Dipak Kumar Sen, J. - (1.) The facts found or admitted in this reference are, inter alia, that under the Employees' State Insurance Act as originally promulgated, only the employees who worked in the factory of an employer came under the purview of the said Act. By Act No. 44 of 1966, the definition of an "employee" under Section 2(9) of the Employees' State Insurance Act was substituted and other categories of employees, viz., persons employed for wages on any work connected with the administration of the factory or establishment or any part of the department or branch thereof or with the purchase of raw materials for, or the distribution or sale of the products of, the factory or establishment were brought within the purview of the said Act.
(2.) The employers did not accept the extended definition of "employee" in the substituted section and challenged the validity of the amending legislation in different High Courts. Subsequently, the High Courts of Calcutta and Delhi rejected the contentions of the employers and held that all categories of employees mentioned in the substituted Section 2(9) of the Employees' State Insurance Act would be employees within the meaning of the said Act. The High Court at Madras and the Employees' Insurance Court, Bombay, took a different view and the Employees' State Insurance authorities preferred appeals from the said decisions. M/s. Shalimar Chemical Works (P) Ltd., Calcutta, the assessee, is a limited company carrying on business of manufacturing of chemicals. The assessee came within the mischief of the substituted Section 2(9) of the Employees' State Insurance Act and became liable to contribute for such insurance to the Employees' State Insurance Corporation on and from January 28, 1968. The assessee, however, did not make any contribution as required under the substituted section nor did it initiate any proceedings challenging the substituted Section 2(9) in any court. The assessee, however, kept watching the proceedings taken by other employers as aforesaid.
(3.) After the decisions of several High Courts on the controversy as aforesaid, the Employees' State Insurance authorities issued a letter to the assessee dated January 9, 1974, informing the latter of the decisions of the courts. It was stated that if the assessee failed to make deduction of the employees' contribution from the wages of the employees and make payment to the Corporation, the assessee would be liable to pay such contribution from its own funds as under the provisions of the Employees' State Insurance Act, the assessee would not be entitled to deduct the employees' contributions from their wages for subsequent periods.;