The Regional Director, E.S.I. Corporation vs Fast & Safe Transports (P) Ltd.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT:** ## **THE HONOURABLE MR.JUSTICE S.S.SATHEESACHANDRAN** **WEDNESDAY, THE 27TH DAY OF NOVEMBER 2013/6TH AGRAHAYANA, 1935** **Ins.APP.No. 69 of 2011 ( )** **--------------------------AGAINST THE ORDER IN M.P.NO.206/2010 IN IC 23/2005 of EMPLOYEES' INSURANCE COURT, ALAPPUZHA ================================** ## **APPELLANT/PETITIONER/RESPONDENT:** **-----------------------------------------------------------** **THE REGIONAL DIRECTOR, E.S.I. CORPORATION, PANCHADEEP BHAVAN, THRISSUR.** **BY ADV. SRI.T.V.AJAYAKUMAR** ## **RESPONDENT/RESPONDENT/APPLICANT:** **-----------------------------------------------------------** **FAST & SAFE TRANSPORTS (P) LTD., VEEKAY TOWER, T.A.B.ROAD, KOCHI-682 018 REPRESENTED BY ITS MANAGING DIRECTOR.** **BY ADV. SRI.A.V.XAVIER BY ADV. SRI.JOLLY JOHN** **THIS INSURANCE APPEAL HAVING BEEN FINALLY HEARD ON 27-11-2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** ## **SD** S.S. SATHEESACHANDRAN, J., --------------------------------------Ins. App.No.69 OF 2011 --------------------------------------Dated this the 27[th] day of November, 2013. ## JUDGMENT Appellant is the Employees State Insurance Corporation, and challenge is against the Order dated 24.03.2011 in M.P.No.206/2010 in I.C.No. 23/2005 by the Employees Insurance Court, Alappuzha (for short, 'E.I.Court'). 2. Short facts necessary for disposal of the appeal can be summed up thus: Respondent is a covered establishment, and corporation issued a demand notice towards the contribution allegedly defaulted by respondent. That demand gave rise to I.C.No. 23/2005 before E.I. Court at the instance of respondent, who disputed the amount claimed by corporation as excessive and unreasonable. E.I.Court entertained the challenge over the demand passing an order directing respondent to deposit Rs.50,000/-, a portion of the sum due towards contribution. That was duly complied by respondent depositing such sum. Proceedings in that case ended in favour of respondent with E.I. **2** _Ins.App. No.69/2011_ Court quashing the demand notice and remitting the matter for fresh consideration by corporation. In terms of the Order of remand, corporation reexamined the question involved over the amount of contribution due from respondent and, on such adjudication, respondent was found liable to pay the sum of Rs.39,729/-. That amount with the statutory interest liable to be paid thereof was assessed and a demand notice was issued to the respondent. Corporation then moved an application before the E.I. Court for adjusting the amount of Rs.50,000/-, deposited by respondent in I.C.No. 23/2005, in the sum due towards the defaulted contribution and interest. Getting notice on that petition respondent appeared and contended that it is liable to pay interest on the defaulted contribution only till the date of deposit of Rs.50,000/- made in I.C.No. 23/2005. Accepting the contention raised by respondent, E.I.Court has passed the Order impugned with the following directions. - “i. The respondent/employer shall pay interest on Rs.39,729/at the prescribed rates for the period from 21.10.2004 to 31.03.2005, the date of deposit of Rs.50,000/- with this Court. - ii. The amount of Rs.39,729/- will not carry any interest for **3** _Ins.App. No.69/2011_ the period subsequent to 31.03.2005. But whatever interest accrued for the above amount while is at the disposal of this Court shall be reimbursed to the petitioner Corporation. iii. Subject to the above conditions, the balance amount will go to the respondent/employer.” 3. I heard the counsel on both sides. 4. On the arguments presented and also having regard to the statutory provisions applicable, two questions emerge for consideration in the appeal. Firstly, whether E.I.Court in an application moved by corporation for release of deposit made by the employer in a previous proceeding, for its adjustment towards the contribution due from such employer, can go into and examine what is the interest to be paid on the defaulted contribution overlooking the statutory provisions under Section 39 of the E.S.I. Act and Rule 31 and 31A of the Regulation. Secondly, whether deposit made under order of court, either for entertaining a challenge against any order of an authority or for stay of implementation of the order challenged in the proceeding, would entitle the party who made such deposit to contend that it would absolve him from paying the interest due which is **4** _Ins.App. No.69/2011_ otherwise statutorily fixed and can be realised by the opposite party. Section 75 of Employees State Insurance Act deals with matters that can be decided by the E.I.Court. None of the matters covered by that Section was involved in the proceedings which commenced before the E.I.Court on the application moved by the corporation for release of the amount deposited before that court in a previous proceeding. It was not open then to the E.I. Court in an enquiry on such application to go into and examine whether the corporation could realise the sum under its revised demand notice with interest or not, especially where payment of interest on defaulted contribution is statutorily fixed. The only question that could be gone into is over the release of amount in deposit which was claimed to be adjusted towards the contribution due from the respondent. Statutory provisions under E.S.I. Act and Regulation referred to above clearly mandate that when there has been a default on the contribution, the corporation can realise it with interest as fixed. There can be no waiver of that interest has been made clear by the apex court in **Goetze India Ltd. v. Employees State Insurance** **5** _Ins.App. No.69/2011_ **Corporation [2008(8)SCC705].** A court deposit of Rs.50,000/made by the respondent for entertaining his challenge against the previous demand issued by the corporation was retained by the court can never be a ground enabling him to waive the interest due on the actual amount subsequently assessed towards the contribution due. Liability to discharge the amount due with interest on the defaulted contribution payable continued with him. On termination of the previous proceedings nothing prevented respondent from seeking withdrawal of the amount deposited for entertaining his appeal against the previous demand. When that be the case, challenges set forth to resist the application of corporation for release of the sum deposited by respondent could not have been entertained by the E.I. Court. Directions issued by E.I. Court how the interest on deposited sum of Rs.50,000/- made before that court should be made are patently unsustainable and it cannot issue such directions in a proceeding of this nature. Where the demand issued to respondent exceeded the amount in deposit, no further enquiry over release of that amount or for its adjustment to the **6** _Ins.App. No.69/2011_ ## contribution would arise for consideration. 5. Learned counsel for respondent relying on an unreported decision rendered by judgment dated 17.01.2012 in INAP No. 109/2011 **[The Deputy Director, ESI Corporation and another v. M/s. Ananth Oil Extractions (P) Ltd.]** urged that an order passed by E.I. Court on similar fact situation as involved in the present case, had been approved by this Court. That decision rendered by a division bench of this Court has to be followed in the present case as well, is the submission of counsel. Looking into the judgment of that unreported decision, I find challenge by the corporation against the Order of E.I. Court was turned down by this Court holding that no substantial question of law was involved in the appeal. In that appeal, no question was canvassed before this Court over competency of the E.I. Court to pass orders, how the interest has to be calculated with respect to the sum deposited. Decision rendered in the unreported judgment has not laid down any proposition of law to be followed. It was only a dismissal of an appeal against an Order of E.I. Court holding that no substantial law was involved. **7** _Ins.App. No.69/2011_ 6. Setting aside the order, E.I. Court is directed to consider the matter afresh and pass appropriate orders in accordance with law. Parties are directed to appear before the court below on 16.12.2013 and the E.I. Court is directed to dispose the application expeditiously, at any rate, within four months from the date of receipt of a copy of this judgment. Sd/- ## S.S. SATHEESACHANDRAN JUDGE sd // True Copy // P.A. to Judge