Regional Director, E.S.I. Corporation, Thrissur-20 v. M/s Dinesh Textiles

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT:** **THE HONOURABLE MR.JUSTICE P.N.RAVINDRAN** **WEDNESDAY, THE 3RD DAY OF OCTOBER 2012/11TH ASWINA 1934** **Ins.APP.No. 16 of 2010 ( ) --------------------------** **EIC.65/2003 of E.I.COURT, KOZHIKODE** **---------------** **APPELLANT/RESPONDENT: --------------------** **THE REGIONAL DIRECTOR, E.S.I.CORPORATION, THRISSUR-20.** **BY ADV. SRI.P.SANKARANKUTTY NAIR** **RESPONDENT/APPLICANT: ---------------------** **M/S.DINESH TEXTILES, VATTAPOYIL, P.O.EACHUR, KANNUR.** **BY ADV. SRI.V.R.KESAVA KAIMAL BY ADV. SRI.N.M.MADHU** **THIS INSURANCE APPEALS HAVING BEEN FINALLY HEARD ON 03-10-2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **VK** **“CR”** **P.N.RAVINDRAN, J. -------------------------------------Ins.Appeal No.16 of 2010 --------------------------------------Dated this the 3[rd] day of October , 2012** ## **J U D G M E N T** The Regional Director, Employees State Insurance Corporation, Thrissur has filed this appeal challenging the order dated 26.5.2009 passed by the Employees Insurance Court, Kozhikkode in E.I.C.No.65 of 2003. The brief facts of the case are as follows: 2. The respondent, a partnership firm, is running a textile shop at Kannur. It was initially covered under the Employees State Insurance Act, 1948, herein after referred to as “the Act” for short, with effect from 11.1.1996. Later the coverage was preponed with effect from 1.4.1995 and the respondent was regularly paying the contribution with effect from that date. While matters stood thus, the Insurance Inspector, Kannur conducted an inspection of the respondent's establishment on 8.8.2001. During the inspection he noticed that the respondent's establishment is coverable with effect from 1.11.1993 as it had employed twenty or more employees for wages with effect from that date. The Insurance Officer thereupon submitted Ext.D1 report dated 8.8.2001 wherein _inter alia_ it was mentioned that the sum of Rs.28,450/- is due by way of contribution Ins.Appeal No.16 of 2010 -2- from 1.11.1993 to 31.3.1995. It was also mentioned that the sum of Rs.2,565/- is due for the period 1999-2000 towards contribution in respect of wages which was initially not taken into account. A copy of Ext.D1 report was served on the Managing Partner of the respondent firm followed by a notice dated 4.9.2001 demanding payment of the sum of Rs.28,450 + Rs.2565 = Rs.31,015/-. The respondent firm remitted the said amount on 19.9.2001. Shortly thereafter, the Assistant Director, Employees State Insurance Corporation, Thrissur issued Ext.P1 notice dated 6.5.2002 in form C-18 (corresponding to Ext.D2) demanding payment of the sum of Rs.27,285/- by way of interest on the sum of Rs.28,450/- which was paid on 19.9.2001 by way of contribution for the period from 1.11.1993 to 31.3.1995 and the sum of Rs.2,565/- paid towards arrears of contribution for the year 1999-2000. Upon receipt of Ext.P1 demand notice, the Managing Partner of the respondent firm sent Ext.P2 reply dated 19.6.2003 disputing the liability to pay the amount demanded. The Recovery Officer of the Employees State Insurance Corporation, herein after referred to as “the Corporation” for short, thereupon issued Ext.P3 demand notice dated 9.10.2003 calling upon the Managing Partner of the respondent firm to pay the amount demanded in Ext.P1 notice, failing which he was informed that steps will be taken to recover the amount due in the manner provided under sections 45-C to 45-I of the Ins.Appeal No.16 of 2010 -3- Act. The Managing Partner of the respondent firm thereupon sent Ext.P4 letter dated 1.11.2003 in reply stating that he proposes to file a case in the Employees Insurance Court, Kozhikkode and therefore further proceedings may be stopped till the disposal of the case. 3. The respondent firm thereafter filed E.I.C.No.65 of 2003 in the Employees Insurance Court, Kozhikkode under section 75 of the Act. The only contention raised by the respondent in the petition under section 75 of the Act was that it had paid the contribution within time and therefore there is no reason to demand interest. The respondent also contended that the claim made in the impugned notice is barred by limitation. In the petition filed in the Employees Insurance Court, the respondent prayed that Ext.P1 may be set aside and the respondents in the Insurance Court may directed to re-assess the dues. The petition filed by the respondent in the Employees Insurance Court is extracted below in full for easy reference: 1. The petitioner's establishment is a Textile Manufacturing Unit and is a covered establishment under the Act. The petitioner has been paying contributions to the ESI promptly. 