Karnataka High Court
Employees' State Insurance ... vs Karnataka Agro Industries Corporation ... on 31 January, 2001
Equivalent citations: [2002(94)FLR659], (2002)IILLJ646KANT
JUDGMENT Chidananda Ullal, J.
1. This miscellaneous first appeal is filed by the Employees' State Insurance Corporation to challenge the order dated December 31, 1996, passed in ESI Application No. 11 of 1991.
2. The appellant-Corporation is represented by learned counsel Sri Narasimha Holla. The respondent-establishment is represented by Sri B. Palakshaiah. Learned counsel for the appellant- Corporation had taken me through the history of the litigation between the parties, and further the orders impugned in the instant appeal.
3. At the outset, he submitted that in ESI Application No. 16 of 1978 filed by the respondent-establishment as against the appellant-Corporation, the E.I. Court had directed the ESI Corporation to pass a fresh order under Section 45-A based on the actual wages paid with reference to the actual number of workers in the establishment of the respondent while upholding the coverage of the Act in respect of the respondent establishment, and that the period of contribution for the earlier litigation was July 1, 1974 to May 28, 1977. While adverting to the impugned order under challenge, Sri Holla had also argued that the impugned order passed by the E.I. Court was under Section 85-B of the Act, for there was delay in payment of the contribution for the subsequent period from May 29, 1977 to August 31, 1983, when it was not in dispute before the E.I. Court that the respondent establishment did commit default in payment of the contribution well in time. According to him there was no good reason for the E.I. Court to allow the application of the respondent establishment to set aside the order passed under Section 85B of the Act. In this context, he had also drawn my attention to the provision under Section 40 of the Act, wherein it had been provided that it is the duty of the employer to pay the contribution without there being any demand. That being so, according to him, under Regulation 31 of the Employees' State Insurance (General) Regulations, 1950, the respondent establishment would have paid the contribution within 21 days from the date of disbursement of the wages to its workers. It was also submitted by him that, when in the earlier round of litigation in Application No. 16 of 1978, very well filed by the respondent-establishment holding that its establishment was covered under the Act, it would not have delayed payment of the ESI contribution for the subsequent period from May 29, 1977, to August 31, 1983. Therefore, he further submitted that, it was totally illegal on the part of the E.I. Court to hold that the Corporation had not passed the modified orders as per its order dated October 31, 1982, in Application No. 16 of 1978. Hence, he prayed that the instant appeal be allowed. Learned counsel appearing for the respondent-establishment, Sri Palakshaiah on the other side argued that the mischief was on the part of the appellant-Corporation, for it had not complied with the direction of the E.I. Court in its earlier Application No. 16 of 1978. It was also argued by him that, had the appellant-ESI Corporation passed the considered order to modify the orders it had passed under Section 45-A of the Act, the one under challenge in its earlier Application No. 16 of 1978, the respondent-establishment would have paid the contribution well in time. It was also pointed out by him that the respondent- establishment was practically waiting for the appellant-ESI Corporation to pass considered order as directed by the E.I. Court in the above Application No. 16 of 1978 to guide itself as to what number of employees/ workers it had to pay the ESI contribution. In this context it was also pointed out by Sri Palakshaiah that the respondent establishment had written on more than three occasions to remind the appellant-Corporation to pass considered order as directed by the E.I. Court in ESI Application No. 16 of 1978, and having waited desperately for such an order in the hands of the Corporation, it had finally paid on March 31, 1986, a contribution of Rs. 86,875.65, on its own, for the period from May 29, 1977, to August 31, 1983. According to him, the honesty of purpose and diligence on the part of the respondent- establishment was very well proclaimed by the said act on its part in the matter of paying the arrears of ESI Corporation. While referring to the discussion of the E.I. Court in the impugned order on issue No. 1 (paragraph 13), it was submitted by him that the E.I. Court was right in setting aside the order passed by the Corporation, whereby it had imposed a penalty of Rs. 54,899 and further interest at 6% amounting to Rs. 17,337. He had also pointed out that in the peculiar facts and circumstances of the case, the E.I. Court was justified in setting aside the impugned order.
4. In the light of the above arguments advanced, the short point that arises for my consideration is whether it was just and proper for the E.I. Court to set aside the impugned order passed by the Corporation under Section 85B of the Act.
5. In this context certain dates appear to be relevant. Admittedly, the Application No. 16 of 1978 filed by the respondent-establishment came to be allowed in favour of the respondent-establishment on October 31, 1982, and furthermore, in doing that, the E.I. Court had specifically directed the appellant-Corporation to pass a fresh order under Section 45-A of the Act based on the actuals, i.e., the actual number of workers/employees in the workshop at Dharwad and actual wages paid to them as found in exhibits A-1 to A-10. The respondent-establishment had paid the E.S.I. contribution from their side for the said period, on their own, on March 31, 1986, amounting to Rs. 86,875.65, based on the actuals. Thereafter, the appellant-Corporation had issued show-cause notice determining the damages on January 3, 1991, and that thereafter, they passed the impugned order under Section 85B demanding the penalty of Rs. 54,899 further interest at 6% on that amount, amounting to Rs. 17,337.
6. On a simple reading of the impugned order, it is clear wherefrom that the E.I. Court had set aside the above order for the reason that the appellant-Corporation did not pass considered order under Section 45-A, as it had directed while allowing the application of the respondent-establishment in the earlier Application No. 16 of 1978. Even while addressing the argument from the side of the respondent-establishment, Sri Palakshaiah vehemently argued that, when the appellant-Corporation had not complied with the direction of the E.I. Court as aforementioned, the respondent-establishment could not decide itself as to what contribution it had to pay for the subsequent period and therefore according to him, there was bonafide reason for the delay in remittal of the ESI contribution for the period from May 29, 1977 to August 31, 1983. Therefore, he submitted that the instant appeal does not merit any consideration in the hands of this Court.
7. In reply, Sri Holla had submitted that in the instant case in hand there was no necessity for invoking the provision under Section 45-A to determine the actual, contributions due on ad hoc basis for the period from May 29, 1977, to August 31, 1983, and that was truly so, for, the respondent-establishment on its own had paid the contribution on actual basis. He also added that the said contribution paid by the respondent was verified to be correct.
8. I find sufficient force in the argument of Sri Palakshaiah that there was some folly on the part of the appellant-Corporation in not passing an order as directed by the E.I. Court in Application No. 16 of 1978 filed by his party, for the respondent-establishment was solely awaiting that order for the purpose of payment of the further ESI contribution particularly for the period from May 29, 1977 to August 31, 1983. The explanation that appears to have been offered by the respondent-establishment before the E.I. Court was very well received by it for a good reason that the appellant-Corporation did not pass a modified order under Section 45-A of the Act as directed by it in the earlier application in Application No. 16 of 1978. In my considered view, the explanation that was offered by the respondent-establishment before the E.I. Court has to be equally endorsed by this Court, in the peculiar circumstances referred to in paragraph supra, to dismiss the instant appeal before this court.
9. The appeal, therefore, fails and accordingly stands dismissed.