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PETITIONER: EMPLOYEES STATE INSURANCE CORPORATION,BHOPAL

       Vs.

RESPONDENT: CENTRAL PRESS & ANR.

DATE OF JUDGMENT21/02/1977

BENCH: BEG, M. HAMEEDULLAH (CJ) BENCH: BEG, M. HAMEEDULLAH (CJ) GUPTA, A.C. KAILASAM, P.S.

CITATION:  1977 AIR 1351            1977 SCR  (3)  35  1977 SCC  (2) 581  CITATOR INFO :  R          1978 SC1478  (22)

ACT:           Employees   State   Insurance  Act  (Act  34   of   1948),         1948--Sections 45A, 75(1)(c), and 75(2) and 99A--Scope of

HEADNOTE:              Section  75(1)(c) of the Employees State Insurance  Act         1948  makes it obligatory on the Insurance Court  to  decide         "the rate of contribution payable by a principal employer in         respect  of  any  employees" if  such  question  or  dispute         arises.  Section 75(2) also provides that "the claim for the         recovery of contributions from the principal employer" shall         be decided by it.         The  appellant-Corporation filed five applications under  s.         75 of the Employees State Insurance Act before the Insurance         Court, Bhopal  (Civil  Judge First Class) for recovery  from         the  respondent of employees’ contributions  payable   under         s.  39  of  the Act  for different periods   from  27-9-1959         onwards,   working  out  the contribution  payable   on   an         "ad  hoc   basis" by  taking   the  wages at  Rs.  100/- per         employee   per  month  as indicated by  the Central  Govern-         ment   by   their  notification  SRO   224  dated  25-1-1957         issued  in  exercise  of their powers under s.  99A  of  the         Act.The Insurance Court disallowed the claims on the  ground         that  the claims have been made on an "ad hoc  basis".   The         first  appeals against that order were allowed by  a  single         Judge  of  the Madhya Pradesh High  Court  (Jabalpur  Bench)         relying  on s. 99A of the Act and on a further  notification         dated  16-1-1968 issued by the Central Government  under  s.         99A.   The  Letters Patent Appeals filed by  the  respondent         were allowed by the Division Bench which held: (1) The power         of  the  Central  Government of issuing  directions  is  not         absolute and The directions cannot be inconsistent with  the         Act  (22).   When  under section 45A of the  Act  a  special         procedure is prescribed regarding the method of  calculation         of the employees’ contribution, no notification or order can         be  issued by the Central Government prescribing  any  other         method on ad hoc basis which obviously becomes  inconsistent         with the other provisions of the Act, namely, section 45A.           Remanding the matter to the Insurance Court, the Court,

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         HELD:             (1)  The nature of the proceedings under  the  Employees         State, Insurance Act 1948 was not properly understood either         by  the Employees Insurance Court or by the High Court  when         the matter was taken before these authorities. [37D]         (2)  The scheme of the Act is that the.  Corporation  itself         should, in a case where there is omission on the part of the         employer to maintain records in accordance with s. 44 of the         Act, determine the amount of contribution on the strength of         such  information as it may collect, make a demand and  upon         refusal  come up before the Insurance Court under s.  75  of         the Act.  The Court should give the Corporation a  direction         to  perform its duty where it considers that this should  be         performed by the Corporation.  It cannot decline to  perform         its  ,own  duty because the Corporation has failed  to  dis-         charge  its function.The Insurance Court is under a duty  to         determine the basis of calculation itself.[36F-H]         (3) The notification of the Central Government under s.  99A         of  the Act was intended to overcome difficulties in  deter-         mining  the wages of the employees.This provision cannot  be         availed of for the purpose of supplying a defect or overcom-         ing a difficulty in adjudication of a dispute for which  the         Employees  Insurance  Court is given ample powers  under  s.         75(1)(c) and 75(2). [37A-B]         36

