Karnataka High Court
The Joint Director Esi Corporation vs M/S Cavalry Links Security Services on 2 December, 2008
resgondeni-estahiishmefié to pay Rss.'!,'i3§42?f---- being the '4cé.§:ra-f§ g§s
fer deiayefi gayment er? the contributénns for the _
Apréé 1994 :9 March 2933' The saéfi arnzier passed¢;f:;%:sgr%AM$e.ct;<é;s%
8&8 cf rim fiat was questioned befgare '
respere§e:3t~estab§Es3:men9: Eay fiiVEng' ESI&'~-.§;§ptEcatiqé~".%.?§i¢M22£2"*f3§3, *~
The said appiécatien was cont&s§5e"d:b;: the f.';§_r"';':'c:V*.":;é:ti§:.é':va;:. Afier
balding enquiry, the ES} by _i'?éi¥:5_c'3e»':--%91§:.:s*VVV' uL:L':*:._cAfer a pj;§éaE"V<;encurred
math the order efthe Jaint that there has
been cieiayed :..g:4a§,ffr°gent '¢§%ntE:ibt;*;i§nV$:' the responcientn.
estabiishmerei" ::::}oL;.rE arciered reduction of
percentage'a.f'VAV'fi::{Es§§§s_ on Rs.4,§6,888§'- minus
Rs.33,3i§:f8§-; ' gfiaié order, the Corperatéczn hag
presented'€hés:4 appéaé, ''
4:4'; {Rs nfeiés§;dV'ab¢%:e, eves": according is the ;'e$pcnfient--~
é 'e5§%'5E§5h}5A3"£sA"..3 5i3¥'rv'§mH:of Rs.4,Q5,888i- was due and Efiayabie
*tcV§€:'a:*_afé1Sv.f§'€;sV:f£.i:§'i$i;EE;?駰3s on the wages paid ts its empioyees fer the
peftaxéitf fr§2Fs*:'§:;riTEV. '!§§4 ts March 2830. Thus, from thés it is dear
"-that the" sje_A:='.;p<mdent~estahi¥$hment has fiat paid the ceniributiens as
provisions of the Act as and when it became due ané
' yiaiyabia. when oncethe estabiishment is covered underthe Asa it
'4 {gander statutory abéigatieré ts pay the centributécns payabéa a3 pas"
the Act as am when it Eecame due ané payaebfiek if the
&
fieguiattcns. fissciding ta Reguiation 31-6 of the Reguéafiw-'$:é;T.§f
an émployer faiis to pay the contributions $p&t'3'if£E*:T€11'_ §_i}"C£€§':
Regutatien 31, or any cthar amzauni payabie unde_r _"'t%1§'§g}¢t,%'_th§._f
Cerporatien may recover damages; fnot Zéxséedzrsg-, t"rw2 _;'~aies
mentioned therein, by way of penaity. i'¥$ ;:2,_<§r c£ai;fsg {;s;;;«.
Regumtéan, for the deiay of aix m€§'n§¥§":3 aw ab§>vweT, ?:hwés';V§§i§fiih£§um
rate of damages required tsé he Sew':-éiti"
'3', ReguEaS:Er;:§:«:V 'discretiera is 'me
Gorporation até ihéég t?§§:Mr;r1inimum percentage
§3resc:*ii3.c«.'z$----"a§*1§ife:5iVi'*i. t;t'£e; }§n3§'}exempti0n provided under
F2eguEa*£§::~:'r1 Zéfi'-CV, --;;>fe:r"<:entage of damages or ever: is
waive off t?i1éa:..g:§V%a:':VwaV5§e_s'4V1:§ miation to the sick industry. %t is
ire iivght cf thVé'p%:e;visi§§ns of Regulation 31%, the Jaint Uirectcr
§1:a>ci:Virng;;§o§s ed¢vA"%e:vy of approxirnatety 26% cf the totai amcunt cf
«::ci%{t;%£$ajtiéf_e$§___ after the axpiry of the pericd aiiavsied under
Re g'uiati~¢fi The respondent-estabiishment dogs not dispute
thafi theiieiay in payment 9'? the contributiena is more than six A' 'géhcszéhs. Therefare, the impasiticn of penaity by way of éamages V. about 26% is in accordance with Ragutation 31-C Ciause ("N") :2'? the Ragukations. However, the ES! Court has reduced the same to 13%.
