Partly allowed

Regional Director, Esi, Corporation v. Executive Director, Commonwealth Trust

Kerala HC10 Apr 2013Ins.APP/18/2009

Case brief

AI extract

What is this about?

The High Court held that while financial difficulties are a factor to consider, they do not wholly exempt an employer from ESI penalty damages if employee contributions were not remitted after wage deduction. The appeal was partly allowed, reducing damages from roughly Rs. 30,696 to Rs. 7,500.

What did the court decide?

Respondent liable to pay Rs. 7,500 as damages; appeal allowed to that extent; E.I. Court order modified.

Regional Director, Esi, Corporation Vs… — Pension and Retirement Benefits | Kerala HC (2013)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE MR.JUSTICE S.SIRI JAGAN & THE HONOURABLE MR. JUSTICE BABU MATHEW P.JOSEPH

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WEDNESDAY, THE 10TH DAY OF APRIL 2013/20TH CHAITHRA 1935

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Ins.APP.No. 18 of 2009 ( )

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AGAINST THE ORDER IN IC.20/2006 of E.I.COURT, KOZHIKODE DATED 25-09-2008

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APPELLANT/RESPONDENT:

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THE REGIONAL DIRECTOR E.S.I.CORPORATION THRISSUR.

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BY ADV. SRI.P.SANKARANKUTTY NAIR

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RESPONDENT(S)/APPLICANT:

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THE EXECUTIVE DIRECTOR, THE COMMONWEALTH TRUST(INDIA) LTD., 7/1136 SOUTH MANANCHIRA ROAD, CALICUT-673001.

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BY ADV. SRI.V.KRISHNA MENON BY ADV. SMT.P.VIJAYAMMA

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THIS INSURANCE APPEAL HAVING COME UP FOR ADMISSION ON 10-04-2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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S.SIRI JAGAN & BABU MATHEW P.JOSEPH, JJ.

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==================

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Insurance Appeal No.18 of 2009

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==================

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Dated this the 10^th day of April, 2013 J U D G M E N T

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Siri Jagan, J.

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The Regional Director of the Employees' State Insurance Corporation, Thrissur, is the appellant herein. The appellant is aggrieved by the judgment of the Employees' Insurance Court, Kozhikode, in I.C.No.20/2006. The respondent filed the I.C. challenging the order of the appellant imposing on the respondent, damages amounting to ` 30,696/- under Section 85B of the Employees' State Insurance Act, for delayed payment of contributions for the period from 4/2003 to 9/2003. The respondent challenged the order imposing damages on the ground that insofar as the delay in payment of contributions was purely on account of acute financial difficulties of the respondent, no damages could have been validly imposed on them in view of the various decisions of this Court, particularly the decision in E.S.I.Corporation v. Premanandan , 2007 (2) KLT 666. The E.I.Court accepted the contention of the respondent and held that financial difficulties are a good ground for avoiding imposition of damages. Accordingly, the E.I. Court

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Ins Appeal 18/09 - : 2 :-

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set aside the order imposing damages. The appellant is challenging the judgment of the E.I. Court. According to the appellant, the financial difficulties are not a factor, which the Corporation can take into account in the matter of imposing damages under Section 85(B). As far as the Corporation is concerned, they are bound by Regulation 31C of the Employees' State Insurance (General) Regulations, as per which, wherever there is delay in payment of contributions, damages as per the formula fixed in Regulation 31C is liable to be imposed on the employer, who delayed payment of contributions. The learned counsel for the respondent would contend that in view of the various decisions of this Court including Premanandan's case (supra), insofar as the delay caused is only on account of financial difficulties, there is no deliberate intention on the part of the respondent to delay payment of contributions and, therefore, no damages could have been imposed. They would submit that identical contentions of the E.S.I. Corporation have been negatived in Premanandan's case (supra).

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We have considered the rival contentions in detail.

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It is a fact that the establishment was in great financial difficulties, which is evident from the documents

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Ins Appeal 18/09 - : 3 :-

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available on record. It is also generally known that this particular establishment was in acute financial difficulties for years together. Apart from that, it was not difficult for the appellant to ascertain whether the contention of financial difficulties is correct or not, insofar as they have already inspected the accounts of the respondent, while deciding to impose damages. In fact, the appellant never had a contention that the respondent did not have financial difficulties.

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But at the same time, we are of opinion that in Premanandan's case (supra) or in any other case, it has not been laid down that on account of financial difficulties, damages have to be avoided under all circumstances. What has been stated in that decision is that financial difficulties should also be taken into account while considering the question of imposition of damages for delayed payment of contributions. It must be remembered that at the time of payment of wages to the employees, the employer is statutorily liable to deduct employees' contributions from wages and to pay the same to the Corporation along with the employer's contributions. If after deducting the contributions from the wages of the employees, at least the employees' contributions are not remitted to the

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Ins Appeal 18/09 - : 4 :-

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Corporation within the time prescribed by the Scheme, it cannot be stated that the employer is completely innocent of the delay. In the above circumstances, we are of opinion that the respondent should be visited with some portion of the damages imposed. We are of opinion that 7500/- would be the appropriate damages in this particular case. Accordingly, we hold that the respondent is liable to pay only 7500/- as the damages as per order impugned in the I.C. The said amount shall be paid within two months.

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The appeal is partly allowed to the above extent and the judgment of the E.I. Court would stand modified accordingly.

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Sd/S.SIRI JAGAN, JUDGE

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Sd/sdk+ BABU MATHEW P.JOSEPH, JUDGE

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///True copy///

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P.A. to Judge

Regional Director, Esi, Corporation v. Executive Director, Commonwealth Trust

Case brief

What is this about?

What did the court decide?

Regional Director, Esi, Corporation v. Executive Director, Commonwealth Trust

Case brief

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