Madras High Court
Employee'S State Insurance ... vs M/S.Sri Velayuthaswamy Spinning ... on 12 June, 2023
C.M.A(MD)No.233 of 2020
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.233 of 2020
Employee's State Insurance Corporation (SRO),
4th Main Road,
K.K.Nagar, Madurai-20.
Represented by its Deputy Director. ... Appellant/Respondent
Vs.
M/s.Sri Velayuthaswamy Spinning Mills,
Pvt.Ltd., (Unit II), Kottaiyur,
Agaram Village, Thadicombu,
Dindigul District.
Represented by its Chief 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 12.04.2019 passed by the E.S.I
Court (i.e. Labour Court), Madurai in E.S.I.O.P.No.63 of 2011, permit
the appellant to charge interest, as claimed in the communication, dated
15.07.2008 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
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1/8
C.M.A(MD)No.233 of 2020
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.63 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.24878
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
08.07.2008 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 27.08.2008.
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C.M.A(MD)No.233 of 2020
3. The E.S.I corporation on 15.07.2011 issued a notice under Form
C-18 seeking interest for the period between October 2007 to July 2008
to a sum of Rs.28,580/-. The said C-18 notice was subject matter of
challenge by the employer in E.S.I.O.P.No.63 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
the express provisions of statute?
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(4) Whether the Trial Court has power to go against
the express provisions of law laid down by the Supreme
C.M.A(MD)No.233 of 2020
Court and this High Court?
(5) Whether the order of the High Court for
prospective implementation of the E.S.I scheme in a factory
can be applied to a different fact also as has been done in
the present case?”
5. According to the learned counsel appearing for the appellant,
the learned Judge of this Court has issued an order on 08.07.2008
clarifying that the coverage of the establishment would commence from
03.10.2007. However, the entire contribution amount was made only on
27.08.2008. 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 08.07.2008.
Within 20 days from the date of clarificatory order, the entire amount has
been deposited by the employer on 27.08.2008. Therefore, E.S.I Court
https://www.mhc.tn.gov.in/judis
was right in quashing C-18 notice demand interest.
C.M.A(MD)No.233 of 2020
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 08.07.2008 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 08.07.2008 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,
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the E.S.I Court was not right in holding that interest should be calculated
C.M.A(MD)No.233 of 2020
only from August 2008. The learned counsel appearing for the employer
had pointed out that in C-18 notice, dated 15.07.2011, it is recorded that
the payments were made by the employer only on 27.08.2008 and
accordingly, interest has to be calculated. As per Exhibit P.2 before the
E.S.I Court, the entire amount has been paid only on 27.08.2008 and
therefore, the calculation relating to interest is as per the provisions of
the Act.
10. In view of the above said deliberations, this Court passes the
following order:
The appeal stands dismissed and Form C-18, dated
15.07.2011 is hereby confirmed.
11. With the above said observations, the Civil Miscellaneous
Appeal stands dismissed. No costs.
12.06.2023
NCC : Yes / No
Index : Yes / No
Internet : Yes / No
gbg
https://www.mhc.tn.gov.in/judis
C.M.A(MD)No.233 of 2020
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.233 of 2020
R.VIJAYAKUMAR,J.
gbg
Judgment made in
C.M.A(MD)No.233 of 2020
12.06.2023
https://www.mhc.tn.gov.in/judis
