M/S GUJRAL TOURS & TRAVELS PVT LTD vs EMPLOYEES STATE INSURANCE CORPORATION

* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment reserved on : 24 November 2023
Judgment pronounced on : 04 January 2024
+ FAO 119/2019 and CM APPL. 13157/2019, CM APPL.
13155/2019, CM APPL. 13158/2019, CM APPL. 9959/2020
M/S GUJRAL TOURS & TRAVELS PVT LTD ….. Appellant
Through: Mr. Harsh Singh, Adv.
Versus
EMPLOYEES STATE INSURANCE CORPORATION
….. Respondent
Through: Mr. V.K. Singh and Ms. Prachi
Singh, Advs.
CORAM:
HON’BLE MR. JUSTICE DHARMESH SHARMA
J U D G M E N T
FACTUAL BACKGROUND

1. This judgment shall decide an appeal under section 82(2) of The
Employees” State Insurance Act, 19481 filed by the appellant company
assailing judgment/order dated 12.12.2018 passed by the then learned
SCJ-CUM-RC (West), Tis Hazari Courts, Delhi, designated as
Employees” Insurance Court, in ESIC Petition No. 18/16 titles as „M/S
Gujral Tour and Travels Pvt. Ltd. vs. Employees State Insurance
Corporation2, whereby the Learned Trial Court dismissed the petition
filed by the appellant company challenging the applicability of the
EST Act to it.

1ESI Act
2ESIC

FACTUAL BACKGROUND:

2. The appellant is a Private Limited Company duly incorporated
under the Companies Act having its office at GL-13, Shiv Nagar, Jail
Road, New Delhi – 110058 and is being represented by Shri A S
Gujral who is the Managing Director of the appellant company. The
appellant company is engaged in business as Travel Agents, Tours
Operators, Clearing and Forwarding Agents, Tourists Transport
Operators, Ship Broker Customs Agents, Consultants for General
Sales for any Airlines, Steamship Companies, Railways, Transport
Companies etc.
3. On the other hand, the respondent ESIC3 is an organization
fully financed from the contributions received from the poor workers/
insured persons and their employers. The respondent constituted under
the ESI Act is enjoined upon to provide for certain benefits to the
employees in case of sickness, maternity and employment injury and
to make provisions for certain other matters in relation thereto.
4. Briefly stated, an inspection of the Establishment of the
appellant company was conducted by the Social Security Officer4 of
the respondent on 05.02.2009, and thereafter on 19.02.2009.
Consequently, vide communication dated 23.02.2009, it was conveyed
to the appellants herein that they fell under the purview of ESI Act
provisionally w.e.f., 01.01.2009 and the establishment was allotted the
code 11-40-106673-1006.

3 Employee”s State Insurance Corporation
4 SSO

5. Thereafter, vide order dated 20.12.2011 passed under Section
45-A of ESI Act, the appellants herein were directed to contribute Rs.
85,800/- for the period from April 2009 to March, 2020 under the Act.
It was further stated that this amount would be recovered under
Section 45-C to 45-I under ESI Act if the same was not contributed.
Additionally, interest amounting to the tune of Rs. 11,148/- was
ascertained to be paid for the period of March 2011 to November
2011.
6. Aggrieved by the above order, the appellant herein filed a
petition under Section 75-76 of the ESI Act challenging the demand
and recovery of Rs. 85,800/- vide order5 dated 20.12.2011 and
demand and recovery of Rs. 11,148.00 vide C-18 no. D/Ins.I/CDO/
l1001066730001006/574/140 dated 02.02.2012. The learned Trial
Court framed the following issues for consideration: –

“1. Whether the petitioner is entitled for quashing of the impugned
demand of Rs. 85,800/- (as raised by the respondent against the
petitioner) and also the order dt 20.12.2011 passed by the
respondent? OPP
2. Whether the petitioner has not come to the court with clean
hands as mentioned in preliminary objection no. 1 of WS of the
respondent and if so, its effect ? OPR
3. Relief ”
IMPUGNED ORDER:

7. Suffice to state that at this stage that the learned Trial Court on
appreciation of evidence led by the parties found that on the date of
inspection, a report was prepared on the spot by the SSO Ex.RW1/1,
and admittedly 29 employees were found working in the
Establishment and the plea of the petitioner/appellant company that

5 No. D/CDO/Ins.I/11001066730001006/4017

the said document Ex.RW 1 corresponding to Ex.PW 1/3 of their own
showed that the wages/salary described therein were net payment
whereas gross payment should have been considered was not accepted
for want of Inspection Book in terms of Regulation 102 A of ESI
General Regulations, 1950 and for its failure to prove Ex.PW-1/3
which was a computer generated print out of the Register of payment
of wages and salaries ,which was held to be falling foul to Section 34
of the Indian Evidence Act. Accordingly, Issue No. 1 was decided in
favour of the respondent ESIC and against the petitioner/appellant
company. Further, it was held that Issue no. 2 was wrongly framed
and not required to be answered. Accordingly, the petition was
dismissed and the said order is, therefore, assailed in the present
appeal.

8. The main grievance of the petitioner company is that the
learned Trial Court failed to appreciate that the RW-1 during the cross
examination admitted that in the year 2009 the employees drawing
gross salary of Rs. 10,000/- or more were not covered under ESIC as
per the Act; and that RW – 2 had not gone through the record
submitted by the petitioner and had passed the order on the basis of
the survey report submitted by the inspector in the office of the
respondent; and that the order has been passed without appreciating
the evidence produced on behalf of the appellants. Further, that the
trial court has passed the order on the basis of conjecture and has
ignored the factual matrix of the case.

ANALYSIS AND DECISION

9. Having given my thoughtful consideration to the submissions
made by learned counsels for the rival parties at the Bar and on
perusal of the record including the digitized LCR6, I find that the
instant appeal is devoid of any merits.
10. First things first, the statutory appeal is provided under Section
82 (2) to the High Court from an order of an Employee/s Insurance
Court if it involves a substantial question of law. In order to
understand whether any substantial question of law is made out in the
present appeal, it would be relevant to re-produce the reasons given by
the learned Trial Court in deciding issue no. 1 against the appellant
company, which reads as under :-

6 Lower Court Record

“9.1 ISSUE NO.l:- Whether the petitioner is entitled for
quashing of the impugned demand of Rs. 85,800/- (as raised by
the respondent against the petitioner) and also the order dt
20.12.2011 passed by the respondent ? OPP
The onus to prove this issue is upon the plaintiff.
9.2. It is not disputed by the parties that at the relevant time any
establishment working without using power, employing 20 or more
coverable employees was liable to be covered under the ESI Act. It
is also not disputed that at the relevant time any employee drawing
gross salary Rs. 10,000/- or less was coverable under ESI Act.
9.3 It is the contention of the respondent that the coverage order
was passed in view of list Ex. RW 1/1 provided by the Manager of
the petitioner and also other relevant materials. On the other hand it
is contended by the respondent that true record of the salaries of
the employees of the petitioner is reflected in Ex. PW 1/3. This
record shows gross as well as net salaries of the employees. The
salaries shown in the list Ex. RV\/ 1/1 are net salaries of the
employees. During cross examination, RW-1 emphasized that the
list Ex. RW 1/1 was prepared and signed by the Manager of the
petitioner company.

