Sahni Silk Mills Private LTD. vs Employees State Insurance Corporation

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1994 Supreme(SC) 635

SUPREME COURT OF INDIA
(BEFORE KULDIP SINGH, P.B. SAWANT AND N.P. SINGH, JJ.)
SAHNI SILK MILLS (P) LTD. AND ANOTHER
Versus
EMPLOYEES STATE INSURANCE CORPORATION
Civil Appeal Nos. 2971-2974 of 1989{From the Judgment and Order dated 21-3-1983, 9-3-1983 and 23-10-1984 of the Punjab and Haryana High Court in F.A.C. Nos. 581, 548 and 525 of 1982 and L.P.A. No. 675 of 1984} with C.A. Nos. 1689-1706 of 1982, SLP (C) Nos. 1200, 3019, 1584 of 1990, 15165 of 1991, 4505-07, 5026-31, 12843-52 of 1983, C.A. Nos. 1708-21 of 1982, decided on July 14, 1994
Advocates appeared
A.P. Bhandari and S.C. Patel, Advocates, for the Appellants in C.A. Nos. 2971-74.
V.C. Mahajan, Senior Advocate (Ms Anil Katiyar and A.K. Srivastava, Advocates, with him) for the Appellants in C.A. Nos. 1689-1706 of 1982.
V.J. Francis and V. Subramaniam, Advocates, for the Petitioner in SLP Nos. 1200, 3019, 1584 of 1990 and 15165 of 1991.
C.V.S. Rao, Advocate, for the Petitioners in SLP Nos. 4505-07, 5026-31 and 12843-52 of 1983 and C.A. Nos. 1708-21 of 1982 in Petitioner/Appellant.
M.L. Verma, Senior Advocate (V.J. Francis and V. Subramaniam, Advocates, with him) for the Respondent in C.A. Nos. 2971-74 of 1989.
K.R. Nagaraja, Advocate, for the Respondent in C.A. No. 1692 of 1982, S. Balakrishnan and M.K.D. Namboodri, Advocates, for the Respondent in SLP No. 3019 of 1990.
A.T.M. Sampath, Advocate, for the Respondent in SLP No. 15165 of 1991.

Advocates:
A.K.SRIVASTAVA, A.P.BHANDARI, A.T.M.SAMPATH, ANIL KATIYAR, C.V.SUBBA RAO, K.R.NAGARAJA, M.K.D.NAMBUDIRY, M.L.Verma, S.BALAKRISHNAN, S.C.PATEL, V.C.MAHAJAN, V.J.Francis, V.SUBRAHMANYAM

Headnote:
Employees State Insurance Act, 1948 - Sections 85-B and 75 - Bombay Provincial Municipal Corporation Act - Sections 481(1)(a), 3 and 4 - Impose damages - Payment of the contribution - Power to recover damages - Recover the damages - Regional Directors of the Employees State Insurance Corporation issued notices under Section 85-B of Employees State Insurance Act, 1948 to appellants between years stating that they proposed to impose damages against appellants because had been delay on part of the appellants in making payment of the contribution, in accordance with provisions of said Act - Different amounts were mentioned in said notices which were to be imposed, as damages against different appellants - Appellants in pursuance to notices aforesaid submitted their explanations – Held, a Ppeals and special leave petitions have been filed on behalf of the Employees State Insurance Corporation for setting aside judgments of the different High Courts holding that in exercise of power Section 94-A of the Act - Corporation could not have delegated its power under Section 85-B(1) by aforesaid Director General of the Corporation empowering him to authorise any other officer - Special leave petitions are dismissed

Judgement Key Points

Certainly. Based on the provided legal document, here are the key points:

The case involves the Employees State Insurance Corporation and the issue of delegation of powers under the Employees State Insurance Act, 1948 (!) (!) .
The core legal question pertains to whether the Corporation could validly delegate its authority under Section 85-B(1) of the Act to recover damages to officers subordinate to the Corporation, specifically whether this delegation was within the statutory framework (!) (!) .
The Court examined the scope of Section 94-A of the Act, which permits delegation of powers, and analyzed whether the delegation included sub-delegation to officers further down the hierarchy (!) (!) .
The resolution of the Corporation, which delegated its powers under Section 85-B(1) to the Director General and authorized him to further delegate to other officers, was scrutinized for compliance with statutory provisions (!) (!) .
The Court held that the delegation of powers must be exercised by the authority to whom they are conferred and cannot be sub-delegated unless explicitly permitted by the statute or necessary implication (!) (!) .
It was determined that the resolution allowing the Director General to delegate his powers to other officers was invalid because the statutory provisions did not expressly or impliedly authorize such sub-delegation (!) (!) .
As a consequence, orders passed by Regional Directors based on the invalid delegation were also invalid, although actions taken during the period when the delegation was valid were upheld to maintain legal stability (!) (!) .
The Court emphasized that the exercise of quasi-judicial powers, such as recovering damages, must be carried out by authorized officials personally and not through unauthorized sub-delegation (!) (!) .
Ultimately, the Court dismissed the appeals and special leave petitions filed by the Employees State Insurance Corporation, affirming that the delegation of powers as attempted was not legally permissible under the statutory framework (!) (!) .

Please let me know if you need further analysis or specific legal interpretations.

Judgment

N.P. SINGH, J.-

C.A. Nos. 2971-2974 of 1989

The Regional Directors of the Employees State Insurance Corporation (hereinafter referred to as the Corporation) issued notices under Section 85-B of the Employees State Insurance Act, 1948 (hereinafter referred to as the Act) to the appellants between the years 1979 to 1981, stating that they proposed to impose damages against the appellants because there had been delay on the part of the appellants in making payment of the contribution, in accordance with the provisions of the said Act. Different amounts were mentioned in the said notices which were to be imposed, as damages against the different appellants. The appellants in pursuance to the notices aforesaid submitted their explanations indicating the reasons and circumstances, because of which the delay had occurred. The Regional Directors passed orders on different dates against the different appellants imposing damages, for the period in question. Being aggrieved by those orders the appellants filed petitions under Section 75 of the Act before the Employees Insurance Court. The Employees Insurance Court dismissed the petitions. Thereafter appeals were filed under Section 82 of the Act before the High Court which were dismissed in limine.

2. Before this Court, the validity of the impugned orders has been questioned on the ground that the power under Section 85-B could not have been exercised by the Regional Directors of the Corporation; it could have been exercised either by the Corporation or by the Director General of the said Corporation.

3. Section 3 of the Act provides for the establishment of the Employees State Insurance Corporation and Section 4 provides for constitution of Standing Committee for the Corporation. Section 85-B vests power in the Corporation to recover from the employer such damages as it may think fit, whenever an employer fails to pay the amount due in respect of any contribution or any other amount payable under the said Act. Section 85-B on the relevant date was as follows:

"85-B. 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 such damages not exceeding the amount of arrears as it may think fit to impose:

Provided that before recovering such damages, the employer shall be given a reasonable opportunity of being heard.

(2) Any damages recoverable under sub-section (1) may be recovered as an arrear of land revenue."

In view of Section 94-A the Corporation may delegate any of its powers to any officer or authority subordinate to the Corporation.

"94-A. Delegation of powers.- The Corporation, and subject to any regulations made by the Corporation in this behalf, the Standing Committee may direct that all or any of the powers and functions which may be exercised or performed by the Corporation or the Standing Committee, as the case may be, may, in relation to such matters and subject to such conditions, if any, as may be specified, be also exercisable by any officer or authority subordinate to the Corporation."

4. In the present case, the power of the Corporation to recover the damages under Section 85-B has not been questioned. The controversy is as to whether this power could have been delegated under Section 94-A aforesaid to the Regional Directors. It may be mentioned that in exercise of the power under Section 94-A the Corporation delegated its power to impose and recover damages from the employers by a resolution dated 28-2-1976.

"Resolved that for purposes of levy of damages under Section 85-B(1) of the Employees State Insurance Act, 1948, as amended up-to-date, the Director General or any other officer authorised by him may levy and recover damages from the employer/s not exceeding the rates as per Table annexed."

(emphasis supplied)

It was pointed out that when Section 94-A provides that the Corporation may direct that all or any of the powers and functi

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1994 Supreme(SC) 635

Cases Referred (3)