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ARTICLE · 29 JULY 2025

Supreme Court: Agent Status Determines Principal Employer Liability Under ESI Act - Designation Irrelevant

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On April 17, 2025, the Supreme Court of India ("Court") in Ajay Raj Shetty v. Director (Special Leave Petition (Criminal) No. 3743 of 2024), upheld the conviction of the general manager of Messrs.

IndiaEmployment and HR
Aayush Kumar
Aayush Kumar
Anoushka Goel
Anoushka Goel
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On April 17, 2025, the Supreme Court of India ("Court") in Ajay Raj Shetty v. Director (Special Leave Petition (Criminal) No. 3743 of 2024), upheld the conviction of the general manager of Messrs. Electriex (India) Limited, Mr. Ajay Raj Shetty ("Appellant"), under Section 85(i)(b) of the Employees' State Insurance Act, 1948 ("ESI Act") for non-remittance of ESI contributions to the Employees State Insurance Corporation ("ESIC" or "Respondent") under the ESI Act, despite deduction of the same from the employees' wages.

Facts

On February 1, 2011, the ESIC carried out an inspection at the factory premises of M/s Electriex (India) Limited ("Company") to verify deductions towards ESI contributions for the period commencing February 1, 2010, to December 31, 2010. Pursuant to the inspection, it was revealed that while ESI contributions amounting to Rs. 8,26,696 (Rupees eight lac twenty-six thousand six hundred ninety-six) had been deducted from employees' wages, it

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