EMPLOYEES STATE INSURANCE CORPORATION THR. ITS DY. DIRECTOR AND ANR v. M/S SHRI RANI SATI INDUSTRIES THR. ITS PARTNER
Applicability of ESI Act: Validity of Visit Note and Inclusion of 'Hamals' as Employees in Determining Coverage under the Employees' State Insurance Act, 1948.
Court: Bombay High Court
Citation: 2025:BHC-NAG:14825
Decision Date: 16-12-2025
List of Laws
The Employees' State Insurance Act, 1948; Factories Act
- Facts: The Employees State Insurance Corporation (ESIC) appealed against the Employees Insurance Court's order, which declared that M/s Shri Rani Sati Industries was not covered under the Employees' State Insurance Act, 1948 (ESI Act) because they allegedly had fewer than 10 employees. The ESIC argued that a visit note and inspection report from 1997 showed more than 10 employees, including regular employees and 'Hamals' (loaders), were working at the establishment. The respondent firm claimed they never had more than 10 employees.
- Procedural Posture: The ESIC's appeal challenges the judgment and order passed by the Employees Insurance Court (Industrial Court), Amravati, in Employees' State Insurance Case No.1/2000. The High Court admitted the appeal and framed substantial questions of law regarding the validity of the visit note and the justification for not covering the establishment under the ESI Act.
- Issue: 1. Was the Employees Insurance Court justified in rejecting the documentary evidence (visit note and inspection report) indicating that the respondent had more than 10 employees? 2. Was the Employees Insurance Court justified in holding that the establishment of the respondent is not covered under the provisions of the ESI Act, and therefore not liable to pay contributions, despite evidence suggesting that 10 or more employees were engaged for wages?
- Holding: The High Court held that the Employees Insurance Court erred in rejecting the visit note and inspection report. The appeal was allowed, and the impugned order of the Employees Insurance Court was quashed and set aside. The High Court found that the provisions of the ESI Act are applicable to the respondent firm.
- Reasoning: The High Court reasoned that the visit note, countersigned by a partner of the respondent firm, was a valid document and should not have been discarded merely because it was written in small handwriting. The court emphasized that the partner had signed the note, acknowledging its contents. Furthermore, the court relied on the Supreme Court's judgment in Rajakamal Transport vs. Employees State Insurance Corporation, which held that 'Hamals' engaged by a firm are also covered under the ESI Act. The court concluded that the Insurance Court committed an error by not considering the inspection report and that there were more than 10 employees working at the respondent's establishment on the day of the visit.
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