Madras High Court
Employee State Insurance ... vs Bharat Heavy Electricals Limited on 20 June, 2023
C.M.A(MD)No.1016 of 2014
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED: 20.06.2023
CORAM
THE HON'BLE MR.JUSTICE R.VIJAYAKUMAR
C.M.A(MD)No.1016 of 2014
1.Employee State Insurance Corporation,
Represented by its Regional Director,
143, Sterling Road, Nungambakkam,
Chennai-34.
2.The Joint Director,
Employee State Insurance Corporation,
2 & 3 Floor, Theerthamalai,
Vaniga Valagam, 39/57 Three Road,
Salem. ... Appellants
Vs.
Bharat Heavy Electricals Limited,
Unit Thiruverumbur, Trichy-14. ... Respondent
PRAYER: Civil Miscellaneous Appeal is filed under Section 82 of the
ESI Act, to set aside the order, dated 12.07.2012 passed by the ESI Court
(i.e.Labour Court), Trichirappalli in E.S.I.O.P.No.8 of 2006, reinstate the
damages, order dated 31.08.2006 of the said corporation.
For Appellants : Mr.P.Ganapathisamy
For Respondent : Mr.Raguvaran Gopalan
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C.M.A(MD)No.1016 of 2014
JUDGMENT
The present appeal has been filed by the E.S.I corporation
challenging the order passed by the Labour Court, Trichirappalli in
E.S.I.O.P.No.8 of 2006.
2. It is not in dispute as far as the permanent employees of the
respondent establishment are concerned, they have been exempted from
the purview of the E.S.I Act by the Government of Tamil Nadu. The
officials of the E.S.I corporation have conducted an inspection and found
that the contractual, casual and temporary employees, who were not
covered under the order of exemption, have not been brought within a
purview of E.S.I Act. On 13.07.2005, an order under Section 45-A was
passed for the period covering 01.04.1991 to 31.03.2001 demanding a
sum of Rs.72,36,409/- as contribution. The said amount was promptly
paid by the respondent employer on 23.07.2005.
3. After payment of the contribution amount, the corporation had
initiated proceedings for recovery of interest and a sum of Rs.24,38,000/-
was demanded under the head of interest. This amount was also promptly
paid by the respondent employer.
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C.M.A(MD)No.1016 of 2014
4. The corporation has initiated proceedings under Section 85-B
and an order to the said effect came to be passed on 31.08.2006.
According to the corporation, when the employer has admitted his
liability and paid the amount demanded under Section 45-A of the Act
belatedly, certainly he is liable to be imposed with the penalty as
contemplated under Section 85-B of the Act. As per the said order, a sum
of Rs.40,68,052/- was demanded. This order was challenged by the
respondent employer in E.S.I.O.P.No.8 of 2006.
5. The tribunal after considering the evidence on either side,
arrived at a finding that the employer had promptly paid the contribution
amount and the interest. That apart, the corporation has not established
that there was mens rea on the part of the employer for avoiding payment
of the contribution amount with regard to the casual and temporary
employees. The tribunal further found that the imposition of damages is
discretionary in nature and the authorities have not exercised the
discretion in a proper manner and proceeded to set aside the imposition
of penalty in entirety. This order is under challenge in the present appeal.
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C.M.A(MD)No.1016 of 2014
6. The learned counsel appearing for the appellants / E.S.I
corporation has contended that the liability to pay the contribution being
a civil liability, the question of mens rea would not arise. If at all if there
is any mitigating circumstances for the delay in payment of the
contribution amount, the same have to be established only by the
employer and not by the corporation. He further contended that as per
Section 40 (1) of E.S.I Act, only the principal employer is liable for
payment of contribution even in respect of contractual labours.
Therefore, the contention of the employer that he was under the
impression that the contractors would have paid the contribution is not
legally sustainable. Though the imposition of penalty is discretionary in
nature, in the present case, since the employer has not established any
mitigating circumstances, the tribunal ought not to have exercised its
discretion to waive the penalty in entirety.
7. Per contra, the learned counsel appearing for the respondent
employer had contended that the employer is a public sector undertaking
which is running a full-fledged hospital within the factory premises. He
further contended that they are also operating a dispensary near the city
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C.M.A(MD)No.1016 of 2014
limits. Whatever amount that was demanded by the corporation has been
paid promptly by the employer and therefore, without considering the
said fact, penalty has been imposed. Hence, he prayed for sustaining the
order passed by the Labour Court.
8. I have carefully considered the submissions made on either side
and perused the material records.
9. It is not in dispute that the permanent employees of the
respondent employer have been exempted by the Government from the
purview of the E.S.I Act. As far as the contractual, casual and temporary
employees are concerned, the E.S.I corporation has passed an order
covering them and the contribution for them have been promptly paid by
the employer. For the belated payment of the contribution, the
corporation has demanded interest which has also been promptly paid by
the employer. However, the employer is challenging only the imposition
of penalty by an order, dated 31.08.2006 under which a sum of Rs.
40,68,052/- was demanded. This Court is of the view that the employer
being a public sector undertaking and they are running a full-fledged
hospital inside the factory premises, which is catering to the needs of the
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C.M.A(MD)No.1016 of 2014
contractual, casual and temporary employees also, the imposition of
penalty of 100% is not legally sustainable. However, the tribunal ought
not to have waived the penalty in entirety. Considering the above said
facts, this Court is inclined to waive 75% of the penalty imposed by the
E.S.I corporation. The respondent employer is directed to pay 25% of the
penalty imposed by the E.S.I corporation by their order, dated
31.08.2006.
10. With the above said observations, the Civil Miscellaneous
Appeal stands partly allowed to the extent as stated above. No costs.
20.06.2023
NCC : Yes / No
Index : Yes / No
Internet : Yes / No
gbg
To
1.The E.S.I Court (i.e.Labour Court),
Trichirappalli.
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.1016 of 2014
R.VIJAYAKUMAR,J.
gbg
Judgment made in
C.M.A(MD)No.1016 of 2014
20.06.2023
https://www.mhc.tn.gov.in/judis
