Calcutta High Court (Appellete Side)
The Kolkata Municipal Corporation vs Employees State Insurance Corporation ... on 6 March, 2012
Author: Aniruddha Bose
Bench: Aniruddha Bose
1 16 W.P. No.2847(W) of 2012 06.03.2012
KC The Kolkata Municipal Corporation Vs. Employees State Insurance Corporation & Ors. Mr. Soumya Majumder.
... for the petitioner.
Mr. J.N. Mahanti.
... for the Opposite Party no. 1.
Mr. Narayan Chandra Bhattacharya, Mr. Musharraf Alam Sk.
... for the State.
The petitioners before me are a statutory authority, Kolkata Municipal Corporation and in this proceeding they assail the legality of an order passed under Section 85-B of the Employees State Insurance Act, 1948. By the said order, the Employees State Insurance (E.S.I.) Authorities have imposed damages under the provisions Section 85-B of the Act for delay in making contribution of dues to the E.S.I. Corporation in accordance with Section 40 of the Act. The quantum of damages levied is Rs.16,15,261/- for the period between the years 2005 and 2007.
Appearing for the petitioners, Mr. Majumder argued that the provisions of the Act cannot be extended to the petitioners as such claim was being made for employees in respect of a factory, being Indira Gandhi Water Treatment Plant at Barrackpore in North 24-Parganas. Mr. Majumder argued that this plant is under the control of the State Government, and hence the petitioners are exempted from making payment of E.S.I. dues in terms of proviso to Section 1(4) of the Act. The second ground on which such levy of damages is challenged is that there is no finding of any willful default on the part of the petitioners in not making contribution within prescribed time and the E.S.I. Authorities, 2 in the absence of any finding in that regard ought not to have had passed an order in terms of Section 85-B of the Act.
The admitted position in this matter is that the petitioners have already made contribution towards E.S.I. dues for the period they were in default and in this writ petition, what is under challenge is an order under Section 85-B of the Act. In reply to their notice to show- cause under the aforesaid provisions, the petitioners had taken the defense of non-applicability of the said statute but having regard to the scope of the present writ petition and considering the fact that the petitioners have paid E.S.I. contribution, I am not adjudicating on the question of applicability of the E.S.I. Act on the petitioners. The said controversy may be required to be addressed to in another proceeding and in the present writ petition, there is no prayer for a declaration that the Act is not applicable to the petitioners. I leave that question open to be decided if needed in any future proceeding.
On the aspect of levy of damages, it has already been decided by the Supreme Court in the case of Employees State Insurance Corporation Vs. H.M.T. Ltd. reported in 2008(3) SCC 35 that damages ought not to be levied mechanically in each and every case of default. In this judgment, it has been held:
"20. We agree with the said view as also for the additional reason that the subordinate legislation cannot override the principal legislative provisions. The statute itself does not say that a penalty has to be levied only in the manner prescribed. It is also not a case where the authority is left with no discretion. The legislation does not provide that adjudication for the purpose of levy of penalty proceeding would be a mere formality or imposition of penalty as also computation of the quantum thereof became a foregone conclusion. Ordinarily, even such a provision would not be held to providing for mandatory imposition of penalty, if the proceeding is an adjudicatory one or compliance of the principles of natural justice is necessary thereunder.3
21. Existence of mens rea or actus reus to contravene a statutory provision must also be held to be a necessary ingredient for levy of damages and/or the quantum thereof."
In the order under challenge there is no finding that the delay, if any, was intentional or it was willful default. Moreover, considering the fact that the petitioners are a statutory body engaged in civic administration, in my opinion, the test to ascertain as to whether their existed actus reus or mens rea would be higher and stricter than an ordinary private sector organisation, as a statutory authority engaged in civic administration would not under normal circumstances be expected to be motivated by greed or ill motive to commit default in meeting their statutory obligations.. In the impugned order, I do not find the authorities have at all addressed the issue in the light of the decision of Supreme Court in the case of H.M.T. Ltd. (supra) and have mechanically levied damages, as if it was a natural consequence for delayed contribution.
Under these circumstances, I quash the impugned order. The writ petition is allowed.
There shall, however, be no order as to costs.
Urgent photostat certified copy of this order be given to the parties expeditiously, if applied for.
(Aniruddha Bose, J.)