Madras High Court· 31 July 2026
Must the obstruction of inspection under the Employees' State Insurance Act, 1948 always be physical?
M/s.Pro-Interactive Services v. The Assistant Director
2026:MHC:3185 · CMA.No.2148 of 2026
Coram: Justice N. Anand Venkatesh
Answer
No. Obstruction of inspection need not always be physical: a person or an entity that refuses to provide any document or register and also refuses to participate in the inquiry will effectively obstruct the inspection. Where the employer provided services at various other places and gave no cooperation, conducting an inspection would become a wild goose chase. Mere inadequacy of the records, however, would not confer jurisdiction to invoke Section 45A.
Headnote
Employees' State Insurance Act, 1948 — s.45A — s.45 — s.44 — s.75 — s.82 — Determination of contribution — Preconditions for invoking Section 45A — Obstruction of inspection —
Employees' State Insurance Act, 1948 — s.45A — Two conditions for invoking Section 45A —
Held: A determination under Section 45A may be made only where two conditions are fulfilled: non production of records and obstruction of inspection. Mere inadequacy of the records would not confer jurisdiction to invoke the provision. (¶20, 23)
Employees' State Insurance Act, 1948 — s.45 — Obstruction of inspection need not be physical —
Held further: The obstruction of inspection need not always be physical. Where an entity refuses to provide any document or register and also refuses to participate in the inquiry, that will effectively obstruct the inspection and satisfy the condition for invoking Section 45A. (¶22, 23)
Employees' State Insurance Act, 1948 — s.75 — Burden on employer claiming it ceased operations —
Held further: Where returns have been filed for a large number of employees, the burden of proof is only on the employer to establish by documents and registers that it ceased to operate; such a presumption cannot be made on its mere ipse dixit. Appeal dismissed. (¶14, 24)
In the Court's own words
Paragraph 22If the appellant did not appear for the personal hearing nor submit all the relevant documents/registers, the Authority would not be in a position to proceed further with the personal hearing/inquiry. In such a scenario, conducting an inspection would become a wild goose chase. More particularly, in the present case, the appellant had provided industrial security services to its customers in the city of Chennai and in various other places in the State of Tamil Nadu. In that case, it would not be possible for the Social Security Officer to go around all the places without any cooperation from the appellant to find out as to how many employees were engaged by them at various places. This attitude on the part of the appellant tantamounts to obstruction of inspection.
Paragraph 23In a given case, the obstruction of inspection need not always be physical. It can arise in a case where a person or an entity refuses to provide any document or register and also refuses to participate in the inquiry. This will effectively obstruct the inspection. An inspection can take place if some ledgers/documents/registers are provided to the Authorities by participating in the personal hearing/ inquiry. In such a scenario, the Authority has to consider the same and must necessarily conduct the inspection to ascertain the number of employees engaged and the contribution payable to them. That is the reason as to why the Hon’ble Apex Court, in the said judgment, made it clear that inadequacy of the records would not confer jurisdiction upon the respondent to invoke Section 45A of the Act. Section 45A of the Act is meant to be invoked in exceptional situations where there was non production of records or obstruction on the part of the employer. The said judgment of the Hon’ble Apex Court relied upon by the learned counsel for the appellant will not come to the aid of the appellant.
Acts & Sections
s.45A Employees' State Insurance Act, 1948s.45 Employees' State Insurance Act, 1948s.44 Employees' State Insurance Act, 1948s.75 Employees' State Insurance Act, 1948s.82 Employees' State Insurance Act, 1948One judgment a day. That's the whole habit.
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