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Issues Involved:
1. Applicability of the Employees' State Insurance Act, 1948 to rice mills in Andhra Pradesh. 2. Compliance with principles of natural justice in issuing the notice. 3. Requirement for inspectors to disclose details of employees and wages under Regulation 10B. Detailed Analysis: 1. Applicability of the Employees' State Insurance Act, 1948 to Rice Mills in Andhra Pradesh: The primary issue was whether the rice mills in Andhra Pradesh fall under the purview of the Employees' State Insurance Act, 1948. The Act was made applicable to these mills from 1st August 2000. Inspections conducted before this date found that more than 10 employees were employed in these mills. The rice mills were considered factories under Section 2(12) of the Act, which defines a factory as any premises where ten or more persons are employed for wages and where a manufacturing process is carried out with the aid of power. The court noted that the applicability of the Act is a jurisdictional question. It must be determined whether the establishments are covered under the Act based on the definitions of "employees" and "wages." The scheme of the Act indicates that only employees drawing wages as defined in Section 2(22) would be covered. 2. Compliance with Principles of Natural Justice in Issuing the Notice: The appellants contended that the principles of natural justice were not followed, as they were not given an opportunity to explain their non-compliance before being issued a notice proposing criminal action. The court observed that Section 44 of the Act, which mandates employers to furnish returns and maintain registers, embraces principles of natural justice. A notice should have been issued to the appellants to comply with the Act's provisions before proposing criminal action. The court found that the notice dated 20th October 2000 did not direct the appellants to comply with the Act but instead asked why criminal cases should not be instituted against them. The court emphasized that the authorities must determine the jurisdictional fact before enforcing the Act, and the appellants should be given an opportunity to show that the Act does not apply to them. 3. Requirement for Inspectors to Disclose Details of Employees and Wages under Regulation 10B: The appellants argued that the inspectors did not disclose the details of employees and wages as required under Regulation 10B of the Employees' State Insurance (General) Regulations, 1950. The court noted that while it is the employers' statutory obligation to furnish such details, the authorities are not bound to disclose the same while issuing a notice. However, discrepancies between the information furnished by the employer and the inspector's report may necessitate the disclosure of such details. The court concluded that the inspection conducted before the Act came into force was ultra vires Section 45(2) of the Act. Consequently, any action taken based on this inspection, including the imposition of penalties, was invalid. Conclusion: The court allowed the appeals to the extent that the impugned judgment was set aside. The appellants were given an opportunity to file their returns and other documents before the authorities within six weeks. The authorities were directed to determine whether the provisions of the Act applied to the respective employers after giving them an opportunity of hearing. If it was found that the Act applied, the authorities could proceed as permissible by law.
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