IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE M.N.KRISHNAN TUESDAY, THE 22ND DECEMBER 2009 / 1ST POUSHA 1931 Ins.APP.No. 8 of 2008() ----------------------- I.C.NO.45/2005 OF E.I.COURT, PALAKKAD APPELLANT/OPPOSITE PARTIES ---------------------------------------------- E.S.I. CORPORATION, PANCHADEEP BHAVAN, NORTH SWARAJ ROUND, THRISSUR-20. BY ADV. SRI.THOMAS MATHEW NELLIMOOTTIL RESPONDENT(S): APPLICANT ------------------------ FLEMIN K.M., S/O. LATE K.T.MATHEW, KOOTHUR HOUSE, KOTTAYIL ROAD, KUNNAMKULAM, THRISSUR, PROPRIETOR OF M/S. VICTORY OFFSET PRINTERS. ADV. SRI.T.C.SURESH MENON THIS INSURANCE APPEALS HAVING COME UP FOR ADMISSION ON 22/12/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: M.N. KRISHNAN, J. ........................................... Ins.A.No.8 OF 2008 ............................................. Dated this the 22nd day of December, 2009 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.No.45/2005. It was an application filed for challenging imposition of damages and the court after consideration held that the damages are not to be imposed. The Insurance Corporation had challenged that finding before this Court. 2. It is a well settled proposition that damages cannot be imposed as a routine and Section 85 B of the Employees State Insurance Act only gives a discretionary power to the Corporation to impose damages and the word used is only ‘may’ and not ‘shall’. It has also been held that unless there is a contumacious conduct or deliberate evadment of payment, imposition by way of damages cannot be done. 3. In this case the contention of the applicant before the court below was that the establishment was in huge trouble because of the change of management. The person Ins.A.No.8 OF 2008 2 who carried out the business died on 31.12.2005 and the person who assumed charge later did not have any experience and all these put together caused the delay and there was no deliberate or willful laches on the part of the establishment. 3. A Division Bench of this Court in E.S.I. Corporation v. Qetcos Ltd. (2008 (3) KLT 336) had considered this question and held that it is not mandatory in all cases of delay in payment of contribution that damages shall be recovered. Discretion has to be exercised while imposing damages. This Court also referred to a decision of the Supreme Court in Employees State Insurance Corporation v. H.M.T. Ltd (AIR 2008 SC 1322) wherein a further reference was made to an earlier decision of the Apex Court and it is extracted as follows: “Existence of means 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”. 4. Therefore when situations satisfy that there was no means rea or deliberate contumacious conduct or willful laches to evade payment, then the discretionary Ins.A.No.8 OF 2008 3 jurisdiction vested in the court under Section 85 B of the E.S.I Act has to be judicially exercised in favour of the establishment and not otherwise. Therefore, I do not find any error committed by the Employees Insurance Court in setting aside the order of damages. The appeal lacks merit and the same is dismissed. M.N. KRISHNAN, JUDGE cl Ins.A.No.8 OF 2008 4