The main legal point established in the judgment is that a subsequent transferee may not be liable for belated payment of contribution under the ESI Act if there is no mens rea on their part, and the authority has the power to waive damages.

JUDGMENT :

Prayer: Memorandum of Grounds of Civil Miscellaneous Appeal filed under Section 82(2) of the Employees State Insurance Act, 1948, against the order dated 14.09.2015 passed in E.I.O.P.No.12 of 2004 by the Employees Insurance Court (Principal Labour Court), Chennai.

1. The Employees State Insurance Corporation represented by its Regional Director, Chennai has brought this civil miscellaneous appeal against the order dated 14.09.2015 passed by the Employees Insurance Court (Principal Labour Court), Chennai in E.I.O.P.No.12 of 2004.

2. When the appeal was taken up for admission, Mr.S.Ravindran, learned Senior Counsel taking notice on behalf of the respondent, urging this Court to dismiss the appeal on the ground that the appellant has not raised any substantial question of law as mandated under Section 82 of the ESI Act, further pleaded that Section 82 makes it mandatory that no appeal shall lie against the order of the ESI Court, unless it involves a substantial question of law. Hence, this Court cannot proceed with the matter.

3. The substantial questions of law raised by the appellant in this appeal, read thus:

“(a) Whether the ESI Court is correct in setting aside the order dated 23.07.2003 by holding that the respondent had not acted in mala fide manner or with bad intention to pay damages for the belated payment of contribution when the respondent is jointly and severally liable to pay the same with the transferor of the establishment as per Section 93-A of the Act?

(b) Whether the respondent is not liable to pay the damages as contemplated under Regulation 31-C of the ESI (General) Regulations, 1950?” However, after hearing the parties, this Court framed the following substantial questions of law:

“(a) Whether the authority under ESI Act while passing order under Section 85-B dealing with levy of damages has got any power or jurisdiction to consider as to whether the non-compliance of any of the statutory provisions including the non-payment of the contribution by the Management is a civil liability or a quasi criminal liability or a criminal liability?

(b) Whether the transferee of a Management Company under Section 93-A of the Employees State Insurance Act, has got any locus standi to question and avoid the liability to pay penalty by way of damages by raising a plea of mens rea on the part of the management, prior to the date of transfer in his favour?

(c) When there was no explanation for the delay offered in making the contribution under the Employees State Insurance Act, whether the authorities passing an order of penalty under Section 85-B of the Employees State Insurance Act is bound to consider the question of mens rea, even without any explanation offered for any such delay?

(d) Whether the authority passing an order under Section 85-B of the Employees State Insurance Act, levying penalty by way of damages has got any discretionary power to reduce the percentage of penalty, below the percentage as fixed under Regulation 31-C of the Employees State Insurance (General) Regulations, 1950?

(e) When there is no power vested with the authority while passing an order under Section 85-B of the Employees State Insurance Act, to grant any remission, other than the proviso made thereto, whether the authority could be legally directed to do an act of consideration of reducing the percentage?”

3. Mr. S. Subbiah, learned Senior Counsel appearing for the appellant-ESI Corporation pleaded that the respondent took charge of the present establishment from the previous owner one Mrs. Nirmal Mirza, operated under the name M/s Wooltop Weavers, from 19.7.2000 and renamed it as M/s Wooltop Designs Private Limited. Since there were arrears of contribution of Rs.1,76,286/- for the period from January, 1997 to September, 1998, the said arrears were demanded from both the transferor and the respondent transferee, for the simple reason that both are jointly and severally liable to pay the said amount, as per Section 93-A of the Employees Stat