JUDGMENT V.M. Pancholi, J. 1. This appeal is filed under section 82(2) of the Employees State Insurance Act, 1948 (ESI Act for short) against the judgment and order dated 6.2.2004 passed by ESI Court No. 1, Rajkot in ESI Application No. 20 of 1998. In this appeal, the appellant has mainly raised following substantial questions of law: "1. Whether in absence of the exemption from the Government for a period of demand and recovery made by the Corporation is Lower Court has jurisdiction to direct for refund of the amount?-- 2. Whether the notification for exemption issued by the Government is retrospective or prospective?" 2. The factual matrix of the present case is as under: 3.1. The present respondent - original applicant - Rajkot Municipal Corporation had filed an application under section 75 of the Employees State Insurance Act before the ESI Court, Rajkot, wherein it has been stated that the present appellant - ESI Corporation applied the provisions of ESI Act to Rajkot Municipal Corporation. However, thereafter the representation was made and therefore the State Government issued the notification dated 09.05.1989, whereby, Rajkot Municipal Corporation was exempted from the provisions of the said Act. Thus, though the provisions of the said Act are not applicable and the applicant - Rajkot Municipal Corporation was exempted in May, 1989, ESI Corporation has illegally recovered an amount of Rs. 97,517/- and the said amount was directly recovered from the bank account of Rajkot Municipal Corporation. Thus, without giving any opportunity of hearing, the amount was recovered from the bank without considering the notification and therefore it was prayed that the Court may declare that provisions of ESI Act would not be applicable in view of the notification and ESI Corporation be directed to refund the amount of Rs.97,517/- with interest. 3.2. The appellant - ESI Corporation filed reply before the ESI Court and pointed out that M/s. Aji Dem Filter Plant, situated at Bhavnagar Road, Rajkot is owned and controlled by Rajkot Municipal Corporation. The said filter plant was covered under ESI Act with effect from 1.4.1962. Rajkot Municipal Corporation paid contribution from 1.4.1962 onwards and thereafter applied for exemption under section 73-F of ESI Act. However, the said request was not accepted by ESI Corporation. Accordingly, the Rajkot Municipal Corporation paid the contribution up to September, 1988. The said filter plant was covered under ESI Act with effect from 1.4.1962. Rajkot Municipal Corporation paid contribution from 1.4.1962 onwards and thereafter applied for exemption under section 73-F of ESI Act. However, the said request was not accepted by ESI Corporation. Accordingly, the Rajkot Municipal Corporation paid the contribution up to September, 1988. It is further stated in the said reply that the Rajkot Municipal Corporation approached the State Government for exemption under section 90 of ESI Act. The State Government by notification dated 9.5.1989 granted the exemption to Aji Dam Filter Plant of Rajkot Municipal Corporation w.e.f. the date of publication of the notification in the Official Gazette. 3.3. It is further stated in the reply by the ESI Corporation that ESI Corporation has recovered an amount of Rs. 97,517/- through the Recovery Officer under section 45-C to 45-1 of ESI Act in September, 1997. It is the case of the ESI Corporation that the said recovery was for the amount outstanding for the period prior to the date of exemption and demand was made several times. The details of the same are given in para 3 of the reply. 3.4. The ESI Court, after considering the documentary evidence produced before it, held that ESI Corporation has illegally recovered an amount of Rs. 97,517/- from Rajkot Municipal-Corporation and directed. the ESI Corporation to refund the said amount. It is this order which is challenged by the ESI Corporation by filing the present appeal. 3. Heard learned Advocate Mr. Hemant S. Shah for the appellant and learned Advocate Mr. Hriday Buch for respondent Corporation. 4. Learned advocate Mr. Hemant Shah for the appellant mainly contended that the State Government issued the notification on 9.5.1989, whereby, the exemption is granted to the respondent with effect from the date of publication of the notification in the Official Gazette. The recovery of Rs. 97,517/- is for the period prior to the date of exemption notification for which several times demand was made. Learned advocate Mr. Shah referred various notices i.e. C-18 and C-19 issued by the appellant from time to time. The recovery of Rs. 97,517/- is for the period prior to the date of exemption notification for which several times demand was made. Learned advocate Mr. Shah referred various notices i.e. C-18 and C-19 issued by the appellant from time to time. Thus, it is submitted that after giving notice the order of recovery was passed and amount was recovered and therefore no illegality is committed by the appellant and therefore the learned ESI Court has committed an error in allowing the application of the respondent herein - Rajkot Municipal Corporation and thereby directing the appellant herein to refund the amount of Rs. 97,517/- to the respondent without interest. He, therefore, submitted that this appeal be allowed. 5. On the other hand, learned advocate Mr. Hriday Buch appearing for the respondent-Rajkot Municipal Corporation submitted that exemption notification has been issued by the Government on 9.5.1989 and the recovery is made by the appellant in the year 1997. From the record, learned advocate Mr. Buch contended that C-18 notices were given by the appellant for the period prior to issuance of notification but the appellant has not passed any order under section 45-A of the ESI Act determining the amount of contribution due from the respondent. Thus, in absence of any order passed by the appellant under section 45-A of ESI Act, the appellant was not empowered to directly issue C-19 recovery notices and therefore the said recovery is illegal and therefore no error is committed by ESI Court while passing the impugned order. 6. I have considered the arguments advanced by the learned Advocates for the parties. I have also gone through the Record and Proceedings as well as the impugned order passed by the ESI Court. 