This appeal is filed by the Employees State

Insurance Corporation (hereinafter referred to as ‘the ESI

Corporation’) under Section 82(2) of the Employees State

Insurance Act, 1948 (hereinafter referred to as ‘the ESI

Act’) challenging the order dated 23.01.2016 passed by

the Employees State Insurance Court at Bangalore

(hereinafter referred to as ‘the ESI Court’) in E.S.I.

Application No.33/2010, whereby the application filed by

the applicant has been allowed in part.

2. For the sake of convenience, the parties are

referred to as per their rankings before the E.S.I. Court.

3.

The

brief

facts

of

the

case

are

that

M/s.Kudremuch Iron Ore Company Ltd., was functioning at

Mangalore. This Company was referred to BIFR and it has

been merged with the applicant’s Company with effect

from 01.04.2007. The further case of the applicant is that

they are making efforts to obtain exemption from the

respondent – ESI Corporation which had provided benefits

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to its employees similar to that of ESI Corporation, i.e.,

free medical facilities, maternity benefits, sick leave

compensation and workmen compensation, etc. It is the

further case of the applicant that they are providing

medical facilities to their employees in a private hospital,

they are also collecting the contribution from the

employees to pay the contribution to the ESI Corporation

under Sections 44 and 45 of the ESI Act. To pay the

contribution to the ESI Corporation, the earlier facility

provided to the employees has been withdrawn by issuing

a Circular dated 19.09.2007. That circular has been

challenged by the Employees Association before this Court

in W.P.No. 15180/2007 and they have obtained an interim

order and this Court, by order dated 25.09.2008 has partly

allowed the writ petition, the medical facilities provided to

the employees has been directed to continue. Therefore,

the further case of the applicant is that in view of that they

are providing medical facilities to the employees, they

have not paid contribution to the ESI Corporation in time.

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Therefore, they are not entitled to pay any interest for the

delayed payment.

4. The respondent – Corporation has issued demand

notice

on

03.06.2010

for

payment

of

interest

of

Rs.7,11,542/- for the delayed payment. Being aggrieved

by the same, the applicant has filed an application before

the ESI Court. The ESI Court has allowed the appeal in

part, set aside the order passed by the ESI Corporation

and directed the applicant to pay only 50% of the interest

claimed. Being aggrieved by the same, the ESI

Corporation is before this Court.

5. Sri K.Krishnappa, learned counsel appearing for

the appellant has raised the following contentions:

Firstly, admittedly, respondent has collected the

contribution from the employees and also they have paid

the contribution, there is a delay in payment of

contribution, under Section 39 of the ESI Act and

Regulation 31B of the Employees’ State Insurance

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(General) Regulations, 1950 the Corporation has all the

right to recover interest for the delayed contribution.

Accordingly, ESI Corporation has issued notice. In support

of his contentions, he has relied on the judgment of the

Hon’ble Apex Court in the case of GOETZE (INDIA) LTD.

Vs. EMPLOYEES STATE INSURANCE CORPORATION

reported in AIR 2008 SC 3122.

Secondly, the ESI Court has wrongly relied on

Section 85B of the ESI Act which is not applicable to the

case on hand. It is only in respect of damages is

concerned. But the ESI Court has wrongly relied on the

provisions of Section 85B of the ESI Act and passed the

impugned order. Hence, the impugned order is contrary to

the provisions of the ESI Act. Hence, he sought for

allowing the appeal.

6. Per contra, Sri Ramesh Upadhyaya, learned

counsel appearing for the respondent has raised the

following contentions:

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Firstly, the applicant was providing a special medical

facility to the employees in the