Madras High Court· 31 July 2026

Whether an assessment under Section 45A of the Employees' State Insurance Act, 1948 can be validly invoked without exercising powers under Section 45 to satisfy the statutory preconditions?

M/s.Pro-Interactive Services v. The Assistant Director

2026:MHC:3185 · CMA.No.2148 of 2026
Coram: Justice N. Anand Venkatesh

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Answer

Yes, where the two conditions are fulfilled. Section 45A may be invoked only on non production of records or obstruction of inspection, and where records are produced and the employer participates in the personal hearing the Authority must necessarily conduct the inspection. Here the employer received the notices, did not care to appear for the personal hearing or inquiry nor submit the relevant documents, so both requirements were satisfied and the substantial question of law was answered in favour of the respondent.

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 20In the said judgment, the Hon’ble Apex Court considered the scope of Section 45A of the Act. It was held that to invoke Section 45A of the Act, two conditions must be fulfilled and they are:

Paragraph 21In the case in hand, the appellant received the notices before the adjudication order was passed by the respondent and in spite of it, the appellant did not care to appear for the personal hearing/inquiry nor submit the relevant documents. Hence, the first requirement has been satisfied.

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 25In the light of the above discussions, the substantial question of law is answered to the effect that the respondent fulfilled the precondition to invoke Section 45A of the Act and they satisfied the requirements prescribed by the Hon’ble Apex Court in the said judgment. Hence, the substantial question of law is answered in favour of the respondent and against 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, 1948

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Also decided in this judgment

Must the obstruction of inspection under the Employees' State Insurance Act, 1948 always be physical?

Plain-language answer prepared by the LexStreak Editorial Desk — verify against the judgment. Source: Madras High Court. Corrections