Kerala High Court
Employees Stateinsurance Corporation vs M/S Pigments India Limited
Author: A.Hariprasad
Bench: A.Hariprasad
IN THE HIGH COURT OF KERALAAT ERNAKULAM
PRESENT:
THE HONOURABLE MR. JUSTICE A.HARIPRASAD
TUESDAY, THE 15TH DAY OF NOVEMBER 2016/24TH KARTHIKA, 1938
Ins.APP.No. 33 of 2012 ()
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AGAINST THE ORDER DATED 23-01-2012 IN I.C. NO. 182/2009 of EMPLOYEES' INSURANCE
COURT, PALAKKAD
APPELLANT/OPPOSITE PARTY:
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EMPLOYEES STATEINSURANCE CORPORATION,
PANCHADEEP BHAVAN, NORTH SWARAJ ROUND, THRISSUR
BY ADV. SRI.SANDESH RAJA K., STANDING COUNSEL
RESPONDENT/APPLICANT:
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M/S PIGMENTS INDIA LIMITED,
THAZHEKAD, THRISSUR DISTRICT PIN: 680 697
BY ADV. SRI.K.K.PREMLAL
THIS INSURANCE APPEAL HAVING BEEN FINALLY HEARD ON 15-11-2016, THE
COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
A.HARIPRASAD, J.
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Insurance Appeal No.33 of 2012
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Dated this the 15th day of November, 2016
JUDGMENT
This appeal is filed by the Employees' State Insurance Corporation aggrieved by the order of the Employees' Insurance Court, Palakkad in I.C.No.182 of 2009. The applicant before the ESI Court is the respondent.
2. Heard the learned standing counsel for the appellant Corporation and the learned counsel for the respondent.
3. Appellant proceeded against the respondent under Section 85B of the Employees' State Insurance Act, 1948 (in short, "the Act") for the delay in payment of contribution for the period from 10.2003 to 09.2004. Admittedly, the respondent company is covered under the provisions of the Act. Challenging the imposition of penalty for the delayed payment of contribution, the respondent filed the case before the ESI Court contending that the delay was caused due to financial difficulties. It is the case of the respondent that it was declared as a sick industrial concern by the Board for Industrial and Financial Reconstruction (BIFR) and a scheme for rehabilitation was under consideration. The ESI Court allowed the application holding that the delay in remitting the contribution was due Ins.Appeal No.33/2012 2 to acute financial problems and there was no mens rea attributable to the respondent. Hence, the notice issued by the appellant Corporation was set aside.
4. Learned counsel for the appellant contended that the respondent company was bound to pay the contribution and they failed in their statutory duty. Section 85B of the Act reads as follows:
"Power to recover damages.-(1) Where an employer fails to pay the amount due in respect of any contribution or any other amount payable under this Act, the Corporation may recover from the employer by way of penalty such damages not exceeding the amount of arrears as may be specified in the regulations:
Provided that before recovering such damages, the employer shall be given a reasonable opportunity of being heard:
Provided further that the Corporation may reduce or waive the damages recoverable under this section in relation to an establishment which is a sick industrial company in respect of which a scheme for rehabilitation has been sanctioned by the Board for Industrial and Financial Reconstruction established under section 4 of the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986), subject to such terms and conditions as may be specified in regulations.
(2) Any damages recoverable under sub- Ins.Appeal No.33/2012 3
section (1) may be recovered as an arrear of land revenue or under section 45C to section 45-I."
According to the learned counsel for the appellant, financial difficulty of a company cannot be an absolute defence for the delayed payment of contribution. A decision by a Division Bench of this Court in Insurance Appeal No.17 of 2007, pronounced on 23.03.2013, is pressed into service.
5. Learned counsel for the respondent contended that the facts in the decision are different from those in this case. In the decision cited by the learned counsel for the appellant, it was seen that there was evidence to hold that the employer had paid salary to the employees and at the time of making the payment, the contribution was deducted. That was not promptly paid to the Corporation was a proved fact. In this case, the ESI Court found that there was no evidence to hold that the respondent had deducted any amount which ought to have been paid to the Corporation. That is purely a question of fact. Relying on a decision of the Supreme Court in Regional Director, ESI Corpn., Kerala v. Metropolitan Engineering Co. Ltd., Kerala ((2010) 10 SCC 730), it is contended by the learned counsel for the respondent that this question of fact cannot be reagitated in an appeal of this nature.
6. It is further contended by the learned counsel for the appellant that the proviso to Section 85B of the Act makes it clear that the Corporation has the discretion to reduce or waive the damages recoverable Ins.Appeal No.33/2012 4 under the Section in relation to an establishment, which is a sick industrial company in respect of which a scheme for rehabilitation has been sanctioned by the BIFR. Regulation No.31C of the Employees' State Insurance (General) Regulations, 1950 also contains a proviso relating to the authority of the Corporation to completely waive the damages levied or leviable under Section 85B of the Act. According to the learned counsel for the respondent, the ESI Court has correctly analysed the facts and found that the respondent company was a sick industrial unit and it did not collect contribution from the employees concerned. It is further submitted on behalf of the respondent that a scheme has been framed by the BIFR as on 08.08.2016.
Considering all these facts, I am of the view that there is no substantial question of law arising in this appeal and the questions raised are purely questions of fact. I find no illegality in the impugned order. Therefore, the appeal is dismissed.
A. HARIPRASAD, JUDGE.
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