No express limitation under Section 85-B ESI Act for damages on delayed contributions, but orders must be within reasonable five-year period per Act's scheme; fourteen-year delay held unreasonable, quashing order.

JUDGMENT :

JITENDRA JAIN, J.

1. On being disclosed about me being a service member of the respondent-gymkhana, both learned counsel stated that they do not have any objection to this Court hearing the present appeal.

2. Admit on following substantial question of law :-

“Whether, the Employees’ State Insurance Court (ESI Court) was justified in setting aside the order passed under Section 85-B of the Employees’ State Insurance Act, 1948 (ESI Act) on the ground that the same is passed beyond the time limit provided by proviso to explanation (b) to Section 77(1A)?

3. Since the issue revolves around a narrow compass, by consent of the parties, the appeal is heard finally at the admission stage.

Brief Facts:-

4. The respondent is a gymkhana incorporated and registered under the Companies Act with the object to promote, manage, assist in the promotion of all forms of athletic sports, pass time, recreation, etc.

Proceedings with respect to applicability of the ESI Act:-

5. There was some difference of opinion between the appellant- corporation and respondent-gymkhana as to whether the respondent-gymkhana was covered by the provisions of the ESI Act.

6. The respondent-gymkhana challenged the applicability of the ESI Act by filing an application to the ESI Court which was numbered as Application (ESI) No. 88 of 1983. The said application came to be dismissed on 29 May 1987. The appeal filed against the said order of the ESI Court before this Court by respondent-gymkhana was also dismissed for non-appearance on 12 April 1996 and there has been no application for restoration of the said appeal till today. Therefore by this dismissal, the respondent-gymkhana accepted applicability of the ESI Act.

7. On 15 March 1989, appellant-corporation demanded contribution of Rs.14.92 lakhs on adhoc basis by issuing Form C-18, being contribution for the period from 1972 to 1989. The respondent- gymkhana vide letter dated 30 August 2000, addressed to the appellant- corporation, without prejudice to its rights and contentions, paid amount of Rs.14.92 lakhs which was the demand made by the appellant-corporation on 15 March 1989. It was specifically mentioned in the said letter that this is without prejudice and with an understanding that no interest would be charged.

8. Admittedly thereafter, the appellant-corporation on 7 September 2000 paid the contribution and the matter stood at rest insofar as the contribution aspect is concerned.

Proceedings with respect to levy of interest:-

9. On 23 March 2011, appellant-corporation demanded interest of Rs.29.17 lakhs on above delayed contribution by issuing notice in Form C-18 for the period from 1972 to 1989. The said demand was challenged by the respondent-gymkhana by filing an application to the ESI Court which was numbered as Application (ESI) No.11 of 2011. The said application was rejected by the ESI Court on 20 August 2015. The respondent-gymkhana challenged the said rejection by filing an appeal before this Court being Appeal No.1149 of 2015 and this Court on 8 February 2022 dismissed the appeal filed by the respondent-gymkhana. The issue raised in this appeal was only qua the rate of interest for the delayed payment of contribution.

Proceedings with respect to imposition of impugned damages/penalty:-