount of Rs. 29,53,351/-, purported to be dues payable by the Indian Steel Wire Products Limited, Jamshedpur (Respondent No. 5), has been demanded from the petitioner and the amount has been attached. The demand of the aforesaid amount from the petitioner-company was made by the Respondent No. 4 on the ground that the petitioner-company has taken over the management and control of the Respondent No. 5 company and therefore the petitioner-company is liable to pay the dues which had accrued and was payable by the Respondent No. 5 company. 3. Contesting the impugned order of demand, the petitioner has protested that the petitioner-company has no legal liability to pay any dues of the Respondent No. 5 company since the Respondent No. 5 company is totally a different and distinct entity of its own and it is not a fact that the petitioner-company either owns or controls the management of the Respondent No. 5 company. 4. During the pendency of this writ application, this Court vide its order dated 10.07.2006 had stayed the recovery of the demanded amount from the petitioner company. It was however informed later, that prior to the passing of the interim order, the entire amount stood already attached by the Respondent No. 4 from the petitioner’s bank account on 04.07.2006. 5. The respondent Corporation has contested the petitioner’s claim in this writ application basically on the ground that the petitioner-company took over the control and management of the Respondent No. 5 company with effect from 20.12.2003 as such the petitioner-company has to bear the liability of the dues payable by the Respondent No. 5 company. 6. The stand taken by the Respondent No. 5 vide its counter affidavit is that the demand vide notice dated 24.08.2005 for payment of a sum of Rs. 29,53,351/-was raised by the Respondent Corporation against the Respondent No. 5. 6. The stand taken by the Respondent No. 5 vide its counter affidavit is that the demand vide notice dated 24.08.2005 for payment of a sum of Rs. 29,53,351/-was raised by the Respondent Corporation against the Respondent No. 5. The Respondent No. 5 had challenged the aforesaid demand before this Court vide W.P.(C) No. 7032 of 2005 on the ground that it had filed an application before the State Government in its appropriate department for exemption from the liability under the Employees State Insurance Corporation Act and had also obtained an interim order of stay of the demand till the disposal of the application which was pending before the State Government. It is also stated in the counter affidavit that payment of the demand is the exclusive liability of the Respondent No. 5 and it undertakes to pay the amount as and when the application for exemption is refused by the State Government. 7. The main controversy in this writ application is therefore, whether the petitioner-company can be held responsible for the liability of the Respondent No. 5 to pay the demanded amount towards contribution to the State Employees Insurance Corporation in respect of the employees working under the Respondent No. 5 ? 8. For better appreciation of the controversy, a brief statement of the background facts would be necessary. The Respondent No. 5 namely the Indian Steel Wire Products, earlier headed by its promoters Ravi Inder Singh and Indra Singh and Sons Pvt. Ltd., became a sick industrial company and was declared as such by the Board for Industrial and Financial Reconstruction (B.I.F.R.), on 24.09.2001. The Industrial Development Bank of India (I.D.B.I.) was appointed as the operating agency by the B.I.F.R. and it was assigned with the duty of ascertaining the liability of the erstwhile management of the Respondent No. 5 company. Pursuant to its appointment as the operating agency, the I.D.B.I. issued an advertisement for the change of management of the Respondent No. 5 company. In response, the petitioner-company submitted a proposal for taking over of the management of the Respondent No. 5 company. A rehabilitation scheme was prepared by the I.D.B.I. on the proposal made by the petitioner-company and the scheme for rehabilitation of the Respondent No. 5 company, was finally sanctioned by the B.I.F.R. on 22.10.2003. Under the sanctioned scheme for rehabilitation, the B.I.F.R. had allowed the change of promoters by substituting the petitioner-company. A rehabilitation scheme was prepared by the I.D.B.I. on the proposal made by the petitioner-company and the scheme for rehabilitation of the Respondent No. 5 company, was finally sanctioned by the B.I.F.R. on 22.10.2003. Under the sanctioned scheme for rehabilitation, the B.I.F.R. had allowed the change of promoters by substituting the petitioner-company. Thereafter the petitioner company took over the management and control of Respondent No. 5 and the factory of the Respondent No. 5 which was lying closed for six years, was reopened. Thus, since after the date of implementation of the Rehabilitation Scheme, the operation of the factory Respondent No. 5 company was revived with the petitioner-company as its promoters. During this period, the Respondent No. 5 company filed an application before the State Government in its appropriate department under Section 87 of the Employees State Insurance Corporation Act for its exemption from the liability under the provisions of the Act, on the grounds specified in the application. While the application was pending consideration and disposal before the concerned authorities