O.P. Garg, J. - (1.) The petitioner, which is a company incorporated under the Indian Companies Act, 1956 and has its registered office at Panki Industrial Area, Kanpur, is undoubtedly covered under the provisions of the Employees State Insurance Act, 1948 (hereinafter referred to as the 'Act'). Earlier the employees, whose salary ranged in between Rs. 3,001 and Rs. 6,500 were not covered by the provisions of the Act. The State Insurance (Central) Second Amendment Act was published under G.S.R. 582 (E) dated 23.12.1996 whereby the Employees State Insurance (Central) Rules, 1950 were amended. The effect of this amendment/notification was that the employees who were drawing wages/salary ranging between Rs. 3,001 to Rs. 6.500 also came within the ambit of the said insurance scheme, as contemplated under the Act. The affected employees who were being paid 8.33% of their basic salary towards medical benefits in cash every month from the employer did not want to be covered by the amended provisions, which came into effect w.e.f. 1.1.1997. Pursuant to this amendment in law. the petitioner-employer made necessary deductions from the salary of the concerned employees for the month of January, 1997 and deposited the same through Challan. The respondent No. 2, which is the Union of the employees approached the Labour-Secretary. Union of India. New Delhi by addressing a representation dated 7.1.1997 praying for exemption from the operation of the Act. It appears that no attention was paid to their request and ultimately the respondent No. 2 had to prefer a Civil Misc. Writ No. 7844 of 1997 before this Court. The said petition was finally disposed of by order dated 4.3.1997, relevant portion of which runs as follows : "However, I direct that If the petitioner moves such an application before the State Government within two weeks' from today, the impugned circular dated 1.1.1997 shall remain stayed until the disposal of the said exemption application. The State Government will decide the said exemption application within a period of three months of production of a certified copy of this order in accordance with law after hearing the parties concerned." Since there was no direction to the employer not to deduct the Employees State Insurance (for short 'E.S.I.') contribution from the salary of the employees, an application for modification of the order dated 4.3.1997 was moved. The order was accordingly modified by this Court on 12.3.1997 in following terms : "On the facts of the case, I direct that respondent No. 3 will not make deduction of E.S.I. contribution from the salary of the members of the petitioner and shall provide medical benefits to them which they were getting prior to 1.1.1997 until the decision of the State Government on the exemption application. My Judgment dated 4.3.1997 stands modified accordingly. Let the modification be made in the certified copy also." The respondent No. 2 made a representation to the State Government for exemption from the operation of the Act. State Government refused to grant requisite exemption by letter dated 3.10.1997. In the meantime, on account of the orders passed by this Court, the petitioner continued to extend the same benefit to the concerned employees as was being extended to them prior to 1.1.1997, meaning thereby the employees were paid 8.33% of the basic salary towards the medical benefit in cash every month and it is stated that a sum of Rs. 1,14,68.253 was paid in cash to 2923 employees during the period February 1997 and July 1998. According to the petitioner, if no order was passed by the Court, the employer was required to make a contribution at the rate of 4.75% of the gross wages/salary of the employees which would have been calculated to only Rs. 88,18,336 while, in fact, the petitioner company had paid in cash to Its employees a sum of Rs. 1,14.68.253 besides Rs. 19.64,251 towards hospital expenses of the employees and their family members to reimburse the actual expenses. In this manner. It is asserted by the petitioner-company that more than the sum required to be contributed has been spent by it. The grievance of the petitioner is that the respondent No. 1-E.S.I. Corporation has sent a demand notice dated 13.11.1998, a copy of which is Annexure-6 to the writ petition, whereby a sum of Rs. 2,63,28.640 as being contribution (c) 6.5% on the total wage bill of Rs. 40,50,55.966.90 P. for the period February. 1997 to July, 1998 had been claimed. This notice was followed by reminder dated 10.3.1999 and ultimately another demand notice dated 16.4.1999 has been issued in which the interest of Rs. 55,831.14 has been claimed on the outstanding amount of contribution and through the notice a total sum of Rs. 3,19,11.755.50P. has been claimed. Another demand notice dated 10th May, 1999 obviously during the pendency of the present petition was issued whereby a sum of Rs. 3.23,44,559 as contribution and interest as contemplated under Section 39 (5( (a) of the Act has been claimed.
(2.) The aforesaid demand notices have been challenged by the petitioner-employer on a variety of grounds. One of the grounds taken by the petitioner-employer is that It was on account of directions issued by this Court in Civil Misc. Writ Petition No. 7844 of 1997 that the contribution could not be deducted from the salary of the employees and since the benefits which were extended to the employees prior to 1.1.1997 were revived and a substantial amount has already been spent by the petitioner company, the demand for the huge amount of contribution is Illegal and Inoperative : that during the period from February, 1997 to July, 1998 no benefits were claimed under the Act by any one of the emplpyees and. therefore, the question of remitting the amount of contribution as calculated and covered by the demand notices, does not arise. It is also stated that since the amount far in excess of the amount required to be contributed has been spent and some of the employees have left the petitioner company, it would now be difficult to recover the amount, which had been paid to such employees or to deduct the amount of contribution from their salary/wages. On the aforesaid ground, the petitioner-employer has challenged the validity. propriety and correctness of the demand notices under Article 226 of the Constitution of India and has prayed that the demand notices be quashed and the respondent No. 1-E.S.I. Corporation be restrained from realizing the amount covered by the demand notices.
(3.) Heard Sri S. P. Gupta, learned, Senior Advocate, assisted by Sri Tarun Agarwal, learned counsel for the petitioner-employer. Sri Rajesh Tewari appearing on behalf of the respondent No. 1-E.S.I. Corporation and Sri V. B. Singh on behalf of the respondent No. 2 Employees Union at considerable length.;