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2018 Supreme(Mad) 3788
IN THE HIGH COURT OF JUDICATURE AT MADRAS
S. RAMATHILAGAM, J.
Regional Director Employees State Insurance Corporation - Appellant
Versus
Pullicar Mills Ltd - Respondent
Civil Miscellaneous Appeal No. 3081, 3088 of 2011
Decided on : 20-09-2018
Advocate Appeared:
G. Bharadwaj, Adv.
The liability to pay interest on belated payment is statutory, and there is no power of waiver of interest.
Headnote:
Interest - Employees State Insurance - ESI Act - Section 39(5) - Summary: The court discussed the legality of the recovery notice and attachment orders issued by the ESI Corporation, and the entitlement of the petitioner to permanent injunction. The court found that the ESI Court had jurisdiction to declare the orders as null and void, and granted the relief of declaration and permanent injunction to the petitioner. The key legal provisions discussed were Section 39(5) of the ESI Act, which mandates the payment of interest on delayed contributions, and the interpretation of the statutory obligation to pay interest. The court's decision was influenced by the Supreme Court's ruling that liability to pay interest is statutory and there is no power of waiver of interest.
Fact of the Case:
The case involved appeals against the order passed in ESIOP.Nos.1 and 2 of 2008, concerning the legality of recovery notices and attachment orders issued by the ESI Corporation.
Finding of the Court:
The court found that the ESI Court had jurisdiction to declare the orders as null and void, and granted the relief of declaration and permanent injunction to the petitioner.
Issues: The issues included the legality of the recovery and attachment orders, entitlement to permanent injunction, and the reliefs sought by the petitioner.
Ratio Decidendi: The court held that the liability to pay interest on belated payment is statutory, and there is no power of waiver of interest. The court's decision was influenced by the Supreme Court's ruling that payment of interest on delayed contributions is mandatory.
Final Decision: The appeals were allowed, and no costs were imposed.
S. RAMATHILAGAM, J.
1. These Civil Miscellaneous Appeals have been preferred against the common order passed in ESIOP.Nos.1 and 2 of 2008 on the file of Principal District Judge, Namakkal (Employees State Insurance Court constituted under ESI Act) dated 10.2.2010.
2. C.M.A.No.3081 of 2011 arises out of the order made in ESIOP.No.1 of 2008 declaring that the order dated 17.8.1999 and 11.11.1999 passed in TNR/INS-IV/51-5689-II and Recovery notice in TN-RECY-ESI/CPI-51 5689-II dated 3.4.2000 are illegal, thereby restraining the respondent/ESI from recovering Rs. 4,16,329/- as interest and interest thereon as per orders dated 17.8.99, 11.11.99 in Ref.No/TNR/INS VI/51-5689-11 as per and attachment notice in TN/RECY/ESI, CPI/51-5689-II dated 3.4.2000.
3. C.M.A.No.3088 of 2011 arises out of the order made in ESIOP No.2 of 2008 declaring the prohibitory order passed in Form CPD in TN/RECY/ESI-FF-3/51-5689-II dated 8.12.2003 as illegal and order passed in Form CP3 in proceedings No.IN/RECY/ESI-CP - 3/51-11 attaching the Indian Bank Account of the petitioner.
4. In the above said two ESIOPs. 1/2008 and 2 of 2008, the petitioner in both the ESIOPs are same and the respondent/ESIC herein has filed ESI OP.No.1 of 2008 praying to (i) declare that the order dated 17.8.99 and 11.11.99 passed in TNR/INS-IV / 51-5689-11 and recovery notice in TN-RECY-ESI CPI-51-5689-IIDT.3-4-2000 illegal, arbitrary and unenforceable in law; (ii) to grant permanent stay, restraining the respondent in any way recovering Rs. 4,16,329/- as interest and interest thereon, as per orders dated 17.8.99. 11.11.99 in ref.no.TNR/INS VI/51-5689-II as per and attachment notice in TN/RECY/ESI, CPI/51-5689-11 dated 3.4.2000.
5. Esi.Op.No.2 of 2008 is filed praying to (i) declare the prohibitory order passed in form CP3 in TN/RECY/ESI-CP-3/51-5689-11 dated 8.12.2003 as illegal, arbitrary and unenforceable in law (ii) to grant permanent stay of the prohibitory order passed in form CP3 in proceedings no.TN/RECY/ESI-CP-3/51-5689-11, attaching the Indian Bank Account of the petitioner and restraining the respondent from attaching the Indian Bank A/c of the petitioner pending disposal of the case.
6. The brief facts of the petitions are that the respondent Mill is covered under the Employees State Insurance Act and the code number allotted is TM/INS/VI-51/5689-II and all the Employees are covered under the Act and the mills having a spindle of 27,811 workable spindles have been running with an utilisation which has shown steady decline of out put. The daily engagement of labour in the Mills have been 830 workers. During the year 1987 to 1988, the Mills were under closure for a period of 11 months due to financial problems.
7. Consequent to general recession in the textile industry, as a whole, in the year 1991-92, the mill has incurred huge loss. This mill is having higher efficiency in the lower counts, because of the conditions of machinery, which have never been improved and the ring frames and back process machinery have always been deficient and the mill was continuously incurring huge loss which resulted in under utilisation of the installed capacity of the Mills. Hence ESI dues of the petitioner could not be paid in time. The respondent Mill has given a detailed letter to the ESI Corporation explaining its difficulties and based on that, the ESI Corporation was pleased to sanction payment of contribution in insalments vide letter dated 23.9.1996 and arrears were allowed to be paid in instalments.
8. A revolving bank guarantee was also furnished to the appellant/ESIC as per existing requirements on 23.11.1997 by the Indian Bank and the Mill has been declared as a sick industry in case No.57/94, of the Board for Industrial Finance and Reconstruction, Delhi.
9. While so, on 10.08.1989, a notice was also issued by the appellant/ESIC claiming damages at the rate of 25% for the delayed payment of contributions at Rs. 7,09,960/- and subsequently, the respondent Mill has not claimed a
