IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE M.N.KRISHNAN WEDNESDAY, THE 6TH AUGUST 2008 / 15TH SRAVANA 1930 Ins.APP.No. 62 of 2005() --------------------------------- IC.116/2001 OF EMPLOYEES INSURANCE COURT, ALAPPUZHA .................... APPELLANT/APPLICANTS --------------------------------------- JOSE BROTHERS DRY CLEANERS, JOS ANNEXURE BUILDING, JOS JUNCTION, KOCHI, REPRESENTED BY ITS MANAGING PARTNER, SUNITHA BABU. BY ADV. SRI.C.ANIL KUMAR SMT.A.K.PREETHA RESPONDENT/ OPPOSITE PARTY ------------------------------------------------ THE REGIONAL DIRECTOR, EMPLOYEES STATE INSURANCE CORPORATION, PANCHADEEP BHAVAN, THRISSUR. ADV. SRI.T.V.AJAYAKUMAR, SC, ESI CORPN. ADV. SRI.P.SANKARANKUTTY NAIR, SC, ESI CORPN. THIS INSURANCE APPEALS HAVING BEEN FINALLY HEARD ON 06/08/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Rs/ M.N.KRISHNAN, J ===================== INAP No.62 OF 2005 ===================== Dated this the 6th day of August 2008 JUDGMENT This appeal is preferred against the judgment of the Employees' Insurance Court, Alappuzha in I.C.No.116 of 2001. The court below did not interfere with levy of interest but interfered with the imposition of damages by reducing it to Rs.20,000/-. Challenging the same, the appeal is preferred by the applicant before the said court. 2. Heard the learned counsel on both sides. So far as the interest is concerned, there is no discretionary jurisdiction left with the Corporation not to levy interest in the light of the provisions under Section 39(5) of the Employees' State Insurance Act and Regulation 31. It has been so held by a Division Bench of this Court in the decision reported in(Cannanore Drug Lines v. E.S.I.Corpon (2007(1) KLT 880). Therefore the said finding of the court does not call for any interference. 3. The next question is on damages. Under Section 85B of the Act, imposition of damages is of a discretionary nature and that is why the Legislature in its wisdom had used the word 'may' instead of 'shall'. It has INAP 62/2005 -:2:- been held by the courts that there must be contumacious conduct or deliberate act to violate the provisions of the statute in order to attract imposition of damages. A Division Bench of this Court in the decision reported in Regional Director, ESI Corpn. v. Managing Director, M/s.Qeteos Ltd.(20038(3) ILR 132) quoting the decision of the Apex Court held that “existence of mens rea or actus reus to contravene a statutory provision must also be held to be a necessary ingredient for levy of damages and/or the quantum thereof”. Here, there cannot be any dispute that it is an establishment which runs on a heavy loss and even in spite of the final order in 1997, it was able to pay the amount in 2001. It was not on account of the deliberate negligence or willful default, but on account of the extreme financial stringency. When such is the situation, one cannot attribute mens rea so as to attract levy of damages. Therefore, I feel this is a fit case where imposition of damages requires interference and therefore it is set aside. In the result, the appeal is disposed of by confirming the judgment on the question of interest and vacating the judgment on the question of imposition of penalty under Section 85B of the Act. M.N.KRISHNAN, JUDGE Cdp/- INAP 62/2005 -:3:-