Case Study: ESIC, Patna and Ors. vs. R.K. Tekriwal & Anr.

Case

Appeal from Original Order No. 4/2008
Date of Judgment: May 1, 2012
Case No.: E.S.I. Case No. 12 of 2003

Court and Date

Patna High Court
Presided by: Hon’ble Mr. Justice Shailesh Kumar Sinha
Judgment delivered on: 1st May 2012

Relevant Law

Employees’ State Insurance Act, 1948

• Section 75(1)(g) – Dispute over liability to pay contribution.
• Section 82 – Appeal to High Court only on substantial question of law.
• Section 45A – Power to determine contributions in default.

Background

• The Employees’ State Insurance Corporation (ESIC) demanded ₹4,31,569 from Azad Transport Co. Pvt. Ltd. as ESI contribution for loaders/unloaders allegedly engaged between 01.10.1991 to 29.02.2000.
• The transport company challenged the demand before the Employees’ Insurance (EI) Court, arguing:
  • The workers were not their employees.
  • They were hired and paid by truck drivers, not the company.
• The EI Court ruled in favor of the company and set aside the ESI demand.

Legal Issue

Whether the demand for ESI contributions by the Corporation was tenable without evidence of:

1. Employer-employee relationship.
2. Identification of number of employees.
3. Wages paid to such employees.

Key Legal Findings

1. No employer-employee relationship established:
   The ESIC failed to show that loaders/unloaders were engaged or paid by the company. No appointment letters or employee records were submittedDemand of ESI contributions not….
2. Failure to identify employees and wages:
   ESIC’s own witness admitted in cross-examination that he could not specify the number of workers or their wages. No statements from the alleged workers were recordedDemand of ESI contributions not….
3. Supreme Court precedent not applicable:
   The Corporation relied on Rajakamal Transport v. ESIC (1996), where the company admitted employment of workers. In contrast, here the workers were not engaged by the company, but by truck owners/driversDemand of ESI contributions not….
4. EI Court considered all evidence:
   The High Court affirmed that the EI Court reviewed all relevant documents and reached a factual conclusion. Since no substantial question of law was involved, the appeal was not maintainableDemand of ESI contributions not….

Judgment

• Appeal Dismissed.
• No costs awarded.
• Finding: Demand by ESIC was perverse and not tenable in law.
• Reason: Absence of evidence regarding employment relationship and wage detailsDemand of ESI contributions not….

Conclusion

The Patna High Court upheld the decision of the EI Court, emphasizing that factual findings, unless involving a substantial question of law, are not appealable under Section 82 of the ESI Act. The burden of proving employer-employee relationship lies with the Corporation, and failure to do so renders contribution demands invalid.

Key Learning

• Mere presence of workers at a company’s premises does not establish employment.
• For ESI liability, the Corporation must clearly prove:
  • The company engaged the workers,
  • The number of such employees, and
  • The quantum of wages paid to them.
• Appeals under Section 82 must involve substantial legal questions—not just factual disagreements.

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