Damages under the E.S.I. Act are discretionary, not mandatory, and must consider genuine hardships, reaffirming that penalties should not automatically apply.

JUDGMENT :

S.K. MISHRA, J.

This Writ Petition has been preferred by the Petitioner to quash order dated 20.12.2021 (Annexure 12) vide which the Deputy Director, E.S.I. Corporation, Bhubaneswar (Opposite Party No.4) rejected the prayer of the Petitioner to waive the damages imposed on it for delayed payment of E.S.I. Contribution. Also a prayer has been made to direct the Opposite Parties to provide effective medical facilities to the employees of the Petitioner’s Establishment in nearby areas of Gumadera, for which they are contributing under the Employees’ State Insurance Act 1948, shortly, “the E.S.I Act”.

2. The factual backdrop of the case is that the Petitioner is the Proprietor of M/s Ajay Construction, situated At- Gumadera, Po/Ps – Belpahar in the District of Jharsuguda. The E.S.I Act has been duly enforced in various districts across Odisha, including Jharsuguda District, vide Gazette Notification dated 30.05.2016. The Petitioner registered his Establishment under the E.S.I. Act in March, 2017. However, due to non-availability of any medical facilities in the nearby areas, the Petitioner couldn’t deduct employees’ contributions due to resistance of the workers. Accordingly, he made a representation on 18.10.2018 requesting the Opposite Party No.2 to provide medical infrastructure in or around Belpahar, so that contributions could be regularised.

2.1. In response to such communication, the Opposite Party No.2 issued a letter on 30.11.2018, stating therein that the E.S.I Act had come into force in the Belpahar area w.e.f 01.06.2016 and steps were being taken to extend the benefits in the newly implemented areas. However, the reply remained silent on the grievance regarding absence of medical facilities in the nearby areas, and no effective action was taken in the said regard.

2.2. The Petitioner then responded on 28.01.2019, reiterating that the nearest medical facility provided by the Corporation is around 22 KMs away, making it infeasible for the workers to access the medical facilities. Despite such difficulty, the Petitioner voluntarily began contributing under the E.S.I Act from December, 2018. A request was made vide the said communication to the authorities not to take any penal action for the previous non-contributed period from March, 2017 to November, 2018, citing the reason of employees’ protest and practical difficulties.

2.3. The Petitioner, on multiple occasions, requested the Opposite Parties-E.S.I.C. to ensure the availability of medical facilities for the employees of his Establishment in nearby area, considering the fact that regular contributions are being made under the E.S.I Scheme. However, despite such contributions, no E.S.I Hospital, Dispensary or empanelled private medical facilities were made available to its employees, thereby depriving them from the statutory benefits. Subsequently, on 01.09.2021, the Opposite Party – E.S.I.C issued a demand notice requiring payment of Rs.4,55,844/- towards employer and employees’ contributions for the period from March, 2017 to January, 2020, citing provisions under Sections 39 & 40 of the ESI Act, 1948, r/w Regulations 29,31 & 33 of the ESI (General) Regulations, 1950, shortly, the Regulation, 1950. In compliance with the above letter, the Petitioner deposited the full amount of Rs. 4,55,844/- under protest on 20.09.2021. However, the Opposite Party No.2, through letter dated 19.10.2021, demanded payment of interest towards delayed payment of contribution of Rs.1,86,279/- U/s 39(5) of the E.S.I Act, r/w Regulatio