2. While so the 1[st] respondent has issued a notice dated 6.5.2002 claiming interest for the delayed payment from November, 1993 onwards. It is submitted that the petitioner has paid the contribution within time and there was no reason to pay interest to the first respondent. The notice issued by the first respondent is not legally sustainable. The total amount claimed by the 1[st] respondent in the notice referred above is Ins.Appeal No.16 of 2010 -4- Rs.27,285/-. The petitioner has sent a reply dated 19.6.2003 to the 1st respondent intimating him the real facts and requested to abstain from taking any action in this regard. But the 1st respondent proceeded further and the proceedings dated 9.10.03 has been issued by the 2[nd] respondent giving copy to the 3[rd] respondent. The 3[rd] respondent may at any time comply the direction of the 2[nd] respondent. As there was no amount due as claimed by the 1st respondent and the claim made in the notice is barred by limitation it is necessitated to file this petition before this Honourable Court. 3. Cause of action arose on 25.10.2003 the date on which the notice under section 45B of the ESI Act was served on the petitioner and thereafter at Kannur which is within the jurisdiction of this Honourable Court. In the above circumstances it is humbly prayed that this Honourable Court may be pleased to set aside the order No. 5411765-19-INS-I dated 6.5.2002 with a direction to re-assess the legally sustainable due and grant other relief that may be found proper by this Honourable Court. 4. The Regional Director, Employees State Insurance Corporation, Kannur, the appellant herein, filed a written objection dated 27.7.2000. The relevant portions thereof are extracted below for easy reference: M/s. Dinesh Textiles, P.O.Eachur, Kannur is a factory covered under the Act. The factory was initially covered with effect from 11.01.1996 and subsequently coverage pre-poned to 1.4.95 and petitioner started compliance from 1.4.95. Later on the factory was visited by the Area Inspector on 8.8.01 for regular inspection and the records verified revealed that the Ins.Appeal No.16 of 2010 -5- factory is coverable from 1.11.93 finally. The contribution due from 1.11.93 to 31.3.95 was also worked out to the extent of Rs.28,450/- along with contribution of Rs.2,565/- on omitted wages for the period 1999-2000. Thus the total contribution of Rs.31,015/- was claimed vide C-18 dated 4.9.01 and petitioner has remitted the dues on 19.09.01. As per Sec.39(5)(a) of the Act interest is payable on the delayed contribution at the rates specified in Regulation 31 A of ESI(Genl) Regulations, 1950. Accordingly a notice in Form C-18 dated 06.05.2002 was issued to the Petitioner claiming interest of Rs.27,285/followed by revenue recovery action as per requisition in Form C-19 dated 12.07.2002. In response to the C-19 requisition, the Revenue Recovery Officer initiated action u/s 45-C to I of the Act for realisation of the dues. Against the above legal action, petitioner moved the above petition which lacks merit and bonafide. In reply to para 1 of the Petition this respondent submits that the petitioner's factory was surveyed by the Ins. Inspector on 22.06.99 and coverage was enforced provisionally with effect from 11.01.96. Subsequent inspection conducted revealed that Petitioner's factory is coverable from 1.4.95 and on receipt of intimation in this regard the petitioner started compliance with effect from the date. Again the Area Inspector visited the factory on 8.8.01 and verified the records from 1.11.93 onwards. Then it was found that coverage is attracted to the factory with effect from 1.11.93 finally as petitioner had engaged 20 persons for wages as on that date. The Inspector has assessed the contribution due for the period from 1.11.93 to 31.3.95 to the tune of Rs.28,450/-. The contribution of Rs.2,565/- due on left out wages for the period 1999-2000 was also reported by the Inspector. Thus the total contribution of Ins.Appeal No.16 of 2010 -6- Rs. 31,015/- was claimed on actual basis vide Form C-18 dated 4.9.01 and the Petitioner has remitted the amount on 19.9.01 without any protest. Petitioner's statement in Para 2 that they have paid the contribution within the stipulated time and there was no reason warranting levy of interest is not correct. Sec.2-A of the Act read with Regulation 10 B casts a primary responsibility on the Petitioner to register their unit under the Act whenever the Act has become applicable to the unit. As per Sec.40 of the Act principal Employer is to pay contribution at the first instance within the time limit specified in Regulation 31. Respondent Corporation is expected to verify the correctness of compliance made by the employer and it was during such inspection that retrospective coverage of the factory from 1.11.93 was detected. As such any claim put on in respect of the left out period cannot be held barred by limitation. It is pertinent to note that when demanded contribution of Rs.31,015 vide C-18 dated 4.9.01, Petitioner had paid the sum without any