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BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT

RESERVED ON : 08.03.2023

PRONOUNCED ON : 13.03.2023

CORAM

THE HONOURABLE MR.JUSTICE R.VIJAYAKUMAR

C.M.A(MD)No.68 of 2017

E.S.I.Corporation

Sub Regional Office (Tirunelveli)

Salai Street, Vannarpettai

Tirunelveli 627 003

Represented by its Joint Director

... Appellant

vs.

Arul Industries

3/171 Ideal Nagar

Tenkasi Road

Tirunelveli 627 012

...Respondent

PRAYER:- Civil Miscellaneous Appeal filed under Section 82 of the

E.S.I.Act 1948, to set aside the order dated 12.07.2016 passed by the

Labour Court, Tirunelveli in ESI O.P.No.26 of 2015 uphold the claim of

the ESI Corporation with necessary directions in favour of the appellant.

For Appellant

: Mr.P.Ganapathisamy

For Respondent

: Mr.G.Arunachalam

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JUDGMENT

The present appeal has been filed by the E.S.I Corporation

challenging an order passed by the Labour Court, Tirunelveli setting

aside the order of the Corporation passed under Section 68 of the

E.S.I.Act.

2.The respondent in the appeal is an industry covered under the

E.S.I.Act. One Thirupathy Venkatachalapathy joined the petitioner

industry on 01.09.2012. The said employee sustained an occupational

injury on 15.09.2012 and his fingers were crushed. On 17.09.2012, his

name was registered under E.S.I.Act in Forum-12. The E.S.I Corporation

had disbursed benefits to the said employee and thereafter, passed the

impugned order on 20.04.2015 sanctioning to recover a sum of

Rs.4,22,242/- as capitalized value given to the employee.

3.The said order under Section 68 of the E.S.I.Act was challenged

by the Management in E.S.I.O.P.No.26 of 2015 on the ground that there

was a delay on the side of the employee in furnishing the particulars

about his family so as to register his name under E.S.I.Act. The

contribution have to be deducted from the employee only by end of the

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calender month namely on 30^th September 2012 and accordingly, the

same were deducted. As per Regulation 31, the contribution amount has

to be deposited within a period of 21 days from the last day of calender

month in which the contribution held due. In the present case, the

contribution amount was deposited within the said period of 21 days.

Therefore, when the employer was not in default with regard to

registration of the employee under E.S.I.Act, the question of recovery of

the capitalized value of the benefit given to the employees cannot be

recovered from the employers.

4.Per contra, the ESI Corporation had contended that the employer

has to register the employee within a period of 10 days from the date of

employment under E.S.I.Act. The first subscription amount has been

paid only after the date of accident. There is a malafide act on the part of

the employer and hence, the Corporation is empowered to collect the

capitalized value from the management as per Section 68 of the

E.S.I.Act.

5.The Tribunal after oral and documentary evidence came to a

conclusion that the subscription had been deposited with the Corporation

within a period of 21 days from 30.09.2012 and hence, there is no delay

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in payment of subscription. When there is no delay in payment of

subscription, malafides could not be attributed to the employer. The

employee should be considered to be an insured person under the

E.S.I.Act. The Tribunal further found that the right of the Corporation to

recover the capitalized value arises only when the employer fails or

neglects to pay any contribution within the time specified. But in the

present case, the subscription amount has been paid within the prescribed

time as contemplated under Regulation 31 and therefore, Section 68 of

the E.S.I.Act cannot be invoked for recovering the capitalized value.

Challenging the said order, the present