IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE M.N.KRISHNAN FRIDAY, THE 11TH JULY 2008 / 20TH ASHADHA 1930 Ins.APP.No. 35 of 2005() -------------------------------- IC.118/2002 of EMPLOYEES INSURANCE COURT, ALAPPUZHA .................... APPELLANT/OPPOSITE PARTY : ---------------------------------------------- THE REGIONAL DIRECTOR, E.S.I. CORPORATION, PANCHADEEP BHAVAN, N.S.ROUND, THRISSUR-20. BY ADV. SRI.P.SANKARANKUTTY NAIR RESPONDENT/APPLICANT : --------------------------------------- M/S.SQUARE DEAL, P.B.NO. 3021, T.A.BEERANKUNJU ROAD, ERNAKULAM NORTH, KOCHI-18, REPRESENTED BY ITS MANAGING PARTNER, A.A.ABRAHAM. BY ADV. SMT.P.VIJAYAMMA SRI.P.LOHITHAKSHAN THIS INSURANCE APPEAL HAVING BEEN FINALLY HEARD ON 11/07/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: pac M.N. KRISHNAN, J. = = = = = = = = = = = = = = INS.APPEAL NO. 35 OF 2005 = = = = = = = = = = = = = = = Dated this the 11th 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.118/02. The applicant therein was directed to pay damages by the E.S.I. Corporation which he challenged before this Court. It is discernible from the judgment that the entire amount due as contribution with interest had been paid and when the demand was made he requested for some instalment facility on account of the financial difficulties which was considered favourably and he was directed to pay the amount in 14 instalments. It is thereafter a notice is issued imposing demands as contemplated under Section 85-B of the E.S.I. Act. So far as the factual matrix is concerned the contention is that there was no deliberate or willful laches in delayed payment and it was on account of the financial stringency the amount could not be paid in lump sum in time and fully realising and convinced of the situation the ESI Corporation Ins. Appeal 35 OF 2005 -:2:- permitted the applicant therein to pay the amount in 14 instalments. It is only thereafter the present notice is issued. The question whether financial difficulties or pendency in a litigation will absolve the employer from the payment of damages by way of penalty has been considered by a Division Bench of this Court reported in E.S.I. Corporation v. Premanandan (2007 (114) FLR 128) and has been held that it can be. When the payment of instalments on the basis of financial stringency is allowed, there is no fairness in asking for damages as laid down in so many other decisions. The word damages used under Section 85-B really connotes a sort of penalty for the delayed payment. The object behind the said provision is to see that unnecessary delay is not caused in making and meeting statutory requirements. But when one is convinced that there was sufficient grounds then it may not be fair to impose damages again and again. Learned counsel had also cited a decision of the Division Bench of this Court reported in ESI Ins. Appeal 35 OF 2005 -:3:- Corporation v. Naduvattam GMVS Sangham Ltd. (2000 (2) KLT 254). In that case this Court held that after granting instalment facilities as per an agreement between the parties, the Corporation cannot demand interest or damages on the above amount. So that also support the decision taken by the Insurance Court. As the law stands on today the judgment rendered by the Insurance Court is correct and it does not call for any interference. Therefore the appeal is dismissed without costs. M.N. KRISHNAN, JUDGE. ul/-