Manash Nath Roy, J. - (1.) The above Rule with the corresponding interim order was obtained on 30th October, 1978, against a show-cause notice dated 15th April, 1977, the order and demand dated 26th July, 1977 by the Regional Director, Employees' State Insurance Corporation (hereinafter referred to as the said Corporation), the application dated 4th July, 1978 by the Deputy Regional Director of the said Corporation, notice of certificate dated 25th August, 1978 as issued by the Certificate Officer, 24-Parganas and the certificate proceedings as initiated and connected therewith. The particulars and the circumstances under which those orders were issued and the proceedings were initiated would be indicated hereinafter.
(2.) The petitioner. M/s. Prabatak Jute Mills Limited (hereinafter referred to as the said petitioner), is a public limited Company incorporated under the Indian Companies Act, 1913 and was an existing Company within the meaning of the Companies Act, 1956. The said petitioner has been stated to be carrying on the business of manufacturing jute products by employing a large number of employees in this factory and has stated that for the running of the concerned industry the said petitioner has to observe the different provisions of the said Act and the Rules and Regulations made thereunder (hereinafter referred to as the said Rules and Regulations respectively). It is also an admitted fact that the said Corporation is a body corporate and established under the said Act.
(3.) It was the case of the said petitioner that on or about 21st April, 1977, a notice dated 15th April, 1977, was received from the Regional Director of the said Corporation asking them to show cause why damages should not be recovered from them for default in making the payment of contributions being 'employers' share and employees' share, in accordance with the section 40 of the said Act which requires that principal employer to pay contributions in the first instance, within the stipulated time as provided for in Regulations 26 of the Employees' State Insurance (General) Regulations 1950. The said Regulation 26 deals with contribution cards to be sent to appropriate office and lays down that (1) An employer, being in possession of a contribution card in respect of any person, shall send it by registered post of messenger, together with a return in duplicate in Form-6 to the appropriate office (a) within seven days or date on which he comes to know of the death of such person ; (b) within seven days of the date on receipt of any requisition on that behalf from the appropriate office ; (c) within 42 days of the termination of the contribution period to which it relates ; (d) within 28 days from the date of permanent closure of the factory and (2) for purposes of section 77 of the Act the due date by which the evidence of contributions having been paid must reach the Corporation shall be the last of the days respectively specified in clauses (a), (b), (c) and (d) of sub-regulation (I). At this stage, 1 think the provisions of section 40 which has been referred to hereinbefore should be quoted:- Section 40 (1): The principal employer shall pay in respect of every employee, whether directly employed by him or by or through an immediate employer, both the employer's contribution and the employee's contribution. (2) Notwithstanding anything contained in any other enactment but subject to the provisions of this Act and the regulations, if any, made thereunder, the principal employer shall, in the case of an employee directly employed by him (not being an exempted employee), be entitled to recover from the employee the employee's contribution by deduction from his wages and not otherwise : Provided that no such deduction shall be made from any wages other than such as relate to the period or part of the period in respect of which the contribution is payable, or in excess of the sum representing the employee's contribution for the period. (3) Notwithstanding any contract to the contrary, neither the principal employer nor the immediate employer shall be entitled to deduct the employer's contribution from any wages payable to an employee or otherwise to recover it from him. (4) Any sum deducted by the principal employer from wages under this Act shall be deemed to have been entrusted to hint by the employee for the purpose of paying the contribution in respect of which it was deducted. (5) The principal employer shall bear the expenses of remitting the contribution to the Corporation. It was the case of the said petitioner that the delays of the damage proposed to be recovered under section 85B of the said Act which deals with power to recover damages and lays down (1) where an employer fails to pay the amount due in respect of any contribution or any other amount payable under this Act, the Corporation may recover from the employer such damages not exceeding the amount of arrears as it may think fit to impose. Provided that before recovering such damages, the employer shall be given a reasonable opportunity of being heard and (2) any damages recoverable under sub-section (1) may be recovered as an arrear of land revenue, was shown in a statement enclosed with the concerned notice which was so served on the petitioner. From a reference to the notices the demand as made would appear to be Rs. 1,17,919/-. The receipt of the notice, as referred to hereinbefore, was not in dispute and it was the case of the said petitioner that in reply to the said notice on 5th May, 1979, the Regional Director of the said Corporation was informed that the notice as issued and served, was not only misconceived but the same was in violation of Regulation 26 as mentioned hereinbefore, and would not in any event, attract the provisions of section 85B(1) of the said Act. It has further been claimed by the said petitioner that in the said reply it was also claimed that the concerned Regional Director should consider whether any proceeding under section 85B(1) of the said Act would lie or the same would be tenable in case of any violation of Regulation 26 of the said Regulations as mentioned hereinbefore. It should also appear that the respondent as mentioned above, was also requested to consider the other submissions of the said petitioner on merits and the said petitioner also asked for a personal hearing.;