9.4 The petitioner has not produced its attendance register. The

petitioner has also not produced inspection book in terms of
Regulation 102 A of ESI (General) Regulations 1950. It is the case
of the respondent that records were not produced at the time of
inspection. In para no.2 of the affidavit Ex. RW-l/A of RW-1, it is
stated that the attendance register and wages register were not
produced. Instead, handwritten list of 29 employees was handed
over to RW-1.
9.5 Ex. PW-1/3 is computer generated printout of register of
payment of wages and salaries. This printout cannot be considered
as book of account in terms of Section 34 of Indian Evidence Act.
During cross examination of RW-1, she repeatedly reiterated that
Ex. RW-1/1 was prepared and signed by Sh. O.P. Bhatia, Manager
of the petitioner. The petitioner has not specifically challenged the
signatures appearing on the list Ex. RW-1/1. If it is argued that list
Ex. RW-1/1/ was prepared by the Inspecting Officer RW-1 on her
own, it is pertinent to observe that without going through the
records of the petitioner, the Inspecting Officer could not have
known the names of the employees of the petitioner. The said
names in the list Ex. RW-1/1/ correspond to the account Ex. PW
1/3. This leads to the conclusion that list Ex. RW-1/1/ was either
prepared by some employee(s) of the petitioner or prepared upon
the instructions some employee Cs) of the petitioner. If the
petitioner claims that list Ex.RW 1/1 was prepared out of the
account Ex. PW 1/3, it is not clear what prevented the petitioner
from directly handing over the account Ex. PW1/3 to the
Inspecting Officer. The list Ex. RW-1/1 bears the stamp of the
petitioner. It is not possible for the respondent’s officer(s) to
procure the stamp of the petitioner’s business unless the same is
provided by some employee(s) of the petitioner. Ex. PW 1/3 is only
for the months of January and February 2009. This is an isolated
document. The petitioner has not filed the bank account details of
its employees to show that the amount reflected in Ex. PW 1/3 was
being regularly credited to the account of the employees. It is
nowhere contended by the petitioner that the employees were paid
in cash.
9.6 In view of above, there is no reason to disbelieve contents
of the list Ex. RW 1/1.
9.7 Issue no. 1 is decided in favour of the respondent and against
the petitioner.

11. In the instant appeal, the appellant company assails the
aforesaid finding of facts by the learned Trial Court. It is well settled

in law that if the findings of facts are illegal, perverse or
unconscionable, there would arise a „question of law”.
12. It is pertinent to mention that Section 2 (12) of the ESI Act as it
existed in the year 2009 before it was amended, by Act 18 of 2010,
defines the term “factory” to mean any premises including the
precincts thereof-

“(a) whereon ten or more persons are employed or were employed
for wages on any day of the preceding twelve months, and in any
part of which a manufacturing process is being carried on with the
aid of power or is ordinarily so carried on, or
(b) whereon twenty or more persons are employed or were
employed for wages on any day of the preceding twelve months,
and in any part of which a manufacturing process is being carried
on without the aid of power or is ordinarily so carried on, but does
not include a mine subject to the operation of the Mines Act, 1952
(35 of 1952) or a railway running shed;.”

13. A bare perusal of the aforesaid provisions would show that
during the relevant time any Establishment which was working
without power employing 20 or more coverable employees was liable
to be covered under the ESI Act. There is further no dispute that
during the relevant time any employee drawing gross salary of
Rs.10,000/- or less was only coverable under the ESI Act.
14. Now, it is pertinent to appreciate that during the course of trial,
the respondent examined RW-1, Ms. Reena Hira, SSO who deposed
that she inspected the premises on 05.02.2009 and she met the
Manager O. P. Bhatia who produced a hand written slip Ex. RW1/1
bearing signatures of the Manager as also seal of the company that
went to show that at the relevant time there were 29 employees

working with the appellant company. The genuineness of Ex. RW1/1
has not been questioned in any manner by the appellant company.
15. It is also borne out from the record that the appellant company
later produced a computer generated print out of the Register of
payment of wages and salaries. PW-1 Ramesh Kalra, who was
examined on behalf of the appellant company in his cross-examination
showed ignorance to any inspection done on 05.02.2009 and
19.02.2009 but he did acknowledge that as on those days there were
14 employees who were drawing wages of Rs.10,000/- or less than
Rs.10,000/-.
16. Much mileage was sought to be taken from the deposition of
RW-1 in her cross examination, wherein she deposed as under:-

“It is true that on the date of inspection /survey 29 employees were
working with the petitioner as per the record submitted by the
petitioner. In the year 2009, the employees drawing gross salary of
Rs.10,000/-or more were not covered under the ESI as per the Act.
In the year 2009, the ESIC was applicable upon the company, if a
company was employing at least 20 or more than 20 employees
drawing up to Rs. 10,000/- or less than Rs.10,000/- per month.

