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2023 DIGILAW 187 (KAR)

Deputy Director v. KICOL Ltd

2023-02-01

H.T.NARENDRA PRASAD

body2023
JUDGMENT/ORDER 1. This appeal is filed by the Employees State Insurance Corporation (hereinafter referred to as 'the ESI Corporation') under Sec. 82(2) of the Employees State Insurance Act, 1948 (hereinafter referred to as 'the ESI Act') challenging the order dtd. 23/1/2016 passed by the Employees State Insurance Court at Bangalore (hereinafter referred to as 'the ESI Court') in E.S.I. Application No.33/2010, whereby the application filed by the applicant has been allowed in part. 2. For the sake of convenience, the parties are referred to as per their rankings before the E.S.I. Court. 3. The brief facts of the case are that M/s.Kudremuch Iron Ore Company Ltd., was functioning at Mangalore. This Company was referred to BIFR and it has been merged with the applicant's Company with effect from 1/4/2007. The further case of the applicant is that they are making efforts to obtain exemption from the respondent - ESI Corporation which had provided benefits to its employees similar to that of ESI Corporation, i.e., free medical facilities, maternity benefits, sick leave compensation and workmen compensation, etc. It is the further case of the applicant that they are providing medical facilities to their employees in a private hospital, they are also collecting the contribution from the employees to pay the contribution to the ESI Corporation under Ss. 44 and 45 of the ESI Act. To pay the contribution to the ESI Corporation, the earlier facility provided to the employees has been withdrawn by issuing a Circular dtd. 19/9/2007. That circular has been challenged by the Employees Association before this Court in W.P.No. 15180/2007 and they have obtained an interim order and this Court, by order dtd. 25/9/2008 has partly allowed the writ petition, the medical facilities provided to the employees has been directed to continue. Therefore, the further case of the applicant is that in view of that they are providing medical facilities to the employees, they have not paid contribution to the ESI Corporation in time. Therefore, they are not entitled to pay any interest for the delayed payment. 4. The respondent - Corporation has issued demand notice on 3/6/2010 for payment of interest of Rs.7, 11, 542.00 for the delayed payment. Being aggrieved by the same, the applicant has filed an application before the ESI Court. Therefore, they are not entitled to pay any interest for the delayed payment. 4. The respondent - Corporation has issued demand notice on 3/6/2010 for payment of interest of Rs.7, 11, 542.00 for the delayed payment. Being aggrieved by the same, the applicant has filed an application before the ESI Court. The ESI Court has allowed the appeal in part, set aside the order passed by the ESI Corporation and directed the applicant to pay only 50% of the interest claimed. Being aggrieved by the same, the ESI Corporation is before this Court. 5. Sri K.Krishnappa, learned counsel appearing for the appellant has raised the following contentions: Firstly, admittedly, respondent has collected the contribution from the employees and also they have paid the contribution, there is a delay in payment of contribution, under Sec. 39 of the ESI Act and Regulation 31B of the Employees' State Insurance (General) Regulations, 1950 the Corporation has all the right to recover interest for the delayed contribution. Accordingly, ESI Corporation has issued notice. In support of his contentions, he has relied on the judgment of the Hon'ble Apex Court in the case of GOETZE (INDIA) LTD. Vs. EMPLOYEES STATE INSURANCE CORPORATION reported in AIR 2008 SC 3122 . Secondly, the ESI Court has wrongly relied on Sec. 85B of the ESI Act which is not applicable to the case on hand. It is only in respect of damages is concerned. But the ESI Court has wrongly relied on the provisions of Sec. 85B of the ESI Act and passed the impugned order. Hence, the impugned order is contrary to the provisions of the ESI Act. Hence, he sought for allowing the appeal. 6. Per contra, Sri Ramesh Upadhyaya, learned counsel appearing for the respondent has raised the following contentions: Firstly, the applicant was providing a special medical facility to the employees in the private hospital. The applicant has taken a decision to withdraw that facility and to pay the contribution to the ESI Corporation. Therefore, they have passed a circular canceling the medical facilities which has been given to the employees. That circular has been challenged by the Employees Association before this Court in W.P.No.15180/2007 and the circular has been stayed by this Court and by order of this Court dtd. 26/9/2008 the writ petition was allowed in part, applicant has been directed to continue the medical facilities provided to its employees. That circular has been challenged by the Employees Association before this Court in W.P.No.15180/2007 and the circular has been stayed by this Court and by order of this Court dtd. 26/9/2008 the writ petition was allowed in part, applicant has been directed to continue the medical facilities provided to its employees. Under these circumstances, the applicant has delayed in payment of contribution. In this regard, he placed reliance on the judgment of the Hon'ble Apex Court in the case of EMPLOYEES STATE INSURANCE CORPORATION vs. DISTILLERIES & CHEMICAL MAZDOOR UNION & ORS. reported in AIR 2006 SC 2767 wherein in special circumstances, the Hon'ble Apex Court, in similar circumstances, has exempted payment of interest. Hence, the ESI Court has rightly exercised the power under the ESI Act and has exempted from payment of 50% of interest in respect of delay in payment of contribution. Hence, he sought for dismissal of the appeal. 7. Heard the learned counsel for the parties. Perused the impugned order and the original records. 8. It is not in dispute that M/s.Kudremuch Iron Ore Company Ltd., was referred to BIFR and it has been merged with the applicant's Company with effect from 1/4/2007. The further case of the applicant is that they have provided their employees medical facilities in a private hospital. Even though they have collected contribution from the employees, in view of their providing medical facilities in a private hospital, they have not paid the contribution. It is the further case of the applicant is that they have issued a circular canceling the medical facilities provided to the employees. That circular has been challenged before this Court in W.P.No.15180/2007 and the same has been stayed. This Court by order dtd. 26/9/2008 has directed the applicant to continue the medical facilities to the employees. Therefore, there is a delay in payment of contribution. But the ESI Court, while considering the case of the applicant has relied on Sec. 85(b) of the ESI Act. In fact, Sec. 85(b) of the ESI Act is not applicable to the case on hand. It is only in respect of recovery of damages. The same is not applicable to the case on hand which is related to the delay in payment. Therefore, the impugned order passed by the ESI Court is contrary to the provisions of the ESI Act. It is only in respect of recovery of damages. The same is not applicable to the case on hand which is related to the delay in payment. Therefore, the impugned order passed by the ESI Court is contrary to the provisions of the ESI Act. The impugned order is passed without application of mind and contrary to the ESI Act. Hence, the order dtd. 25/11/2016 is unsustainable. 9. Accordingly, the appeal is allowed. The order dtd. 25/11/2016 passed by ESI Court in ESI Application No.33/2010 is set aside. ESI Application No.33/2010 is restored to file. The matter is remitted back to the ESI Court to reconsider the matter afresh after giving opportunity to the parties, in accordance with law.