IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE M.N.KRISHNAN WEDNESDAY, THE 9TH JULY 2008 / 18TH ASHADHA 1930 Ins.APP.No. 33 of 2005() ------------------------ IC.137/2002 of EMPLOYEES INSURANCE COURT, ALAPPUZHA .................... APPELLANTS/OPPOSITE PARTIES: ---------------------------------------------------- 1. EMPLOYEES' STATE INSURANCE CORPORATION, PANCHADEEP BHAVAN, TRICHUR-20, REPRESENTED BY ITS REGIONAL DIRECTOR. 2. THE RECOVERY OFFICER, ESI CORPORATION, PANCHADEEP BHAVAN, TRICHUR-20. BY ADV. SRI.P.SANKARANKUTTY NAIR RESPONDENT: APPLICANT: ------------------------------------------ HOTEL KARTHYANI, OTTAPPUNNA JUNCTION, CHERTHALA, REPRESENTED BY ITS MANAGING PARTNER, VINOO VIJAYAN. BY THIS INSURANCE APPEALS HAVING BEEN FINALLY HEARD ON 09/07/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Kss M.N. KRISHNAN, J. = = = = = = = = = = = = = = INS.APPEAL NO. 33 OF 2005 = = = = = = = = = = = = = = = Dated this the 9th day of July, 2008. J U D G M E N T This appeal is preferred against the judgment of the Employees Insurance Court, Alappuzha in I.C.137/02. The applicant before the Court fought up to the High Court and ultimately it was held that it is liable to coverage under the provisions of the E.S.I. Act. After the payment of the amount notice under Section 85 requiring the applicant to show cause why damages amounting to Rs.9,698/- should not be imposed was issued. Further another notice dated 9.9.02 was issued levying interest on Rs.44,422/-. The applicant objected the demand for interest and damages by taking up the position that entire period in which the delay was attributed was the period under litigation. But over ruling the objection the appellant confirmed the levy of interest and by another proceeding damages was also imposed. The Court held that for the purpose of damages the Corporation has excluded the period of litigation and Ins. Appeal 33 OF 2005 -:2:- therefore the same yardstick should be applied in imposing the interest as well. Therefore it set aside the order and directed the appellant to revise the procedure by adopting the same yardstick that had been adopted while imposing the damages. It is against that decision the present appeal is preferred. 2. Learned counsel for the Corporation has cited before me a decision reported in Cannanore Drug Lines v. E.S.I. Corporation (2007 (1) KLT 880). In the said decision the Division Bench of this Court (of which I was also a party) held as follows. “Merely because the appellant failed to pay contribution allegedly under a bona fide impression or belief that the establishment was not covered under the provisions of the E.S.I. Act cannot absolve the appellant from the liability of paying interest on the delayed payment of E.S.I. Contribution under S.39(5) read with Regulation 31A. Neither the provisions in the E.S.I. Act nor the provisions in the E.S.I. (General) Regulations give any discretion to the respondent to exempt the appellant from the liability to pay interest on Ins. Appeal 33 OF 2005 -:3:- the delayed payment of E.S.I. Contribution. The bona fide impression of the appellant that his establishment was not covered under the provisions of the E.S.I. Act or the pendency of a dispute before the E.S.I. Court regarding the appellant's liability to pay E.S.I. contribution cannot be a valid ground for exempting the appellant from paying interest in terms of S.39 (5)(a) and Regulation 31A. When the statute does not provide for any such exemption the respondent cannot exclude the amount of interest from the demand made against the appellant.” 3. So in the light of this decision it is very clear that the liability to pay interest at the rate of 12% per annum arises when the amount falls due on the last day of the wage period within 21 days of the last day of the calendar month in which the contribution fell due. Therefore, it is ultimately held that S.39(5)(a) and Regulation 31A of the E.S.I. Act mandates levying of interest and the Corporation has no discretion to wipe it off or reduce it. So the finding of the E.I. Court is set aside on that point. Ins. Appeal 33 OF 2005 -:4:- 4. I am informed by the learned counsel for the appellant that the damages had been imposed only after excluding the period and therefore it does not require any further modification. Therefore, the appeal is allowed and the E.S.I. Corporation is entitled to proceed with the recovery of the amount as ordered by it. Regarding the correctness of the amount an opportunity of being heard be given and further proceedings be done. M.N. KRISHNAN, JUDGE. ul/-