2023 LLR 16
BOMBAY HIGH COURT
Hon'ble Mr. M.S. Karnik, J.
OOCJ W.P. (L) No. 7264/2020, Dt/– 5-2-2021
SBI General Insurance Company Ltd.
vs.
Employee's State Insurance Corporation and Anr.
EMPLOYEES' STATE INSURANCE ACT, 1948 – Section 45A – ESI Authority determined the compensation in respect of surveyors and insurance agents etc. – Petitioner have challenged that order of ESI Authority in writ petition contending that such surveyors and insurance agents etc. have not relationship of employer-employee with petitioners since they are also rendering services to other Banks & insurance companies and their services are not restricted to the petitioners – Held, ESI has not considered this contention of the petitioner – ESI Authority has also not considered the relevant circular/order of ESIC stating that commission paid is not the ‘wage' under section 2(22) of the said Act – Circular of ESIC further states that where dealers/agents are appointed by employers but it is not obligatory on the part of such dealers/agents to attend to factories/establishments and they are paid commission only on quantum of sales – Amount paid to an organisation for maintenance of machinery /equipments as part of service contract will not attract ESI contribution – Payment made to Labour Consultants, Lawyers, Engineers, Counsels, Chartered Accountants does not constitute ‘wage' under the Act and no contribution is payable – Hence, impugned orders are set aside – Matters are remitted back to ESI Authority for considering the issues afresh in accordance with law within 12 weeks. Paras 6 to 9
For Petitioners: Mr. Sudhir Talsania, Senior Advocate a/w Mr. Vishal Talsania, Ms. Nikita Vardhan i/b Kanga and Company, Advocates.
For Respondents No. 1 & 2: Mr. Shailesh S. Pathak, Advocate.
IMPORTANT POINTS
Judgment
M.S. Karnik, J.–1. Heard learned Senior Counsel Shri Talsania for the Petitioners and Shri Pathak appearing on behalf of the Respondents No. 1 & 2.
2. This Petition under Article 227 of the Constitution of India impugns the order dated 11/09/2020 passed under section 45A of the Employees' State Insurance Act, 1948 (for short ‘the said Act') which is at Exhibit ‘G1' and order dated 11/09/2019 at Exhibit ‘G2'. By the said order, the Assistant Director – Authorised Officer of the ESI Corporation determined the compensation of Rs. 2,97,52,797/- payable by the Petitioners as a principal employer towards the ESI contribution. By the other order dated 11/09/2019, Assistant Director – Authorised Officer of the ESI Corporation determined the compensation of 14,95,179/- Learned Senior Advocate submitted that authority has fastened the liability of paying ESI contribution on the Petitioners in respect of surveyors and insurance agents etc. It is his submission that these surveyors / insurance agents etc. are not in the employment of the State Bank of India and they are working as commission agents for specified service. Learned Senior Advocate submits that the said surveyors, insurance agents are rendering services to other Banks & insurance companies and their services are not restricted to the State Bank of India. There is no employer-employee relationship according to him.
3. Learned Senior Counsel invited my attention to the detailed submissions made by the Petitioners to the show cause notice which is at Exhibit ‘C'. In his submission, the Corporation itself issued a circular/order which is available on the website of the Corporation stating that commission paid is not ‘wage' as defined under section 2(22) of the Act. He submits that the claim is contrary to the Corporation's own circular. He submits that other contentions raised in the detailed submissions are not considered. It is thus his submission that all these aspects have not been considered and the authority has recorded a finding that surveyors & other categories of persons are the employees under section 2(9) of the said Act and survey vendors are immediate employers under section 2(13) of the said Act without any materials and said findings are contrary to the circular/order of ESI Corporation.
4. Shri Pathak leaned Counsel appearing on behalf of Respondents No. 1 & 2 raised a preliminary objection regarding maintainability of this Petition. He invited my attention to sections 75 and 45AA of the said Act to contend that the remedy of the Petitioners is to file an Appeal before ESIC Court against the impugned orders. He therefore submits that present writ petition against the impugned order is not maintainable and in fact according to him, if the Petitioners were to file an Appeal, they were liable to make mandatory deposit.
5. Shri Pathak submitted that the order passed by the authority is a well reasoned order. He invited my attention to the definition of the term ‘wage' defined under section 2(22) of the said Act. He submits that the persons mentioned in the order are squarely covered by the said definition and are liable to pay ESI contribution. He invited my attention to the findings recorded by the authority to contend that the said findings can not be regarded as perverse.
6. I have heard learned Counsel for the parties. I have gone though the copy of the Petition and the impugned orders as also relevant exhibits. The authority has proceeded on the footing that the category of persons mentioned in the order are covered by the provisions of the ESI Act. However, though the specific contention was raised by the Petitioners in their written submission that the Corporation itself has issued a circular/order stating that commission paid is not the ‘wage' under section 2(22) of the said Act, the said circular does not appear to have been considered. The Corporation does not deny that such a circular/order is in existence. In the said circular/order, it has been provided that where dealers/agents are appointed by employers but no regular wages are paid and it is not obligatory on the part of the such dealers / agents to attend to the factories/ establishments and they are paid commission only on the quantum of the sales, in such cases, the amount paid by the employer as commission / dealership does not constitute ‘wage' under section 2(22) of the ESI Act and hence, no contribution is payable. Further in respect of the service contract it is provided that Amount paid to an organisation for maintenance of machinery / equipments as part of service contract will not attract ESI contribution. The circular provides payment made to Labour Consultants, Lawyers, Engineers, Counsels, Chartered Accountants does not constitute ‘wage' as per the provisions of section 2(22) of the said Act, hence, no contribution is payable. In fact, said circular/order goes on to say that what items will form the part of wage both under section 2(9), i.e., for considering the employee for the purpose of coverage.
7. In this view of the matter, I find substance in the contention of learned Senior Advocate that the said circular has not been considered by the authority. The impugned orders call for interference and are accordingly set aside.
8. The matters are remitted back to the authority for considering the issue afresh on its own merits and in accordance with law.
9. All contentions are kept open. I may not be understood to have expressed any opinion on the merits of the controversy or the circular.
10. The authority is requested to decide the proceedings expeditiously after hearing all concerned and may hear the application expeditiously in accordance with law in any case within a period of 12 weeks from today.
11. Parties to appear before the authority on 18/02/2021 at 3.00 p.m.
12. Writ Petition is disposed of.