IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE A.K.BASHEER & THE HONOURABLE MR. JUSTICE P.Q. BARKATH ALI. WEDNESDAY, THE 31ST MARCH 2010 / 10TH CHAITHRA 1932 Ins.APP.No. 36 of 2008() -------------------------------- IC.33/2005 OF ESI COURT, PALAKKAD .................... APPELLANT/OPP. PARTY:- ------------------------------------ REGIONAL DIRECTOR, ESI CORPORATION, PANCHADEEP BHAVAN, NORTH SWARAJ ROUND, THRISSUR 680 020. BY ADV. SMT.T. D. RAJALAKSHMY, SC, ESI CORPN. RESPONDENT/APPLICANT. -------------------------------------- M/S EASTERN TREADS LTD., OONUKKAL POST, KOTHAMANGALAM, ERNAKULAM DISTRICT REPRESENTED BY THE EXECUTIVE DIRECTOR M.E. MOHAMMED. ADV. SRI.E.K.NANDAKUMAR FOR R1 SRI.A.K.JAYASANKAR NAMBIAR FOR R1 SRI.K.JOHN MATHAI FOR R1 SRI.P.BENNY THOMAS FOR R1 THIS INSURANCE APPEALS HAVING BEEN FINALLY HEARD ON 31/03/2010, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: PKK A.K. BASHEER & P.Q. BARKATH ALI, JJ. ---------------------------------------------------- INS. APPEAL NO. 36 OF 2008 ----------------------------------------- DATED THIS THE 31TH DAY OF MARCH 2010 JUDGMENT A.K. BASHEER, J. This appeal is at the instance of the Employees State Insurance Corporation through its Director. The challenge is against the order passed by the Employees Insurance Court, Palakkad. By the impugned order, the court below has set aside Ext.A2 and A4 orders issued by the Corporation against the respondent herein. 2. Ext.A2 order was issued by the Corporation under Section 45-A of the Act. Under the said order the Corporation demanded a sum of Rs. 71,675/- towards contribution payable by the respondent /employer, on the basis of the salary paid to Marketing Executives under it. The court below after considering the evidence of AW1, a Senior Officer of the Company and AW2 and AW3, Marketing Executives working in the Company, came to the conclusion that the Marketing Executives had not been on duty in the office on a permanent basis. They were always away from INS. APPEAL NO. 36 OF 2008 2 the office in connection with marketing the products of the Company. It was noticed by the court below that the Government of Kerala had specifically excluded this class of employees from the perview of the Act as revealed from Ext.A10 notification. It was also noticed by the court below that as against the claim of Rs. 71,675/-, the respondent Company had deposited Rs. 16,521/-. The respondent, Company contended that the balance contribution was not paid for the reasons stated above. The said contention was accepted by the Court below and accordingly Ext.A2 order was set aside. Having perused the materials available on record, we do not find any reason to interfere with the finding entered by the court below in this regard. 3. The other order under challenge is Ext.A4 issued under Section 85-B of the Act.The Corporation took the view that there was contumacious act on the part of the respondent/ Company in refusing to pay the contribution and therefore a sum of Rs. 57,549/- was demanded by the INS. APPEAL NO. 36 OF 2008 3 Corporation by way of damages. 4. The court below, placing reliance on Ext.A8 series of annual reports of the Company for the financial years 2000-01, 2001-02 and 2002-03 came to the conclusion that there was no contumacious contact as alleged, since these annual reports clearly indicated that the financial position of the Company was not satisfactory and that there was acute financial stringency. It is trite that merely because a provision has been made for levy of penalty, it should, by itself necessarily lead to the conclusion that penalty must be levied in all situations. The competent authority is vested with discretionary power under the Act and Regulations (See Prestolite (India) Ltd. Vs. Regional Director and Another AIR 1994 SC 521 and Dilip N. Shroff Vs. Joint Commissioner of Income Tax, Mumbai & Another (2007) 6 SCC 329, E.S.I Corporation Vs. H.M.T Ltd. 2008-1 LLJ 814 (SC) ) 5. Having perused the materials available on record, we do not find any reason to interfere with the findings of INS. APPEAL NO. 36 OF 2008 4 fact entered by the court below in this connection. 6. There is no merit in any of the contentions raised by the appellant. Therefore the appeal is dismissed. A.K. BASHEER (JUDGE) P.Q. BARKATH ALI (JUDGE) pkk