In Brief
The ESI Corporation sought to enforce demand notices for compulsory insurance contributions from a cinema theatre established in 1981 that had stopped paying contributions after September 1989 when its workforce fell below 20 employees. The High Court had quashed the demand notices, finding the amended provision (Section 1(6) of the ESI Act, requiring coverage regardless of employee numbers) applied retrospectively and unfairly. The Supreme Court reversed this, holding that the amended provision operates prospectively from 20.10.1989 onwards, making all established factories and cinemas liable regardless of actual workforce size. The Court emphasized the ESI Act's social welfare purpose requires broad, protective interpretation favouring workers.
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