IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE M.N.KRISHNAN THURSDAY, THE 17TH JULY 2008 / 26TH ASHADHA 1930 Ins.APP.No. 65 of 2005() -------------------------------- IC.41/2003 of E.I.COURT, PALAKKAD .................... APPELLANT/OPP.PARTY : ------------------------------------- EMPLOYEES STATE INSURANCE CORPORATION, PANCHDEEP BHAVAN, NORTH SWARAJ ROUND, THRISSUR-20 REPRESENTED BY THE REGIONAL DIRECTOR. BY ADV. SMT.T.D.RAJALAKSHMY, SC, ESI CORPN. RESPONDENT/APPLICANT : --------------------------------------- RAJAN, S/O.LATE V.RAMAN NAIR, SRINIKETH, PATTURAICKAL, PONNUVEETIL LANE, THRISSUR I (MANAGING PARTNER OF M/S.RAJ TRANSPORT, THRISSUR). BY ADV. SRI.ANTONY DOMINIC SRI.A.M.SHAFFIQUE (SR.) SRI.E.K.NANDAKUMAR SRI.K.JOHN MATHAI THIS INSURANCE APPEALS HAVING BEEN FINALLY HEARD ON 17/07/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: pac M.N.KRISHNAN, J ===================== INAP No.65 OF 2005 ===================== Dated this the 17th day of July 2008 JUDGMENT This appeal is preferred by the Employees' State Insurance Corporation against the order of the Employees' Insurance Court, Palakkad in I.C.No.41 of 2003. The applicant therein challenges Ext.A1 order whereby the Corporation imposed damages totalling Rs.57,122/-. The said order was attacked on the ground that the establishment was not running after the death of the father, the applicant took charge of the establishment and in spite of acute financial crisis, cleared the arrears of insurance dues by instalments. It is thereafter notice is issued imposing damages. It has been repeatedly held by the courts that levy of damages for delayed payment of contribution is not mandatory in all cases and 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. In the decision reported in Regional Director, ESI Corporation and another v. Managing Director, M/s.Qetcos.Ltd.(ILR 2008(3) Kerala 132) a Division Bench of this Court extracted the view of the Apex Court reported in AIR 2008 SC 1322, held as follows: “Existence of mens rea or actus reus to Ins.A 65/2005 -:2:- contravene a statutory provision must also be held to be a necessary ingredient for levy of damages and/or the quantum thereof”. Therefore the imposition of damages contemplated under Section 85 B of the Act is not a ritualistic procedural formality but a judicial discretion to be exercised depending upon the facts and circumstances of each case. Here is a case where a son, who took over the management after the death of the father with more difficulty in spite of financial crisis cleared the arrears of insurance due with interest in instalments, which was conceded to by the Corporation and therefore he did not have the mens rea to violate the provisions of the statement. That is why unlike the payment of interest which is mandatory the imposition of damages is made only discretionary by using the word 'may' and not 'shall'. Therefore applying the entire principles to the facts of this case, I find that there had been no deliberate attempt made by the applicant to evade payment and it does not call for imposition of penalty as damages. Therefore I concur with the finding of the Insurance Court and dismiss the appeal. M.N.KRISHNAN, JUDGE Cdp/- Ins.A 65/2005 -:3:-