Validity of assessment made without following specified principles.

M/s. Madras Hotel Ashoka (P) Limited, Pantheon Road, Egmore, is the appellant herein. The Employees State Insurance Scheme was extended to hotels in Madras City from January 15, 1977 as per G.O. Ms. No. 287, dated July 3, 1976. There are about 156 workmen in the appellant hotel. On February 14, 1979 Inspector of the E.S.I. Corporation inspected the Hotel and submitted his report for the period from January, 1977 to January, 1978. Pursuant to the same Ex. P-2 communication dated September 25, 1978 was sent by the Regional Office of E.S.I. Corporation to the appellant pointing out that there has been a delay of 76 days and 93 days in submission of contribution cards for the contribution period ending on 7/77 and 9/77 respectively. The appellant has also been requested to pay interest of Rs. 147.60 towards late submission of contribution cards as laid down under Regulation 31-A of E.S.I. (General) Regulations, 1950 at the rate of 6% per annum for each day of default or delay in payment of contributions. The communication has also pointed out some other omissions on the part of the appellant. On October 14, 1978 the appellant sent Ext. P. 3 letter to the Corporation stating that the E.S.I. Scheme has been newly introduced in their Hotel. Before starting this scheme, their Office Assistant and Accountant went to the Mount Road Office of the Corporation and took. necessary instructions in this regard. In addition to E.S.I. Scheme, they are implementing schemes like Employees Provident Fund, Family Pension Scheme, Employees Deposit-linked Insurance Scheme, Salary Savings Life Insurance Scheme and Staff Welfare Fund (Govt.) for the benefit of their workers. There has been some delay in sending the contribution cards. This was mainly due to the fact that while in other schemes they simply remitted into the State Bank of India, the contributions of the Management and the employees in E.S.I. Scheme, they had to purchase 3, 000 stamps and affix the same in the cards every week. On many occasions the State Bank had no stock of stamps of their requirement. The appellant, however, assured the E.S.I. Corporation that they would send the contribution cards in time in future. They have also required that instead of proposing to take penal action even from the beginning stage, the Corporation could apprise them of what they should do and cooperate with the Hotel in fully and more thoroughly implementing the scheme for the benefit of their workers.

2. On March 5, 1979 the Insurance Inspector made the second inspection. It does not appear that any communication was sent by the Corporation to the appellant till July 14, 1982. Ex. P-7 is the letter addressed to the appellant by the Corporation on July 14, 1982 regarding this inspection. This letter reads that as per Regulation 26 of E.S.I. (General) Regulations, 1950 cards are required to be submitted to Regional Office within 42 days of the expiry of the relevant contribution period. The appellant has been requested in this communication to submit the contribution cards in time. The communication further recites that he has submitted the contribution cards after the due date for the contribution periods ending on 5/77, 7/77, 9/77, 11/77, 1/78, 3/78, 5/78 and 7/78. Therefore, interest at 6% per annum becomes due as per Regulation 31-A of E.S.I. (General) Regulations, 1950 for which separate communication will follow. He is also liable to pay damage for the above delay for which he will receive a communication separately.

3. The third inspection took place on February 29, 1980. Ex. P-4 is the letter addressed to the appellant by the E.S.I. Corporation on January 8, 1981 in this connection. Significantly enough there is no reference to the defects noticed during the inspection on March 5, 1979. This communication only mentions that the old dues communicated by their office letter of even number dated September 25, 1978 has not been made. Failure to pay the said amount will lead to penal ac