Madras High Court
M/S Pharm Products (P) Ltd vs The Assistant Director on 16 June, 2023
C.M.A.(MD).No.504 of 2010
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED : 16.06.2023
CORAM:
THE HONOURABLE MR.JUSTICE R.VIJAYAKUMAR
C.M.A(MD)No.504 of 2010
and
M.P(MD) No.1 of 2010
M/s Pharm Products (P) Ltd.,
Represented by its Managing Director,
Medical College Road,
Thanjavur – 613 007. ... Appellant/Petitioner
-vs-
The Assistant Director,
Employees State Insurance Corporation,
143, Sterling Road,
Chennai – 600 034. ... Respondent/Respondent
PRAYER: Civil Miscellaneous Appeal filed under Section 82 of Employee
State Insurance Act, 1948, against the order of the Employees State Insurance
Court (Principal District Court), Thanjavur, dated 04.12.2009 in the case
E.S.I.O.P.No.52 of 2005.
For Appellant : Mr.C.Sankar Prakash
For Respondent : Mr.N.Dilipkumar
https://www.mhc.tn.gov.in/judis
1/8
C.M.A.(MD).No.504 of 2010
JUDGMENT
The present Civil Miscellaneous Appeal has been filed by the employer
challenging the order passed by the Employees State Insurance Corporation,
imposing penalty under Section 85-B of the E.S.I. Act for a sum of Rs.5,989/-
(Rupees Five Thousand Nine Hundred and Eighty Nine only).
2. Originally, the employer was issued with a show cause notice on
31.01.1996 and thereafter, Form C-18 notice was issued on 18.06.1997
demanding a sum of Rs.22,096/- (Rupees Twenty Two Thousand and Ninety
Six only) as contribution. Challenging the said C-18 notice, the employer had
filed E.S.I.O.P.No.38 of 1997 before the Labour Court/E.S.I. Court,
Thanjavur on 10.07.1997. Pending E.S.I.O.P, the employer had remitted a
sum of Rs.11,500/- (Rupees Eleven Thousand and Five Hundred only) to the
Court deposit. Thereafter, E.S.I.O.P was allowed and remitted the matter back
to the E.S.I. Corporation, by an order, dated 24.02.2003.
3. After remand, the authorities conducted an enquiry under Section
45-A of the E.S.I Act. Pending enquiry, the employer had deposited a sum of
Rs.9,384/- (Rupees Nine Thousand Three Hundred and Eighty Four only)
https://www.mhc.tn.gov.in/judis
C.M.A.(MD).No.504 of 2010
before the authorities. The said amount was accepted by the authorities and
order under Section 45-A of the E.S.I.Act was passed on 26.05.2004.
Therefore, it is clear that neither the coverage nor the quantum of contribution
are in dispute.
4. The E.S.I Corporation had issued a show cause notice for initiating
the proceedings under Section 85-B of the E.S.I.Act, demanding a sum of
Rs.5,989/- (Rupees Five Thousand Nine Hundred and Eighty Nine only) for
the belated payment of the contribution. The said sum was arrived at for the
belated payment of the contribution for the period between April 1993 to
March 1994. According to the Corporation, the payment of the contribution
was due on 21.02.1996 and the employer had approached the E.S.I. Court on
10.07.1997. Between the said period, there was no litigation pending and
therefore, the employer is liable to pay damages. The E.S.I.O.P filed by the
employer, was disposed on 24.02.2003. Thereafter, the employer had
deposited the amount only on 07.05.2004. Therefore, for the period between
08.03.2003 to 04.05.2004, the Corporation had demanded and imposed the
damages. The said order was challenged by the employer before the E.S.I.
Court.
https://www.mhc.tn.gov.in/judis
C.M.A.(MD).No.504 of 2010
5. The E.S.I. Court, after considering the oral and documentary
evidence, has arrived at a finding that the amount claimed as damages under
Section 85-B of the E.S.I. Act is legal and it is in accordance with law and
proceeded to dismiss the said petition. Challenging the same, the present
appeal has been filed by the employer raising following the substantial
questions of law:
1. Whether the respondent is bound to levy
damages for all the cases of late-remittance of E.S.I.
Contribution amount?.
2. Whether the appellant is liable to pay the
maximum amount of damages irrespective of the
reason for the late remittance of the contribution
amount?
3. Whether presence of mens rea is a vital factor
to decide the quantum of damages?.
4. Whether the learned Judge was right in
passing a non-speaking order?.
6. According to the learned counsel appearing for the appellant/
employer, under Section 45-A of the E.S.I Act, order was passed on
26.05.2004 and even before passing of the said order, the employer had
deposited the amount on 07.05.2004. Therefore, the question of initiating
https://www.mhc.tn.gov.in/judis
C.M.A.(MD).No.504 of 2010
proceedings under Section 85-B of the E.S.I.Act, does not arise. That apart,
unless the Corporation establishes that there was mens rea on the part of the
employer in belatedly making payment of the contribution, the order
imposing penalty is not legally sustainable. Hence, he prayed for allowing the
appeal.
7. Per contra, the learned counsel appearing for the respondent/E.S.I.
Corporation had contended that the period, during which, litigation was
pending has been excluded. The damages have been calculated only for the
pre-litigation and post-litigation period. The claim for contribution and the
delay in payment of contribution being a civil liability, the question of
proving mens rea by the Corporation does not arise. As and when the amount
becomes due as per the statute, the employer is expected to deposit the
contribution amount without waiting for any adjudication by the authorities
under Section 45-A of the E.S.I Act. Hence, he prayed for sustaining the order
passed by the E.S.I. Court.
8. I have carefully considered the submissions made by the learned
counsel on either side and perused the material on records.
https://www.mhc.tn.gov.in/judis
C.M.A.(MD).No.504 of 2010
9. The coverage of the appellant establishment is not in dispute. The
establishment has accepted the order passed under Section 45-A of the
E.S.I.Act and has also deposited the amount. The only issue that arises for
consideration is whether the Corporation can levy damages and there are any
mitigating circumstances in favour of the employer either to waive the
damages or to reduce the damages.
10. Form C-18 notice was issued by the Corporation has been
challenged by the employer in E.S.I.O.P.No.38 of 2019 on 10.07.1997.
However, the due date for payment of contribution is 21.02.1996. Therefore,
the period between 21.02.1996 and 10.07.1997 has been taken into
consideration for imposition of penalty. E.S.I.O.P.No.38 of 1997 was
disposed of on 24.02.2003. Thereafter, the amount was deposited only on
07.05.2004. The delay in the post-litigation period has also been taken into
consideration for imposition of penalty.
11. Therefore, this Court does not find that there is an error or infirmity
either in the order passed by the Corporation or by the E.S.I.Court, Thanjavur.
All the substantial questions of law are answered against the appellant.
https://www.mhc.tn.gov.in/judis
C.M.A.(MD).No.504 of 2010
12. Accordingly, this Civil Miscellaneous Appeal stands dismissed.
There shall be no order as to costs. Consequently connected Miscellaneous
Petition is closed.
16.06.2023
NCC : Yes/No
Index : Yes / No
Internet : Yes / No
ebsi
To
1. The Employees State Insurance Court
(Principal District Court), Thanjavur,
2. The Section Officer,
Vernacular Records,
Madurai Bench of Madras High Court,
Madurai.
https://www.mhc.tn.gov.in/judis
C.M.A.(MD).No.504 of 2010
R.VIJAYAKUMAR,J.
ebsi
C.M.A.(MD)No.504 of 2010
16.06.2023
https://www.mhc.tn.gov.in/judis