0 afamagés in aim manner grescréfied zsndasr £f:e __ Reg£.:§a%,ia:3s. V f?» xxxx ._ A 13, Seaféor; 85»-8 er? the fiat £3353 five vg::>rzi$"~Vf';%?3ze§§$ _ recover", Levy of éamages fi:é§*§*éékr?ci.=<.%:' 52.: £:§{«2e<_.§a*y _<:f I pefiafiy, The fegfsfafzire Eimtfed Eize g;;:~;sd;¢i;a:;%~a§';;;;ee aufimrféy fa few panafiy :19.' mt ex¢7e=e:_a?§.::rqr £352 'érgj:e:§;.;;}£ 5?" ar'raar$. Fiegssiatian of fireé ._§§§eg$.3§af§£:;*?$:m ffzerefare, fr: our fiflffifibfi, }%.':o;?st.r:;ér;% vkeeréng {:3 View five £anguavge..V:ase£_ !kf?;V:_§f};é"'§*;9 g£;é.5£'f §V$ 2'-'Ac? am' noé defwrs She sarme.H'_'V_ '» "
At para-~25, theitj.Ls§§:d$hips§;'_ha3$é_:'furt%3érfig.-_i;>$é2"~.3V;.¢":d thus; .:§:fafui%§}§fL;%e}fF.§§?'5as s§$é'V;§ay mat a penasfiv £233 tact;-. be" jévfeV§V':.§}}'f;{:fn. 15133316? prescrfbeci it is aim :20? '=aj s::ase'-- J aafhorfiy is feff WI"??? PEG , -fifscreffimiy '~?"°f2e"'-Eegiéisiafion daes mi prcszkfie She? '3"¢.a:§{.ic§5¥c;a€{ca:§""fassnifm pyrpose of few 9? penaéy ' 2 , _ prfiaeegfirzsg wc-aid he a mere farmaflty es' impaosftém of ésvsiso compufatibr? 9:' me quanmm thereef ' ' £3e§'a?}}.é§_ aizfcrsgane cwzciszsion. Ora'ir?ar§fy_. ever? séicf? 3 ;;r¢?é§s§9n waulfi mt fie hem' fa prctrfdfng far maédafory fmpossfion af persaky, if ffze proceeding is ' u flag? aajudicafary we as" compfiance vii??? the prfncipfes of f?&f£3!'3ij£a'Sf!§E?>9 is necessary theregmder, "
12. TI"2u$, the Ages: Ccurt heéd that Eeagy cf girenalty is neither a mere for"ma£ity war the cemputation af the quanium thereof' is a foregone <>n¢ Their' Lorciships have further ebserveé that if $3' the prcceeéing is an acijuciicaimry one' it shouid ccmpiy witfa the prirzcipies czf rzaturai justice.
13. Thus from the abave decisian, it is ciear ti1.z::t..:;:'3€>p%4»s;:e_r under Section $5»-B of the Act, ta recmser ciar33é.Tg. é$;""V_--§$:'--- mandatery and in each case the authggfifties $.}"t'€§i;i§'i'£'fc'l§fi'E';i éheéi' "
minds having reg:-arc} to the facts and cirtgum:3tenf1ce's.c§fAt'%ie 'c'a%s{e*z__'a;2§3 AA recorci a finding as to whether'ét.___is a Vfijt°caseaf6r' r§cov§;§iz*§g damages.
14. Reading of sec-:sj¢::A'e5-tséf:n1:e,é§:r._gnd Réguaétaon sac, in the ligjizt §f'Atir::€§'V_af§:£2§aiai::'<§.é%:é$icn 5% {he Age): Court tegether, érz my ccnsfiered €z%exsy; authcréties record a finding of fact that ha¥;iEng" :egard"v_t6'*"§he facts anfi circumstances of a «..Apar£'§§ii§ka;;*..L;:a.$_e, it is?" ""fEt-base far recovering damages as provided L_'u%i§:iérT.Se4¢:fi:§Vfi'~V of the Act then, they are governed by the pfcwissionsé Reguiation 31-0, in which event, the penaity im;3oéed:"e.gr{r1"ot be Eess than the minimum percentage prescribed ..t§':e're._i.n.
15¢ As already noticed above; the rempondent-estabéishment dees net dispute the fact that there was Ec-rag deiay in payment of the cont s admittediy is the tune of Rs.4,§6,888i- and it was EE penafiy. Under these circumstances, i am of we considered opinion that the £3! Gear: is not justified in reducing the penaiiy impcsed by ihe autherities to 16% as against 26%. As ;w :.':;'t'E<:.e:,'i aariier Reguiation 31-»C do nat vest any discretian authorities to impose penalty at a rate befow"the..;pef_¢e}ftége-.1_ V' prescribed therein, The E83 Court én'Jt»§€é'¢a$e'--«Aon.; ».;;.it?{eui"*. considering the effect of Regulatécn V_;x::rocéie ;:§:eAfi»i:<:'. the percentage of damage tev:ed~:§f"~~:%0%,i% The E8! "
Court, in my considered ,--o;::¥nion -is --iI§:eg é'~!»LA_ancl «éitsa. cfintrary ta Reguiatécan 31~C. Therefo'fe;M'i;t' Ac:'aT;e¢e_rV1}';aVt::v bé§'é£:3t:ai'n.ed. in this View of the matter, the 'agppeai (§e §éW§$ Vt ¢)A'§.j:'Q_aiEv€:~:¢:§é§'rV£'." The question of law raisedvlfor _conA's?ELé'era;ii'e.n és..V}a"ns_wm";éd in the negative. 1:6....€gccc§f'é%in:gEy;~hfhe '-afiffiéai is aiiowed. The zsrder dated 'p'ass"ed by 'tfié"E$l Court in Esi Appiicatéon No,22:'2G(33 'ti-:- _<.1:"e'::ii'syfi'§§ sf penaity to 1G% is set aside, The oréer
-- VV oftfié C¢fi;4;3 t;§{_tif::EGn is upheici.
Sdl-'1 Kudqe mar'