IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE M.N.KRISHNAN FRIDAY, THE 5TH SEPTEMBER 2008 / 14TH BHADRA 1930 Ins.APP.No. 43 of 2006() ------------------------ IC.05/2004 of ESI COURT, PALAKKAD .................... APPELLANT/OPPOSITE PARTY ------------------------------------- EMPLOYEES'STATE INSURANCE CORPORATION, REPRESENTED BY ITS REGIONAL DIRECTOR(KERALA) NORTH SWARAJ ROUND, THRISSUR. BY ADV. SRI.T.V.AJAYAKUMAR RESPONDENTS: APPLICANT --------------------------------- MOHAMMED HAROOM, MANAGING DIRECTOR, M/S.UNITED PLYWOODS LTD., REGISTERED OFFICE, P.B.NO. 40, ANAMALA ROAD, CHALAKUDY P.O. BY ADV. SRI.E.K.NANDAKUMAR SRI.A.K.JAYASANKAR NAMBIAR SRI.K.JOHN MATHAI SRI.P.BENNY THOMAS SRI.ANIL D. NAIR THIS INSURANCE APPEALS HAVING BEEN FINALLY HEARD ON 05/09/2008, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: M.N. KRISHNAN, J. = = = = = = = = = = = = = = INS.APPEAL NO. 43 OF 2006 = = = = = = = = = = = = = = = Dated this the 5th day of September, 2008. J U D G M E N T This appeal is preferred against the order of the Employees Insurance Court, Palakkad in I.C.5/04 whereby the Court set aside Exts.A1 and A2 and directed the E.S.I. Corporation to issue fresh notice for interest at the rate of 12% or at the rate not exceeding the lending rate of interest charged by the scheduled Banks at the relevant time. So far as the question of damages is concerned the E.S.I. Corporation found that there had been no deliberate avoidance of payment though there was delay. So it invoked its jurisdiction and held that S.85(B) being a discretionary relief and as there is no willful or contumacious conduct did not award damages. I do not find any mistake. 2. It has to be stated that the mere question of financial difficulty may not be the sole criteria for not imposing damages but it may be one of the circumstances which may tend a Court to consider the exercise of its Ins. Appeal 43 OF 2006 -:2:- judicial discretion. The main aspect is the deliberate avoidance or contumacious conduct. In this case there is nothing to show about the contumacious conduct or deliberate avoidance and therefore damages need not be ordered and I confirm the finding of the E.S.I. Court. 3. So far as interest aspect is concerned S.39(5) states that a simple interest only at the rate of 12% per annum or at such a higher rate as may be specified in the regulations till the date of disbursal of this actual payment. The proviso makes it further clear such imposing of interest specified in the regulation shall not exceed the lending rate of interest charged by any schedule bank. It is true that under Regulation 31-A by an amendment dated 1.9.94, the simple interest to be levied is made as 15% per annum. But the Regulation cannot be read in isolation with the main Section and therefore as ordered by the E.S.I Court a fresh notice has to go in terms of S.39(5) and the proviso. If it is Ins. Appeal 43 OF 2006 -:3:- going to levy more than 12% it must be exactly in tune and in compliance of the mandate under the proviso to S.39(5) (a). With this observation the appeal is disposed of. M.N. KRISHNAN, JUDGE. ul/-