IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.SIRI JAGAN MONDAY, THE 31ST JANUARY 2011 / 11TH MAGHA 1932 WP(C).No. 8077 of 2007(J) ------------------------- PETITIONER: -------------- PALM FIBRE(INDIA)PVT. LTD., PATHIRAPALLY, ALLEPPEY, REPRESENTED BY ITS CHAIRMAN AND MANAGING DIRECTOR, MATHEW JOSEPH. BY ADV. SRI.MATHEW JOHN (K) SRI.SUJESH MENON V.B. RESPONDENTS: ----------------- 1. THE SECRETARY TO GOVERNMENT, MINISTRY OF LABOUR & EMPLOYMENT GOVERNMENT OF INDIA, NEW DELHI. 2. THE MANAGER, BRANCH OFFICE, E.S.I.CORPORATION, ALAPPUZHA-688001. R1 BY ADV. SRI.D.SOMASUNDARAM, ADDL.CGSC SRI.GEORGE JOSEPH, CGC R2 BY ADV.SRI.T.P.M.IBRAHIM KHAN, SC, ESI CORPN. THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 31/01/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No. 8077 of 2007(J) APPENDIX PETITIONER'S EXHIBITS: EXT.P1 : TRUE COPY OF THE COMMUNICATION DATED 20.11.2006 BY THE 2ND RESPONDENT. EXT.P2 : TRUE COPY OF THE REPLY BY THE PETITIONER DATED 4.12.2006 TO THE 2ND RESPONDENT. EXT.P3 : TRUE COPY OF THE LETTER DATED 2.1.2007 BY THE 2ND RESPONDENT. EXT.P4 : TRUE COPY OF THE CHALAN EVIDENCING THE REMITTANCE OF THE AMOUNT. EXT.P5 : TRUE COPY OF THE COMMUNICATION DATED 10.02.2007 BY THE PETITIONER. /TRUE COPY/ PA TO JUDGE. S.SIRI JAGAN, J ------------------------------------------- W.P(C).No. 8077 of 2007 -------------------------------------------- Dated this the 31st day of January, 2011 JUDGMENT The petitioner is challenging the amendment to Rule 51 of the Employees State Insurance (Central) Rules, 1950 on the ground that the amendment runs contrary to the statutory provisions embodied under Section 39 of the Employees State Insurance Act. Consequently he also challenges Exhibits P1 and P2 orders directing the petitioner to pay contributions calculated in accordance with the amended Rule. 2. The contention of the learned Standing Counsel for the ESI Corporation is that what is prohibited under Section 39 is fixation of rate in excess of what was in existence prior to 1989 and that in the amended Rule 51, there is no change in the rate as such and the only change is regarding the rounding off of the amount arrived at applying the rate, to the next rupee instead of to the next multiple of 5 paise, which cannot be considered as a change in the rate as such. 3. I have considered the rival contentions. 4. Section 39 of the Employees State Insurance Act reads thus: WP(C).8077/07 2 “39. Contributions.- (1) The contribution payable under this Act in respect of an employee shall comprise contribution payable by the employer (hereinafter referred to as the employer's contribution) and shall be paid to the Corporation. (2) The contribution shall be paid at such rates as may be prescribed by the Central Government: Provided that the rates so prescribed shall not be more than the rates which were in force immediately before the commencement of othe Employees' State Insurance (Amendment) Act, 1989. (3) The wage period in relation to an employee shall be the unit in respect of which all contributions shall be payable under this Act. (4) The contributions payable in respect of each wage period shall ordinarily fall due on the last day of the wage period, and where an employee is employed for part of the wage period, or is employed under two or more employers during the same wage period, the contributions shall fall due on such days as may be specified in the regulations. (5) (a) If any contribution payable under this Act is not paid by the principal employer on the date on which such contribution has become due, he shall be liable to pay simple interest at the rate of twelve per cent per annum or at such higher rate as may be specified in the regulations till the date of its actual payment: WP(C).8077/07 3 Provided that higher interest specified in the regulations shall not exceed the lending rate of interest charged by any scheduled bank. (b) Any interest recoverable under clause (a) may be recovered as an arrear of land revenue or under section 45C to section 45-1.”(underlining supplied) Unamended Rule 51 of the Employees' State Insurance (Central) Rules reads thus: “51.The rates of contribution.- The amount of contribution for a wage period shall be in respect of.- (a) Employers contributions, a sum (rounded to the next higher multiple of 5ps) equal to (4%) of the wages payable to an employee; and (b) Employees contribution, a sum (rounded to the next higher multiple of 5ps) equal to 1 ½%) of the wages applicable to an employee.” The Amended Rule 51 of the Employees State Insurance Act reads thus: “51. Rates of contribution.- The amount of contribution for a wage period shall be in respect of,- (a) employer's contribution, a sum (rounded to the next higher rupee) equal to four and three-fourth per cent of the wages payable to an employee; and (b) employee's contribution, a sum (rounded to the next higher rupee) equal to one and three-fourth per cent of the wages payable to an employee.” WP(C).8077/07 4 5. The petitioner's grievance is only regarding the rounding off to the next higher rupee. According to the petitioner, prior to the amendment, the rounding off was only to the next higher multiple of 5 paise. When that is changed to rounding off to the next higher rupee, the rate would be higher than what was in force immediately prior to the Amendment Act of 1989, is the contention. 6. The petitioner does not contend that there is any change in the rate as such. His contention is that instead of rounding off to the next higher multiple of 5 paise, when the amount is rounded off to the next higher rupee, certainly, the rate also would correspondingly change, which would be higher than the rate which was in force immediately prior to the Amendment Act of 1989. I am not inclined to countenance that contention of the petitioner. Admittedly, the rate has not been increased contrary to the prescription in the proviso to Section 39(2) of the E.S.I Act. The rounding off cannot be considered as a change in the rate. Rounding off is only to make the calculation easy for fiscal purpose. The earlier rule was at a time when 5 paise and 10 paise were in vogue. But, presently the Government has stopped minting 5 paise and 10 paise and even 25 paise and 50 paise. Therefore those denominations are not in circulation now. As such it will be practically impossible for transactions in terms of paise and in such circumstances, the rounding off can be made only to the next WP(C).8077/07 5 higher rupee. Therefore, rounding off cannot be considered as a change in the rate as such, so as to violate the proviso to Section 39(2) of the E.S.I Act. Therefore, I do not find any merit in the Writ Petition. Accordingly, the Writ Petition is dismissed. S.SIRI JAGAN, JUDGE vgs