Disputed Issues Under Employees' State Insurance Act Ought To Be Referred To Designated Court Under S.75: Telangana High Court

Brief Facts of the case

The writ petition was filed by the petitioner to declare the action of the respondents illegal in insisting payment of Rs. 5,46,975/- from the petitioner under Section 45A of the Employees' State Insurance Act for the period from 2011 to 2015, though it was brought to their notice that the partnership firm was closed in the year 2011 itself.

The counsel for the petitioner submitted that the petitioner joined in partnership in 2008 and he was only the sleeping partner. Since the firm sustained losses, the partnership was closed in the year 2011. The representative of the firm had informed the same to the respondent at the issuance of a show cause notice. Despite the same, the respondent passed the impugned order for payment of contributions and served the notice on petitioner. The petitioner produced the bank statement to show that the firm stopped business in 2011. However, the respondents still insisted for payment of the said amount.

The respondent contended that the petitioner had alternative and effective remedy under Section 75 of Employees' State Insurance Act which details the matters to be decided by the Court. The respondent Corporation had issued an order under Section 45A, and the same was refused by the Petitioner. The Respondent Corporation followed the due procedure as per the provisions of ESI Act. The petitioner even failed to produce relevant documents or proof of evidence about the closure of the unit.

Findings of the Court

The court held that the petitioner ought to have filed the documents or challenged the orders by filing an application under Section 75 of the Act for the matter to be adjudicated by Employees' Insurance Court. The High Court cannot adjudicate the disputed issues and such issues are to be decided with reference to the original documents.

Justice G. Radha Rani made the following observations:

"In the present case the Writ petition is not filed for enforcement of any of the Fundamental Rights nor there was any violation of the Principles of Natural Justice as show cause notice was issued to the petitioner and opportunities are provided to the petitioner to submit his written representation as well as for personal hearing, some of which were availed by him by sending his representative and some not availed by him even after receipt of notice. The order passed is not without jurisdiction nor vires of any Act are challenged in this case. The petitioner failed to produce the documentary evidence in support of his contention about closure of the firm before the concerned authorities."

Hence, the Writ Petition was dismissed with a direction to the petitioner to approach the Employees' Insurance Court.

Case Title: C. Chandra Mohan Reddy v. Union of India

Citation: 2022 LiveLaw (Tel) 27

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