The main legal point established in the judgment is the discretionary nature of imposing damages under Regulation 31C and the mandatory nature of interest payment under Section 39(5)(a).

JUDGMENT :

NIKHIL S. KARIEL, J.

1. Heard learned Advocate Mr. Krutarth K. Pandya on behalf of the appellants and learned Advocate Mr. Pankaj R. Desai on behalf of the respondents-employers in both the appeals.

2. ADMIT. Learned Advocate Mr. Desai waives service of notice of admission on behalf of the respondents.

3. With consent of learned Advocates for the parties, the present first appeals are taken up for final disposal.

4. The First Appeal No. 4982 of 2022 calls into question judgment and order dated 19.08.2019 passed by the learned Employees' State Insurance Court, Rajkot in ESI Application No. 15 of 2008, and whereas the First Appeal No. 296 of 2023 calls into question judgment and order dated 19.08.2019 passed by the learned Employees' State Insurance Court, Rajkot in ESI Application No. 02 of 2009.

5. Since the facts as well as the issues raised in both the appeals are identical, both the appeals are being taken up for final disposal together.

6. Learned Advocate Mr. Krutarth K. Pandya on behalf of the appellant-Corporation would submit that the impugned decisions passed in both the ESI Applications referred to hereinabove suffer from two major infirmities inasmuch as learned Advocate would submit that the learned ESI Court has set aside the Notices issued under Section 85-B of the Employees' State Insurance Act, 1948 (For short the “ESI Act”) imposing damages of Rs. 91,244/- and damages of Rs. 1,00,578/- respectively upon the respondents-Employers and whereas the learned ESI Court has also restricted the interest for a period of two years. Learned Advocate Mr. Pandya would submit that on both the counts, the learned ESI Court has committed grave error.

6.1 It is submitted by learned Advocate Mr. Pandya that as far as the aspect of damages is concerned, the appellant-Corporation can recover damages from the employer who fails to pay contribution within specified period as stated under Regulation 31 of the Employees' State Insurance (General) Regulations, 1950 (For short “the Regulations”) i.e. before 21st day of the calender month, more particularly as per the power granted under the Regulation 31C of the Regulations. Learned Advocate would submit that the respondents-employers were liable to pay contribution in respect of the employees within 21 days of the last day of the wages i.e. starting from April, 1997 and whereas the employers i.e. the respondents herein have made actual payment in the month of April, 2004. Learned Advocate would submit that as per the Table at Regulation 31C of the Regulations, the Corporation is entitled to impose damages at the rate of 25% for delay of six months and above. Learned Advocate would submit that the appellants having gone as per the statutory prescription, no fault could have been found with the appellant-Corporation.

6.2 Insofar as the aspect of interest is concerned, learned Advocate Mr. Pandya would submit that the issue is no more res integra inasmuch as according to learned Advocate, the Hon'ble Apex Court in a recent decision in case of Regional Director/Recovery Officer and Another vs. Nitinbhai Vallabhai Panchasara, vide order dated 17.11.2022 in Special Leave to Appeal (C) No. 16380 of 2022, has inter alia decided the said aspect. Learned Advocate would submit that as per the said decision the Hon'ble Apex Court has interfered with a decision of the ESI Court, whereby the ESI Court had reduced the period of interest for two years only and whereas learned Advocate would submit that in the instant cases also the learned ESI Court has reduced the interest for a period of two years and the same would stand covered by the decision of the Hon'ble Apex Court. Making such submissions, learned Advocate Mr. Pandya would request this Court to set aside the impugned decisions and to direct payment of damages as well as the interest from the date the same had accrued.

7. These appeals are vehemently contested by learned Advocate Mr. Pankaj R. Desai on behalf of the respondents-employers. At