protest. It is, therefore, evident that Petitioner was concealing coverage and utilising the amount due to Respondent Corporation for his business purpose. As per Sec.39(5)(a) of the Act read with Reg. 31-A of ESI (Genl) Regulations, 1950, payment of interest on delayed contribution is a statutory requirement. When the employer in relation to the covered factory delayed payment of contribution for the period from 1.11.93 to 31.3.95, a notice in Form C-18 dated 6.5.02 was issued to the petitioner in accordance with the above provisions of the Act claiming interest on delayed contribution along with interest on delayed contribution on omitted wages for the period 1999-2000. The period of delay involved and interest payable on each wage period was also Ins.Appeal No.16 of 2010 -7- clearly appended on the reverse of the C-18 interest notice. The total interest payable at the prevalent rate was worked to Rs.27,285/-. Respondent is not in receipt of Petitioner's letter dated 19.6.03. When the petitioner failed to pay the statutory dues, this respondent initiated recovery action by issuing a requisition in Form C-19 dated 12.7.02 to the Recovery Officer who in turn issued Garnishee Order dated 9.10.03 to the 3[rd] Respondent u/s 45-C to I of the Act. However, in view of the stay granted vide order No.CMP 109/03 in EIC 65/03, the Garnishee Order dated 9.10.03 has been withdrawn by the respondent. The action taken by Resp.Corpn. is strictly in accordance with the provisions of the Act and is legal and valid. The petitioner has no cogent reasons to file the instant petition. He has conceded liability from 1.11.93 without any protest and has paid the contribution due as demanded by the Corporation. It is therefore, clear that petitioner was hiding retrospective coverage. The amount due to the Corporation was utilised for Petitioner's business purpose and he has made profit out of it. The demand of interest is, therefore, just and cannot be held barred by limitation. 5. Shorn of details, the contention raised by the appellant was that the employer who conceded the liability to pay contribution with effect from 1.11.1993 and remitted the contribution, is liable to pay interest under section 39(5a) of the Act and Regulation 31 (a) of the Employees' State Insurance (General) Regulations, 1950, herein after referred to as “the Regulations” for short. It was also contended that the coverage initially with effect from 11.1.1996 was provisional, that on subsequent inspection the establishment was covered with effect Ins.Appeal No.16 of 2010 -8- from 1.4.1995 and still later after the inspection held on 8.8.2001 with effect from 1.11.1993 and therefore, the demand made by the Corporation is in order. 6. The respondent herein filed a rejoinder dated 23.11.2004 contending _inter alia_ that though at the time of first inspection itself the respondent's establishment was liable to be covered with effect from 1.11.1993, the appellant had assured the employer that if it accepts coverage without protest from 1.4.1995, all previous claims will be ignored, that the Corporation did not keep its assurance, that after inspection on 8.8.2011 the employer was asked to pay contribution with effect from 1.11.1993 and the said amount was remitted without protest as the employer was not willing to go for litigation. Paragraphs 2 to 5 of the rejoinder dated 23.11.2004 are extracted below for easy reference: 2. It is true that the petitioner's establishment was covered with effect from 11.1.96 and subsequently coverage preponed to 1.4.95. In fact the respondent coerced the petitioner and compelled them to make payment. The petitioner agreed with the decision of the respondent in order to avoid a continuous litigation. It is submitted that at the time of their first inspection, it was told that the petitioner's establishment was eligible for coverage w.e.f. 1.11.93. But the respondent assured that if the petitioner accepted the coverage without any protest from 1.4.95, all the previous claim will be ignored by them. So even if the petitioner is not liable to pay contribution Ins.Appeal No.16 of 2010 -9- for the said period the petitioner paid the amount. 3. The respondent did not keep their assurance. After their visit on 8.8.01 the petitioner was asked to pay contribution w.e.f. 1.11.93. In fact the petitioner need not pay any contribution for the said period. But the petitioner who was not willing to go for any litigation, paid the amount. In fact the respondent was trying to make gain from the innocence of the petitioner. It is clear from their statement that the petitioner had remitted the amount without any protest. It is submitted that it is possible for the respondent to assess the interest at the time of making demand for the contribution for the period from 1.11.93 to 31.3.95. The respondent is trying to make harm to the petitioner for ever. It cannot be allowed. The fact that the petitioner had paid the contribution without any protest, is not a ground to lay unsustainable claim against the petitioner. 