7. From the record, it has emerged that Aji Filter Plant of respondent-Rajkot Municipal Corporation was covered under the ESI Act from April, 1962. The respective ESI contribution was paid by the respondent from time to time. However, the respondent made a representation to the State Government for exemption from the provisions of ESI Act under section 90of the said Act. The State Government issued the notification on 9.5.1989 and granted exemption to the respondent from the date of issuance of the notification. The respective ESI contribution was paid by the respondent from time to time. However, the respondent made a representation to the State Government for exemption from the provisions of ESI Act under section 90of the said Act. The State Government issued the notification on 9.5.1989 and granted exemption to the respondent from the date of issuance of the notification. From the record, it is further revealed that C-18 notices were given by the appellant from time to time to the respondent calling upon the respondent to pay their contribution due from them for the period prior to date of issuance of the notification i.e. prior to 9.5.1989. If C-18 notices are carefully seen in last paragraph of all the notices, it has been observed as under: "5. Please take notice that unless your explanation and/or a statement as mentioned in para-4 above showing the actual dues for the periods in question is submitted to this office within the time specified as above, this office shall proceed with the case on merits and an order shall be passed under section 45-A of the Act determining the amount of Contributions due from you under the provisions of the ESI Act and further cause of the same to be recovered as arrears of Land Revenue through the Collector along with interest @ 6% per annum under Regulations 31-A of the ESI (General) Regulations, 1950 payable in arrears of contributions for each day of default or delay in payment of dues." 8. Thus, it was informed to the respondent that if the explanation is not given by the respondent, the appellant shall proceed with the case on merits and order shall be passed under section 45-A of the ESI Act. Thus, it was informed to the respondent that if the explanation is not given by the respondent, the appellant shall proceed with the case on merits and order shall be passed under section 45-A of the ESI Act. At this stage, provisions contained in section 45-A of the ESI Act is required to be referred, which reads as under: "45-A. Determination of contributions in certain causes.--(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 12° [Social Security Officer] or other official of the Corporation referred to in sub-section (2) of section 45 is 121 [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 subsection (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 45-B [or the recovery under sections 45-C to 45-1]" 9. Thus, C-18 notices were issued to the respondent informing that order under section 45-A of ESI Act would be passed. However, no such order determining the liability of the respondent is passed by the appellant. No such order is placed on record and directly C-19 notices were issued to the respondent for recovery of the amount and accordingly after issuance of the recovery notices, total amount of Rs. 97,517/- was recovered from the bank account of the respondent. However, no such order determining the liability of the respondent is passed by the appellant. No such order is placed on record and directly C-19 notices were issued to the respondent for recovery of the amount and accordingly after issuance of the recovery notices, total amount of Rs. 97,517/- was recovered from the bank account of the respondent. Thus, in the opinion of this Court, appellant was obliged to pass an order under section 45-A of the Act determining the liability of the respondent for the payment of their contribution and in absence of such order, the appellant ought not to have issued the recovery notices and recovered the amount from the respondent. Thus, no illegality is committed by the ESI Court while passing the impugned order. 10. Thus, so far as substantial question of law raised by the appellants in the present appeal is concerned, it is held that in absence of exemption granted by the Government for the period of demand and recovery made by the Corporation, the lower Court has no jurisdiction to direct the appellant-Corporation to refund the amount. Now, so far as another substantial question of law is concerned, it is held that the notification for exemption issued by the Government is having prospective effective and it cannot be applied retrospectively. However, it is clarified that in the facts of the present case the aforesaid two substantial questions of law raised by the appellant are misconceived. This Court has already observed hereinabove that in the facts of the present case though C-18 notices were issued to the respondent for the payment of their contribution for the period prior to the date of exemption notification issued by the Government i.e. 9.5.1989, the appellant-ESI Corporation has not passed any order under section 45-A of ESI Act determining the liability of the respondent-Rajkot Municipal Corporation for the payment of their contribution under the ESI Act. Thus, without determining the liability of the respondent, the appellant directly issued the recovery notices and the amount of Rs. 97,517/- was recovered from the bank account of the respondent. Thus, in the facts of the present case, the substantial questions of law raised by the appellant are misconceived. This appeal is, accordingly, dismissed. Record and Proceedings be sent back to the lower Court. At this stage, learned Advocate Mr. 97,517/- was recovered from the bank account of the respondent. Thus, in the facts of the present case, the substantial questions of law raised by the appellant are misconceived. This appeal is, accordingly, dismissed. Record and Proceedings be sent back to the lower Court. At this stage, learned Advocate Mr. Hemant S. Shah for the appellant requested that this order be stayed for a period of eight weeks so that the appellant can approach before the Hon'ble Supreme Court. The said request is opposed by learned advocate for the respondent. However, this Court has granted stay in favour of the appellant while admitting the appeal and the said stay is continued till today and therefore in the interest of justice this order is stayed for a period of eight weeks. Appeal Dismissed