IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE M.SASIDHARAN NAMBIAR WEDNESDAY, THE 1ST APRIL 2009 / 11TH CHAITHRA 1931 Ins.APP.No. 37 of 2008(A) ------------------------- IC.14/1996 of E.I.COURT, KOLLAM .................... (S): APPELLANTS/ OPPOSITE PARTIES -------------------------------------------------------- 1. THE ASSISTANT REGIONAL DIRECTOR, E.S.I.CORPORATION, THIRUVANANTHAPURAM. 2. THE RECOVERY OFFICER, E.S.I.CORPORATION, THRISSUR. BY ADV. SRI.T.V.AJAYAKUMAR RESPONDENT(S): APPLICANT --------------------------------- SRI.ROY.M.MATHEW, MOTHOOTTU HOUSE, KOZHENCHERRY, PATHANAMTHITTA. ADV. SRI.P.RAMAKRISHNAN THIS INSURANCE APPEALS HAVING COME UP FOR ADMISSION ON 01/04/2009, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: M.SASIDHARAN NAMBIAR,J. =========================== INS.APPEAL NO. 37 OF 2008 =========================== Dated this the 1st day of April,2009 JUDGMENT Respondents in I.C.14/1996 before the Employees Insurance Court, Kollam are the appellants. The applicant therein is the respondent. Respondent filed the application under Section 75 and 77 of Employees State Insurance Act challenging the demand made by the appellants. When the Employees Insurance Court rejected his contentions and dismissed the application,respondent filed MFA 1208/1999. As per judgment dated 12.7.2005, this court upheld the claim of the appellant Corporation that first respondent is liable to pay contribution for the omitted wages. But the appeal was allowed to the limited extent of considering the question of bar of limitation on the demand made, as it was contended that INSA 37/2008 2 the claim raised by the appellant Corporation is barred under proviso to Section 77(1A) (b) of the Employees State Insurance Act. After remand the E.I. Court relying on the Full Bench decision of this Court in E.S.I. Corporation v. Excel Glasses Ltd (2003(3) KLT 42 declared that the claim for contribution for the omitted wages is sustainable only with regard to five years prior to the date of demand and the claim beyond that period is unsustainable. The appeal is filed by the ESI Corporation challenging the judgment. 2. Learned counsel appearing for the appellants and respondent were heard. 3. The E.I. Court relying on the Full Bench decision in E.S.I. Corporation Case (supra) held that the Corporation is entitled to claim arrears only for a period of five years prior to the date of demand in view of Section 77(1A) (b) of E.S.I. Act. As rightly pointed out by the learned counsel appearing for the appellant that decision was INSA 37/2008 3 overruled by the Apex Court in Employees State Insurance Corporation v. Santhakumar (2007(1) KLT 133. 4. The Full Bench of this court had held that a plain reading of the statutory provision contained in Section 77 and the Regulation show that the Corporation can make a claim within five years from the date on which that had arisen and if the proviso to Section 77(1A)(b) was construed as the period for the Corporation to approach the E.I. Court, it would be open to the Corporation to make a claim at any time and if that is permitted the employer would be greatly handicapped as it would not have the records for a period beyond five years. Their Lordships of the Supreme Court disagreed with the view and construing the provisions of Section 77(1A) held:- “29. S.77 of the Act relates to commencement of proceedings before the E.S.I. Court. The INSA 37/2008 4 proviso to sub-section 77 of the Act cannot independently give any meaning without reference to the main provision, namely S.77 of the Act. Therefore, he proviso to Clause (b) of S.77 (1A) of the Act, fixing the period of five years for the claim made by the Corporation, will apply only in respect of claim made by the Corporation before the E.S.I. Court and to no other proceedings.” It was also held that Section 75(2) empowers the Corporation to apply to E.S.I Court to determine a dispute against an employer where it was satisfied that such a dispute exists and if there is no dispute in the determination either under Section 45A(1) or under Section 68, the Corporation can INSA 37/2008 5 straightaway go for recovery of the arrears. Their Lordships also held that proviso to Section 77 (1A)(b) would apply only to a case where the Corporation approaches the E.S.I. Court under section 75(2). In the light of the decision of the Supreme Court the finding of the E.I Court is not sustainable. 5. Learned counsel appearing for respondent then pointed out that even if proviso to Section 77 (1A)(b) is not applicable, the claim for contribution should have been raised by the Corporation within a reasonable period and as the reasonable period depends on the facts of the case and the E.I. Court did not consider this aspect, E.I. Court may be directed to consider whether the demand made was within a reasonable period. 6. The Supreme Court in the said decision considered the question whether the concept of reasonable time can be read into the provision, eventhough it is not specifically provided. After INSA 37/2008 6 elaborately considering the meaning of reasonable time, it was held that the factual aspect has to be examined to decide whether the claim is made within a reasonable period. As in this case, that question was not considered and focus was made only on Section 77(1A) (b) of E.S.I Act. Hence the employer was permitted to move the E.S.I. Court within a period of two months and the E.S.I. Court was directed to determine whether demand was raised within a reasonable period of time or considering the question of prejudice, if any, for the delayed action taken by the Corporation. As this question was not considered by the E.I.Court and the E.I. Court solely relied on the Full Bench decision of this court which was subsequently overruled by the Apex Court, the question is to be considered afresh. The appeal is allowed. The order passed by the E.I. Court in I.C.NO.14/1996 dated 6.6.2006 is set aside. E.I. Court, Kollam is directed to INSA 37/2008 7 determine whether the demand raised by the Corporation is within a reasonable period of time and whether the delayed action taken by the Corporation has resulted any prejudice to the respondent. It is made clear that respondent has to deposit the amount covered by the demand less the disputed amount then only E.I. Court need consider the question. M.SASIDHARAN NAMBIAR JUDGE tpl/- M.SASIDHARAN NAMBIAR, J. --------------------- W.P.(C).NO. /06 --------------------- JUDGMENT SEPTEMBER,2006