4. The petitioner reiterates the contentions in the petition. The claim is time barred. So the action of the respondent cannot be held legal. 5. The contention that the petitioner has conceded the liability from 1.11.93 without any protest and has paid the contribution due as demanded by the corporation, so it is clear that the petitioner was hiding retrospective coverage, etc., are false and hereby denied. 7. In the Employees Insurance Court, the Managing Partner of the respondent firm was examined as PW-1 and Exts.P1 to P4 were marked. On the side of the appellant, the Insurance Inspector, Kannur who was in office during the relevant time was examined as DW-1 and Exts.D1 to D3 were marked. Before the Insurance Court the respondent gave up the contention that the demand for payment of Ins.Appeal No.16 of 2010 -10- interest is barred by limitation and submitted that it is pressing only the issue regarding its liability to pay interest. Relying on the decision of the Madras High Court in **Employees Insurance Corporation v. M/s.Pathy and Co. & another (CDJ 2006 MHC 138)** the Employees Insurance Court held as no specific order covering the establishment with effect from 1.11.1993 had been issued and the employer had paid the contribution on 19.9.2001 within 15 days from the date of receipt of the notice demanding payment, namely 4.9.2001, the claim for interest is not justifiable. It was held that when the Corporation itself was fault, the claim for interest cannot be justified. The Regional Director of the Employees Insurance Corporation has, aggrieved thereby, preferred this appeal. 8. I heard Sri.Sandesh Raja, learned counsel appearing for the appellant and Sri.V.R.Kesava Kaimal, learned counsel appearing for the respondent. I have also gone through the pleadings and the materials on record. The stipulation regarding the period within which contributions have to be remitted and the consequences of nonpayment within the stipulated time are set out in section 39 of the Act and regulations 31 and 31 A of the Regulations. Section 39 of the Act and regulations 31 and 31 A of the Regulations are extracted below for easy reference. **Section 39. Contributions** - (1) The contribution payable Ins.Appeal No.16 of 2010 -11- under this Act in respect of an employee shall comprise contribution payable by the employer (hereinafter referred to as the employer's contribution) and contribution payable by the employee (hereinafter referred to as the employee's contribution) and shall be paid to the Corporation. (2) The contribution shall be paid at such rates as may be prescribed by the Central Government. Provided that the rates so prescribed shall not be more than the rates which were in force immediately before the commencement of the Employees' State Insurance (Amendment) Act, 1989. (3). The wage period in relation to an employee shall be the unit in respect of which all contributions shall be payable under this Act. (4). The contributions payable in respect of each wage period shall ordinarily fall due on the last day of the wage period, and where an employee is employed for part of the wage period, or is employed under two or more employers during the same wage period, the contributions shall fall due on such days as may be specified in the regulations. 5(a) 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 twelve per cent per annum or at such higher rate as may be specified in the regulations till the date of its actual payment: Provided that higher interest specified in the regulations shall not exceed the lending rate of interest charged by any scheduled bank. (b) Any interest recoverable under clause (a) may be recovered as an arrear of land revenue or under section 45 C to section 45-I. Ins.Appeal No.16 of 2010 -12- Explanation- In this sub-section, “scheduled bank” means a bank for the time being included in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934) **Regulation 31. Time for payment of contribution** - An employer who is liable to pay contributions in respect of any employee shall pay these contributions within 21 days of the last day of the calendar month in which the contributions fall due. Provided that where a factory/establishment is permanently closed, the employer shall pay contribution on the last day of its closure: Provided that an employer may opt, in such manner as may be prescribed, by the Director-General for payment of amount in advance towards contribution to be adjusted against contributions payable by him (including employees' contribution) for a wage period so that the balance of advance amount continues to be more than the contributions due and payable at the end of the concerned wage period. Such an employer shall furnish in the prescribed proforma (Form 5A), a six monthly statement of contributions payable and paid in advance with the balance left at the end of each month along with return of contributions to the appropriate Regional Office of the Corporation. **Regulation 31A. Interest on contribution due, but not paid in time.