Madras High Court
Employees State Insurance Corporation vs M/S Neyveli Lignite Corporation ... on 12 August, 2020
Author: T.Raja
Bench: T.Raja
C.M.A.Nos.1030 of 2020 etc.
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 12.08.2020
CORAM
THE HONOURABLE MR.JUSTICE T.RAJA
C.M.A.Nos.1030, 1033, 1034 & 1035 of 2020
1. Employees State Insurance Corporation
Regional Office (Tamil Nadu)
Panchdeep Bhavan
No.143, Sterling Road
Chennai 600 034
2. The Social Security Officer
Employees State Insurance Corporation
Nellikuppam, Cuddalore .. Appellants in all the CMA's
-vs-
M/s Neyveli Lignite Corporation Limited
Thermal Power Station-I
Neyveli 607 807 .. Respondent in all the CMA's
Memorandum of Grounds of Civil Miscellaneous Appeals filed under Section
82(2) of the Employees State Insurance Act, to set aside the orders dated 7.8.2014
passed in E.S.I.O.P.Nos.4, 3, 2 & 5 of 2014 on the file of the Employees Insurance
Court (Labour Court), Cuddalore, respectively.
For Appellants :: Mr.S,Subbiah
Senior Counsel for
Mr.G.Bharadwaj
For Respondent :: Mr.N.Nithyanandan
1/11
http://www.judis.nic.in
C.M.A.Nos.1030 of 2020 etc.
JUDGMENT
Heard learned counsel for the parties through video conferencing due to the Covid-19 pandemic.
2. Civil Miscellaneous Appeal Nos.1030, 1033, 1034 & 1035 of 2020 have arisen from the impugned orders dated 7.8.2014 passed by the Employees Insurance Court (Labour Court), Cuddalore in E.S.I.O.P.Nos.4, 3, 2 & 5 of 2014, respectively.
3. When the Thermal Power Station-I of Neyveli Lignite Corporation Limited situated at Neyveli, Cuddalore District admittedly stands covered under the provisions of the Employees' State Insurance Act, 1948, the said unit was required to pay the contribution within the time prescribed under Regulation 20 of the Employees' State Insurance (General) Regulations, 1950 which were framed under the Act. But the Neyveli Lignite Corporation Limited failed to make the contribution as required by law and therefore, a notice was issued to the respondent employer on 8.10.2012 to explain as to why damages to the extent of the percentage included in column-7 of the notice should not be imposed for such non-remittance. A written statement dated 20.10.2012 was given by the Neyveli Lignite Corporation Limited to the Employees' State 2/11 http://www.judis.nic.in C.M.A.Nos.1030 of 2020 etc. Insurance Corporation Limited to drop the damages levied, for the reasons stated therein, more particularly, when the ESI Authority have allotted the code number to the unit in Form C-11 only on 12.1.2012, though the provisions of the ESI Act were made applicable from 1.1.2011, the process of enrolling the contract workers as members of the scheme has to be done and therefore, as per the ESI Regulations, it became necessary to fill up the Form-I as prescribed in clause 11 of the Regulations in respect of each person to be enrolled in the scheme and besides, as most of the contract workers have not even attended the school, they were unable to fill up the forms by themselves and also unable to give the bank account particulars, the date of appointment, the details of family members, etc. Hence, the respondent-Corporation took steps to inform and contact the contract workers through their contractor, since there were difficulties in getting the contract workmen to assemble at one place for making them aware of the scheme and get the form-I filled up correctly. When there were more than 1000 workers, the data could not be collected on time, more particularly, when the ESI Corporation themselves have allotted the code number to the unit only on 12.1.2012. After obtaining the particulars, on line entry required careful and undisturbed attention and without the code number, it was impossible to make any remittance to the ESI authorities. When the ESI Corporation have allotted the code number through Form C-11 on 12.1.2012 only, they cannot ask the contribution from 1.1.2011. However, the 3/11 http://www.judis.nic.in C.M.A.Nos.1030 of 2020 etc. respondent-Corporation had paid the contribution with effect from 1.1.2011. In addition to the payment of contribution, they have also paid the interest for the belated payment. But with regard to the damages alone, though they paid the same under protest, an explanation was given to waive the same, by virtue of the proviso (c) to Regulation 31-C of the Employees' State Insurance (General) Regulations, that was turned down. Hence, the issue was taken to the ESI Court. The ESI Court, accepting more than one reason given by the Neyveli Lignite Corporation Limited, allowed the E.S.I.O.P's vide order dated 7.8.2014, setting aside the proceedings dated 30.8.2013 issued by the ESI Corporation. Aggrieved thereby, the present appeals have been filed.
