Allowed

Employees State Insurance Corporation v. M/S Hotel Panchavady

Kerala HC9 Jun 2014Ins.APP/111/2012

Case brief

AI extract

What is this about?

The High Court set aside the ESI Court order that stayed recovery of damages for delayed ESI contributions. The appellate court held that the trial court erred in treating interest as penalty under Section 85B, clarifying that only the nominal damages of Rs. 9/- were the subject of appeal.

What did the court decide?

The impugned order dated 24.5.2010 is set aside; the applicant is liable to pay the ESI contributions and interest claimed.

Employees State Insurance Corporation Vs M/S… — Pension and Retirement Benefits | Kerala HC (2014)

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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 B.KEMAL PASHA

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MONDAY, THE 9TH DAY OF JUNE 2014/19TH JYAISHTA, 1936

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Ins.APP.No. 111 of 2012 ()

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M.P.1/2011 ESI COURT, IDUKKI (CAMP AT KOTTAYAM) IC 5/2007 of ESI COURT,IDUKKI

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APPELLANTS/RESPSONDENTS:

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THE ASSISTANT DIRECTOR EMPLOYEES STATE INSURANCE CORPORATION DIVISIONAL OFFICE, KURUMPELIL AVENUE, POLAYATHODE, KOLLAM.

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THE RECOVERY OFFICER

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ESI CORPORATION, PANCHADEEP BHAVAN, NORTH SWARAJ ROUND THRISSUR.

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BY ADV. SRI.THOMAS MATHEW NELLIMOOTTIL

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RESPONDENT/APPLICANT:

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SHRI M.T.AUGUSTINE, LICENSEE M/S HOTEL PANCHAVADY CHENGANASSERY - 686 101.

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THIS INSURANCE APPEAL HAVING BEEN FINALLY HEARD ON 09-06-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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B.KEMAL PASHA J.

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- - - - -- - - - Ins.Appeal No.111 of 2012

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- - - - -- - - - Dated this the 9^th day of June, 2014

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JUDGMENT

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The respondent, Licensee of a covered establishment under

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the Employees State Insurance Act, 1948 (hereinafter referred to as

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'the E.S.I. Act' for short) had caused delay in payment of contributions for the period from 1.10.1991 to 31.8.1993, 1.9.1993 to 31.3.1994 and 1.4.1994 to 31.5.1997. For such delayed payment of contributions, an amount of `9/- was imposed as damages by the

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Employees State Insurance Corporation, that too for the period from 1.10.1991 t 31.8.1993 only. Along with the same, as rightly entitled as per law, the E.S.I. Corporation has imposed interest under Section 31A of the Employees State Insurance (General) Regulations, 1950, also. By a mistaken impression, the Employees Insurance Court, Idukki (Camp at Kottayam) has decided through

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Ins.Appeal No.111 of 2012 2

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the impugned order dated 24.5.2010 that the E.S.I. Corporation has claimed damages exceeding the contribution amount for the particular period in contravention of Section 85B of the E.S.I. Act.

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Even though the penalty imposed by way of damages was

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only an amount of 9/-, the court below in a mistaken impression considered the amount of interest also, as penalty coming under Section 85B of the E.S.I. Act. Therefore, the court below has made an observation that E.S.I. Corporation had worked out the damages for the period from 1.4.1994 to 31.4.1997 at 13,521/-, when the amount of contribution was 11,523/- only. Similarly for the period from 1.9.1993 to 31.3.1994, the E.S.I. Corporation has worked out damages at 12,981/- when the amount of contribution was 7,623/- only. Even though an amount of 9/- only was imposed as damages by the Corporation, the court below has noted the amount of interest also as amount of damages. By taking such a mistaken view, the court below has ordered that “therefore the

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Ins.Appeal No.111 of 2012

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applicant is not liable to pay any any amount as per Ext.A2 notice towards damages.” Further, the court below made it clear that the applicant is liable to pay the ESI contributions and interest claimed by the ESI Corporation.

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For correcting the said error, which had apparently occurred in the face of the order, the ESI corporation had filed M.P. No.1 of 2011, for reviewing the said order. The court below has dismissed the M.P. on the ground that the court below has no power to review.

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The learned counsel for the appellant has invited the attention of this court to the decision in DSR Steel (Private) Limited v. State of Rajasthan and others (2012(6) SCC 782), where in it was held that when the Tribunal refused to interfere with the decree or order earlier made, through a review, there is no question of any merger and anyone aggrieved by the decree or

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order of the Tribunal or court shall have to challenge within the

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Ins.Appeal No.111 of 2012 4

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time stipulated by law, the original decree and not the order dismissing the review petition. It was further held that time taken by a party in diligently pursuing the remedy by way of review in such a case, may be excluded from consideration while condoning the delay in filing of the appeal. Even though, the appellant is challenging the dismissal of the review petition also, the appellant is challenging the original judgment as such.

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When the impugned judgment reveals that the applicant is liable to pay the ESI contribution and interest claimed by the ESI corporation, the interference by the court below was confined to an amount of 9/- only, which was imposed as damages. As the interference in taking away such damages was under a mistaken notion, the same has also to be corrected. The ESI corporation has chosen to impose an amount of 9/- only, as damages. The same should not have been interfered with, by the court below. There was no challenge towards interest and rightly, the court below has

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Ins.Appeal No.111 of 2012

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not interfered with the power to impose interest. The matter is presently, one for mere clarification that the court below had considered the matter in a mistaken impression, that the amount of interest was imposed as amount of penalty. Therefore, the impugned judgment passed as an order is liable to be set aside.

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In the result, this appeal is allowed and the impugned

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order is set aside. There is no order as to costs.

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Sd/-

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B.KEMAL PASHA , JUDGE

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// TRUE COPY //