Disputes by business and other establishments on coverage of Employees State Insurance (ESI) and/or their clubbing would have to be raised before the appropriate ESI Court u/s 75 of the ESI Act, and petitions should not be preferred directly before the High Court to make this court decide on the disputed question, the Madras High Court has ruled.

Merely because petitioners made an assertion that they were all separate units, that by itself would not empower them to challenge the same before this Court, Mr Justice K. Chandru held while dismissing writ petitions from six establishments.

Kanchi Silk Palace, Kanchi Dresses, Kanchi Ssteels, Kanchi Foot Wear, Twin Bags and Twin Bros, all located in T. Nagar, Chennai, contended in their petitions that they were carrying on knitting business under different names.

They were aggrieved by order dated March 6, 2006, wherein respondent ESI Corpn directed them to cover their units under the ESI Act in terms of the notification issued under Sec 1(5). They said they were separate establishments and they could not be clubbed together for ESI coverage.

Noting that the Supreme Court in its judgement in Sumangali vs Regional Director, ESIC (2008) 9 SCC 106 laid down guidelines based upon factual findings recorded by the ESI Court and the High Court showed that there was unity in management, supervision and control, geographical proximity, financial unity, general unity of purpose and functional integrity among different units, and for the sake of ESI coverage, the different units could be treated as one establishment. The apex court also found that no specific test for determining one establishment was laid in the Act. But yet that question had to be gone into on the basis of the materials produced.

In the present case, the Judge said, prima facie respondent had taken the stand that it was a single establishment for the purpose of ESI coverage. If petitioners wanted to dispute the same, they had to seek remedy by way of dispute u/s 75. The dismissal of present writ petitions would not disentitle petitioners from moving the ESI Court, the Judge ruled.

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September 2021