IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE M.N.KRISHNAN THURSDAY, THE 13TH NOVEMBER 2008 / 22ND KARTHIKA 1930 Ins.APP.No. 47 of 2008() --------------------------------- IC.88/2005 of EMPLOYEES INSURANCE COURT, ALAPPUZHA .................... APPELLANT: ------------------- M/S.LOTS SHIPPING LIMITED, 4TH FLOOR, GCDA COMPLEX, MARINE DRIVE, ERNAKULAM.REPRESENTED BY ITS DIRECTOR, JOHN MATHEW. BY ADV. SRI.ANIL S.RAJ SRI.RADHIKA RAJASEKHARAN P. SRI.MANU GOVIND RESPONDENT: --------------------- THE REGIONAL DIRECTOR, ESI CORPORATION, N.S.ROUND, THRISSUR-20. BY ADV. SRI.T.V.AJAYAKUMAR, SC, ESI CORPN. THIS INSURANCE APPEALS HAVING COME UP FOR ADMISSION ON 13/11/2008,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Rs/ M.N.KRISHNAN, J ===================== INAP No.47 OF 2008 ===================== Dated this the 13th day of November 2008 JUDGMENT This appeal is preferred against the judgment in I.C.No.88 of 2005 of the Employees' Insurance Court, Alappuzha. It was an application seeking for a declaration that the Employees State Insurance Act is not applicable to the applicant company. After considering the entire materials the E.I. Court held that the E.S.I.Corporation can enforce the provisions of the E.S.I.Act with effect from 1.2.2005 and then directed to issue notice proposing to assess E.S.I contribution from 1.2.2005. This is a case where there was an initial offer voluntarily by the establishment for a coverage under the E.S.I.Act which was declined by the Corporation. Subsequently they issued a provisional notice on 1.2.2005 demanding E.S.I. contribution. It is at that stage, the establishment contended for the position that it is not liable to be covered under the E.S.I.Act. It is that provisional notice which has been challenged and the court found that it is liable to be covered. The interesting question argued before me is that the E.I. Court should not have fixed the date as 1.2.2005 and it should have left that date to be fixed by the INAP 47/2008 -:2:- Corporation. A perusal of the judgment would reveal that the court fixed the date only with a view to help the establishment so that no demand is made by the Corporation prior to 1.2.2005 when a provisional notice is issued and it is challenged. It means a dispute has arisen regarding the question of coverage. A Division Bench of this Court in the decision reported in Cannanore Drug Lines v. E.S.I.Corporation(2007(1) KLT 880) held as follows: “The bona fide impression of the appellant that his establishment was not covered under the provisions of the E.S.I Act or the pendency of a dispute before the E.S.I.Court regarding the appellant's liability to pay E.S.I. contribution cannot be a valid ground for exempting the appellant from paying interest in terms of S.39(5)(a) and Regulation 31A. When the statute does not provide for any such exemption the respondent cannot exclude the amount of interest from the demand made against the appellant”. Thus it makes it crystal clear that the amount has to be paid when it becomes due with the grace period of 21 days and the mere bona fide belief or the pendency of the litigation shall not be a ground. The Corporation had issued a provisional notice on 13.5.2005 with the date of coverage from 1.2.2005. That is why that date has been fixed by the court as the commencing point. It cannot be found fault with and the question of interest also is liable to be paid in the light of the decision referred to above. But, I make it clear that this has been an establishment which INAP 47/2008 -:3:- volunteered by the authority for a coverage which was rejected to start with and subsequently allowed to be covered and so there has never been any contumacious conduct, recalcitrant attitude or mens rea to avoid payment. I make it very clear in this case that the Corporation shall not venture to issue any notice levying damages under Section 85B of the ESI Act. Since the attitude of the establishment had been friendly and if there is any discretionary jurisdiction vested with the Corporation, they shall bestow that to the establishment by showing some concession after issuing notice fixing the amount inviting for the objection. Only after considering the entire matter proceedings shall be initiated for recovery of the amount. M.N.KRISHNAN, JUDGE Cdp/-