Case: Standard Drum &amp; Barrel Manufacturers Company, Bombay Vs. Regional Director, Employees State Insurance Corporation., Bombay

as it may think fit to impose. Therefore, it cannot be said that the orders passed as to the damages are beyond the scope of the section. Further it cannot be forgotten that the E.S.I. scheme is a piece of social security scheme. Social security is one of the fundamental needs of the day. It is a security which a Welfare State or Society furnishes through appropriate organisation or legislation against certain risks which an individual of small means cannot effectively provide by his own ability or foresight such a social insurance scheme provides benefits to the persons with small earnings as of right and not by way of charity. The fund for the social security scheme is raised from the combined contributory efforts of Insurer, Employer and the State. There is basic difference in the nature of benefits received under the Employees State Insurance Act and the Employees Provident Fund Act. Provident Fund is paid to the Industrial Worker after he retires or to his dependents in case of his early death. In case of contributory provident fund, both worker and employer are to contribute but the amount is paid to the workman concerned after his retirement or to his dependeants in case of his premature death. It has a co-relation with the contribution made by the worker. Such is not the case, with the Insurance scheme. Contribution raised under the Act goes to the common pool for providing benefits to the workmen in case of sickness, maternity and employment injury etc. It is not necessary to deal with the object of the legislation in any further details in view of the decision of the Supreme Court in A.I.R. 1978 S.C. 1478 (Royal Talkies, Hyderabad and others v. Employees State Insurance Corporation through its Regional Director, Hill Fort, Road Hyderabad. This is what the Supreme Court has observed in para 9 of the said judgment. "9. A consepectus of the statute, to the extent relevant, is necessary to appreciate the controversy at the Bar. The statutory personality and the social mission of the Act once projected, the resolution of the conflict of interpretation raised in this case is simple. Although, technically the Act is a pre-constitution one, it is a post-independence measure and shares the passion of the Constitution for social justice. Articles 38, 39, 41, 42, 43 and 43-A of the Constitution show concern for workers and their welfare. Since independence, this legislative motivation has found expression in many enactments. We are concerned with one such law designed to confer benefits on this weaker segment in situations of distress as is apparent from the preamble. The machinery for State Insurance is set up in the shape of a Corporation and subsidiary agencies. All employees in factories or establishments are sought to be insured against sickness and allied disabilities, but the funding, to implement the policy of insurance, is by contributions from the employer and the employee. In view of the complexities of modern business organisation the principal employer is made primarily liable for payment of contribution "in respect of every employee, whether directly employed by him or by or through an immediate employer". Of course, where the employee is not directly employed by him but through another immediate employer, the principal employer is empowered to recoup the contribution paid by him on behalf of the immediate employer (section 41). There is an inspectorate to superwise the determination and levy of the contributions. There is a chapter prescribing penalties; there is an adjudicating machinery and there are other policing processes for the smooth working of the beginning project envisaged by the Act. The benefits belong to the employees and are intended to embrace as extensive a circle as is feasible. In short, the social orientation, protective purpose and human coverage of the Act are important considerations in the statutory construction, more weighty than more legamacity or gramatical nicety. 8. It cannot also be forgotton that the regulations framed under the Act make specific provisions for the contribution of amount by the employer as well as the workmen. It prescribe time for payment of the amount and also prescribed procedure as to how the amount is to be paid. In the present case the employees contribution was already deducted. Therefore, in substance the said amount was entrusted to the employer by the employees for the purpose of paying contribution. This is clear from section 40(4) of the Act. By newly added Explanation II, to section 405 of the Indian Penal Code, this position is further clarified. Said Explanation reads as under: "A person, being an employer, who deducts the employees contribution from the wages payable to the employee for credit to the Employees State Insurance Fund held and administered by the Employees State Insurance Corporation established under the Employees State Insurance Act, (34 of 1948), shall be deemed to have been entrusted with the amount of the contribution so deducted by him and if he makes default in the payment of such contribution to the said fund in violation of the said Act, shall be deemed to have dishonestly used the amount of the said contribution in violation of a direction of law as aforesaid." It was rightly contended by Shri Jaykar, that in the present case the appellant-company is not only an habitual defaulter bus is practically treating the E.S.I. scheme, as self-financing scheme for its business. We find much substance in this contention of Shri Jaykar. In the present case it is practically an admitted position that in all 23 defaults were committed by the appellant company and it is in the case of last show cause notice that the maximum penalty is imposed. There is Corporation was quite justified in described that the appellant-company was a chronoic or a habitual defaulter and hence the maximum penalty prescribed by law was called for. Therefore, we do not find this is a case wherein any interference is called for with the discretion exercised by the Regional Director of E.S.I.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]If all those three orders are read together it is quite clear that the Regional Director of the E.S.I. considered the explanation offered by thein its proper context. In case of two notices he reduced the claim for damages. So far as the last show cause notice is concerned, in view of the considerable delay in payment of contribution and the fact that it related to the 21st to 23rd defaults, he thought that there is no scope for any reduction in the damages. Therefore, it cannot be said that the orders passed by the Regional Director of E.S.I. are not speaking orders. The orders clearly indicate application of mind to the explanation offered by theregarding the delay in payment of contribution and, thereafter, a decision is taken by the Regional Director of the E.S.I. imposing penalty or damages. The order of the Regional Director of E.S.I. under sectioncannot be equated with the judgment of the Court containing detailed reasons. If the order passed indicates application of mind to all the relevant circumstances, and is not arbitrary then only because it is not like a judgment of the Court it cannot be held that it is not a speaking order. Therefore, in our view it cannot be said that the orders are vitiated either forof mind or that they are not speaking orders. As already observed the orders passed are speaking orders and give all the necessary particulars. Therefore, we do not find any substance in this contention of Shrithe present case it is practically an admitted position that in all 23 defaults were committed by the appellant company and it is in the case of last show cause notice that the maximum penalty is imposed. There is Corporation was quite justified in described that thewas a chronoic or a habitual defaulter and hence the maximum penalty prescribed by law was called for. Therefore, we do not find this is a case wherein any interference is called for with the discretion exercised by the Regional Director of E.S.I.