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TMI Blog2006 (2) TMI 687X X X X Extracts X X X X X X X X Extracts X X X X ..... ntained in Section 45-C, 45-I of E.S.I. Act, 1948 as amended and II Schedule to the Income Tax Act read with Section 45-H of ESI Act, 1948. It is the case of the petitioner that it is a registered firm and deals with the business of manufacturing hydraulic pneumatic seals and as they were looking out for premises for their business purpose, in response to the auction sale conducted by respondent Nos. 3 and 4, the petitioner purchased plot U-149 in the Nagpur industrial area of MDDC within the limits of village Nildoh, Tq. Hingna, District Nagpur. The petitioner having given the highest offer, the same was accepted by respondent Nos. 3 and 4 and the said plot along with the building was sold by respondent Nos. 3 and 4 in favour of the petitioner through registered sale-deed dated 26-6-1995. 2. It is the case of the petitioner that earlier this property was owned by M/s J.J. Cold Tread, Nagpur who were dealing in the business of remoulding of tyres in the said property. The said M/s. J. J. Cold Tread was a defaulter of respondent Nos. 3 and 4 and, therefore, respondent Nos. 3 and 4 attached and sold their assets for a consideration of ₹ 7,00,000/- by virtue of powers vested ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ESI Act and otherwise also this Court should not entertain Writ Petition under Articles 226 and 227 of the Constitution of India as the subject-matter of the dispute involves questions of fact and law which can be examined by the ESI Court which is constituted Under Section 74 of the said Act being a dispute between the employer and the respondent Corporation. It is also contended that the fate of the Writ Petition filed by the petitioner mainly hinges on the provisions of Section 93-A of the Act which lays down liability in case of transfer of establishment. Thus, in view of the fact that an alternative legal remedy is available Under Section 75 of the ESI Act, the petition deserves to be dismissed. 5. It is the contention of the respondent Nos. 1 and 2 that for all purposes, the transfer effected by the Maharashtra State Financial Corporation is a deemed transfer as per the provisions contained in Section 29(2) of the S.F.C. Act, 1961 and for the purposes of provisions of Section 93-A of the ESI Act, 1948 and hence, the petitioners are liable to pay the dues of E.S.I, which have not been paid by the employer of the said establishment. It is the contention of the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case where the petitioner had purchased the property from the State Financial Corporation and the High Court on examining the case came to the conclusion that such transfer would not come within the mischief of Section 17-B and held as under in para 6 of the reported judgment: A conjoint reading of the provisions of Sections 2, 8 and 17B of the EPF Act as quoted above gives a clear picture that the liability to pay contribution and other sums due from the employer on transfer of an establishment is specifically provided in Section 17B of the EPF Act. The principle behind it is that the employer, who is liable to pay Under Section 6 of the Act the contribution and other sums, cannot by reason of its owning or occupying the establishment on transfer be permitted to avoid such liability and, therefore, provision is made Under Section 17B of the Act, that the employer as well as the transferee shall be jointly and severally liable to pay the contribution and other sums up to the date of transfer. This speaks that by reason of the transfer, the liability on the employer would not cease, but would continue to exist and would also be fastened upon the transferee, though limited to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the liability to pay contribution under the provisions of the Act is in respect of factory or establishment and the principal employer is a person who owns such factory or establishment, while the immediate employer is one who conducts such factory or establishment. Shri Shah urged that expression employer is not defined under the Act, but overlooks that the import of that expression can be well gathered from the definition of other terms defined Under Section 2 of the Act. Section 2(9) of the Act defines employee and means any person employed for wages in connection of the work of a factory or establishment to which the Act applies and who is directly employed by the principal employer or through an immediate employer on the premises of the factory or establishment. The expression immediate employer is defined Under Section 2(13) of the Act and in relation to employees means a person who has undertaken the execution on the premises of a factory or establishment to which the Act applies or who under the supervision of the principal employer carries on work at the factory or establishment. The term principal employer is defined Under Section 2(17) of the Act and means