CAV JUDGMENT

This miscellaneous first appeal is filed challenging the order dated 16.05.2017 passed in ESI Appl. No.2/2015 by the Employees’ State Insurance Court, Mysuru (herein after referred as ‘ESI Court’).

2. Heard the learned counsel appearing for the appellant. The respondent is served and unrepresented.

3. The factual matrix of the case of the appellant that the respondent has not paid the ESI contribution from May 2013 to August 2013 and hence, an action is invoked warranting levying the statutory damages. The delay varied from 181 days to 249 days in making the payment of monthly contribution. Hence, notice was issued with a show cause notice proposing to determine a damage amount of Rs.1,99,452/- invoking Section

85B of ESI Act read with Regulation 31-C. The said order was challenged before the ESI Court but ESI Court allowed in part reducing the same to 50% waiving remaining 50% of the damage amount. Hence, the present appeal is filed before this Court.

4. The main contention of the learned counsel for the appellant is that no dispute with regard to the non-payment of the contribution and also no dispute with regard to the delay in making the payment. The counsel would vehemently contend that ESI Court committed an error in relying upon the judgments and fails to take note of Section 85B read with Regulation 31-C. The scope of wavier of damage is only in the circumstances mentioned therein at second proviso to sub-section (1) of Section 85B of ESI Act. The powers are exercised by virtue of Sections 38, 39, 40 of the ESI Act. The counsel also would submit that this Court already considered the same issue in M.F.A.No.5144/2014 vide order dated 02.06.2023 relying upon the judgment of the Apex Court in the case of HORTICULTURE EXPERIMENT STATION GONIKOPPAL, COORG vs REGIONAL PROVIDENT FUND ORGANIZATION reported in (2022) 4 SCC 516 wherein the Apex Court held that failure to deposit contribution – imposition of damages for delayed payment – Breach of civil obligations/liabilities committed by employer. The Apex Court held that the same is sufficient for imposition of penalty or damages. There is no further requirement on authority concerned to examine existence of element of actus reus/mens rea or to examine issue of justification, for imposing damages. The counsel referring the order passed by this Court considering the judgment of the Apex Court submits that the same is squarely applicable to the facts of the case on hand. Hence, prays for set aside the impugned order.

5. Having considered the grounds urged in the appeal memo and also considering the arguments of the learned counsel for the appellant, the points that would arise for consideration of this Court are:

1. Whether the ESI Court committed an error reducing the damage to 50%?

2. What order?

Point No.1

6. Having heard the learned counsel appearing for the appellant and also on perusal of the material available on record, it discloses that the appellant’s contention is that the order is against Section 85B of ESI Act and also against the Regulation 31C of the said Act and ought not to have reduced to 50% of the amount waving the remaining 50% of the amount of damages. This Court also while narrating the facts of the case also taken note of the judgment relied upon by the counsel for the appellant and also the principles laid down in the judgment referred supra in the case of HORTICULTURE EXPERIMENT STATION GONIKOPPAL, COORG wherein also the Apex Court held that there is no further requirement on authority concerned to examine existence of element of actus reus/mens rea or to examine issue of justification, for imposing damages. In view of the principles laid down in the judgment as well as Section 85B, it is clear that only could be reduced in relation to a establishment which is a sick industrial company in respect of which a scheme for rehabilitation has been sanctioned by the Board for Industrial and Financial Reconstruction established under Section 4 of the Sick