4. Mr.S.Subbiah, learned senior counsel appearing for the appellants in all the matters heavily argued that the ESI Court have committed a grave error in allowing the E.S.I.O.P's, interfering with the proceedings of the ESI authority, opining that the payment of damages cannot be recovered from the Neyveli Lignite Corporation Limited, as the respondent have explained the reasons for making the contribution. Again arguing on the substantial questions of law, the learned senior counsel submitted that whether the delay in following the procedure contemplated under the ESI Act for registration of employees is a valid reason for the belated payment of contribution by the respondent.
4/11 http://www.judis.nic.in C.M.A.Nos.1030 of 2020 etc.
5. It is at this juncture, Mr.N.Nithyanandan, learned counsel appearing for the respondent-Corporation, raising a preliminary objection for maintaining the appeals, purely relying on Section 82 of the Employees' State Insurance Act, urged this Court to dismiss the appeals on the ground that when Section 82 of the Act makes it mandatory that no appeal shall lie against the order of the ESI Court, unless there is a substantial question of law, this Court cannot proceed with the matters.
6. Having heard learned counsel for the parties, it is relevant to extract the substantial questions of law raised by the appellants, as follows:-
(i) Whether the delay in following the procedure contemplated under the Act for registration of employees under the ESI Act by the respondent is the valid reason for belated payment of contribution?
(ii)Whether the respondent is not liable to pay damages if the contribution is not paid within the period specified under Regulation 31?
(iii)Whether it is open to the respondent to dispute the levy of damages when the same has been paid to the appellants?
(iv)Whether the ESI Court is correct in setting aside the order dated 30.8.2013 passed under Section 85-B of the Act?5/11
http://www.judis.nic.in C.M.A.Nos.1030 of 2020 etc.
7. A repeated reading of the above substantial questions of law raised by the appellants would show that none of the above can be construed as substantial questions of law, leave alone the question of law. The first issue raised by the appellants as to whether the delay in following the procedure contemplated for registration of employees under the ESI Act by the respondent is a valid reason for the belated payment of contribution, is only a question of fact. Similarly, the second issue as to whether the respondent-Corporation is not liable to pay damages, if the contribution is not paid within the period stipulated under Regulation 31, is also a pure question of fact. Even the rest of the issues also cannot be construed as the substantial questions of law. In this context, it is pertinent to extract Section 82 of the Employees' State Insurance Act, 1948 and the proviso (c) to Regulation 31-C of the Employees' State Insurance (General) Regulations 1950, which read as follows:-
“Section 82. Appeal. — (1) Save as expressly provided in this section, no appeal shall lie from an order of an Employees’ Insurance Court.
(2) An appeal shall lie to the High Court from an order of an Employees’ Insurance Court if it involves a substantial question of law.6/11
http://www.judis.nic.in C.M.A.Nos.1030 of 2020 etc. (3) The period of limitation for an appeal under this section shall be sixty days.
