Important Point
The liability to pay interest under ESI Act and Regulations is statutory. There is no power of waiver and question of any compromise or settlement does not arise.

Judgment

Dr. Arijit Pasayat, J. —

1.Challenge in this appeal is to the Order passed by a Division Bench of the Punjab and Haryana High Court dismissing the writ petition filed by the appellant.

2.Controversy lies within a very narrow compass. Employees State Insurance Corporation (in short the ‘Corporation’), the respondent herein raised a demand for contribution under the Employees State Insurance Act, 1948 (in short the ‘Act’) on the component of efficiency bonus for the period January 1988 to September, 1989 by Order dated 23.7.1992. The demand was challenged before the ESI Court under Section 75 of the Act. Pending the proceedings before the ESI Court, Corporation by letter dated 1.3.1997 asked for production of record for the purpose of re-verification for the period from 1989 to 1991 and from 1992 to 1994 to determine the amount payable.

The respondent Corporation on re-verification determined the actual amount payable as follows :

(a)1/88 to 3/89 as Rs.2,26,454/-

(b)4/89 to 3/94 as Rs.5,28,071/-

________________

Total Rs.7,54,525/-

_______________

Appellant agreed to pay the contribution and paid the same in October/November, 1997. Appellant took the stand that there was a bonafide dispute about eligibility. Since eligibility to “efficiency bonus” under the scheme was subject to attendance of 50 days in a quarter is payable and paid quarterly. Appellant took the stand that it falls outside the definition of wages under Section 2(22) of the Act. Appellant took the plea that its stand was supported by a Judgment of this Court in Whirlpool of India Ltd. v. Employees’ State Insurance Corporation,1 [2000(3) SCC 185]. The ESI Court disposed of the matter on 6.1.1998 taking note of the stand of the appellant that it had deposited the definite amount after re-verification and the bank guarantee furnished by the appellant was released. On 11.1.2000 the Corporation wrote a letter to the appellant demanding payment of interest on the amount paid to the Corporation for the period from 1988 to 1994 as covered by Order dated 6.1.1998 and directed payment of interest amounting to Rs.4,61,825/-. The appellant questioned the demand before the High Court by filing a writ petition. The appellant’s stand was that a compromise had been arrived at as is apparent from the Order of the ESI Court to the effect that nothing was payable by the appellant. Corporation took the stand that the liability to pay interest was statutory and, therefore, there could not have any compromise. In any event the submission of the appellant that nothing further was payable as ESI contribution was noted and therefore, the bank guarantee was released. There was no question of any compromise to waive the interest which is not statutorily permissible. The High Court accepted the stand and dismissed the writ petition.

3.In support of the appeal learned counsel for the appellant submitted that there was an Order of stay and therefore the question of any interest does not arise. Further when the counsel for the Corporation himself stated that nothing further was payable, it clearly indicated that there was a statement on the compromise for waiver of interest. It was pointed out that with a view to buy peace the appellant had agreed to pay the amount though this case was clearly covered by Whirlpool’s case (supra).

4.Learned counsel for the respondent on the other hand submitted that there is no question of any compromise to waive interest because the same is statutorily payable. There cannot be any compromise without any authority when there is no provision for any compromise or statement. It is therefore stated that the High Court’s view is right.

5.In Order to appreciate rival submissions it would be necessary to take note of few provisions, Sections 39 and Regulations 31 and 31A reads as follows :

“Section 39- Contributions

xx xx xx

5(a)If any contribution payable under this Act is not paid by the principal employer on the da