IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE M.N.KRISHNAN FRIDAY, THE 5TH DECEMBER 2008 / 14TH AGRAHAYANA 1930 Ins.APP.No. 6 of 2007(F) ------------------------- (AGAINST THE JUDGMENT IN I.C.4/02 DTD.18.7.06 OF E.I. COURT, KOLLAM.) APPELLANT (S): OPPOSITE PARTY: ---------------------------------------------- THE REGIONAL DIRECTOR, E S I CORPORATION, THRISSUR. BY ADV. SMT.T.D.RAJALAKSHMY, SC, ESI CORPN. RESPONDENT(S)APPLICANT: --------------------------------- THE MANAGING DIRECTOR, M/S.CITY THEATRES (P) LTD., THAMPANOOR, THIRUVANANTHAPURAM. THIS INSURANCE APPEALS HAVING BEEN FINALLY HEARD ON 05/12/2008, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: M.N. KRISHNAN, J. = = = = = = = = = = = = = = INS.APPEAL NO. 6 OF 2007 = = = = = = = = = = = = = = = Dated this the 5th day of December, 2008. J U D G M E N T This appeal is preferred against the judgment of the Employees Insurance Court, Kollam in I.C.4/02. The prayer in the application is to declare Ext.A3 order as unsustainable as also Ext.A8. According to the insurance inspector the applicant has omitted to pay contribution of Rs.21,881/- in respect of certain wage payments made during 1.4.88 to 31.3.91. It is also in reply to the same it is contended that the said demand is not proper. Thereafter there is also a demand to pay contribution of Rs.79,718/-, for the period 1991-92 to 1996-97, 1999-2000 and 2000-2001. Ext.A8 is the order by which it is demanded and it is also under challenge. The E.I. Court held that Ext.A3 order demanding Rs.21,881/- contribution of omitted wages from 4/98 to 3/99 is valid and sustainable. It declared that assessment and demand on contribution of omitted wages for 4/91 to 3/97 is unsustainable but it declared that the contribution of omitted Ins. Appeal 6 OF 2007 -:2:- wages for the period 4/99 to 3/2001 is legal and valid. It is further declared that the interest is chargeable from the date of expiry of 21 days of passing Exts.A3 and A8 orders. 2. The challenge is against the two points namely that declaring the demand of wages relating to the period from 4/91 to 3/97 as unsustainable and also holding that interest is liable to be paid only after the expiry of 21 days after passing of Exts.A3 and A8 orders. The E.I. Court had taken the view that the Employees' State Insurance Corporation is not entitled to claim any amount that is due beyond the period of 5 years most probably in the light of the decision reported in ESI Corporation v. Excel Glasses Ltd. (2003 (3) KLT 42). In the decision reported in E.S.I. Corporation v. Santhakumar (2007 (1) KLT 133) the Apex Court reversed the Full Bench decision of this Court and held that Section S.45A and Section 77(1A)(b) of the ESI Act does not prescribe any period of limitation for the Employees State Insurance Corporation to initiate action and the bar of limitation will arise only when E.S.I. Corporation approaches the E.I. Court for remedial measures. Or in other words it is held that S.45A and S.77(1A)b does not prescribe any period Ins. Appeal 6 OF 2007 -:3:- of limitation and the insurance corporation is perfectly entitled to proceed against the establishment, wherein the theory of concept of reasonable time also is laid down. Therefore the finding of the E.I. Court that the demand is barred by limitation could not be sustained in the light of the decision of the Apex Court referred to above. So the said finding is vacated. 3. The next question is regarding the interest. The E.I. Court held that the liability to pay interest would arise only on determination of the liability, i.e., after a grace period of 21 days. This was considered by a Division Bench of this Court in the decision reported in Cannanore Drug Lines v. E.S.I. Corporation (2007 (1) KLT 880). This Court held that, “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 Ins. Appeal 6 OF 2007 -:4:- respondent cannot exclude the amount of interest from the demand made against the appellant.” 4. Or in other words the amount is to be paid from the date when it is due and not after the 21 days from the date of determination. So the said finding of the E.I. Court is also liable to be vacated. In the result the appeal succeeds and it is held that there is no limitation for claiming the contribution and further that interest has to be paid for the amount when it becomes due and not from the date of determination. The E.I. Corporation is directed to issue fresh notice to the respondent in the appeal fixing the amount, determine the correctness of the amount after hearing them and then proceed to realise it in accordance with law. M.N. KRISHNAN, JUDGE. ul/-