BHARAT HEAVY ELECTRICALS LTD. versus ESI CORPORATION

Citation: [2008] 2 S.C.R. 900 · Decided: 14-02-2008 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Case Allowed

Judgment (excerpt)

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[2008] 2 S.C.R. 900 
A 
BHARAT HEAVY ELECTRICALS LTD. 
v. 
ESI CORPORATION 
(Civil Appeal No.1271 of 2008) 
B 
FEBRUARY 14, 2008 
(S.B. SINHA AND V.S. SIRPURKAR, JJ.) 
- ;. ~· 
Employees' State Insurance Act, 1948: 
c 
s. 45-A - Proceedings for recovery of Employees' State 
Insurance contribution - Noticee pleading engagement of 
workers by immediate employers, (contractors) and praying 
for their impleadment in the proceedings - Prayer declined 
by determining authority -
Held: The Act recognizes 
'immediate employer' - Section 45A enables to recover the 
D dues both from principal as also the immediate employer - It 
provides for an opportunity of hearing to both of them - Matter 
~ 
remitted to determining authority either to implead the 
contractors as parties and/or summon them for producing 
necessary records - Principles of natural justice - Opportunity 
E of hearing - Practice and Procedure - lmpleadment of 
necessary party 
The appellant, a Public Sector Undertaking, was 
issued notice u/s 45A of the Employees' State Insurance 
F 
Act, 1948 stating that it did not deposit Employees' State 
Insurance contribution for the period 19. 7 .1981 to 
i 
30.9.1991. The appellant contended that it engaged 
contractors who employed the workmen concerned for 
execution of its works and the contractors would be in 
possession of the relevant records. The appellant prayed 
G for impleadment of the said contractors as parties in the 
proceedings. The prayer was rejected stating that the 
~ 
appellant, being the principal employer, could recover the 
ESI contribution from the immediate employers, i.e. the 
contractors, under ss.40 and 41 of the Act and, therefore, 
H 
900 
-
t 
BHARAT HEAVY ELECTRICALS LTD. v. 
901 
ESI CORPORATION 
...., J,._ 
it was not necessary to implead the contractors. The A 
appellant filed a writ petition which was ultimately 
dismissed by a Division Bench of the High Court. 
Aggrieved, the noticee BHEL filed the instant appeal. 
Allowing the appeal, the Court 
B 
HELD: 1.1 In the proceedings initiated under Section 
~ 
45A of the Employees' State Insurance Act, 1948, an 
immediate employer and/or principal employer may also 
show that they are not liable to deposit any contribution 
on behalf of the employees on the ground that the c 
establishment in question did not come within the purview 
thereof. The purpose of the proceedings, both under the 
Act as also the Employees Provident Fund Act, is to 
determine the amount due from any employer in respect 
' 
of the employees under the statutory schemes. Both the 
Acts envisage compliance of principles of natural justice. D 
The proviso appended to Section 45A of the Act provides 
for a statutory mandate of giving a reasonable opportunity 
of being heard. [para 12] [912-B, C, D] 
1.2 Section 45A of the Act enables the appropriate E 
authority to recover the dues both from the principal as 
also the immediate employer. An order passed under 
Section 45A of the Act has a serious civil and/or financial 
consequence as the amount so determined is liable to be 
~ 
recovered as arrears of land revenue. The quantum of F 
amount due has to be determined in respect of all contract 
workers engaged by the contractors. The principal 
employer has a statutory right to recover the contributions 
from the contractors, they being the immediate employers. 
[para 13] [912-E, F, G; 913-A] 
G 
~ 
1.3 The ESI Act recognizes the existence of an 
immediate employer. Section 44 of the Act not only 
mandates the principal employer, but also the immediate 
employer to file its reports and maintain registers. Further, 
it is also to be seen that in terms of the provisions. of the 
H 
902 
SUPREME COURT REPORTS 
[2008] 2 S.C.R. 
A Contract Labour (Regulation and Abolition) Act, 1970 and 
..l.. • 
the Rules framed thereunder, a contractor is required to 
maintain a register of the workmen employed by him. 
The contractor is also required to issue an employment 
card to the said workers. Muster rolls, wages registers 
B and other records in respect of each worker engaged 
by the contractor are also required to be maintained. 
c 
[para 13-14] [913-A, D, E, F] 
. ,,_ ... 
Food Corporation of India v. Provident Fund 
Commissioner & Ors. (1990) 1 SCC 68 - relied on. 
Ashok Leyland Limited v. Employees' State Insurance 
Corporation (2000) 2 LLJ 593 - approved. 
Madras Gymkhana (represented by its Honourary 
Secretary), Madras v. Employees' State Insurance Corporation 
1 
D (repr

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