IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 12.01.2011 CORAM: THE HON’BLE MR. JUSTICE K.CHANDRU W.P.No.29016 of 2004 & WPMP No.35240 of 2004 1 M/S. EMPEE INTERNATIONAL HOTEL AND RESORTS LTD. REP.BY ITS DIRECTOR M.P. PURUSHOTHAMAN [ PETITIONER ] Vs 1. THE JOINT DIRECTOR EMPLOYEES STATE INSURANCE CORPORATION REGIONAL OFFICE (Tamil Nadu) 143, STERLING ROAD CHENNAI- 34. 2. THE ASSISTANT DIRECTOR EMPLOYEES STATE INSURANCE CORPORATION REGIONAL OFFICE (Tamil Nadu) 143, STERLING ROAD CHENNAI.34 3. THE RECOVERY OFFICER EMPLOYEES STATE INSURANCE CORPORATION CHENNAI - 34. [ RESPONDENTS ] Prayer : Petition under Article 226 of the Constitution of India praying for a Writ of Certiorari calling for the records pertaining to proceedings bearing No.TN/D-18/INS.VI/51-8875-111 dated 27.5.2004 on the file of the 1st respondent and that of the proceedings bearing TN/INS.VI/51-8875-111 dated 2.8.2004 on the file of the 2nd respodnent and quash the same. For Petitioner :: Mr.V.Kalyanaraman For Respondents :: Mr.K.C.Ramalingam O R D E R The petitioner is a hotelier having unit at Anna Salai, Chennai, which is covered by the provisions of the ESI Act. They have come https://hcservices.ecourts.gov.in/hcservices/ forward to challenge the order passed under Section 85(B) of the ESI Act levying damages for the delayed payment. In the impugned order, it is stated that while the petitioner has paid the contribution, there was an enormous delay and when notice was issued, the petitioner came up with a plea that they have paid the amount of contribution in four instalments for the year 1995-1996 and they have paid the contribution in ten instalments for the year 2003-2004. The defence taken by the petitioner was that as there was severe financial constraint as well as low occupancy in the hotel, they could not generate required funds and in essence they offered for waiver of damages on the plea of recession made by them. However, the ESI Corporation found that the delay was not few days or few weeks, but there was enormous delay of 2013 days in making the due contribution, though the Regulation 31 of the ESI (General) Regulations, 1950 obliges the employer to pay the contribution immediately after the completion of 21 days period. 2. The Writ Petition was admitted on 8.10.2004. Pending the Writ Petition, this Court granted an interim stay on condition that the petitioner deposits Rs.75,000/- as a condition precedent for grant of stay. Mr.V.Kalyanaraman, learned counsel for the petitioner stated that the condition has been complied with. 3. The only question that has to be determined is for the reasons set out in the affidavit whether the petitioner is entitled for waiver or reduction. Mr.V.Kalayanaraman, learned counsel for the petitioner submitted that the petitioner has sent a letter setting out the reasons for waiver and the respondent Corporation has not considered the same and therefore the impugned order is liable to be set aside. 4. Section 85-B of the ESI Act enables the ESI Corporation to levy damages. The 1st proviso to Section 85-B only prescribes that before levy of damages, the employer should be given a reasonable opportunity of being heard. In the present case, it is not the case of the petitioner that they were not given notice before damages were levied on them. The 2nd proviso to Section 85-B also gives a legislative guideline for the reduction or waiver of damages. The condition set out therein is the Industry must be a sick Industry for which a Scheme has been sanctioned by BIFR under the provisions of SIC Act, 1985. Even in such cases, the ESI Corporation alone can decide whether they are qualified for waiver. 5. The Supreme Court vide its judgment in EMPLOYEES' STATE INSURANCE CORPORATION VS. HMT LTD. AND ANOTHER reported in (2008) 3 SCC 35 had stated that Section 85-B of the Act empowers the Corporation to recover damages in the event of employer fails to make payment of the https://hcservices.ecourts.gov.in/hcservices/ amount due in respect of contribution. The only qualification being the amount of levy shall not exceed to total contribution. In paragraph Nos.25 and 26, it was averred as follows: "25. The statute itself does not say that a penalty has to be levied only in the manner prescribed. It is also not a case where the authority is left with no discretion. The legislation does not provide that adjudication for the purpose of levy of penalty proceeding would be a mere formality or imposition of penalty as also computation of the quantum thereof became a foregone conclusion. Ordinarily, even such a provision would not be held to providing for mandatory imposition of penalty, if the proceeding is an adjudicatory one or compliance with the principles of natural justice is necessary thereunder. 26. Existence of mens rea or actus reus to contravene a statutory provision must also be held to be a necessary ingredient for levy of damages and/or the quantum thereof." 6. But, in the present case, as noted already, the delay is not few days or few weeks, but more than five years. Secondly, it is not the case of the petitioner that they have not been heard before the levy of damages. The plea for waiver or reduction must be based upon the statutory guideline provided under the Act. The vague statement that they were suffering due to recession cannot be a ground and the second proviso to Section 85-B of the Act state so the parameters under which the Corporation can consider the reduction or waiver of damages. Since those ingredients are missing in the case of the petitioner, the relief claimed in the Writ Petition is misconceived. The impugned order does not suffer from any illegality or impropriety. Hence, the writ petition stands dismissed. No costs. The Miscellaneous Petition is closed. Sd/ Asst.Registrar /true copy/ Sub Asst.Registrar ajr https://hcservices.ecourts.gov.in/hcservices/ To 1. THE JOINT DIRECTOR EMPLOYEES STATE INSURANCE CORPORATION REGIONAL OFFICE (Tamil Nadu) 143, STERLING ROAD CHENNAI- 34. 2. THE ASSISTANT DIRECTOR EMPLOYEES STATE INSURANCE CORPORATION REGIONAL OFFICE (Tamil Nadu) 143, STERLING ROAD CHENNAI.34 3. THE RECOVERY OFFICER EMPLOYEES STATE INSURANCE CORPORATION CHENNAI - 34. +1cc to M/s. Aiyar & Dolia, Advocate Sr2831 +1cc to Mr.K.C.Ramalingam, Advocate Sr 2822 RSY(CO) km/2.2. W.P.No.29016 of 2004 https://hcservices.ecourts.gov.in/hcservices/