The main legal point established in the judgment is that the levy of interest under Section 39(5)(a) of the ESI Act is mandatory, and the liability to pay the interest is a statutory liability, not subject to waiver or reduction by the Court or the Authority.

ORDER

1. Though served, nobody has entered appearance on behalf of the respondent.

2. Leave granted.

3. We have heard Shri Santosh Krishnan, learned counsel appearing on behalf of the appellants at length.

4. Feeling aggrieved and dissatisfied with the impugned judgment and order dated 03-02-2022 passed by the High Court of Gujarat at Ahmedabad in R/First Appeal No.297/2022, by which the High Court has dismissed the said appeal preferred by the appellant(s) herein and has not interfered with the order passed by the Employees State Insurance (ESI) Court restricting the levy of interest leviable under Section 39(5)(a) of the Employees State Insurance Act, 1948 (For short the 'the ESI Act') for two years only, the Employees State Insurance Corporation and another have preferred the present appeal.

5. The facts leading to the present appeal in nut-shell are as under -

6. That the Authority sent Demand Notice to the respondent demanding the amount of Rs.17,295/- for the period from April 1988 to April, 1990, and amount of Rs.4,195/- for the period from April, 1990 to September, 1990. Being aggrieved and dissatisfied with the said demand, the respondent filed ESI Application No.53 of 1991 before the ESI Court. The ESI Court rejected the said application by order dated 17.01.2012 and it was decided that the ESI Act has been applicable to the respondent organisation w.e.f. 01.04.1988.

7. The Authority under the ESI Act passed an order on 01.04.1988 covering the respondent under the provisions of the ESI Act from 01.04.1988. The respondent was allotted the ESI Code also. The order passed by the Authority under the ESI Act covering the respondent under the provisions of ESI Act w.e.f 01.04.1988 was challenged by the respondent.

8. That, thereafter, the respondent started paying ESI contribution w.e.f. 01.04.1988. However, as there was delay in making the payment of ESI contribution, the Authority issued notices and raised the demand of Rs.10,486/- for the period between 01.04.1988 to March, 1990 and interest thereon @12% (interest component of Rs.6,333/-). The said demand was in exercise of powers under Section 39(5)(a) of the ESI Act. The demand of interest leviable under Section 39(5)(a) of the ESI Act was again challenged by the respondent before the ESI Court by way of ESI Application No.9/2012. Relying upon the decision of this Court in Employees State Insurance Corporation Vs. HMT Ltd. and another (2008) 3 SCC 35, the ESI Court partly allowed the said application and restricted the amount of interest to two years only.

9. The order passed by the ESI Court was the subject matter before the High Court. The High Court by the impugned judgment and order has dismissed the appeal by observing that no substantial question of law arises. The impugned judgment and order passed by the High Court is the subject matter of present appeal.

10. Learned counsel appearing on behalf of the appellants has vehemently submitted that both, the ESI Court as well as the High Court have not properly appreciated that the levy of interest under Section 39(5) (a) of the ESI Act is mandatory and neither the Court nor the Authority have any jurisdiction and/or authority to waive the interest.

11. It is further submitted that as such the conclusion and the findings arrived at by the ESI Court, confirmed by the High Court that the interest can be leviable for two years only is not supported by any statutory provision. It is further submitted by learned counsel appearing on behalf of the appellants that the decision of this Court in the case of Employees State Insurance Corporation Vs. HMT Ltd. and another (supra) shall not be applicable at all as in the said case, this Court was considering Section 85-B and not interest leviable under Section 39(5)(a) of the ESI Act.

12. It is submitted that the language used in both the Sections is different. It is submitted that in Section 39(5)(a) of the ESI Act, the word used is 'Shall', however, in Section 85(B) which is related to the