JUDGMENT:                 CIVIL  APPELLATE JURISDICTION   Civil  Appeals  Nos.         325-329 1977.               (Appeals by special leave from the Judgment and  Order         dated   1.12.1971  cf-the  Madhya  Pradesh  High  Court   in         L.P.ANos. 13--17 of 1969).                 L.N.  Sinha, Sol. Genl. and Girish Chandra  for  the         appellant.          J. P. Gopal and Shreepal Singh, for the respondent.         The Judgment of the Court was delivered by                 BEG,  C.J.--This appeal by special leave arises  out         of  the proceedings initiated on 12.7.1961 by the  appellant         Corporation, under section 75 of the Employees’ State Insur-         ance Act  1948 (hereinafter referred to as the Act),claiming         contribution  from  the  respondents   for  various  periods         between.  27.9.1959 and 31.3.1965, which they are liable  to         pay under section 40 of the Act.                 It appears that the respondents-employers failed to.         maintain the  registers or records and to submit returns  of         wages  paid  as  required   under section  44  of  the  Act.         Hence, the Insurance Court, which was  called upon to  adju-         dicate under Section 75(1)(c) of the Act, on the  matter  in         dispute,  found  itself  under to decide,  the  question  in         issue.   It  dismissed the application on  the  "round  that         there  was no provision  for deciding such a dispute  on  an         "ad  hoc basis." We fail   to understand what  is  precisely         meant  by "ad hoc basis" Section 75(2) of the  Act  provides         inter  alia, that a claim for the   respondent We find  that         recovery of contributions shall be decided by the Employees’         Insurance  Court.   Not only as the mandatory duty cast upon         it to decide such  disputes, but it is armed with the powers         of  a  Civil Court, including summoning  and  enforcing  the         attendance  of  witnesses,  compelling  the   discovery  and         production   of  documents  and  material   objects,   under         section 78 of the Act.             The  powers of the Corporation are given in Section  45A         of the Act, introduced by Act 44-of 1966, whereby the Corpo-

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       ration   may, on the basis of the information available  to.         it,  determine the amount of contributions payable and  make         necessary demands. Apparently, the scheme of the Act,  after         the  amendment, is that the Corporation itself should, in  a         case where there is omission on the part of the employer  to         maintain  records in accordance with Section 44 of the  Act,         determine  the  amount of contributions on the  strength  of         such information as it may collect.   It can then make,  the         demand.   If the employer refuses to comply with the  demand         so made, the matter can come up before the Employees’ Insur-         ance Court under  Section 75 of the Act.   The Court  should         give  the Corporation a direction to perform its duty  where         it  considers that this should be performed by the  Corpora-         tion.    It cannot decline to perform its own  duty  because         the Corporation has failed to discharge its functions.         The  matter having Come up before that Court, the  claim  by         the  Corporation  was  rejected erroneously  merely  on  the         ground that there         37         was  difficulty in determining the basis of wages in a  par-         ticular factory so as to enable a calculation of the  amount         of contributions to be made by the employer.   It seems that         the notification of the Central Government under section 99A         of the Act, also, introduced by Act 44 of 1966, was intended         to  overcome such a difficulty in determining the  wages  of         the  employees.   After having considered the provisions  of         section 99A of the Act, we doubt whether this provision  can         be  availed  of  for the purpose of supplying  a  defect  or         overcoming  a difficulty in adjudication of a  dispute.  for         which the Employees’ Insurance  Court is given ample powers.         Moreover,   the  Corporation   has itself   to  collect  the         information  initially and make a provisional demand on  the         basis of that information under section 45A in such a case.             The learned single Judge, before whom the matter went up         in  appeal,  thought that the notification  of  the  Central         Government fixing wages, presumably on the strength of  some         notion as to what prevailing wages in such cases are,  could         be.  used for this purpose.   The Corporation itself  should         have  gathered information under section 45A.   The  Employ-         ees’ Insurance Court should be apprised of this information.         and  is under a duty to determine the basis  of  calculation         itself.    It cannot expect the Central Government to  over-         come  such a difficulty by an order or direction under  sec-         tion  99A of the Act. We think that the nature of  the  pro-         ceedings  was not properly understood either by the  Employ-         ees’  Insurance Court or by the High Court when  the  matter         was  taken  before these authorities.  Hence,  the  Division         Bench,  which accepted the appeal from the decision  of  the         single judge had, while invalidating the notification  under         section 99A of the Act, failed to give a direction that  the         Employees’  Insurance    Court  should  itself  perform  its         duties.             In  the  light of the foregoing statement of  the  legal         position, we allow this appeal, set aside the. judgments  of         the Division Bench   as well as of the learned single  Judge         and orders of the Employees Insurance Court.  We remand  the         matter  to the Employees’ Insurance Court for  determination         in accordance with law as explained by us above.         Parties will bear their own costs.         S.R.                             Appeal  allowed  and   case         remanded.         38