of the State Government, the Respondent Corporation issued a demand notice to the Respondent No. 5 demanding payment of a sum of Rs. 29,53,351/-towards arrears of contribution due from April, 2004 to March, 2005. The Respondent No. 5 challenged the demand by filing a writ application before this Court and had obtained an interim order of stay of the demand till the disposal of the aforementioned application of the Respondent No. 5 by the State Government. A similar demand notice was issued by the Respondent Corporation against the petitioner also demanding payment of the aforesaid amount and on the petitioner’s failure to meet the demand, the Respondent Corporation had also proceeded to recover the amount by attachment of the same from the petitioner’s bank account. It is this impugned demand notice and the order of attachment of the bank account as made by the Respondent Corporation, that has been challenged by the petitioner in this writ application. 9. It is this impugned demand notice and the order of attachment of the bank account as made by the Respondent Corporation, that has been challenged by the petitioner in this writ application. 9. Explaining the grounds advanced in the writ application, Sri Rajiv Ranjan, learned counsel for the petitioner submits that the impugned order of demand as made by the Respondent Corporation and the action of the Respondent Corporation, attaching the amount from the petitioner’s bank account, is totally illegal and without jurisdiction since the petitioner-company cannot be saddled with the liability of the Respondent No. 5 company merely because the petitioner-company happens to be the promoters of the Respondent No. 5 company. Learned counsel explains that the Respondent No. 5 namely the Indian Steel Wire Products Limited, is a distinct and separate company, registered separately under the Companies Act and also under the Employees State Insurance Corporation Act and has its own assets and liabilities which are totally separate and distinct from that of the petitioner-company. The dues and liabilities arising in the name of the Respondent No. 5 company is payable therefore only by the Respondent No. 5 company and by no stretch of imagination can such liability be shifted and fastened upon the petitioner-company. Learned counsel adds that the petitioner-company is also distinct and separate company registered both under the Companies Act and also under the Employees State Insurance Corporation Act and therefore owes its liabilities towards its own employees under the Employees State Insurance Corporation Act and not the liabilities towards the employees of the Respondent No. 5 company. Learned counsel adds further that the petitioner company does not come within the meaning of “Principal Employer” of the employees of the Respondent No. 5 company as defined under Section 2(17) of the Employees State Insurance Corporation Act. Rather, the Respondent No. 5 company, being itself a legal entity and owner of its factory, is the principal employer of its employees and the liability, if any, under the Employees State Insurance Corporation Act, has to be treated as the exclusive liability of the Respondent No. 5 company only. Even the Directors of the Respondent No. 5 company would not be governed by the definition of “Principal Employer”, as laid down under the Act. To buttress his argument, learned counsel refers to the judgement of the Supreme Court in the Case of Regional Provident Fund Commissioner & Ors. Even the Directors of the Respondent No. 5 company would not be governed by the definition of “Principal Employer”, as laid down under the Act. To buttress his argument, learned counsel refers to the judgement of the Supreme Court in the Case of Regional Provident Fund Commissioner & Ors. Vs. ABS Spinning Orissa Ltd. & Anr. vide Civil Appeal No. 6928 of 2002 and to another case namely the case of Employees State Insurance Corporation Vs. S.K.Aggarwal and Others 1998(6) SCC 288 . It is further submitted that even otherwise, in view of the specific declaration given by the Respondent No. 5 company in its counter affidavit stating therein that it is prepared to acknowledge and meet its liability towards payment of the demanded amount in the event its application for exemption under the E.S.I.C. Act is refused by the State Government, the Respondent Corporation may take whatever appropriate measures for recovery of the amount from the Respondent No. 5 company alone and no such recovery can be made from petitioner company. 10. As against this Sri Rajan Raj learned counsel for the Respondent Corporation would argue that the ground pleaded by the petitioner that the Respondent No. 5 company is a separate and distinct entity having no connection with the petitioner-company, is incorrect and misleading. Referring to the specific paragraphs of the writ application, learned counsel argues that the petitioner-company has admitted to have taken over the management and control of the Respondent No. 5 company and the said company which was closed for more than six years, has been now reopened. Learned counsel argues that from the aforestated admission of the petitioner, it would be manifest that the petitioner-company took over the control and management of the Respondent No. 5 company on and from 22.11.2003 and as such, the petitioner-company has to bear the liability of the Respondent No. 5 company towards payment of the demanded amount. Learned