Labour contractor pursued for ESI contributions for a period she says she employed no one; High Court sets demand aside after ten years
In 2015 the Employees' State Insurance Corporation ordered a Tirupati labour contractor to pay Rs 1,44,788 in contributions for June 2010 to March 2011 and started recovery. A municipal certificate said she had supplied no contract labour from April 2010. On 10 April 2026 the High Court set the demand aside and sent it back for a fresh hearing.
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How we verify →Demand set aside on 10 April 2026 and remanded for a fresh hearing.
What happened
The High Court recorded that the contractor ran a labour-supply establishment registered with the ESI Corporation from 2007. The Corporation issued an ad hoc notice for Rs 2,84,750 in May 2015 and, on 15 July 2015, an order under section 45-A determining Rs 1,44,788 for June 2010 to March 2011, followed by recovery proceedings in 2016.
She relied on a certificate dated 17 October 2015 from the Health Officer of the Tirupati Municipal Corporation stating that she had not supplied any labour on contract basis from 1 April 2010, and said she had paid contributions for the five workers engaged on a later contract.
Justice K. Sreenivasa Reddy held that the order demanding contributions for 2010 to 2011 'appears to be unjustifiable', set aside the 2015 order and the 2016 recovery proceedings, and directed a fresh notice and hearing.
What the High Court said
“ordering the Writ Petitioner to pay the contributions for the period from 01.06.2010 to 31.03.2011 appears to be unjustifiable.”
W.P. No. 23255 of 2016, judgment dated 10 April 2026, para 17 — read the full text
A payroll tax on staff she says she did not have
The case turns on a mandatory social-insurance levy on employers. The contractor spent a decade contesting a demand for a period in which, on the municipality's own certificate, she supplied no labour.
What we could not confirm
This is a civil demand and recovery, not a criminal prosecution. Liability has not been finally decided; the Corporation may issue a fresh notice. The High Court order calls the district Chittoor, which then included Tirupati.