Employer's Failure To Deposit Contributions Doesn't Disentitle Insured Person's Ward From Availing ESI Quota: Rajasthan HC Grants Relief To NEET Candidate

Justice Ashok Kumar Gaur observed,

"The non-deposit of contribution in spite of deduction will not make the person disentitle for the benefit of ward of insured person if the insured person had paid the contribution to his employer prior to 31.03.2021."

It ordered,

"The respondent-Corporation has acted arbitrarily in issuing the order dated 04.10.2021 and accordingly, the same is quashed and set aside. The petitioner No.1 is held entitled for grant of status as ward of insured person for the purpose of admission in ESIC quota. The respondent-Corporation would issue the necessary certificate to the petitioner No.1 within the shortest possible time and preferably within 5 (five) days from the date of this order".

In the present case, the petitioner, son of a person insured under ESI Act, was denied the benefit of 'ward of insured person quota' (IPs) for admissions.

The ESI Corporation had issued an admission notice for admission to UG courses on 13.09.2021 and it provided that there shall be insured persons quota in favour of those candidates, whose either parent is insured person as on 31.03.2021.

The petitioner was denied this benefit, stating that his father was not an insured person on 31.03.2021.

On the perusal of Sections 2(14), 39 and 68 of Employees' State Insurance Act, 1948, the court observed that the insured person is not only the person who has paid the contribution but also includes a person whose contribution is payable and not actually paid due to any reason, like delay, on the part of employer, etc.

In this case, it noted, the petitioner's father was employed on 03.03.2021, his pay slip for the month of March 2021 showed that ESI deduction was made of Rs.148/- from his salary and the bank statement along-with pay-slip for the month of March, 2021 also showed that his father had received the salary after the deduction of the ESI Contribution.

In this background, the Court reminded that it is the duty of the principal employer to pay the contribution under the Act on the date when it becomes due and if he fails to do so, the Corporation has power to recover the same from the principal employer even by charging interest.

It added that if there is a neglect on the part of an employer, as per provision contained in Section 68, the person cannot be declined the benefits or his entitlement if the employer has failed to deposit the contribution.

The court rejected the arguments of the respondents that since the contribution was not deposited by the employer with the ESI Corporation and as such, the petitioner will not be entitled for issuing certificate of Ward of Insured Persons.

The court responded that the non-deposit of contribution in spite of deduction will not make the person disentitle for the benefit of ward of insured person if the insured person had paid the contribution to his employer prior to 31.03.2021.

The court observed that merely receiving the contribution, subsequently after 31.03.2021, by the ESI Corporation and some information being furnished about employment date of the insured person, showing it to be contrary to the record of the contribution, will not deprive insured person benefits under the Act.

The single bench relied on the case of Bharagath Engineering Vs. R. Ranganayaki and Ors, wherein the Apex Court has held that the employer cannot be heard to contend that since he had not deducted the employee's contribution on the wages of the employee, he will not be liable. The Apex Court further held that Section 38 of the Act, casts a statutory obligation on the employer to insure its employees and the date of commencement has to be from the date of appointment of the concerned employee.

The court further relied on Hari R. Nair & Anr. v. The Director General & Ors., has also considered the similar issue and has found that the Corporation cannot deny the otherwise eligible insured person the certificate on which the premise employer contributed or filed the returns late.

Mr. Pushpendra Pal Singh Tanwar, Adv. on behalf of Mr. Shobhit Tiwari, Adv. appeared for the petitioners, whereas Mr. Divyesh Maheshwari, Adv. Mr. Angad Mirdha, Adv. Dr. Arjun Singh Khangarot, Adv. Dr. Vibhuti Bhushan Sharma, AAG with Mr. Harshal Tholia, Adv. appeared for the respondents.