Esi Corporation Rep.By Its Joint ... vs M/S Anjaneya Cotton Mills Pvt Ltd
2022 Latest Caselaw 3030 Kant

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         IN THE HIGH COURT OF KARNATAKA
                 DHARWAD BENCH

 DATED THIS THE 22ND DAY OF FEBRUARY, 2022

                           BEFORE

        THE HON'BLE MR. JUSTICE R. NATARAJ

              M.F.A. NO.22130/2010 (ESI)

BETWEEN:

ESI CORPORATION,
REP. BY ITS JOINT DIRECTOR,
ESI CORPORATION, SUB-REGIONAL OFFICE,
NO.H-42 GROUND FLOOR, NIKETAN,
DOLLARS COLONY, ADJ. NEW CENTRAL
BUS-STAND, HUBBALLI-580030.
                                                   ... APPELLANT
(BY SRI VINAY S.KOUJALAGI & SRI V.M.SHEELAVANT, ADVOCATES)

AND:

M/S ANJANEYA COTTON MILLS PVT.LTD.,
JAYALAKSHMI, P.B.ROAD,
DAVANGERE,
REP.BY ITS MANAGING DIRECTOR.
                                               ... RESPONDENT
(BY SRI. SURESH S.GUNDI, ADVOCATE)

       THIS MISC.FIRST APPEAL IS FILED UNDER SECTION 82(2) OF
THE E.S.I. ACT, 1948 AGAINST THE JUDGMENT AND ORDER DATED
02.11.2009, PASSED IN ESI APPLICATION NO.45/2005, ON THE FILE
OF THE EMPLOYEE'S STATE INSURANCE COURT, HUBLI, AT HUBLI,
ALLOWING    THE PETITION   FILED UNDER   SECTION   75 OF THE
EMPLOYEES STATE INSURANCE ACT, 1948.

       THIS APPEAL COMING ON FOR FINAL HEARING, THIS DAY, THE
COURT DELIVERED THE FOLLOWING:
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                           JUDGMENT

This appeal under Section 82(2) of the Employees State

Insurance Act, 1948 (henceforth referred to as 'Act of 1948') is

filed by the ESI Corporation challenging the order dated

02.11.2009 passed by the Employees State Insurance Court,

Hubballi (henceforth referred to as 'ESI Court') in ESI Application

No.45/2005 by which it set aside the contribution demanded

from the respondent.

2. The respondent is an establishment covered under

the provisions of the Act of 1948. The ESI Corporation had

passed an order under Section 45(A) of the Act of 1948

demanding contribution of Rs.1,23,833/-. Later it reduced the

same to a sum of Rs.93,905/- which was challenged by the

respondent in ESI application No.15/1999. The ESI Court allowed

the same in part, in terms of the order dated 14.03.2001 and

struck off the interest demanded and ordered to pay the balance

contribution of Rs.18,803/- since the respondent had already

deposited part of the amount demanded. This order was again

challenged in MFA No.3030/2001. This Court in terms of the

order dated 31.10.2003 remitted the case back to the ESI Court

to reconsider the case relating to the grant of interest. After

remand, the ESI Court passed an order on 01.07.2004 and

directed the payment of Rs.42,433/- towards interest. The

respondent deposited the amount on 16.07.2004. Thereafter the

ESI Corporation claimed damages of Rs.79,768/-. The

respondent challenged the order imposing damages by filing ESI

Application 45/2005. The appellant opposed the application. The

respondent examined one of its employees as AW1 and marked

documents as Ex.A1 to A6 while the appellant marked Exs.R1 to

R9.

3. Based on the oral and documentary evidence, the

ESI Court held that the time to make the contribution began

from 01.07.2004 when the ESI Court passed an order directing

the respondent to pay Rs.42,433/-. The ESI Court held that the

respondent had paid the interest of Rs.42,433/- on 16.07.2004

within 15 days from the date of the order and that the

respondent is not liable to pay damages. The ESI Court found

that the damages was claimed for the period 08.02.1996 to

25.08.1996 based on an order under Section 45(A) of the Act of

1948 which was challenged before the Courts which reached

finality on 01.07.2004. Hence the ESI Court held that there was

no justification for claiming damages. Hence it allowed the

application filed by the respondent.

4. Being aggrieved by the order passed by the ESI

Court dated 02.11.2009, the present appeal is filed.

5. Learned counsel for the appellant submitted that the

liability to pay damages arose immediately on default of payment

of the contribution and therefore the demand for damages was

justified.

6. Per contra, the learned counsel for the respondent

submitted that the question of paying contribution was finally

decided on 01.07.2004 and that the respondent had deposited all

the amounts demanded as contribution and interest and

therefore there is no justification to claim the damages.

7. I have considered the submissions made by the

learned counsel for the parties.

8. The facts as narrated above undeniably demonstrate

that the respondent had challenged the order demanding

contribution and the same attained finality on 01.07.2004 when

the respondent called upon to pay interest on the contribution.

There is no deliberate delay on the part of the respondent.

However the respondent has paid all the amounts demanded

including the interest within the specified time and therefore the

question of demanding damages from the respondent does not

arise. The ESI Court has carefully considered the contentions

urged as well as the judgment of the Madras High Court in

Madras Hotel Ashoka Private Limited V/s ESIC and Regional

Director ESIC Chennai V/s N.Dhasarathy and sons and another

and the judgment of the Hon'ble Supreme Court in Regional

Director ESIC Kerala V/s Metropolitan Engineering Company

Limited and held that the demand for damages was unjustified.

9. The respondent having paid the contribution as

demanded as well as the interest, cannot be penalized to pay

damages. In that view of the matter, this appeal lacks merit and

the same is dismissed.

SD/-

JUDGE

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