(4) The provisions of sections 5 and 12 of the [Limitation Act, 1963 (36 of 1963)] shall apply to appeals under this section. Regulation 31-C. Damages on contributions or any other amount due, but not paid in time. — If an employer fails to pay contribution within the periods specified under Regulations 31, or any other amount payable under the Act, the Corporation may recover damages, not exceeding the rates mentioned below, by way of penalty: — Period of delay Maximum rate of damages in % per annum of the amount due
(i) less than 2 months 5%
(ii) 2 months and above but less than 4 months 10%
(iii) 4 months and above but less than 6 months 15%
(iv) 6 months and above 25% Provided that the Corporation, in relation to a factory or establishment which is declared as sick industrial company and in respect of which a rehabilitation scheme has been sanctioned by the Board for Industrial and Financial Reconstruction, may:
(a) in case of a change of management including transfer of undertaking(s) to workers’ cooperative(s) or in case of merger or amalgamation of sick industrial company with a healthy company, completely waive the damages levied or leviable;7/11
http://www.judis.nic.in C.M.A.Nos.1030 of 2020 etc.
(b) in other cases, depending on its merits, waive upto 50 per cent. damages levied or leviable;
(c) in exceptional hard cases, waive either totally or partially the damages levied or leviable.”
8. As per Section 82 of the Act, the present appeals are not maintainable, as they are bereft of any substantial question of law. Even otherwise, the impugned orders passed by the Employees Insurance Court (Labour Court), Cuddalore do not call for any interference, for the following reasons. When the unit of Neyveli Lignite Corporation Limited other than mines were retrospectively brought under the purview of the Employees' State Insurance Act, 1948 with effect from 1.1.2011, the ESI authorities have allotted the code number to the respondent-Corporation through Form C-11 only on 12.1.2012, therefore, the respondent herein was unable to remit the contribution before 12.1.2012. In the meanwhile, the process of enrolling thousands of contract workers for the purpose of the ESI scheme and also the particulars of each of the individual contract workers have taken considerable time. The reason being that various data have to be collected for the purpose of filling up the Form-I, namely, (a) bank particulars, account numbers etc., (b) date of appointment of the contract workers (c) details of nominees, (d) family members (e) in case of disabilities, details thereof, etc. 8/11 http://www.judis.nic.in C.M.A.Nos.1030 of 2020 etc. The collection of all these details in respect of registration pertaining to thousands of workers have taken considerable time. Besides, most of the contract workmen were not in a position to furnish the requisite information for completion of Form-I. However, the respondent-Corporation have admittedly paid the contribution with effect from 1.1.2011 along with interest on the belated payment. In addition thereto, the respondent also paid the damages under protest.
9. Now, therefore, the question is whether the ESI Corporation is justified in claiming damages, having allotted the code number to the respondent Corporation through Form C-11 only on 12.1.2012, that is after 1 year and 11 days, as the applicability of the provisions of the ESI Act to the non-mining workers came into effect on 1.1.2011, the respondent-Corporation, after explaining the facts in issue, have rightly paid the contribution from 1.1.2011 and also the interest for the belated payment. Hence, the question of payment of damages, in my considered opinion, for the belated payment, has been rightly interfered with by the ESI Court, by virtue of the proviso (c) to Regulation 31-C of the Employees' State Insurance (General) Regulations that says that in exceptional cases, the damages on contribution or any other amount due to the delay in making the payment, may be waived totally or partially. Considering the reasons cited by the respondent-Corporation, the damages alone have been waived. 9/11 http://www.judis.nic.in C.M.A.Nos.1030 of 2020 etc. Therefore, the impugned orders cannot be found fault with. 10/11 http://www.judis.nic.in C.M.A.Nos.1030 of 2020 etc. T.RAJA, J.
ss
10. For all the aforementioned reasons, all the civil miscellaneous appeals fail and they are dismissed. No costs.
Speaking/Non speaking order 12.08.2020
Index : yes/no
ss
To
1. The Employees' Insurance Court
(Labour Court), Cuddalore
2. Employees State Insurance Corporation
Regional Office (Tamil Nadu)
Panchdeep Bhavan
No.143, Sterling Road
Chennai 600 034
3. The Social Security Officer
Employees State Insurance Corporation
Nellikuppam, Cuddalore
4. M/s Neyveli Lignite Corporation Limited
Thermal Power Station-I
Neyveli 607 807
C.M.A.Nos.1030, 1033, 1034 & 1035 of 2020
11/11
http://www.judis.nic.in