Blue Ribbon Infra vs. The Union Of INDIA

Heard Sri. V.Sai Kumar, learned counsel for the petitioner and Smt. S.Siva Kumari, learned Standing Counsel for E.S.I Corporation.

Learned counsel for the petitioner submits that the petitioner was the Managing Partner of M/s. Blue Ribbon Infra, a partnership firm which permanently ceased business operations in 2018 due to severe financial distress. Following the closure, the firm surrendered its GST registration and after due verification, GST Department issued “No Dues” clearance Certificate in 2023. The petitioner’s firm vacated its business premises, and had no employees or wage payments thereafter. Since the establishment remained non-operational from 2018 onwards, no liability to pay ESI contributions would arise. However, issuing demand notices in the year 2026 demanding a sum of Rs.7,27,097/- towards ESI contributions, for the period August 2020 to July 2025, despite the firm being already ceased its operations, is ex facie illegal and unsustainable. Learned counsel further submits that all communications, including the impugned notices, were sent to the old business address and petitioner got aware of the proceedings only upon receipt of the demand notice. Thereafter, petitioner immediately submitted detailed representations along with documentary proof, including GST cancellation, Nil returns, and other records, requesting closure/inactivation of the ESI code. However, without considering the representations or affording an opportunity of hearing under Section 45A of the ESI Act, the respondents proceeded to raise the demand and initiate recovery proceedings by issuing recovery certificate. Aggrieved thereby, the petitioner has filed the present writ petition and accordingly prayed to set aside the impugned order.

On the other hand, Smt. S.Siva Kumari, learned Standing Counsel for the ESI Corporation, submits that the writ petition is not maintainable, in view of the efficacious alternative statutory remedies available under the Employees' State Insurance Act. Learned Standing Counsel further submits that the petitioner has the remedy of filing an appeal before the competent Appellate Authority, i.e., the Joint Director, ESI Corporation, or the ESI Court for adjudication of his grievances and relied on the judgment of the Hon'ble Supreme Court in United Bank of India v. Satyawati Tondon, reported in (2010) 8 SCC 110. 5. Learned Standing Counsel further submits that there is no violation or procedural irregularity in issuing the recovery certificate and demand notice, as such no case was made out warranting interference of this Court in exercise of juri iction under Article 226 of Constitution of India. Accordingly, prayed to dismiss the writ petition.

Perused the record and considered the submissions made by both the learned counsel.

In this regard, Section 75 of the E.S.I Act is extracted for quick reference:

Matters to be decided by Employees' Insurance Court. — (1) If any question or dispute arises as to— (a) whether any person is an employee within the meaning of this Act or whether he is liable to pay the employee's contribution, or (b) the rate of wages or average daily wages of an employee for the purposes of this Act, or (c) the rate of contribution payable by a principal employer in respect of any employee, or (d) the person who is or was the principal employer in respect of any employee, or (e) the right of any person to any benefit and as to the amount and duration thereof, or (ee) any direction issued by the Corporation under section 55A on a review of any payment of dependants' benefit, or *** (g) any other matter which is in dispute between a principal employer and the Corporation, or between a principal employer and an immediate employer or between a person and the Corporation or between an employee and a principal or immediate employer, in respect of any contribution or benefit or other dues payable or recoverable under this Act, or any other matter required to be or which may be decided by the Employees' Insurance Court under this Act, such question or dispute subject to the provisions of sub-section (2A) shall be decided by the Employees' Insurance Court in accordance with the provisions of this Act. (2) Subject to the provisions of sub-section (2A), the following claims shall be decided by the Employees' Insurance Court, namely:— (a) claim for the recovery of contributions from the principal employer; (b) claim by a principal employer to recover contributions from any immediate employer; *** (d) claim against a principal employer under section 68; (e) claim under section 70 for the recovery of the value or amount of the benefits received by a person when he is not lawfully entitled thereto; and (f) any claim for the recovery of any benefit admissible under this Act.

As could be culled out from the facts and circumstances and the submissions made by their respective counsel, this Court is of the considered view that the petitioner has an effective alternative statutory remedy under the provisions of Employees’ State Insurance Act or by approaching the competent ESI Court and raise all available pleas as are available to him under law.

In view of the provision and judgment referred to supra, without going into the merits of the case, this Writ Petition is disposed of, granting liberty to the petitioner to approach the competent Appellate Authority or ESI Court for redressal of his grievance. If such an appeal is filed, the Appellate Authority shall consider and decide the same in accordance with law. No costs. Miscellaneous petitions pending, if any, shall stand closed. ___________________________ JUSTICE RAVI CHEEMALAPATI Date:25.06.2026 Ksj