The High Court of Kerala dismissed the appeal by ESI Corporation. Finding the delay in contributions was due to factory closure and financial crisis, the Court upheld the Lower Court's refusal to levy damages under Section 85-B as non-intentional evasion.
None. Appeal dismissed; no order as to costs.
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IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR.JUSTICE HARUN-UL-RASHID
FRIDAY, THE 11TH DAY OF JANUARY 2013/21ST POUSHA 1934
Ins.APP.No. 70 of 2011 ( )
AGAINST THE ORDER IN IC.9/2009 DATED 02-05-2011
APPELANT/OPP. PARTY:
EMPLOYEES' STATE INSURANCE CORPORATION REPRESENTED BY ITS REGIONAL DIRECTOR(KERALA) PANCHADEEP BHAVAN,ROUND NORTH,THRISSUR-680020.
BY ADV. SMT.T.D.RAJALAKSHMY, SC, ESI CORPN.
RESPONDENT(S)/APPLICANT:
MR.SHAJU K.S., S/O.K.K.SEKHARAN, KANAMKOT HOUSE,PUTHURKARA,AYYANTHOLE POST THRISSUR-680003.
BY ADV. SRI.C.D.DILEEP
THIS INSURANCE APPEALS HAVING BEEN FINALLY HEARD ON 11-01-2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
HARUN-UL-RASHID,J.
INSURANCE APPEAL NO. 70 OF 2011
DATED THIS THE 11TH DAY OF JANUARY, 2013
JUDGMENT
Employees State Insurance Corporation is the appellant. The appeal is directed against the order dated 2/5/2011 in I.C.No.9/2009 on the file of the Employees Insurance Court, Palakkad. Respondent herein is the applicant in I.C.No.9/2009. The applicant challenged Ext.A1 order dated 25/1/2008 issued under Section 85-B of the ESI Act, levying damages of `33,353/- for the period from 4/1997 to 11/2000 and 1997-98 to 1998-99 for the delay in remitting ESI contribution. The applicant in Ext.A1order issued under Section 85-B of the ESI Act submitted before the authority that the factory had been closed down in the year 2001, that the factory had been auctioned by the Kerala Financial Corporation as the applicant was not in a position to pay off the loan availed from the K.F.C., that the factory was purchased by a third person and that he is running the factory. It is also stated that due to financial crisis the factory was closed and the
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INS.APPEAL.No.70/2011
contributions could not be paid. The Regional Director, ESI Corporation found that the employer did not deduct the employees' share of contributions from their wages under Sub Section 2 of Section 40 of the ESI Act. In Ext.A1 proceedings the Officer found that there was absolutely no reason for the employer not to deduct employees' contribution in terms of Section 40(2) of the Act, when wages were paid and pay the same to the Corporation. The Regional Director ordered levy of damages under Section 85B of the ESI Act levying `33,353/- for the delayed payment of contributions stating that the said action of the employer speaks of deliberate disregard of the statute and brings out unequivocal terms the contumacious conduct on the part of the employer.
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acute financial crisis and that the factory was taken over by the KFC and later auctioned it for realising the loan amount. The ESI court also noticed the fact that the factory and its premises is occupied by a third person. The court further observed that the opposite party has not disputed the said fact and that therefore it is clear that the delay in payment of contribution was not intentional or to avoid or evade the statutory liability with any ulterior motive. The court on the facts stated above also held that the contention of the opposite party that the failure of the applicant in deducting the employees' contribution and paying it to the Corporation would amount to contumacious act is not supported by any evidence and therefore in the circumstance, it was improper to invoke the provisions of Section 85-B of the Act. The facts and circumstances noticed above would show that the ESI Court had applied its mind to the issue involved and concluded that the delay in paying the ESI contribution was not intentional to avoid or evade the statutory liability with any ulterior motive.
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INS.APPEAL.No.70/2011
In the circumstances, the impugned order passed by the
ESI court does not suffer from any legal infirmity. I agree with the view expressed by the Employees Insurance Court. No grounds are made out for interference by this Court.
In the result, the appeal is dismissed. No order as to
costs.
Sd/-
HARUN-UL-RASHID,
JUDGE.
kcv.
2 issues framed by the court
Whether the ESI Court properly applied Section 85-B given the employer's acute financial crisis and factory closure.
Whether the delay in paying ESI contributions was intentional or due to unavoidable circumstances.
2 provisions across 1 enactments
EMPLOYEES' STATE INSURANCE CORPORATION
MR.SHAJU K.S.
HARUN-UL-RASHID
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