17. It is borne out from the evidence brought and proven on the
record by the parties that the details of the employees and their
respective salaries reflected in Ex. RW1/1 otherwise tallied with the
computer generated statement Ex. PW 1/3 relied upon by the appellant
/ company. Be that as it may, there is no flaw in the observations by
the learned Trial Court that the appellant company failed to establish
that the details of the wages in Ex. RW1/1 or for that matter Ex. PW
1/3 were based on the net salary being to the employees and not gross
salary.

18. Needless to state that the burden of proving such aspect was
upon the appellant company. The computer generated copy Ex. PW
1/3 was not supported by a Certificate in terms of Section 65 B (4) of
the Indian Evidence Act7 and the learned Trial Court rightly
concluded that it was also inadmissible for being a „self serving
document” in terms of Section 34 of the Indian Evidence Act.8 No
account books or relevant extracts therefrom were proven on the
record to substantiate Ex. PW 1/3.
19. Further, the Attendance Register as well as Inspection Book in
terms of Regulation 102A of the ESI General Regulation 19509 was
not produced either. Incidentally, there was no challenge in the cross-

7 65B. Admissibility of electronic records.-
(4) In any proceedings where it is desired to give a statement in evidence by virtue of this section,
a certificate doing any of the following things, that is to say –
(a) identifying the electronic record containing the statement and describing the manner in which it
was produced;
(b) giving such particulars of any device involved in the production of that electronic record as
may be appropriate for the purpose of showing that the electronic record was produced by a
computer;
(c) dealing with any of the matters to which the conditions mentioned in sub-section (2) relate,
and purporting to be sign by a person occupying a responsible official position in relation to the
operation of the relevant device or the management of the relevant activities (whichever is
appropriate) shall be evidence of any matter stated in the certificate, and for the purposes of this
sub-section if shall be sufficient for a matter to be stated to the best of the knowledge and belief of
the person stating it.
8 34.[Entries in the books of account, including those maintained in an electronic form], regularly
kept in the course of business, are relevant whenever they refer to a matter into which the Court
has to inquire, but such statements shall not alone be sufficient evidence to charge any person with
liability.
9 (i) Every principal employer shall maintain
a bound inspection book and shall be responsible for
its production, on demand by an Inspector or any other officer of the Corporation duly authorised
to exercise the powers of an Inspector irrespective of the fact whether the principal employer is
present in the factory or establishment or not during the Inspection.
(ii) A note of all irregularities and illegalities discovered at the time of inspection indicating
therein the action, if any, proposed to be taken against the principal employer together with the
orders for their remedy or removal passed by an Inspector or any other officer of the Corporation
duly authorised to exercise the powers of an Inspector, shall be sent to the principal employer who
shall enter the note and orders in the inspection book.
(iii) Every principal employer shall preserve the inspection book maintained under this regulation,
after it is filled, for a period of 5 years from the date of the last entry therein.]

examination of RW-1 to her version that the Attendance Register and
Registry was not produced, and at the cost of repetition, merely a hand
written list of 29 employees was handed over to the RW-1.

FINAL ORDER:

20. The sum and substance of the aforesaid discussion is that that
the finding on facts recorded by the learned Trial Court does not call
for any interference. It does not suffer from any kind of patent
illegality, perversity or incorrect approach to the law. Accordingly, the
present appeal is dismissed.
21. The interim order dated 01.04.2019 passed by this Court
whereby the operation of the impugned order dated 12.12.2018 was
stayed subject to the amount of the ESI dues levied getting deposited
with the Registrar General of this Court is hereby vacated and the
respondent ESIC shall be released such amount with accrued interest
forthwith.
22. The pending applications also stand disposed of.

DHARMESH SHARMA, J.
JANUARY 04, 2024
ss