counsel would argue further that the controversy as raised by the petitioner in this case has to be resolved by looking at the “economic realities behind the legal façade” and not confined only to a narrow legalistic view. Learned counsel would argue further that the controversy as raised by the petitioner in this case has to be resolved by looking at the “economic realities behind the legal façade” and not confined only to a narrow legalistic view. Learned counsel would explain further that where the character of a company, or the nature of the persons who control it, is a relevant feature, the Court will go behind the mere status of the company by “lifting the corporate veil” and find out where the real control and management of the company lies. To buttress his argument learned counsel would refer to and rely upon the judgement of the Supreme Court in the case of State of Uttar Pradesh Vs. Renusagar Power Company 1998 A.I.R.(SC) 1737. 11. From the facts of the case it appears that in order to rehabilitate the Respondent No. 5 company, a rehabilitation scheme was floated by the B.I.F.R. under which the proposal offered by the petitioner-company was accepted and pursuant to such acceptance, a change in the promoters of the Respondent No. 5 company was allowed and the petitioner company was substituted. The revival of the Respondent No. 5 company was thereafter effected under the promotership of the petitioner-company. In the entire process of rehabilitation, the identity of the Respondent No. 5 company as a distinct and separate entity from its promoters namely the petitioner-company, has been maintained. As indicated by the submissions of the learned counsel for the petitioner, the scheme for rehabilitation did only provide that the petitioner-company could nominate persons for the Board of Directors of the Respondent No. 5 company and nothing further. Nothing has been brought by the respondents to confirm that the petitioner-company has taken over ownership of the Respondent No. 5 company or that the decision of the Board of Directors of the Respondent No. 5 company are guided and governed by the petitioner-company. Nothing has been brought on record by the Respondent Corporation to suggest that the Respondent No. 5 company is a 100% subsidiary of the petitioner-company. Nothing has been brought on record by the Respondent Corporation to suggest that the Respondent No. 5 company is a 100% subsidiary of the petitioner-company. Thus, even “by lifting the veil of corporate entity”, as the learned counsel for the Respondent Corporation would want to, it is absolutely clear that the petitioner-company is neither the owner nor does it have absolute control over the business of the Respondent No. 5 company or over the decisions taken by the Board of Directors of Respondent No. 5 company. For the same reasons, it cannot be said that the petitioner company is the Principal Employer of the employees working under the Respondent No. 5 company. For all practical purposes, the Respondent No. 5 company enjoys a status and identity of its own, distinct and separate from the petitioner-company. Thus, the factory in which the workers are employed and in whose respect the claim for contribution has been raised by the Respondent Corporation, is owned by the Respondent No. 5 which is a limited company and which, even as per the definition under Section 2(17) of the E.S.I.C. Act, is the principal employer. It is by now well established by a catena of decisions of the Supreme Court that even a subsidiary company has its separate existence as against the holding company and therefore the holding company is not liable to bear responsibility for the debt owed by the subsidiary company. The principle of “lifting the corporate veil” was explained and applied by the Supreme Court in the context of the facts before it that the respondent-company namely the Renusagar Power Co., was a 100% subsidiary of Hindalco fully controlled by Hindalco in all aspects. Such is not the facts in the present case. As such, the judgement in the case of State of Uttar Pradesh Vs. Renusagar Power Company (Supra) would not apply to the facts of the present case. 12. As it appears from the declaration made in the counter affidavit of the Respondent No. 5 company, it has undertaken its responsibility to pay the demanded amount in the event its application for exemption from the provisions of the Employees State Insurance Corporation Act is refused by the State Government. Since the Respondent No. 5 has undertaken the liability, the Respondent Corporation may have a right to recover the amount from the Respondent No. 5 company only and not from the petitioner-company. Since the Respondent No. 5 has undertaken the liability, the Respondent Corporation may have a right to recover the amount from the Respondent No. 5 company only and not from the petitioner-company. 13. In the light of the facts and circumstances and the discussions made above, I find merit in this writ application and accordingly the same is allowed. The impugned order of the Respondent Corporation issued under the signature of the Respondent No. 4 and the order of attachment of the amount of demand, as passed by the Respondent No. 4, from the bank account of the petitioner is hereby quashed. The Respondent Corporation is directed to refund the attached amount, together with statutory interest, to the petitioner within one month from the date of this order.