in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hi Cotton Mills, Mau Nath Bhanjan v. The Regional Director, Employees State Insurance Corporation, Kanpur reported in (1995)ILLJ703All and this decision almost covers the issue as to the liability of a purchaser to whom the property is not transferred by the original employer and has placed reliance on the finding in the said case recorded in paragraphs 6, 7 and 9 of the reported judgment in which it was observed as under: 6. Counsel for the respondent relying on Section 93-A of the Act, 1948, argued that both the employer and the person to whom the establishment was transferred, shall jointly and severally be liable to pay the amount due in respect of any contribution or any other amount payable under this Act. Section 93-A relates to the cases involving transfer of the factory or establishment from one person to another. If a factory is transferred either in whole or part by an employer by sale, gift, lease or licence or in any other manner whatsoever, then by virtue of Section 93-A the employer or the transferee to whom the factory is so transferred shall jointly and severally be liable to pay the amount due in respect of any contribution payable under this Act in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... occurring in Section 93-A of the Act of 1986, cannot take within its sweep the transfer, which is a consequence of acquisition. The Counsel for the respondent made a queer argument before us that the Act of 1986 itself uses the term 'transfer' in Section 3 and elsewhere. An Act has to be interpreted in totality and not by picking up solitary words. The entire Act of 1986 is aimed at acquisition and that does not refer to a transfer by way of sale, gift, lease or licence or in the like manner. 9. The Counsel for the respondent then relied on Vemly Hotels v. Kuldeep Singh and Ors. In this case 'Hotel Bombay International' belonged to a trust. By agreement dated 24-9-1968, the trustees allowed Merchant Hotels Private Limited to conduct the hotel for a period of five years from 1-8-1968. The hotel was then conducted by Merchant Hotels Private limited. The trustees executed another agreement dated 13-5-1979 in favour of Vemly Hotels, whereby Vemly Hotels were allowed to conduct the hotel from 1-8-1978 to 31-3-1983. The question was whether Merchant Hotels Private Limited and Vemly Hotels were liable to pay contribution. On these facts, the Bombay High Court held t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he highest bidder, the property has been conveyed in their favour. In Clause 6 of the said lease, it is made clear that the parties have agreed and declared that all the liabilities as to rights, rents, rates, taxes and dues in respect of the said assets, if any which may be due or which may hereinafter fall due and the MIDC charges, G.P. taxes, local cess, if any, outstanding upto this date and transfer fees as may be demanded by MIDC and of the MSEB shall be paid and satisfied by the purchasers and the Corporation shall not be in any way liable to make good the expenses incurred by the purchasers on any account. 12. Except for this liability, the petitioners have not taken over any liability of the establishment which was registered under ESI Act with respondent Nos. 1 and 2. There is no doubt that liability for payment of contributions Under Section 40 of the ESI Act is on the principal employer. Under Section 41 the principal employer has to recover the contributions in respect of an employee from the immediate employer and Act imposes obligation on the employer to pay both the contributions, i.e. employer's contribution and employee's contribution, in the first inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manner assist the respondent Nos. 1 and 2. On the other hand, the cases of Suburban Ply and Panels (P) Ltd. v. Regional Provident Fund Commissioner and Ors 2004 Lab.I.C. 1190 and M/s Swadeshi Cotton Mills, Mau Nath Bhanjan v. The Regional Director, Employees State Insurance Corporation, Kanpur reported in (1995)ILLJ703All (cited supra) squarely apply to the case of the petitioner. 16. In the case of ESI Corporation v. Balaraman 2001 (1) CLR 617 the Division Bench of High Court of Kerala was required to examine an identical issue. In the said decision, the Kerala High Court observed in para 2 as under : 2. The main contention taken up before this Court is that Under Section 93A of the Employees' State Insurance Act, when transferee received the factory by sale, lease or gift, he is liable to pay the contribution. Section 93-A of the ESI Act reads as follows : 93.A. Liability in case of transfer of establishment Where an employer, in relation to a factory or establishment, transfers that factory or establishment in whole or in part, by sale, gift, lease or licence or in any other manner whatsoever, the employer and the person to whom the factory or establish ..... X X X X Extracts X X X X X X X X Extracts X X X X
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