JUDGMENT : Yashwant Varma, J. Heard Sri V.K. Upadhyay, learned Senior Counsel assisted by Sri Ritvik Upadhya in support of this petition. Although, respondents are duly represented, none has appeared on their behalf even when the matter is taken in the revised call. 2. The petition challenges proceedings initiated by the Employees State Insurance Corporation [hereinafter to be referred to as "the Corporation"] and seeks quashing of a demand dated 2 April 2004. The Corporation has in terms of the impugned demand called upon the petitioner to discharge liabilities towards dues payable under the Employees State Insurance Act, 1948 together with penalty and damages. Sri Upadhyay, learned Senior Counsel, has assailed the demand principally on the ground that the liability of the petitioner under the provisions of the aforementioned Act shall stand governed by the provisions made in a Scheme of Rehabilitation sanctioned by the BIFR in respect of the petitioner. Referring to the provisions made in that Scheme insofar as ESI dues are concerned, Sri Upadhyay has drawn the attention of the Court to the relevant clause of the Sanctioned Scheme which provided that the Corporation would accept liquidation of ESI dues over two years without demanding any interest or penalties thereon. In view of that stipulation in the Sanctioned Scheme, Sri Upadhyay contends that the demand insofar as it places a liability of interest and damages is unsustainable. 3. Insofar as the question of principal dues are concerned, there is no dispute before this Court. Sri Upadhyay has stated that the principal dues have already been paid. That only leaves the Court to consider whether the impugned demand insofar as it levies interest and damages is sustainable. 4. Undisputedly, the Sanctioned Scheme restricts the liability of the petitioner in respect of ESI dues to the principal amount only with interest and penal levies being specifically and unambiguously excluded. The provision of the Scheme as sanctioned in terms of Section 32 of SICA would clearly bind and override all other statutes and instruments mandating to the contrary. This is manifest from the plain language employed in that provision which reads thus: - "S. 32. The provision of the Scheme as sanctioned in terms of Section 32 of SICA would clearly bind and override all other statutes and instruments mandating to the contrary. This is manifest from the plain language employed in that provision which reads thus: - "S. 32. Effect of the Act on other laws.- (1) The provisions of this Act and of any rules or schemes made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any other law except the provisions of the Foreign Exchange Regulation Act, 1973 (46 of 1973), and the Urban Land (Ceiling and Regulation) Act, 1976 (33 of 1976) for the time being in force or in the Memorandum or Articles of Association of an industrial company or in any other instrument having effect by virtue of any law other than this Act....." (emphasis supplied) 5. Section 32, in unambiguous terms statutorily confers overriding authority to schemes sanctioned under SICA notwithstanding anything inconsistent in any other law. The only statutes which stand saved from the position of preeminence conferred to schemes sanctioned under SICA are the Foreign Exchange Regulation Act, 1973 and the Urban Land (Ceiling and Regulation) Act, 1976. 6. While the law on this issue is well settled, the Court deems it apposite to only notice two decisions referred to hereinafter. In Raheja Universal Vs. NRC, (2012) 4 SCC 148 the Supreme Court enunciated the legal position as follows: - "[37] This Court has taken the view in Tata Motors Ltd., (2008) 7 SCC 619 that the Act of 1985 has been enacted to secure the principles specified in Article 359 of the Constitution of India. It seeks to give effect to the larger public interest. It should be given primacy because of its higher public purpose. As the Act of 1985 is a special law and on the principle that a special law will prevail over a general law, it is permissible to contend that even if the provisions contained in Section 22(1) read with Section 32 of the Act, giving overriding effect vis-a-vis the other laws, other than the Foreign Exchange Regulation Act, 1973 and the Urban Land Ceiling and Regulation Act, 1976 had not been there, the provisions of the general law like the Companies Act, for regulation, incorporation, winding-up etc. of the companies would have still been overridden to the extent of inconsistency. of the companies would have still been overridden to the extent of inconsistency. We have already seen that this Court had, in the case of Jay Engineering, taken the view that the Interest on Delayed Payments to Small Scale and Ancillary Industries Undertaking Act, 1993 shall have to give way for enforcement of the provisions of the Act of 1985. In the case of Tata Davy also, the Court took the view that the State Sales Tax Act would have to be read and construed in comity to the provisions of the Act of 1985 which shall have the overriding effect. In the case of Tata Motors Ltd. v. Pharmaceuticals Product of India Ltd., this Court was concerned with the provisions of mismanagement and oppression contained in Sections 391 and 394 of the Companies Act and whether the Company Court will have the jurisdiction to pass orders in preference to the proceedings pending before the Court under the Act of 1985. The Court while holding the primacy of the Act of 1985 held as under:- "SICA furthermore was enacted to secure the principles specified in Article 39 of the Constitution of India. It seeks to give effect to the larger public interest. It should be given primacy because of its higher public purpose. Section 26 of SICA bars the jurisdiction of the civil Courts. What scheme should be prepared by the operating agency for revival and rehabilitation of the sick industrial company is within the domain of BIFR. Section 26 not only covers orders passed under SICA but also any matter which BIFR is empowered to determine. 23. The jurisdiction of civil court is, thus, barred in respect of any matter for which the appellate authority or the Board is empowered. The High Court may not be a civil court but its jurisdiction in a case of this nature is limited." 