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2013 DIGILAW 1113 (KER)

ESI Corporation v. Kerala Solvent Extractions

2013-12-18

S.S.SATHEESACHANDRAN

body2013
Judgment : 1. Employees State Insurance Corporation, hereinafter referred to as Corporation, is the appellant. Order passed by the Employees' Insurance Court, Palakkad (for short, 'E.I. Court') quashing the proceedings initiated against the respondent, a covered establishment, for determination of the sum, allegedly, due from it towards omitted contribution payable under Employees State Insurance Act, 1948 (for short, 'the Act') as barred by limitation, is challenged in the appeal. 2. Alleging that respondent had defaulted or omitted to pay contribution for the period from 01.04.1992 to 31.10.1992, Corporation initiated proceedings under Section 45A of the Act in 2003 imputing that registers and other records relating to the above period were not placed for verification. Such proceedings were challenged by respondent before the E. I. Court, and upholding its contentions the proceedings were quashed. That gave rise to an appeal before this Court, Insurance Appeal No.48/2009, at the instance of Corporation. Setting aside the order of E.I. Court the case was remanded by judgment dated 05.01.2010, by which the E.I. Court was directed to consider the question of limitation afresh taking note of the decision rendered in Employees' State Insurance Corporation v. Santha Kumar [2007(1) KLT 133(SC)]. On such remand, after reconsidering the issues involved in the proceedings, E.I. Court again set aside the demand notice issued by Corporation under the order challenged in this appeal. 3. I heard the counsel on both sides. Question involved in the proceedings whether steps taken by corporation issuing a demand notice to the respondent for determining the sums due towards omitted contribution for the period specified is barred by limitation or not, does not call for serious scrutiny in the light of amendment made to Section 45A of the Act, which has come into force with effect from 01.06.2010. Section 45A of the Act reads thus: “45A. Section 45A of the Act reads thus: “45A. Determination of contributions in certain cases.-(1) Where in respect of a factory or establishment no returns, particulars, registers or records are submitted, furnished or maintained in accordance with the provisions of section 44 or any [Social Security Officer] or other official of the Corporation referred to in sub-section (2) of section 45 is [prevented in any manner] by the principal or immediate employer or any other person, in exercising his functions or discharging his duties under section 45, the Corporation may, on the basis of information available to it, by order, determine the amount of contributions payable in respect of the employees of that factory or establishment. [Provided that no such order shall be passed by the Corporation unless the principal or immediate employer or the person in charge of the factory or establishment has been given a reasonable opportunity of being heard:] [Provided further that no such order shall be passed by the Corporation in respect of the period beyond five years from the date on which the contribution shall become payable.] (2) An order made by the Corporation under sub-section (1) shall be sufficient proof of the claim of the Corporation under section 75 or for recovery of the amount determined by such order as an arrear of land revenue under section 45B [or the recovery under sections 45C to 45-I].” 4. 2nd proviso added to the section spells out that no steps for determination of omitted contribution shall be made by Corporation in respect of a period beyond five years from the date on which the contribution become payable. In the present case the omitted contribution for the period involved became payable seven years before the commencement of proceedings under Section 45A of the Act. Order passed by this Court in the previous appeal of Corporation was rendered at a time when the decision of the apex court in Santhakumar's Case with respect to Section 45A of the Act, as it then stood, held that no period of limitation can be canvassed against proceedings over delayed or omitted contribution. After amendment to that section adding the 2nd proviso thereto, referred to earlier, which came into effect from 01.06.2010, the maximum period provided for initiating such proceedings for determination of omitted contribution is only five years from the date on which the contribution became payable. After amendment to that section adding the 2nd proviso thereto, referred to earlier, which came into effect from 01.06.2010, the maximum period provided for initiating such proceedings for determination of omitted contribution is only five years from the date on which the contribution became payable. In the present case, proceedings were pending for determination over omitted contribution when 2nd proviso was added to Section 45A of the Act. But where such proceedings having been initiated after the period of five years from which such contribution became done, it cannot be continued negating the effect of the 2nd proviso added to Section 45A, which has fixed an outer limit of five years for proceeding with determination over such delayed contribution. 5. Learned counsel for Corporation has argued before me that the proviso newly added has no retrospective effect since it has not been spelt out so in Section 45A of the Act. Reference is made to Section 91A of the Act where it has been specifically stated that the amendment made to that section has got only prospective effect. I do not find any merit in the submission made by counsel. Section 91A was inserted in the Act under Act 44 of 1966 and it came into operation from 17.06.1967. Previously, effect of that section with respect to grant of exemption under Sections 87, 88, 90 or 91 of the Act was to operate either prospectively or retrospectively. By subsequent amendment under Act 18 of 2010 dated 24.05.2010 the words 'either prospectively or retrospectively' were substituted by the word 'prospectively'. Previously, 91A of the Act has operation 'retrospectively or prospectively' and by the amendment its effect is restricted and limited to have prospective operation only. Such an amendment has been made to that section cannot be canvassed to contend that where the amendment made does not show of its operation retrospectively or prospectively it has to be read and given effect to as having prospective operation only. Where the 2nd proviso added to section 45A of the Act by amendment states that proceedings for determination of omitted contribution cannot be taken over the period preceding five years whet it become payable and the amendment made has not been limited to prospective operation only, then, it has applicability over proceedings already initiated by Corporation, where it has not become final. On the facts presented in the case, it is crystal clear that proceedings initiated by Corporation under Section 45A of the Act for determining omitted contribution from respondent, admittedly, proceeding the period of five years from which such contribution became payable are clearly barred by limitation. In view of the conclusion formed as above, I find the Order passed by E.I. Court quashing the demand notice issued by the Corporation has only to be upheld. Appeal is dismissed directing both sides to suffer their costs.