IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE M.N.KRISHNAN WEDNESDAY, THE 6TH JANUARY 2010 / 16TH POUSHA 1931 Ins.APP.No. 16 of 2008() ------------------------ IC.43/2004 of E.I.COURT, KOLLAM .................... APPELLANT/OPPOSITE PARTY. --------------------- THE REGIONAL DIRECTOR, E.S.I. CORPORATION, THRISSUR - 20. BY ADV. SRI.P.SANKARANKUTTY NAIR RESPONDENT/ APPLICANT. ------------------------- SRI.T.C.PAUL, MANAGING DIRECTOR, M/S. TRAVANCORE HERITAGE PVT. LTD., CHOWARA P.O., BALARAMAPURAM, THIRUVANANTHAPURAM - 695 501. ADV. SRI.P.RAMAKRISHNAN THIS INSURANCE APPEAL HAVING BEEN FINALLY HEARD ON 06/01/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: M.N.KRISHNAN, J. --------------------------- INS.APPEAL.No.16 OF 2008 --------------------------- Dated this the 6th day of January, 2010 J U D G M E N T ~~~~~~~~~~~ This is an appeal preferred against the order of the Employees Insurance Court, Kollam, in I.C.No.43/2004. The applicant establishment was imposed to pay damages by way of penalty and the Employees Insurance Court had set it aside on the ground that there exists no ground to impose damages. It is the case of the establishment that, it was on account of the acute financial stringency, delay was occasioned and there was no contumacious conduct involved in the matter. The position is fairly well settled now. Under Section 85B of the Employees State Insurance Act, 1948, the word used is 'may' and not 'shall' thereby indicating that the imposition being plenary in nature discretion has to be exercised judicially. Now, in the decision reported in Regional Director, E.S.I. Corporation and another v. Managing Director, M/s.Qetcos Ltd [ILR 2008(3) 132], a Division Bench of this Court held that it is not always necessary to impose damages even when there is only financial INAP.No.16/2008 2 difficulty. There must be mens rea. In the said decision, reference was made to the earlier Supreme Court decisions, wherein it has been held that mens rea shall be an important ingredient for imposing damages. Right from 1988 onwards, this Court has taken the view that unless there is a contumacious conduct or deliberate or willful evadement of payment, penalty cannot be imposed as a routine. So, considering the fact that there was financial stringency, which lead to the unavoidable situation of making delay in the payment and in the absence of any contumacious conduct it has to be held that the court below had exercised its discretion judicially and it does not call for any interference. Therefore, the appeal lacks merits. Hence dismissed. (M.N.KRISHNAN, JUDGE) ps