IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE M.N.KRISHNAN MONDAY, THE 28TH JULY 2008 / 6TH SRAVANA 1930 Ins.APP.No. 26 of 2007(F) ------------------------------------ I.C. NO.4/2004 OF E.S.I COURT, IDUKKI. .................... APPELLANTS/ OPP.PARTIES: ------------------------------- ---------- 1. E.S.I. CORPORATION, PANCHADEEP BHAVAN, NORTH SWARAJ ROUND, THRISSUR, REPRESENTED BY ITS REGIONAL DIRECTOR. 2. THE REVENUE RECOVERY OFFICER, E.S.I. CORPORATION, THRISSUR. BY ADV. SMT.T.D.RAJALAKSHMY, SC, ESI CORPN. RESPONDENT/ APPLICANT: ---------------------------------------- SHYLA RAJENDRAN, HOTEL NEW ANANDAMANDIRAM, THIRUNAKKARA, KOTTAYAM. BY ADV. SRI.DINESH R.SHENOY, ADV. SRI.V.V.UNNIKRISHNAN. THIS INSURANCE APPEALS HAVING BEEN FINALLY HEARD ON 28/07/2008,THE COURT ON THE SAME DAY PASSED THE FOLLOWING: M.N.KRISHNAN, J ===================== Ins.A. No.26 OF 2007 ===================== Dated this the 28th day of July 2008 JUDGMENT This appeal is preferred against the order of the Employees Insurance Court, Idukki in I.C.No.4 of 2004. The case relates to one of imposition of damages under Section 85B of the Employees' State Insurance Act. The petitioner before the insurance court is the proprietrix of a hotel. The hotel was assessed to pay amount under the Employees' Insurance Act. The matter was brought up to the High Court and it was made liable to pay the amount. The applicant therein remitted Rs.18,000/- on 23.4.2002 and for remitting the balance amount in instalments, the E.S.I. Corporation granted time. Thereafter it has initiated proceedings levying damages. The E.I.Court held that there is no contumacious conduct and therefore held that it is not proper to impose damages. 2. Heard the learned counsel for both sides. Imposition of damages is a statutory right conferred under the Employees' State Insurance Act. But, it is not an imperative duty but a discretionary right. While dealing with the provisions of interest for delayed payment, the statute refers to the word Ins.A.No.26/2007 -:2:- 'shall' and when it comes to the question of damages, the statute uses the word 'may'. In the latest decision of this Court reported in Regional Director, ESI Corporation and another v. Managing Director, M/s.Qetcos.Ltd. (ILR 2008(3) 132) following the guidelines of the Apex Court in the other decisions, the mode of approach is laid down. It was held by 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”. The Apex Court also observed that “a penal provision should be construed strictly. Only because a provison has been made for levy of penalty, the same by itself would not lead to the conclusion that penalty must be levied in all situations. Such an intention on the part of the legislature is not decipherable from Section 85B of the Act. When a discretionary jurisdiction has been conferred on a statutory authority to levy penal damages by reason of an enabling provision, the same cannot be construed as imperative. Even otherwise, an endeavour should be made to construe such penal provisions as discretionary, under the statue is held to be mandatory in character”. Applying this dictum to the facts of this case, it can be seen there was a contest by the applicant that it is not covered by the Act. But, ultimately when it was found so, the applicant paid some amount and requested for payment of the balance Ins.A.No.26/2007 -:3:- amount in instalments and without prejudice to the right of the E.S.I. Authorities they granted time. I am conscious of the fact that the E.S.I. Authorities had granted time without their prejudice to impose damages. But what is to be gathered is regarding the conduct of the applicant in such a situation. It is not a deliberate, intentional and contumacious conduct to avoid payment of the amount, but only on account of the financial stringency time has been prayed for, for making the payment. So, I feel this is a fit case where the court below was in holding that there has been no contumacious or deliberate act to evade statutory payment. The discretion has to be used in favour of the applicant and that is what has been done precisely by the E.I.Court. I do not find any ground to interfere with such a decision. Therefore the appeal fails and the same is dismissed. M.N.KRISHNAN, JUDGE Cdp/-