Madras High Court
The Employee'S State Insurance ... vs M/S.Bannari Amman Spinning Mills on 12 June, 2023
C.M.A(MD)No.932 of 2019
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED: 12.06.2023
CORAM
THE HON'BLE MR.JUSTICE R.VIJAYAKUMAR
C.M.A(MD)No.932 of 2019
The Employee's State Insurance Corporation,
Sub-Regional Office, 2nd Main Road,
K.K.Nagar (West), Madurai-20.
Represented by its Deputy Director. ... Appellant/Respondent
Vs.
M/s.Bannari Amman Spinning Mills,
Nadukkandanur Pirivu,
Morepatti Post, Vadamadurai,
Dindigul District.
Represented by its General Manager. ... Respondent/Petitioner
PRAYER: Civil Miscellaneous Appeal is filed under Section 82 of the
E.S.I Act, to set aside the order, dated 11.10.2019 passed by the E.S.I
Court (i.e.Labour Court), Madurai in E.S.I.O.P.No.65 of 2011, permit the
appellant to charge interest, as claimed in the communication, dated
18.07.2011 as permissible under law and allow this Civil Miscellaneous
Appeal with necessary directions in favour of the appellant.
For Appellant : Mr.P.Ganapathisamy
For Respondent : Mr.K.Hemakarthikeyan
https://www.mhc.tn.gov.in/judis
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C.M.A(MD)No.932 of 2019
JUDGMENT
The present appeal has been filed by the E.S.I corporation
challenging the order of the Labour Court, Madurai in E.S.I.O.P.No.65 of
2011.
2. According to the learned counsel appearing for the appellant,
the coverage of the E.S.I Act was extended to the respondent employer
with effect from 01.08.2000. However, the said coverage was challenged
by the employer by filing various proceedings. Ultimately, the writ
petition came to be dismissed on 03.10.2007. After the dismissal of the
writ petition, the employer had filed M.P.No.1 of 2008 in W.P.No.26368
of 2007 seeking clarification to the effect that the order of the dismissal
of the writ petition will have only prospective effect and therefore, the
employer will be under a statutory obligation to deposit the contribution
amount only from the date of passing of the order in writ petition, namely
03.10.2007. The learned Judge of this Court passed an order on
08.08.2008 to the effect that the contributions have to be paid by the
employer only with effect from 03.10.2007. Pursuant to the said orders,
the employer had paid the entire due on 15.08.2008.
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C.M.A(MD)No.932 of 2019
3. The E.S.I corporation on 18.07.2011 issued a notice under Form
C-18 seeking interest for the period between October 2007 to July 2008,
May 2011 and July and August 2008 to a sum of Rs.34,587/-. The said
C-18 notice was subject matter of challenge by the employer in
E.S.I.O.P.No.65 of 2011.
4. The Labour Court after considering the evidence of both the
parties, arrived at a finding that the corporation could not attribute any
motive or bad intention upon by the employer to evade payment of
contribution. Therefore, the payment made by the employer immediately
after passing of the order should be treated as a strict compliance with
the statutory regulations and thereafter, the demand for interest is not
legally sustainable. On the basis of the said findings, the Form C-18
notice was set aside by the Labour Court. Challenging the said order, the
present appeal has been filed by the E.S.I corporation raising the
following substantial questions of law:
“(1) Whether E.S.I Court has got power to prevent
charging of interest as admissible as per the provisions of
the E.S.I Act, 1948 and E.S.I (General) Regulations, 1950?
(2) Whether the order of the E.S.I Court will promote
the interest of the workers?
(3) Whether the Trial Court has power to go against
https://www.mhc.tn.gov.in/judis the express provisions of statute?
C.M.A(MD)No.932 of 2019
(4) Whether the Trial Court has power to go against
the express provisions of law laid down by the Supreme
Court and this High Court?”
5. According to the learned counsel appearing for the appellant,
the learned Judge of this Court has issued an order on 08.08.2008
clarifying that the coverage of the establishment would commence from
03.10.2007. However, the entire contribution amount was made only on
15.08.2008. The interest being statutory and consequential in nature, the
same cannot be waived by the authorities or by the Court. The Labour
Court ought not to have taken the date of disposal of the writ petition as
the crucial date for calculation of interest, when the High Court has
specifically clarified that the coverage is from 03.10.2007 onwards.
6. Per contra, the learned counsel appearing for the respondent had
contended that though the writ petition was dismissed on 03.10.2007, a
clarification petition was pending before the High Court to clarify
whether the order would have retrospective effect or prospective effect.
An order was passed in the said clarificatory petition only on 08.08.2008.
Within a week from the date of clarificatory order, the entire amount has
been deposited by the employer on 15.08.2008. Therefore, E.S.I Court
was right in quashing C-18 notice demand interest.
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C.M.A(MD)No.932 of 2019
7. I have carefully considered the submissions made on either side.
8. A perusal of the order, dated 03.10.2007 indicates that the
challenge to the coverage under E.S.I Act was made by the employee’s
union and it was dismissed on the said date. Thereafter, the employer has
chosen to file M.P.No.1 of 2008 to seek clarification whether the order
would have a retrospective effect or not. The clarificatory order was
issued on 08.08.2008 to the effect that E.S.I Act coverage would start
from 03.10.2007. Therefore, it is clear that the coverage of the
establishment under the E.S.I Act starts from 03.10.2007. The scope of
review is only for the purpose of seeking clarification whether the
employer has to pay contribution for the period between August 2001
and September 2007. Therefore, the payment of the contribution from
October 2007 onwards was not the subject matter of the review. Hence,
the contention of the learned counsel appearing for the employer that
they were awaiting for the orders in the review petition till 08.08.2008 is
not legally sustainable.
9. The E.S.I Court has taken the date of disposal of the
clarificatory petition as crucial date for the calculation of interest. When
the High Court has clarified that the Act is applicable from 03.10.2007,
https://www.mhc.tn.gov.in/judis
the E.S.I Court was not right in holding that interest should be calculated
C.M.A(MD)No.932 of 2019
only from August 2008. The learned counsel appearing for the employer
had pointed out that in C-18 notice, dated 18.07.2011, it is recorded that
the payments were made by the employer only on 17.09.2008 and
accordingly, interest has to be calculated. However, as per Exhibit P.2
before the E.S.I Court, the entire amount has been paid even on
15.08.2008 and therefore, the calculation relating to interest is not as per
the provisions of the Act.
10. In view of the above said deliberations, this Court passes the
following orders:
(i) The appeal stands allowed and Form C-18, dated
18.07.2011 is hereby set aside.
(ii) The authorities are at liberty to demand and recover
interest for the period between October 2007 to August 2008.
11. With the above said observations, the Civil Miscellaneous
Appeal stands allowed to the extent as stated above. No costs.
12.06.2023
NCC : Yes / No
Index : Yes / No
Internet
https://www.mhc.tn.gov.in/judis : Yes / No
gbg
C.M.A(MD)No.932 of 2019
To
1.The E.S.I Court (i.e.Labour Court),
Madurai.
2.The Section Officer,
Vernacular Section,
Madurai Bench of Madras High Court,
Madurai.
https://www.mhc.tn.gov.in/judis
C.M.A(MD)No.932 of 2019
R.VIJAYAKUMAR,J.
gbg
Judgment made in
C.M.A(MD)No.932 of 2019
12.06.2023
https://www.mhc.tn.gov.in/judis
