The Employees State Insurance ... vs M/S.Thiruvettai Ayyanar ...
2023 Latest Caselaw 5384 Mad

Citation : 2023 Latest Caselaw 5384 Mad
Judgement Date : 5 June, 2023

Madras High Court

The Employees State Insurance ... vs M/S.Thiruvettai Ayyanar ... on 5 June, 2023

    2023/MHC/2475




                           BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT

                                             DATED: 05.06.2023

                                                    CORAM:

                            THE HONOURABLE MR.JUSTICE N.SATHISH KUMAR

                                        C.M.A(MD)No.270 of 2023
                                                  and
                                        C.M.P(MD)No.3257 of 2023


                     The Employees State Insurance Corporation,
                     Sub-Regional Office,
                     Second West Street,
                     K.K.Nagar,
                     Madurai – 625 020.
                     through its Director.            :Appellant/Respondent


                                             .vs.


                     M/s.Thiruvettai Ayyanar Spinners(P)Limited,
                     Plot No.B-4(D), B-5 Sidco Industrial Estate,
                     Kappalur, Madurai – 625 008,
                     through its Manager
                     Authorized Officer S.Manikandam. :Respondent/Petitioner


                     PRAYER: Civil Miscellaneous Appeal filed under Section 82 of the
                     Employees State Insurance Act, 1948 against the judgment made in
                     E.S.I OP.No.58 of 2019, dated 26.12.2019, on the file of the Labour
                     Court(Employees State Insurance Court or in short ESI Court),
                     Madurai and to set aside the same.


                                  For Appellant           :Mr.I.Pinaygash

                                  For Respondent          :Mr.V.O.S.Kalaiselvam


                     1/8
https://www.mhc.tn.gov.in/judis
                                                   JUDGMENT
                                                   *************

Challenging the order passed by the Labour Court reducing

the damages to an extent of 25% of the amount as claimed by the

respondent ie., Rs.1,87,344/-, the present Civil Miscellaneous

Appeal came to be filed.

2.The Civil Miscellaneous Appeal was admitted on the

following substantial question of law:

''Whether the Labour Court, Madurai is correct in allowing the respondent's case based on mere pleading of financial cruch suffice in law without producing the records of profit and loss account evidencing for financial crisis either before the ESI Authority or before the Court of Law?

3.Challenge has been made before the Labour Court,

Madurai to set aside the order under Section 85(B) of the ESI Act

passed in No.57-00-038326-000-0101/INS-II/85-B/406/18, dated

14.3.2019.The proceedings have been passed claiming damages

under Section 85-B of the ESI Act for violation. Challenge has been

made on the ground that there is no mens rea and actus reus in

the impugned order to claim damage.

https://www.mhc.tn.gov.in/judis

4.The learned Trial Court negatived the contention of the

respondent herein that there was no mens rea and actus reus,

however, reduced the damage to an extent of 25% on the ground

that there is financial crisis being suffered by the textile industry.

Challenging the same, the present appeal came to be filed.

5.The learned counsel for the appellant would submit that

without any materials to show that the respondent suffered from

financial crisis, the Court itself has presumed such financial crisis

on the part of the respondent and reduced the pay damages. Hence

it is the contention that without establishing even the facts,

reduction of the damages to an extent of 25% is not valid in the eye

of law.

6.The learned counse for the respondent submit that taking

judicial note, reduced the damages during the period of

demonetization and GST Implementation that there was a

financial crisis. Hence the Labour Court has correctly reduced the

pay damages. He has also placed reliance in the decision reported

in 2006(3) LLN 122 in the case of Halwasia Vidya Senior

Secondary School) Haryana .vs.The Regional Provident

Fund Commissioner.

https://www.mhc.tn.gov.in/judis

7.On a perusal of the records, the Labour Court having

negatived the contention of the respondent that there was mens

rea or actus reus on the part of the respondent, however, reduced

the damages to the tune of 25% of the amount as claimed by the

respondent ie., Rs.1,87,344/-. In fact, the trial Court has presumed

financial crisis on the part of the respondent, without any evidence

whatsoever produced. It is relevant to note that taking advantage

of the financial crisis to seek for indulgence of the Court to use its

discretion to reduce the damages and proper materials on record

must be there to show that at the relevant point of time, the

respondent had suffered financial crisis and that there is no

intentional default, which warranted damages. On a perusal of the

entire materials, no such materials whatsoever is placed to show

the respondent suffered from financial crisis at the relevant point

of time. In this regard, the learned counsel produced the judgment

made in C.M.A(MD)No.974 of 2017, dated 10.3.2023 in the

case of The Regional Director, Tirunelveli .vs. The

Management, The Sree Sivakumar Spinning Mills, Sankar

Nagar, Tirunelveli, represented through the Managing

Director, wherein, it is held that without any oral or documentary

evidence, to prove that they were under the financial crisis

during the relevant point of time, the Labour Court, Cannot

https://www.mhc.tn.gov.in/judis exercise its discretion and reduce the quantum of damages,

especially to an extent of 80%. Similarly the Honourable Apex

Court in Civil Appeal NO.2137 of 2012 held that:

''17.Taking note of three Judges Bench judgment of this Court in Union of India and others .vs. Dharmendra Textile Processors and others(supra), which is indeed binding on us, we are of the considered view that any default or delay in the payment of EPF contribution by the employer under the Act is a sine qua non for imposition of levey of damages under Section 14B of the Act, 1952 and mens rea or actus reus is not an essential element for imposing penalty/damages for breach of civil obligations/liabilities.''

8.Considering the above judgments, this Court is of the view

that no materials whatsoever was produced to show that there is

financial crisis on the part of the respondent. The discretion

exercised by the Labour Court is without any jurisdiction. The

Honourable Apex Court in the case reported in 2006(3) LLN 122

as cited supra,reduced the damages to an extent of 25% taking

into consideration of the fact that there was no allegation against

the appellant that there was delay in making deposit with State

Government under the scheme which was being followed by the

https://www.mhc.tn.gov.in/judis appellant ans considering the special features of cases,damages

restricted to 25% of the amount levied by the Commissioner. In the

above scenario, the damages has been reduced in that case,

whereas, the very damage itself is imposed for delayed payment

in this case.