7. A Division Bench of the Court in J.K. Cotton Weaving & Spinning Mills Vs. Union of India, (2017) 345 ELT 27 (All) was called upon to consider the validity of a demand raised by Excise authorities inconsistent with the provisions made in a Sanctioned Scheme. Dealing with that question the Court held: - "6. A Division Bench of the Court in J.K. Cotton Weaving & Spinning Mills Vs. Union of India, (2017) 345 ELT 27 (All) was called upon to consider the validity of a demand raised by Excise authorities inconsistent with the provisions made in a Sanctioned Scheme. Dealing with that question the Court held: - "6. A perusal of the said Scheme would show that as per the terms and conditions of the Rehabilitation Scheme it was provided that the respondent-department would grant exemption to the petitioner-company from payment of interest, penalty etc. and accept payment of excise duty finally payable in pending cases over a period of 2 years from the year in which such amount becomes payable. 7. It was contended that in view of the Scheme and the specific provisions contained in Clause 8.04(d), the impugned demand for Rs.6,89,000/- was absolutely illegal and in violation of the specific terms and conditions of the Rehabilitation Scheme. ... 27. The question that now remains for consideration of this Court is that whether the petitioner is liable for payment of interest and penalty as demanded by the impugned notice dated 17-6-2005. 28. As already noticed in Clause 8.04 (d) of the Rehabilitation Scheme dated 12-11-2002 framed by the BIFR, the petitioner is not liable for payment of interest and penalty. Section 22 of the Act clearly provides that once proceedings have been initiated under the Act and an inquiry under Section 16 is pending or any Scheme referred to under Section 17 is under preparation or consideration or a sanctioned Scheme is under implementation then, notwithstanding anything contained in any other law for the time being in force no proceeding for the winding up or execution or distress or the like against any of the properties of the industrial undertaking company and no proceedings for recovery of money or for enforcement of any security against the company etc. shall be maintainable. 29. Section 32 of the act further provides that the Schemes made under the Act shall have effect notwithstanding anything inconsistent therewith contained any other law except two Acts namely FERA and Urban Land Ceiling Act for the time being in force and Memorandum or Articles of Association of an Industrial Company or in any other instrument having effect by virtue of any other law other than this Act. The Excise Act has not been exempted from the applicability of section 32 of the Act. ... 35. In our opinion, the judgment referred to in the case of Voltas Ltd.(supra) was on its own facts and does not help the respondents inasmuch as in the Scheme under consideration before the Apex Court, there was no express waiver from the statutory liability of payment of interest at the rate of 18%. However, in the case before us the provisions of Clause 8.04(d) of the Rehabilitation Scheme contains an express waiver from payment of interest, penalty etc. and to accept payment of excise duty finally payable in pending cases over a period of 2 years, from the year in which such amount becomes payable. 36. The petitioner having already deposited a sum of Rs.6,89,000/- as 50% part payment for 2004-2005 and having given an undertaking for payment of remaining 50% amount of Rs.689000/- which also was paid on 6-3-2006 (Annexure-SA1 to the supplementary affidavit) the liability towards payment of excise duty had been duly discharged as per the demand notice and the company was not liable for payment of penalty or interest in terms of the specific provisions of the Rehabilitation Scheme." 8. The necessary corollary to the enunciation of the statutory position noticed above would be that the liability of the petitioner insofar as ESI dues are concerned would be governed exclusively by the provisions made in the Sanctioned Scheme in that respect. That Scheme admittedly absolves the petitioner from the liability towards interest and penalties under the Act. That damages are penal in character cannot possibly be doubted in light of the decision of the Supreme Court in ESI Corp. Vs. HMT Ltd., (2008) 3 SCC 35 where it was held: - "16. It is a well-known principle of law that a subordinate legislation must conform to the provisions of the legislative Act. Section 85-B of the Act provides for an enabling provision. It does not envisage mandatory levy of damages. It does not also contemplate computation of quantum of damages in the manner prescribed under the Regulations. 17. The statutory liability of the employer is not in dispute. An employee being required to be compulsorily insured, the employer is bound to make his part of the contribution. An employee is also bound to make his contribution under the Act. It does not also contemplate computation of quantum of damages in the manner prescribed under the Regulations. 17. The statutory liability of the employer is not in dispute. An employee being required to be compulsorily insured, the employer is bound to make his part of the contribution. An employee is also bound to make his contribution under the Act. But the same does not mean that levy of damages in all situations would be imperative. 18. Section 85-B of the Act uses the words "may recover". Levy of damages thereunder is by way of penalty. The legislature limited the jurisdiction of the authority to levy penalty i.e. not exceeding the amount of arrears. Regulation 31-C of the Regulations, therefore, in our opinion, must be construed keeping in view the language used in the legislative Act and not dehors the same." 9. In light of the legal position noticed above, the Court is of the considered view that the impugned demand insofar as it places a burden of interest and damages upon the petitioners cannot be sustained. 10. The petition is accordingly allowed. The impugned demand dated 2 April 2004, insofar as it imposes a liability towards payment of interest and damages upon the petitioner shall stand set aside.