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Andhra Pradesh High Court
Judges : ALLADI KUPPUSWAMI, K.JAYACHANDRA REDDY
Employees State Insurance Corporation, Hyderabad - Appellant
Versus
Sundaram Motors, Secunderabad - Respondent
C.M. As 653/77 etc.
Decided On : 11-24-78
Advocates Appeared :
.
Held: Section 85-B cannot be assailed on the ground of excessive delegation of the powers to recover damages or that it is repugnant to article 14 of the Constitution. There are sufficient safeguards against arbitrary and capricious exercise of the power to levy damages.
The main object of Section 85 B is to see that the employer pays the contribution amount in time. If the employer does not pay the contribution amount in time it will lead to serious hardship to the employees who have to receive various benefits from out of the insurance fund. When the Act provides that the amount should be paid within a particular period and it is not so paid, immediately there is a failure to pay the amount. The expression failure occurring both in Section 85A and 85B has to be construed as failure without reasonable cause . Hence, before a penalty is imposed under Section 85-A or damages recovered under Section 85-B it must be shown that the failure was without any justifiable cause. Therefore, there is no injustice caused to the employees if the expression failure in Section 85-B is also construed as including delay in payment as long as it is also noted that the failure must be a failure without reasonable or justifiable cause.
Under Regulation 29, the payment is made only when the stamps are affixed to the contribution cards payment must be said to have been made only when the stamps are affixed and cancelled. Failure to pay enabling the corporation to levy damages should be failure without reasonable or justifiable cause.
The rigid formula fixing the rates on the basis of a prescribed table cannot be applied and the authorities have to apply their mind and come to a conclusion as the quantum of damages in each case. The expression damages cannot be read as penalty in section 85-B.
C. M. As. Allowed.
( 1 ) THESE appeals are preferred by the Employees State Insurance corporation (referred to hereinafter as the Corporation) against the orders of the Employees Insurance Court at Hyderabad allowing the application filed by the respondent in each of these appeals for a declaration that the order passed by the Regional Director of the Corporation levying damages under Sec. 85-B of the Employees State Insurance Act (referred to herein as the Act) for delayed payment of the amount of contributions by the employee. Though the respondents in these appeals are different, as a common quest ion arises for consideration, they have been heard together and disposed of by this common judgment.
( 2 ) IN order to appreciate the contentions raised in these appeals it is sufficient to set out the facts in one of them, namely. C. M. A. 653/77.
( 3 ) THE respondent herein is covered under the provisions of the employees State Insurance Act, 1948. Under the said Act the principal employer has to pay in respect of every employee both the Employer s contribution and the employees contribution. These contributions are to be paid at the rales specified in the first Schedule. One week is the unit in respect o which all contributions shall be payable and the contributions payable it respect of each week shall ordinarily fall due on the last day of the Week under the Regulations framed in pursuance of Sec. 43 of the Act, the employer has to pay the contribution within 21 days, after the termination of the contribution period in respect of every employee, the contribution perioi being defined in Sec. 2 (5) of the Act as a period being not less then 25 but not exceeding 27 consecutive weeks or six consecutive months as may be specified in the Regulation. Regulation 4 specifies the contribution period under regulation 31 (c) the employer is obliged to pay contribution within certain specified periods and regulation 29 lays down that every contribulion shall be paid by affixing contribution stamps on the contribution card of the employees which is issued in respect of an insured person for the purpose of affixing contribution stamps. Regulation 25 prescribes the time limti within which the contribution cards should bs sent to the appropriate office of the Corporation. Under Sec. 85-B of the Act, which came into force on 1-9-1975, it is provided that where an employer fails to pay the amount due in respect of any contribution, the Corporation may recover from him such damages not exceeding the amount of arrears as it may think fit to impose provided that before recovering the said damages the employer shall be given a reasonable opportunity of being heard. Under Sec. 18 of the Act H is provided that a Standing Committee shall administer the affairs of the Corporation and may exercise any of the powers and perform any of the functions of the Corporation subject to the general superintendence and control of the corporation. In exercise of this power the Standing Committee passed a resolution on 20. ^12-1975 to the effect that the Director General or any other officer authorised by him may levy and recover damages according to a table provided for levying damages in a sliding scale, the rates varying with refernee to the number of defaults and the period of default.
( 4 ) THE Regional Director issued a notice to the respondent herein stating that they had failed to pay the contributions as they committed default in making payment of the contributions within the stipulated time as provided under the Regulations as per the details furnished in the enclosed statement. The enclosed statement contained a list of the contribution periods, date of the submission of the contribution cards the due date of submission and the extent of delay in submitting the cards. The damages were worked out according to the per centage of amount of contribution as prescribed in the table, which as has already been noted, depends upon the number of times the de
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