Jharkhand High Court Opines That Establishments Once Deemed To Be Under The Fold Of ESI Will Continue To Be Obligated To Make Contributions Even If The Number Of Employees Subsequently Falls Below The Threshold

[1]The Jharkhand High Court has upheld that establishments covered under the Employees’ State Insurance Corporation Act, 1948 (ESI Act), are obligated to deposit employee subscriptions to contribute to the ESI fund, irrespective of the number of employees. This ruling was made in a case involving an entity that had been served a notice by the ESI Inspector for failing to provide necessary records and make ESI contributions. The court dismissed the entity’s claim of the Act’s prospective application and emphasized that it was the entity’s responsibility to contribute to the ESI fund.

The court also ruled that the entity was not eligible for any leniency regarding the payment of interest on its dues. It noted that the entity’s failure to remit payments as required by the Act frustrated its purpose, as the intended benefits could not be realized due to non-deposit of funds into the ESI fund.

[1] L.P.A. No. 187 of 2023