** - An employer who fails to pay contribution within the periods specified in Regulation 31, shall be liable to pay simple interest at the rate of fifteen per cent per annum in respect of each day of default or delay in payment of contribution. 9. In section 39 (1) of the Act, it is stipulated that the contribution payable under the Act in respect of an employee shall Ins.Appeal No.16 of 2010 -13- comprise of the contribution payable by the employer (employer's contribution) and the contribution payable by the employee (employee's contribution) and shall be paid to the Corporation. In subsection (4) it is stipulated that the contribution payable in respect of each wage period shall ordinarily fall due on the last day of the wage period and where an employee is employed for part of the wage period, or is employed under two or more employers during the same wage period, the contribution shall fall due on such days as may be specified in the regulations. In clause (a) of sub-section (5) of section 39 of the Act, it is stipulated that if any contribution payable under the 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 twelve per cent per annum or at such higher rate as may be specified in the regulations, till the date of its actual payment. In regulation 31 of the Regulations it is stipulated that an employer who is liable to pay contribution in respect of any employee shall pay the contribution within 21 days of the last day of the calendar month in which the contribution falls due. In regulation 31-A it is stipulated that an employer who fails to pay contribution within the period specified in regulation 31 shall be liable to pay simple interest at the rate of 15% per annum in respect of each day of default or delay in payment of contribution. On and with effect from 1.10.2005, the rate of interest Ins.Appeal No.16 of 2010 -14- has been scaled down to 12% per annum. Interpreting section 39 (5) (a) of the Act and Regulation 31-A of the Regulations, a Division Bench of this Court in **Cannanore Drug Lines v. E.S.I.Corporation (2007** ## **(1) KLT 880)** held as follows: 4. We notice that the scope of the above mentioned provision has been elaborately considered by a Division Bench of this Court in W.A.1277 of 2003 with which we fully concur. S.39 (4) of the E.S.I. Act states that the contributions payable in respect of each wage period shall ordinarily fall due on the last day of the wage period. Regulation 31 of the Employees' State Insurance (General) Regulations, 1950 stipulates that an employer who is liable to pay contributions in respect of any employee shall pay these contributions within 21 days of the last day of the calendar month in which contributions fall due. S.39 (5)(a) of the E.S.I. Act states that if any contribution payable under the said 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 or at such higher rate as may be specified in the regulations till the date of its actual payment. Regulation 31A states that an employer who fails to pay contribution within the period specified in Regulation 31 shall be liable to pay simple interest at the reate of 12% per annum in respect of each day of default or delay in payment of contribution. Above statutory provisions make it clear that the appellant was liable to pay the E.S.I. Contributions which fell due on the last day of the wage period within 21 days of the last day of the calendar month in which the contributions fell due. 5. Merely because the appellant failed to pay contribution allegedly under a _bona fide_ impression or belief that Ins.Appeal No.16 of 2010 -15- the establishment was not covered under the provisions of the E.S.I. Act cannot absolve the appellant from the liability of paying interest on the delayed payment of E.S.I. Contribution under S.39(5) read with Regulation 31A. S.39(5)(a) uses the expression “if any contribution payable under this Act is not paid by the principal employer on the date on which such contribution has become due”. Regulation 31A uses the expression “an employer who fails to pay contribution within the periods specified in Regulation 31”. Neither the provisions in the E.S.I. Act nor the provisions in the E.S.I. (General) Regulations give any discretion to the respondent to exempt the appellant from the liability to pay interest on the delayed payment of E.S.I. contribution. The _bona fide_ impression of the appellant that his establishment was not covered under the provisions of the E.S.I. Act or the pendency of a dispute before the E.S.I. Court regarding the appellant's liability to pay E.S.I. Contribution cannot be a valid ground for exempting the appellant from paying interest in terms of S.39(5)(a) and Regulation 31A. When the statute does not provide for any such exemption the respondent cannot exclude the amount of interest from the demand made against the appellant. 