Kerala High Court
E.S.I. Corporation vs Bagsvig on 30 June, 2005
Equivalent citations: 2005(3)KLT609, (2005)IIILLJ614KER
Author: J.B. Koshy
Bench: J.B. Koshy
JUDGMENT J.B. Koshy, J.
1. Heard both sides.
2. Respondent was issued with a demand notice demanding contributions payable to the Employees State Insurance Corporation. The respondent challenged the same before the Employees' Insurance Court by filing I.C.79 of 1990. At the time of hearing, it was submitted that the liability was admitted, but only prayed that they may be given time for payment of the amount in instalments. Therefore, the application was disposed of by granting facility to pay the arrears covered in the letter of the E.S.I. Corporation dated 22.11.1990 in 12 monthly instalments starting from first day of December, 1993. Accordingly, the amount was paid in instalments. Thereafter, the Corporation demanded interest for proportionate delays. Challenging that the respondent filed I.C. No. 59 of 1994. The E.I. Court held that no interest can be levied.
3. Section 39(5)(a) of the Employees' State Insurance Act provides that if any contribution payable under this Act is not paid by the principal employer on the date on which such contribution has become due, he shall be liable to pay simple interest at the rate of 12% per annum. This is a statutory provision. The dates when contributions are due are also fixed in the statute. Merely because the E.I. Court has granted instalment facility to pay off the principle contributions, it cannot be stated that statutory interest is waived. Employees' Insurance Court has no authority to waive the statutory interest. The amount due has to be paid to the Corporation from the respective dates when they became due with proportionate interest till the payment is effected.
4. It is contended by the counsel for the respondent that when instalment facility was granted, the due dates of payment of contributions itself were changed and therefore, no interest is payable. That contention cannot be accepted. Due dates are fixed for payment of contributions and what the E.I. Court given in the earlier judgment in I.C.79/90 was only instalment facility to pay the amount already delayed. If instalments as directed by the court are paid, the Corporation cannot impose damages for the reason that the contributions were delayed because damages are in the nature of penalty. Here, no damages were imposed, only interest was demanded. Therefore, the direction of the E.I. Court that no interest shall be charged from the date of filing I.C.79/90 is set aside.
The appeal is allowed.