IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE M.N.KRISHNAN TUESDAY, THE 11TH NOVEMBER 2008 / 20TH KARTHIKA 1930 Ins.APP.No. 98 of 2007() ------------------------------- IC.51/2004 of EMPLOYEES INSURANCE COURT, ALAPPUZHA .................... APPELLANT/RESPONDENT ---------------------------------------- THE REGIONAL DIRECTOR, ESI CORPORATION, PANCHADEEP BHAVAN, NORTH SWARAJ ROUND, THRISSUR. BY ADV. SRI.P.SANKARANKUTTY NAIR RESPONDENT/APPLICANT --------------------------------------- M/S SANJOE FOODS & RESORTS PVT. LTD., CARMEL BUILDING, BANERJI ROAD, ERNAKULAM. ADV. SRI.E.K.NANDAKUMAR FOR R1 SRI.A.K.JAYASANKAR NAMBIAR FOR R1 SRI.K.JOHN MATHAI FOR R1 SRI.P.BENNY THOMAS FOR R1 SRI.ANIL D. NAIR FOR R1 THIS INSURANCE APPEALS HAVING BEEN FINALLY HEARD ON 11/11/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: M.N.KRISHNAN, J ===================== INAP No.98 OF 2007 ===================== Dated this the 11th day of November 2008 JUDGMENT This appeal is preferred against the judgment of the Employees' Insurance Court, Alappuzha in I.C.No.51 of 2004. The question involved is regarding damages. The court below found that it is not a fit case where the discretionary jurisdiction of damages has to be used against the establishment and therefore set aside the order imposing damages. The position is clearly well settled unlike imposition of interest under Section 39(5) of ESI Act, levy of damages under Section 85B of the Act is not mandatory and only discretionary. It has been held that discretionary jurisdiction has to be judicially exercised. So far as this case is concerned, a huge amount has been ordered to be paid by way of contribution and it was paid with interest and thereafter damages had been levied. It was on account of the financial difficulties, the establishment was not able to pay the amount in time. Recently a Division Bench of this Court in the decision reported in Regional Director, ESI Corporation and another v. Managing Director, M/s.Qetcos Ltd(ILR 2008(3)(Kerala) 132) held that levy of INAP 98/2007 -:2:- damages for delayed payment of contribution is not mandatory in all cases. If there is no mens rea and the employer was unable to pay the contribution in time due to circumstances beyond its control, damages can be waived completely. The Division Bench also quoted the decision of the Apex Court 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”. It has also been held in so many decisions that there must be either contumacious conduct or recalcitrant attitude to violate the mandate of the statute. Here is a case where it has been explained that due to reasons beyond its control on account of the financial stringency it was not able to pay the amount. The non-payment was neither intentional nor deliberate and it was not actuated any mens rea. Therefore I concur with the finding of the E.I.Court on levy of damages by the Corporation was not proper and it has correctly decided it. Therefore the appeal lacks merit and the same is dismissed. M.N.KRISHNAN, JUDGE Cdp/-