MEMORANDUM (E.S.

I ACT) TO: FROM: Students of FYBMS, Jai Hind Poorvi Chothani, Esq

Mr. Mohan Bhargav belonged to a very poor family from Kasoli situated at Ahmedabad. He was a very ambitious person. He came to Mumbai in the year 1997 to pursue his career as a big businessman. Initially he started working in a small retail shop. He was very dedicated towards his work and within a short period of time, he started his own business. In October 1999, he inaugurated a factory by name Swades where cotton clothes were manufactured. The quality of the goods manufactured in his factory was so superior that he started receiving export orders from various multinational companies. The overall strength of his factory was of 1000 workers including women. Mr. Bhargav personally looked over the administrative work of his factory. He took due care to provide various facilities to all his workers like sanitary, drinking facilities etc. He maintained a Register in his factory where the details of all his workers like their name, place of residence, wages, etc. was recorded. Mr. Bhargav established a Fund for the benefit of workers, where every month he deposited some amount. It also included contributions obtained from the workers. He regularly filed returns with the E.S.I. Corporation, established by Maharashtra Government. He first remitted to the corporation, the contribution amount from his own pocket and then deducted the employees contribution from their wages, but the expenses incurred towards such remittance were also deducted from workers wages. In May 2000, Mr. Bhargav went for a holiday in Goa, with his family. The expense incurred towards that holiday was from the contribution amount, which he was required to remit to the corporation. His failure to deposit the contribution amount in time resulted in issue of a Recovery Certificate against him. He was required to pay a penalty of 12% p.a. in addition to the contribution amount. In July 2000, Mr. Mihir Virani, one of the employees of the factory was infected with a viral fewer and was given sick leave. He also received sickness benefit, but the same excluded the initial period of 2 days of his sickness.

Mrs. Kajal Khanna and Mrs. Rani Seth, two women employees of the factory during the period of their pregnancy claimed maternal benefit. Mr. Mohan Bhargav granted entire maternal benefit amount to Mrs. Kajjal Khanna, but since Mrs. Rani Seth died before delivering the child; her nominee was given the benefit amount only till the date of her death. In September 2001, while working in the factory two employees, Mr. Raj Thappar and Mr. Anurag Basu met with an accident. This accident made Mr. Thappar permanent partial disabled resulting in amputation of his both hands but caused death of Mr. Basu. The only heirs of Mr. Basu were his grandparents, who claimed dependants benefit from Mr. Bhargav, including the expenses incurred for Mr. Basus funeral. Since the claim amount of Mr. Thappar was not satisfied, he filed a case against Mr. Bhargav before the Insurance Court, which directed the matter to be first decided by the Medical Council to decide the type of disablement suffered by Mr. Thappar. The Medical Council directed Mr. Bhargav to pay the benefit amount for life to Mr. Thappar. The defense taken by Mr. Bhargav was that since due to accident, Mr. Thappar was not able to make further contribution, and therefore he is not liable to provide benefit to Mr. Thappar for life. He also approached the Insurance Court and also filed appeal before High Court. Before hearing the case, the Insurance court required him to first deposit 50% of the disputed amount. Both, the Insurance Court and the High Court confirmed the said order passed by the Medical Benefit Council. Questions: 1. 2. Has Mr. Mohan Bhargav committed offence by deducting workers wages for remitting contribution amount to corporation? Do you think both the employer and the employees are liable to make contribution? When can an employee claim exemption from making contribution? 3. 4. At what rate does the employer and employees are required to make contribution? Is Mr. Bhargav obliged to regularly file return to Corporation?

5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19.

Can Mr. Bhargav be held liable to pay interest @ 12% for failure to pay contribution amount in time? Can Mr. Bhargav deduct employees wages for contribution made by him towards employees contribution? Is Mr. Bhargav required to first deposit the contribution amount? Can Mr. Mihir Virani claim sickness benefit for initial 2 days of his sickness? If yes, when? Can a nominee of Mrs. Rani Seth claim entire benefit amount? What benefit Mr. Thappar can claim? Till what period and how much? Can Mr. Thappar claim benefit till life even though he could not make any further contribution? Are Mr. Anurag Basus grand parents entitled to benefit? How much and at what rate? Can they claim expenses borne for the funeral of Mr. Basu? Can Insurance Court refer matter first to Medical Council? Can Insurance Court direct Mr. Bhargav to deposit 50% of the disputed amount before hearing his plea? Can Mr. Bhargav file appeal to High Court against the Insurance Courts order? What is the limitation period in filing an appeal? What penalty do you think, can be imposed on Mr. Bhargav for failure to deposit contribution in time? What is the maximum penalty that can be imposed on Mr. Bhargav for deducting employees wages towards employers contribution? What is the maximum penalty that can be imposed in case of subsequent offence?