10. The said decision was followed by another Division Bench of this Court, of which I was a member, in **E.S.I.Corporation v. Bharath Hotel (2008 (3) KLT 195)** wherein it was held that the statutory provisions are very clear and capable of only one interpretation and that the decision in **Cannanore Drug Lines v. E.S.I.Corporation (2007 (1) KLT 880)** lays down the correct law. The Division Bench also held that there is no conflict between Ins.Appeal No.16 of 2010 -16- **Cannanore Drug Lines v. E.S.I.Corporation (2007 (1) KLT 880)** and the decision of the Division Bench in **E.S.I.Corporation v. Cannanore Spinning & Weaving Mills [2001(3) KLT 393]** wherein the Division Bench of this Court had taken the view that as payment of contribution was stayed by an order of this Court in a writ petition challenging the enhancement of wage limit from Rs.3,000/- per mensem to Rs.6,500/- per mensem, the amended provisions did not take effect and therefore there was no liability to pay contribution. 11. The very same provisions were considered by the Apex Court in **M/s.Goetze (India) Limited v. Employees State Insurance Corporation [AIR 2008 SC 3122]** . Interpreting the aforesaid provisions, the Apex Court held that the liability to pay interest is statutory and there is no power of waiver. In the case before the Apex Court, demand for payment of interest arose consequent upon a reverification of the contribution payable for the period from 1989-1990 and 1992-1994. After re-verification, the Employees State Insurance Corporation demanded payment of the sum of Rs.7,54,525/- from the employer. The contribution was paid but later the employer took the stand that there was a dispute about eligibility. Such a contention was raised on the plea that efficiency bonus cannot be treated as part of wages. The said dispute was disposed by the Employees Insurance Court in view of the payment of the entire amount demanded by the Ins.Appeal No.16 of 2010 -17- Employees State Insurance Corporation. After the arrears of contribution was paid, the Employees State Insurance Corporation demanded payment of interest. The said demand gave rise to a writ petition. The High Court of Punjab and Haryana held that liability to pay interest is statutory and therefore it cannot be waived. Upholding the said decision, the Apex Court held the liability to pay interest is statutory and that there is no power of waiver. 12. In the instant case, the pleadings and the materials on record disclose that when the Corporation demanded payment of contribution with effect from 1.11.1993 (Rs.28,450/-) and Rs.2,565/for the period 1999-2000 being the contribution payable on wages which was omitted to be taken into account, the respondent paid the same without protest. It did not question its liability to pay the said amount or coverage of the establishment with effect from 1.11.1993. As a matter of fact, it is evident from the rejoinder filed by the respondent before the Employees Insurance Court that even at the time of initial coverage, the respondent's establishment was liable to be covered with effect from 1.11.1993, but it was covered initially with effect from 1.4.1995 only. As the respondent had not disputed coverage of establishment with effect from 1.11.1993 and had paid the contribution for the period from 1.11.1993 to 31.3.1995 without protest, it cannot be heard to contend that it had not defaulted Ins.Appeal No.16 of 2010 -18- payment of the contribution or that the Corporation was at fault in not demanding payment of contribution for the said period. As held by this Court and the Apex Court, on the terms of section 39(5)(a) of the Act, the liability to pay interest is st atutory and the Corporation has no discretion in the matter. The demand made by the Corporation for payment of interest, which was challenged before the Employees Insurance Court was therefore lawfully made. As stated earlier, though the respondent had a contention that the claim for payment of interest is barred by limitation, the said claim was given up before the Employees Insurance Court. No such plea was raised before me also during the course of arguments. The only argument which was raised before the Insurance Court and before this Court was as regards the respondent's liability to pay interest. In the view that I have taken, I am of the considered opinion that the appellant is entitled to succeed. For the reasons stated above, I allow the appeal and set aside the judgment dated 26.5.2009 passed by the Employees Insurance Court, Kozhikkode in E.I.C.No.65 of 2003. Consequently, E.I.C.No.65 of 2003 shall stand dismissed. The parties shall bear their respective costs. Sd/- ## **P.N.RAVINDRAN, JUDGE.** Rkc // true copy// PA to Judge