IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE M.N.KRISHNAN WEDNESDAY, THE 6TH JANUARY 2010 / 16TH POUSHA 1931 Ins.APP.No. 18 of 2008() ---------------------------------- IC.31/2005 of ESI COURT, PALAKKAD .................... APPELLANT/OPP. PARTY --------------------- E S I CORPORATION, PANCHADEEP BHAVAN, NORTH SWARAJ ROUND, THRISSUR-20. BY ADV. SMT.T.D.RAJALAKSHMY, SC, ESI CORPN. RESPONDENT(S): APPLICANT ------------------------ PIGMENTS INDIA LIMITED, THAZHEKAD, THRISSUR-680 697. THIS INSURANCE APPEALS HAVING COME UP FOR ADMISSION ON 06/01/2010, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: tss M.N. KRISHNAN, J. = = = = = = = = = = = = = = INS.APPEAL NO. 18 OF 2008 = = = = = = = = = = = = = = = Dated this the 6th day of January, 2010. J U D G M E N T This is an appeal preferred against the order of the Employees Insurance Court, Palakkad in I.C.31/05. The applicant, establishment moved the court for setting aside the order of imposition of damages and the court below found that the delay was occasioned on account of the financial crisis and there was no deliberate or willful conduct. Therefore it set aside the order of imposition of damages. It is against that decision the Corporation has come up in appeal. 2. Heard the learned counsel. U/s 85B of the E.S.I.Act imposition of damages is a discretionary power vested with the authority and the word used is 'may' and not 'shall'. The Hon'ble Supreme Court has considered this aspect and held that since imposition of damages is plenary in nature the discretion has to be judicially exercised. Right from 1988 onwards this court has taken the view that unless INS.APPEAL NO. 18 OF 2008 -:2:- there is a contumacious conduct, willful or deliberate evadement of payment imposition of damages cannot be done as usual course. Now in the decision reported in Regional Director, ESI Corporation v. Managing Director, M/s Qetcos Ltd. (ILR 2008 (3) Kerala Series 132) this court held that, “Levy of damages for delayed payment of contribution, is not mandatory in all cases. If there is no mensrea and the employer was unable to pay the contribution in time due to circumstances beyond its control, damages can be waived completely.” 3. The learned Judges also referred to the decision of the Apex Court in E.S.I. Corporation v. HMT Ltd. (AIR 2008 (SC) 1322). While considering that question the Apex Court has relied upon another decision and that portion is extracted as follows. “Existence of mensrea 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.” INS.APPEAL NO. 18 OF 2008 -:3:- 4. Here the definite finding is that the unit was undergoing severe financial crisis and there was no deliberate or contumacious conduct on the part of the establishment. When it is so the discretion has to be exercised in favour of the applicant/establishment and it has been rightly done by the court below. Therefore the appeal lacks merit and the same is dismissed. M.N. KRISHNAN, JUDGE. ul/-