Hi All, I would like to know if any labor contractor if terminated/ stopped his contract in year 2018, and in the year 2019 ESIC bodies came to knew that XYZ contractor is defaulter for amounting to Rs. 20 lakh since the year 2015-2018 and contractor has vanished.
1. In the above scenario does ESI can hold responsible for the Principal employer and issue Garnishee to pay any outstanding- and if, even after the payment by principal employer amounting to Rs. 1 lakh, (which was on hold by principal employer).
2. Does ESI can send summon with reference to Garnishee to pay the difference amount outstanding to Rs. 19 lakh to the principal employer
Note: Contractor used to submit fabricated/ edited challans during monthly bill submission to principal employer.

From India, Vadodara
D. Manager
Hr Consultant


Manual challans of ESIC got abolished from 2012 and electronic form of contribution record and challan payment receipt exists,
It is principal's responsibility to ensure that contributions of ESIC/EPF is remitted by the contractor, before settlement of their bills payment,
electronic submitted contribution records / challans can not be made duplicate, in monthly form 12 to 14 the principal got the full details of employee wages and contributions by contractor, and they has to seek the CR and payment clearance details with bills.
PE always stands liable for the defaults of the contractor's compliance.
Get help with your local ESIC legal counsel, who can study the records and can guide further.


ESI can issue a notice to Principal Employer but cant held responsible for default payment. In the said case, Principal employer can issue a notice to the contractor, that his money with them shall kept on hold till he clears dues with ESI.

It is clearly shows that some sorts of nexus was existing between HR people of PE and Contractor. In principle the bill of contractor is considered for process after getting the HR clearance.

The ESI authority cant claim with PE because what they were doing for last three years and ESI deposit is done on monthly basis.

India Pistons Repco Limited 2014 LLR 536 held that in absence of any control or supervision over the employees of the independent contractor who was given various job work to be carried out, the principal employer cannot be held liable for the ESI contribution hence the ESI authority has wrongly determined the money.

The management of PE should act upon the staff/officer to whom the Contractor used to submit the pay sheet & challan etc,(. fabricated/ edited challans) during monthly bill submission.

From India, Mumbai

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