Authority: High Court at Calcutta (Constitutional Writ Jurisdiction – Appellate Side)

Order Date: 05.10.2026

Case Overview

  • Parties: State Bank of India & Anr. (Petitioners) vs. Employees State Insurance Corporation (ESIC) & Ors. (Respondents), with Reserve Bank of India appearing as a respondent.
  • Nature of Proceeding: Writ petition (WPA 6511 of 2025) challenging garnishee orders issued by the ESIC Recovery Officer under the Employees’ State Insurance (ESI) Act.
  • Key Dates & Background:
  • Recovery Officer issued prohibitory/garnishee orders on 21‑Feb‑2025 and 26‑Feb‑2025 against SBI and RBI respectively.
  • Petitioners argued the orders were issued despite an earlier prohibitory order dated 12‑Aug‑2024 and a reply letter dated 19‑Dec‑2024 accompanied by a demand draft of Rs 1,26,000 and two‑year account statements.
  • The Division Bench in MAT 222 2025 (interim order on 17‑Feb‑2025) allowed the appellant (SBI) to operate its account with Rs 5 lakh frozen, later disposing the appeal on 17‑Mar‑2025 and directing a fresh appeal before the appellate authority under Section 45 of the ESI Act.
  • The Division Bench ordered that the impugned garnishee orders remain in abeyance and that no adjournment be granted to the appellant.
  • The appellant’s affidavit claimed ESIC’s actions were an abuse of process; ESIC contended the petitioner was a defaulter under the ESI Act.
  • RBI later informed the Court that the amount debited under the garnishee orders had been credited back to SBI’s account.
  • Statutory Provisions Invoked: Sections 45G, 45H, 45A of the ESI Act. The petitioners argued that Sections 45G/45H require a notice and an opportunity of hearing to determine the banker’s ability to pay, which was not complied with.
  • Observations by the Court:
  • The garnishee orders were issued to implement an order dated 12‑Feb‑2024 under Section 45A of the ESI Act.
  • The Division Bench’s order of 17‑Mar‑2025 had stayed the garnishee orders and permitted a fresh hearing.
  • ESIC’s declaration of SBI as a “deemed defaulter” was made without applying mind and violated natural justice, especially since the SBI account of the customer was “inoperative”.

Final Outcome

  • The High Court quashed and set aside the garnishee orders dated 21‑Feb‑2025 and 26‑Feb‑2025.
  • The orders are declared infructuous following the Division Bench’s direction for a fresh hearing under Section 45A of the ESI Act.
  • WPA 6511 of 2025 is allowed; any related applications stand disposed of.
  • The Court directed that a certified copy of the judgment be provided to the parties upon compliance with formalities.

Topics: Legal Judgment, ESI Act Enforcement