ESIC told to refund amount collected from TEXCO

Establishment doesn’t come under the purview of ESI Act, says court

The Employees’ State Insurance Corporation (ESIC) has been directed to refund about ₹35.82 lakh deducted as contribution from Tamil Nadu Ex-Servicemen’s Corporation (TEXCO), a government undertaking formed with an objective to provide jobs to ex-servicemen.

In its petition before the Employees’ Insurance Court (Principal Labour Court), TEXCO said since its inception in 1986, the government granted it an exemption from the purview of the ESI Act and an order was issued periodically up to August 31, 2007.

It also pointed out that for the period from September 2007 to July 2008 there was a delay in getting the exemption from the government and alleged that by taking advantage of it, the ESIC had issued a demand notice and subsequently recovered the said amount by way of Garnishee proceedings in 2010.

ESIC denied the allegations and also argued that an order issued subsequently granting the exemption for the said period had listed some conditions and one of them was contribution for the exempted period shall not be refunded.

The court ruled that the establishment would not come under the purview of the ESI Act and ESIC had no locus standi to raise the demand and set aside its notices.

It also said the condition in the G.O. only spoke about the payment made voluntarily and not about the coercive Garnishee action of recovery and rejected ESIC’s plea.

However, the Labour Court did not order any interest payment on the amount as sought by TEXCO.

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