M/S Escorts Tractor Ltd. vs Employees State Insurance Co.

Court
Punjab and Haryana High Court

FAO-492-1995 (O&M
M)
1

127


IN THE HIGH C
COURT OF PUNJAB AND HA
ARYANA AT CHANDIGARH
FAO-492-1995 (O&M)
Decision: AUGUST 24, 2026
)
6
Date of D

S TRACTOR LTD.

........Appellant
M/S ESCORTS

EMPLOYEES S

CORAM: HON

Present: Ms

Mr.
Versus
STATE INSURANCE CO.
........Respondent
N'BLE MR. JUSTICE HARKE
ESH MANUJA
. Geeta Gulati, Advocate for t
the applicant-appellant.
H.S. Bhatia, Advocate for the
e respondent.

ANUJA, J. (ORAL)
HARKESH MA

By
way of present appeal, ch
allenge has been laid to a
a
decision dated
14.12.1994 passed by the
learned Employees' State
e
Insurance Cour
rt at Faridabad whereby, a cha
allenge laid to an order dated
d
05.01.1989 pas
ssed in terms of Section 45
5-A of the Employees' State
e
Insurance Act,
1948 (hereinafter referred to
as ‘the Act’) calling upon the
e
appellant-Emplo
oyer to make payment of
employees' and employer's
s
share of ESI co
ontribution amounting to Rs.1
,83,974.60/- besides interest
t
of Rs.3,639.50/
/- was declined.
2. The
e record of this appeal was b
burnt and from the salvaged
d
record of the pa
artially burnt cases, the same
was reconstructed subject to
o
just exceptions
and further verification.
3. Brie
efly stating, the appellant
company on 23.02.1987
7
introduced a s
scheme called “Efficiency S
Scheme” for improving the
e
performance, b
better utilisation of men and
d machinery, including better
r
work efficiency.
. The “Efficiency Scheme” pr
rovided for certain payments
s
on account of
efficiency displayed by the
e workers. Vide order dated
d
28.09.1987, the
e respondent called upon the
e appellant to make payment
t
TEJWINDER SINGH
2026.09.01 10:52
I attest to the accuracy and
integrity of this document

2 FAO-492-1995 (O&M)

of employer's and employees' contribution on account of payment under
the “Efficiency Scheme” made for the period of January 1986 to April
1987, amounting to Rs.1,83,783.15/-. The said demand was responded
to by the appellant vide letter dated 27.11.1987. However, vide order
dated 05.01.1989 passed by the respondents under Section 45-A of the
Act, the appellant was called upon to pay a sum of Rs.1,83,974.60/-
towards contribution. The said demand was challenged by the appellant,
but, the same was repelled by the learned Employees' State Insurance
Court at Faridabad vide its decision dated 14.12.1994, hence the present
appeal.
4. Learned counsel for the appellant submits that in the present
case wherein, the appellant had duly furnished its records and returns
with further evidence which was even inspected by the Authorities as
such, the proceedings at best were required to be initiated in terms of
Section 75 of the Act instead of Section 45-A thereof and thus, the
demand raised by the respondent vide order dated 05.01.1989 was
wholly illegal.
5. On the other hand, learned counsel for the respondent
submits that if at all it was found that the proceedings under Section 45-A
of the Act were not maintainable, liberty be granted to initiate the
proceedings in accordance with law in terms of Section 75 thereof as the
appellant was enjoined upon to submit the employer's and employees'
contribution against the payments made under the Efficiency Scheme.
6. I have heard learned counsel for the parties and gone
through the paper-book. I find substance in the submissions made on
behalf of the appellant.
TEJWINDER SINGH
2026.09.01 10:52
I attest to the accuracy and
integrity of this document

3 FAO-492-1995 (O&M)

7. In the present case, from the deposition of respondent-
witness, RW-1 namely, M.L. Khurana, it was discernible that the
inspection against the appellant-Company was regularly carried out
which testified that demands under the “Efficiency Scheme” were made
on monthly basis. In such circumstances, it was evident that
returns/records pertaining to the payments made under the “Efficiency
Scheme” were produced by the appellant before the respondents and the
same were duly inspected. In such circumstances, the order dated
05.01.1989 passed by the respondents in exercise of Section 45-A of the
Act for raising demand of Rs.1,83,974.60/- as against the employer's-
employees' contribution towards the payment made under the “Efficiency
Scheme” was wholly illegal, uncalled for and without jurisdiction. At best
any such demand was required to be raised in exercise of powers under
Section 75 of the Act. In such circumstances, the ESI Court at Faridabad
went wrong in upholding the demand raised by the respondents vide
order dated 05.01.1989 passed in terms of Section 45-A of the Act.
8. Accordingly, decision dated 14.12.1994 passed by the
Employees' State Insurance Court at Faridabad is hereby set aside and
the demand dated 05.01.1989 made from the appellant in terms of
Section 45-A of the Act is also set aside. Consequently, the present
appeal is allowed.
9. Though, the demand raised vide order dated 05.01.1989 has
been set aside on the technical aspect of respondents being not
empowered to raise any such demand in exercise of powers under
Section 45-A of the Act, however, at this belated stage, it may not be
appropriate to grant liberty to the respondents so as to invoke fresh
proceedings against the appellant in terms of Section 75 of the Act as in
TEJWINDER SINGH
2026.09.01 10:52
I attest to the accuracy and
integrity of this document

4 FAO-492-1995 (O&M)

terms of Section 77(1A) of the Act, the proceedings before the
Employees' Insurance Court at best are required to be commenced
within three years from the date on which the cause of action arose.
However, in the case in hand, the demand pertains to the period of
January 1986 to April 1987 and a period of around 40 years has lapsed.
10. At this stage, it may be noticed here that in case any amount
in terms of the demand raised vide order dated 05.01.1989 has been
deposited by the appellant before the respondent-Corporation or before
the Employees' State Insurance Court, Faridabad, the same be refunded
to the appellant within two months.
11. Pending application(s), if any, shall also stand disposed of.


24.08.2026 (HARKESH MANUJA)
Tejwinder JUDGE
Whether speaking/reasoned Yes/No
Whether reportable Yes/No


TEJWINDER SINGH
2026.09.01 10:52
I attest to the accuracy and
integrity of this document