Non-production of records and non-cooperation with inquiry constitute obstruction warranting assessment under Section 45A.

The appellant, a private company providing industrial security services, employed personnel deployed at various locations in and around Chennai and had been paying Employees’ State Insurance contributions until November 2011.

For the period December 2011 to May 2013, contributions were not paid.

The Employees’ State Insurance Corporation issued a show-cause notice proposing a contribution of ₹6,85,328 under Section 45A of the Employees’ State Insurance Act, 1948 (“the Act”).

Several notices fixing personal hearings were issued, including a notice received at the appellant’s Delhi address; however, the appellant neither appeared nor produced the relevant records.

The Corporation consequently assessed the contribution for 71 employees by order dated 19 August 2015.

The appellant challenged the assessment under Section 75 of the Act, contending that it had ceased operations in Tamil Nadu and that the statutory requirements for invoking Sections 45 and 45A had not been satisfied.

The Employees’ Insurance Court dismissed the petition on 18 November 2025, leading to the present appeal under Section 82 of the Act.

Whether the appellant was denied reasonable notice and an opportunity of hearing before the Section 45A assessment was made.

Whether the appellant had established that it ceased operations and engaged no employees in Tamil Nadu from December 2011 to May 2013.

Whether the Corporation could validly invoke Section 45A of the Act without conducting an inspection under Section 45, in light of the Supreme Court’s decision in Carborandum Universal Ltd. v. ESI Corporation, 2025 SCC OnLine SC 2865.

The Court applied Sections 44, 45, 45A, 75 and 82 of the Employees’ State Insurance Act, 1948.

Section 45A authorises a best-judgment determination of contributions where the employer defaults in producing records or otherwise prevents the Corporation from determining the correct contribution.

Relying on Carborandum Universal Ltd. v. ESI Corporation, 2025 SCC OnLine SC 2865, the Court held that Section 45A is an exceptional and residuary power, not an alternative assessment mechanism available at the Corporation’s discretion; its invocation requires non-production of records or obstruction of inspection, whereas mere inadequacy of records is insufficient.

The Court also applied the principles of natural justice, requiring reasonable notice and an opportunity of hearing before adjudication.

The Court rejected the appellant’s natural-justice objection because repeated notices were issued, one notice was acknowledged at the Delhi address, and the appellant failed to attend the scheduled hearings or produce the relevant documents.

The claim that the appellant had ceased operations in Tamil Nadu was also disbelieved.

The records showed returns relating to 186 employees, including 99 employees shown as being on leave, while contributions had been paid for 87 employees in November 2011.

The termination of one contract with M/s. Indus Towers did not establish that all operations in Tamil Nadu had ceased, and the appellant produced no supporting registers or documents.

Applying Carborandum Universal, the Court held that the statutory preconditions for Section 45A were satisfied: the appellant’s failure to participate in the inquiry or submit records constituted non-production, and, given the geographically dispersed nature of its security operations, its non-cooperation effectively obstructed inspection.

Physical obstruction was not necessary; refusal to provide records and participate in the inquiry could make inspection practically impossible.

The appellant had received adequate notice, failed to appear or produce relevant records, and had not established that it had ceased operations or employed no personnel in Tamil Nadu during the relevant period.

The civil miscellaneous appeal was dismissed, the Employees’ Insurance Court’s order dated 18 November 2025 in E.I.O.P. No.24 of 2016 was confirmed, and no order as to costs was made.