Educational institutions are liable to ESI contributions, but interest for certain periods can be waived due to interim stays and delays caused by litigation.

COMMON ORDER

The petitioners before this Court are educational institutions. They have filed these writ petitions, (1) Challenging the demand notices issued under Section 45A of the ESI Act to pay the contribution under the ESI Act;

(2) Challenging the garnishee orders passed under Section 45G of the ESI in respect of the bank accounts of the educational institutions;

(3) Seeking a direction to consider their request to extend the benefit of write off with regard to the contribution, interest and damages to the educational institutions as per the mandate of the Full Bench of this Court in WP.No.34236 of 2019 dated 29.07.2020; and (4) Seeking a direction to refund the already adjusted amount and repayment of the same to the educational institutions.

2.Learned Senior Counsel appearing for the petitioners submitted that the petitioners are educational institutions. By notification dated 29.12.2010, the ESI Act was made applicable to educational institutions. It was challenged by the educational institutions and there was an order of interim stay on the operation of the notification since 25.07.2011 in WA.No. 1233 of 2011. This interim stay was subsequently extended by a Division Bench of this Court vide order dated 09.06.2015. Thereafter, this issue was conclusively determined only in the year 2020 by a Full Bench of this Court, vide order dated 29.07.2020, holding that the educational institutions are covered under the ESI Act. The Full Bench, however, directed the authorities to consider the claim for write off under Section 91C in light of the pandemic situation. Even thereafter, the ESI Corporation has claimed huge contributions for this period and paying the same would virtually cripple the educational institutions.

3.He further submitted that the respondent ESI Corporation has also claimed interest amount, treating as if these contributions were payable for the respective periods as per Section 39 of the Act. However, the notification was not enforced when the matter was pending in Court and contributions could not be paid on account of the interim orders that were passed. Hence the entire arrears as well as the interest are liable to be waived.

4.On the other hand, learned Standing Counsel for the respondent ESI Corporation made his submissions as follows:-

4.1.When the arrears of contribution has been determined in the exercise of the powers under Section 45A, the petitioners have an appeal remedy under Section 45AA or a remedy to approach the Employees' State Insurance Court (ESI Court), under Section 75 of the Act. Hence, these writ petitions filed under Article 226 are not maintainable before this Court.

4.2.Once the State Government's notification dated 25.07.2011 extending the Act to educational institutions has come into force, then as per Section 2-A of the Act read with Rule 10(b) of the Employees State Insurance (General) Regulations 1950, it is the primary duty of the employer to register themselves and pay the dues. The contribution becomes due from the last date of the wage period and it has to be remitted within 21 days from the last date of the calendar month, in which the contribution fell due. Thereafter, the interest shall accrue automatically and the liability is statutory in nature. The interest is payable as per Section 39 of the Act. These are statutory dues and lack of financial resources cannot be a ground to escape the liability under the ESI Act.

4.3.The validity of G.O.Ms.No.237, Labour and Employment (K1) Department, dated 26.11.2010 has been upheld by the Full Bench of this Court in All India Private Educational Institutions Association's case an