JUDGMENT

This Civil Miscellaneous Appeal has been filed by the Employees

State Insurance Corporation, challenging the Order passed in E.S.I.O.P. No.05 of 2017, dated 08.03.2021, by the Presiding Officer, Employees State

Insurance Court, Puducherry.

2. The parties are referred to hereunder according to their litigative status and ranking before the Employees State Insurance Court.

3. The facts leading to filing of this appeal is as follows:

The respondent herein is an Establishment situated at Pondicherry and it is covered under the Employees State Insurance Act, 1948 [ESI Act in short] required to pay contributions in accordance with Section 40 of the ESI Act. On 04.10.2011, a show Cause Notice in Form C-18 Adhoc was issued to the appellant to pay contributions and they did not pay the contributions required by law. On receipt of the notice, the employer appeared before the appellant-Corporation and reported their inability to pay the contributions. After due enquiry, an Order under Section 45-A of the ESI Act, 1948 was issued for demanding the respondent herein to pay omitted wages for a sum of Rs.2,74,203/- for the period from 10/09 to 07/11. Thereafter, payment was made belatedly by the respondent on 18.07.2015. Since belated payments have been made, the appellant initiated proceedings for imposing damages as per Section 85-B of the ESI Act, 1948. For this purpose, notice was issued on 12.05.2015 for the appearance and accordingly, the official from the respondent appeared and pleaded for waiver of damages. Terming that such a request made is not sustainable, the appellant proceeded to impose damages. After due enquiry, considering the extent of delay in remittance of omitted wages, the appellant levied damages of Rs.1,85,786/- for the period from 10/2009 to 07/2011 an Rs.55,096/- for the wage period from April 2009 to September 2009.

4. Aggrieved over the damages levied on the respondent, they approached the ESI Court, by invoking Section 75 (1) (g) of the ESI Act, to set aside the Order passed by the appellant herein, imposing damages. After recording the evidence of both sides, ESI Court, in its Order has held that since there was a delay in remitting the omitted wages the authority has right in imposing damages. However, ESI Court has held that imposing damages of more than 25% of the contribution amount i.e., omitted wages is not proper. Accordingly, it has reworked and made calculations of 25% of the total contributions to be paid and directed to the respondent herein to pay the same.

5. Aggrieved over the modification of the quantum of damages, the appellant herein has approached this Court on the ground that the ESI Court has failed to note Section 85-B of the ESI Act, which empowers the appellant to impose compensation to the maximum of contribution amount to be paid by the respondent herein. Therefore, it was contended that the ESI Court erred in holding that only 25% contribution amount shall be levied as damages.

6. Despite notice served on the respondent, no one appeared on their behalf.

7. I have considered the submissions made on behalf of the appellant.

Regulation 33-C of the ESI State Regulation Act, 1950, empowers the corporation to impose damages, to be recovered from the employer. Section 85-B provides the manner in which the damages to be recovered. For better appreciation, both the provisions i.e., 85(B) of the Employees State Insurance Act and Regulation 33-C of the Employees State Insurance General Regulation Act, 1950 are incorporated herein which reads as follows:

“85B of the ESI Act. Power to recover damages.?

(1) Where an employer fails to pay the amount due in respect of any contribution or any other amount payable under this Act, the Corporation may recover from the employer by way of penalty such damages not exceeding the amount of arrears as may be specified in the regulations:Provided that before recovering such damages, the employer shall be given a reasonable opportunity of being heard:Provided furthe