IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE PIUS C.KURIAKOSE & THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM TUESDAY, THE 2ND FEBRUARY 2010 / 13TH MAGHA 1931 Ins.APP.No.9 of 2007(F) --------------------------- IC.4/2002 of EMPLOYEES INSURANCE COURT,IDUKKI .................... APPELLANT/APPLICANT -------------------------- M/S.VIKAS HIRE PURCHASE COMPANY LTD., KMC XII/436, KOOTTICKAL BUILDINGS, NEW MARKET ROAD, KOTTAYAM, REPRESENTED BY ITS MANAGING DIRECTOR, P.K.JOSE. BY ADV. SRI.R.RAMADAS RESPONDENT(S): OPPOSITE PARTIES ------------------------------------------ * 1. EMPLOYEES' INSURANCE COURT, IDUKKI. [DELETED] 2. THE EMPLOYEES STATE INSURANCE CORPORATION, REPRESENTED BY ITS REGIONAL DIRECTOR, REGIONAL OFFICE, NORTH SWARAJ ROUND, THRISSUR. 3. THE REGIONAL DIRECTOR, EMPLOYEES STATE INSURANCE CORPORATION, REGIONAL OFFICE, NORTH SWARAJ ROUND, THRISSUR. 4. THE DEPUTY DIRECTOR, EMPLOYEES STATE INSURANCE CORPORATION, REPRESENTED BY ITS REGIONAL DIRECTOR, REGIONAL OFFICE, NORTH SWARAJ ROUND, THRISSUR. INS. APPL. NO.9/07 -2- 5. THE RECOVERY OFFICER, EMPLOYEES STATE INSURANCE CORPORATION, REPRESENTED BY ITS REGIONAL DIRECTOR, REGIONAL OFFICE, NORTH SWARAJ ROUND, THRISSUR. *[R1 IS DELETED FROM THE PARTY ARRAY AS PER ORDER DT.03/09/2008 IN I.A. NO.2316/2008] ADV. SMT.T.D.RAJALAKSHMY, SC, ESI CORPN. FOR R2 TO 5 THIS INSURANCE APPEAL HAVING COME UP FOR ADMISSION ON 02/02/2010,THE COURT ON THE SAME DAY PASSED THE FOLLOWING: PIUS C. KURIAKOSE & C. K. ABDUL REHIM, JJ. ------------------------------------------------ Ins. Appeal No.9 of 2007 ------------------------------------------------ Dated this the 2nd day of February, 2010 JUDGMENT Abdul Rehim, J This appeal under Section 82 of the Employees' State Insurance Act is preferred against the order in I.C. No.4/02 of the Employees Insurance Court, Idukki. The demand raised by the Employees State Insurance Corporation to pay contributions along with interest and damages under Section 85-B of the Act, was challenged before the Insurance Court by the Appellant/Applicant. The Insurance Court found that in view of admissions made by the appellant with respect to the liability for payment of contributions during the relevant period and in view of the fact that such contributions have already been paid, the dispute regarding liability for payment of interest and Ins. Appeal No.9 of 2007 -2- damages alone need be considered. 2. With respect to payment of interest the Insurance Court found that, since payment of contributions within the time stipulated under the statute was defaulted, there is a statutory liability for payment of interest for the belated period which cannot be waived. But, the Insurance Court found that the delay caused in effecting payment was not due to any wilful laches, and that the applicant was facing financial crisis during the relevant time. Therefore, the quantum of damages imposed under Section 85-B was reduced to 25% of the amount demanded. The appellant herein is challenging the order of the Insurance Court to the extent of imposing payment of 25% of the damages demanded under Section 85-B. 3. Heard, Sri.R.Ramadas, counsel appearing for the appellant and Smt.T.D.Rajalekshmi, Standing Ins. Appeal No.9 of 2007 -3- Counsel appearing for the respondent/Corporation. 4. As observed by the court below, we notice that the liability for payment of interest on belated payment of contributions, is a statutory liability and the Insurance Court is not empowered to grant any waiver. The above aspect is covered by Division Bench decision of this Court in Cannanore Drug Lines v. E.S.I Corporation (2007(1) KLT 880). Therefore, we are not inclined to accept the contentions raised against findings of the Insurance Court upholding the demand for payment of interest. 5. With respect to demand for damages under Section 85-B, we notice that the Insurance Court has accepted contentions of the applicant, that there was no wilful laches on the part of the applicant in not remitting the amount within due time. Further, the court found that the applicant was in severe financial Ins. Appeal No.9 of 2007 -4- crisis. Therefore, it is evident that the Insurance Court has not found any contumacious acts on the part of the applicant which can be attributable with an element of 'mens rea'. Counsel for the appellant has drawn our attention to a Division Bench decision of this Court in ESI Corporation v. Qetcos Ltd. (2008(3) KLT 336). It is held therein that imposition of damages under Section 85-B of the ESI Act is penal in nature and factual situations has to be considered by the authorities. It is held that the authorities should exercise discretion while imposing damages. If there is no 'mens rea' and the employer was not able to pay the amount due to circumstances beyond his control, the damages can be totally waived. In the case at hand, since the Insurance Court had accepted contentions of the applicant regarding their inability to pay the contributions within the due dates, we are of Ins. Appeal No.9 of 2007 -5- the considered opinion that imposition of damages under Section 85-B can be totally waived. 6. Under the above circumstances, the appeal is allowed in part setting aside the impugned order of the Insurance Court to the extent it upheld 25% of the demand for payment of damages under Section 85-B of the Act. 7. Parties are directed to suffer their costs. PIUS C. KURIAKOSE JUDGE C. K. ABDUL REHIM JUDGE kns/-