Defaulters: what the ESIC could do but did not.

Action had been taken once very effectively and enthusiastically by the ESIC Officers’ Federation in the year 1997 through a Member of the Standing Committee Mr. Gautam hailing from Mumbai, to streamline the work of follow-up with the defaulters by making it easier for the employers to pay the contribution. All the Regions were asked to give their opinion on it. And, all the Regions supported that proposal.

A recap of that proposal is appropriate.

1. Every employer covered under the ESI Act would pay the contribution through a Cheque or Demand Draft in the Branch Office (then, Local Office) and get formal acknowledgment of the same.
2. No payment would be received in cash by the Branch Office. The Branch Manager will arrange to deposit all the instruments  in the ESI Corporation’s Bank Account the next day by preparing a Broad Sheet for the same.
3. By twenty second of every month, he would easily know which employer did not pay the Contribution for the previous month and issue notices to all those Partial Defaulters besides calling them over phone and remind them.
4. In the case of Persistent Defaulters, he would issue Show Cause Notices after the six monthly Period of Contribution is over and send the notice as well as acknowledgment to the Regional Office for taking action for prosecution.
5. He would, during the course of the month, obtain the Bank Reconciliation Statement and ensure that all the cheques and Demand Drafts presented by him were accounted for and no cheque was dishonoured.
6. In the event of dishonour of any cheques, the Branch Manager would take further action of issuing notices in time as per law and send the papers to the Regional Office for further action.

This process was suggested by the ESIC Officers’ Federation after a lot of deliberation with various Regional Units.

This procedure would have ensured cent per cent that there was no Missing Credit or Delayed Credit. The proposal was intended to make proper use of the existing manpower. The loss of money actually paid by the employers as Contribution which was running into crores of rupees would have been a thing of past, if this proposal had been accepted.

Moreover, Corporation would have saved a lot of money paid, unnecessarily,  to the Bank which was functioning as the Authorised Bank.

But, for mysterious reasons, the proposal was torpedoed by some people  who wanted patronize the Bank to continue in that unnecessary work of collection of payments made by employers and others. As a result, the Missing Credits were getting accumulated more and more. And, there was no way of knowing how much has been lost. The Authorised Bank is not made accountable.

The proposal of the ESIC Officers’ Association was a fool-proof one and if it had been enforced there would have been

1. no missing credits,
2. no wrong inclusion of names in the Defaulters List,
3. timely follow up with the defaulters every month,
4. timely action against the Persistent Defaulters immediately after the Contribution Period is over and not after the commencement of the relevant Benefit Period.
5. One would not get stuck with only the SBI.

Because of the absence of that system, Missing Credits ran into crores of rupees and Delayed Credits could not be followed up.

A well-intentioned proposal, which was so practical and viable and would save enormous money for the ESI Corporation, was buried deep without any reply to the Federation.

Even the suggestion to enforce the method on trial basis in certain pockets in a few Branch Offices was not given credence. This, in spite of the personal interest shown by Shri C.K.Sharma, the acting Director General in the year 1998. He wanted Branch Office wise details of revenue to analyse the pattern of  expenditure on benefits to zero in on the employers in respect of whom incidence was high. Yet, the SBI won and the ESIC lost.

Will anyone unravel the mystery behind it?

The ESIC ignored its own potential to ensure leakage-free collection of funds and error-free preparation of Defaulters List.

Instead, it continued with its earlier method which was a long-winding one like preparation of Defaulters List at Regional level and pursuing the cases in those lists.

The issue is whether the Administrative Procedure followed by the ESIC helped the coverage of workers employed in the covered factories but not revealed by the employers.

What system was put in place in the Eighties and what is followed now will be examined, from the point of view of concealed employees, in the subsequent Posts.

But, even after introduction of the I.T. Roll-Out, it would be better if monitoring the  defaulters is performed at the Branch Office level by an officer of A.D. level. The role of the Authorised Banks in the functioning of the ESIC should be reduced to the minimum considering the cost-benefit ratio and the extent of difficulties in reconciliation even after the I.T. Roll – Out.