IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.M.JOSEPH & THE HONOURABLE MR. JUSTICE M.L.JOSEPH FRANCIS THURSDAY, THE 4TH JUNE 2009 / 14TH JYAISHTA 1931 Ins.APP.No. 79 of 2006 A ------------------------------------------- AGAINST THE ORDER DATED 20/02/2006 IN IA. 31/2006 IN IC.15/2006 of ESI COURT, PALAKKAD .................... APPELLANT/RESPONDENT ---------------------------------------- E.S.I. CORPORATION, PANCHADEEP BHAVAN, NORTH SWARAJ ROUND, THRISSUR-20. BY ADV. SRI.T.V.AJAYAKUMAR RESPONDENT/PETITIONER --------------------------------------- M/S.WEST COAST CONCRETE PRODUCTS, INDUSTRIAL DEVELOPMENT AREA, ANGAMALY SOUTH, ERNAKULAM. ADV. SRI.E.K.NANDAKUMAR SRI.A.K.JAYASANKAR NAMBIAR SRI.K.JOHN MATHAI SRI.P.BENNY THOMAS THIS INSURANCE APPEALS HAVING COME UP FOR ADMISSION ON 04/06/2009, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: K.M. JOSEPH & M. L. JOSEPH FRANCIS, JJ. ------------------------------------------ INS. APPEAL NO.79 OF 2006 A ------------------------------------------ Dated this the 4th June, 2009 JUDGMENT Joseph, J. Though this matter is coming up for admission, we heard the learned counsel appearing for the appellant as also the learned counsel appearing on behalf of the respondent. The respondent is covered by the Employees' State Insurance Act. Aggrieved by the proceedings under Section 45A of the ESI Act, the respondent filed application under Section 75 of the ESI Act before the ESI Court. It is the case of the appellant that they had filed a caveat application under Section 148A of the CPC. However, by Annexure A3 order, the Insurance Court has proceeded to admit the case on condition that the respondent will deposit a sum of Rs.50,000/= with the appellant on or before 27.3.2006 and it is further ordered that if the respondent fails to deposit the amount as directed, the insurance case will INS.APPEAL NO.79/06A 2 stand dismissed for default. It is the said order which is the subject matter of challenge in this Appeal filed by the ESI Corporation. 2. Section 75 speaks about the matters to be decided by the ESI Court. Sub-section (2B) which was inserted by Act 29 of 1989 with effect from 20.10.1989 reads as follows: “(2B) No matter which is in dispute between a principal employer and the Corporation in respect of any contribution or any other dues shall be raised by the principal employer in the Employees' Insurance Court unless he has deposited with the Court fifty per cent of the amount due from him as claimed by the Corporation: Provided that the Court may, for reasons to be recorded in writing, waive or reduce the amount to be deposited under this sub-section.” INS.APPEAL NO.79/06A 3 It is pointed out by the appellant that the following was the reason for the said enactment: “To put a curb of unnecessary litigation by the employers, it is proposed to provide that no application from an employer disputing the claim of the Corporation for payment of contribution or other dues shall be entertained by Employees Insurance Court, unless the employer deposits 50% of the amount claimed by the Government.” 3. Shri T.V. Ajayakumar, learned counsel for the appellant would point out that in this case, for instance, the amount fixed in the determination was Rs.20 Lakhs and yet, without giving any reason, though as per Section 75(2B) the respondent should have been called upon to deposit Rs.10 Lakhs, the amount is reduced from Rs.10 Lakhs to Rs.50,000/=. This is totally illegal, it is pointed out. He points out that this is a social INS.APPEAL NO.79/06A 4 welfare legislation. He submits that having regard to the clear unambiguous requirement of law when there was waiver or reduction, it must be supported by reasons to be recorded in writing. 4. Per contra, learned counsel for the respondent would first of all point out that the facts of this case will illustrate the folly of the argument of the appellant. The demand for Rs.20 Lakhs has itself been set aside by the Insurance Court and he would, therefore, firstly point out that the Appeal itself has become infructuous. He would further contend that the requirement of law is only that the amount to be deposited must be deposited in a Bank and that it need not be paid over to the Corporation. He further submits that the reasons are elaborated in the Affidavit accompanying the application filed, seeking waver or reduction and those reasons would certainly have appealed to the Court and it is not necessary to further set out INS.APPEAL NO.79/06A 5 the reasons all over again, as reasons are available in the Affidavit which is before the Court. 5. Learned counsel for the appellant would point out that now-a-days there is a practice by the Court to dispense with or grant reduction without any basis. Of course, this is disputed by the learned counsel for the respondent. Learned counsel for the appellant also relied on a Judgment of a learned Single Judge of the Calcutta High Court in Employees' State Insurance Corporation and Others v. Hotel Airport Ashok and another (2006 (1) LLJ 785). Therein also, the Court took the view that reasons must be assigned. 6. We have already extracted the provision contained in Section 75(2B). The rule is that the amount mentioned, namely fifty per cent of the amount must be deposited. However, a discretion is given to order waiver or reduction of the amount. Apart from the fact that there is no unbridled discretion in a INS.APPEAL NO.79/06A 6 system which is governed by rule of law, we also are to be governed in this case by the specific words which have been carefully used by the legislature. We have already noted the objects and reasons which led to the amendment. The law clearly commands that the Court must record reasons if it decides to deviate from the principle of the main provision, namely deposit of fifty per cent. We also take note of the fact that the discretionary power is located in the provisions of a proviso. Therefore, the main provision which declares the normal rule to be followed is that the amount should be deposited. We cannot also overlook the fact that this is a social welfare legislation and while it may be true that on a case to case basis the Court may exercise its discretion to waive or reduce the amount, any such decision must be supported by reasons which must not only be present in the mind of the Court, but they must be reduced to writing. This is the inevitable result INS.APPEAL NO.79/06A 7 of the unambiguous language employed in the proviso. In view of the admitted fact that subsequent to the filing of the Appeal, the main case itself stands disposed of, there is no need for us to interfere with the order and no further orders are necessary. Sd/= K.M. JOSEPH, JUDGE Sd/= M.L. JOSEPH FRANCIS, JUDGE kbk. // True Copy // PS to Judge