Orissa High Court
Ajay Kumar Bhramar vs Union Of India & on 12 September, 2025
IN THE HIGH COURT OF ORISSA, CUTTACK
W.P.(C) No.105 of 2022
Ajay Kumar Bhramar
Bar Ray ....... Petitioner
-Versus-
Union of India &
Others ....... Opposite Parties
For Petitioner : Mr. S. K. Parida, Advocate
For Opposite Parties : Mr. M. K. Pradhan,
Sr. Panel Counsel Advocate
(For O.P. No.1)
Mr. B. Dash, Advocate
(For the Corporation)
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CORAM: JUSTICE SANJAY KUMAR MISHRA
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Date of Hearing: 14.07.2025 and Judgment: 12.09.2025
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S.K. MISHRA, J.
This Writ Petition has been preferred by the
Petitioner to quash order dated 20.12.2021 (Annexure 12)
vide which the Deputy Director, E.S.I. Corporation,
Bhubaneswar (Opposite Party No.4) rejected the prayer of
the Petitioner to waive the damages imposed on it for
delayed payment of E.S.I. Contribution. Also a prayer has
been made to direct the Opposite Parties to provide effective
medical facilities to the employees of the Petitioner's
Establishment in nearby areas of Gumadera, for which they
are contributing under the Employees' State Insurance Act
1948, shortly, "the E.S.I Act".
2. The factual backdrop of the case is that the
Petitioner is the Proprietor of M/s Ajay Construction,
situated At- Gumadera, Po/Ps - Belpahar in the District of
Jharsuguda. The E.S.I Act has been duly enforced in
various districts across Odisha, including Jharsuguda
District, vide Gazette Notification dated 30.05.2016. The
Petitioner registered his Establishment under the E.S.I. Act
in March, 2017. However, due to non-availability of any
medical facilities in the nearby areas, the Petitioner couldn't
deduct employees' contributions due to resistance of the
workers. Accordingly, he made a representation on
18.10.2018 requesting the Opposite Party No.2 to provide
medical infrastructure in or around Belpahar, so that
contributions could be regularised.
2.1. In response to such communication, the Opposite
Party No.2 issued a letter on 30.11.2018, stating therein
that the E.S.I Act had come into force in the Belpahar area
w.e.f 01.06.2016 and steps were being taken to extend the
benefits in the newly implemented areas. However, the reply
remained silent on the grievance regarding absence of
medical facilities in the nearby areas, and no effective action
was taken in the said regard.
2.2. The Petitioner then responded on 28.01.2019,
reiterating that the nearest medical facility provided by the
Corporation is around 22 KMs away, making it infeasible for
the workers to access the medical facilities. Despite such
difficulty, the Petitioner voluntarily began contributing
under the E.S.I Act from December, 2018. A request was
made vide the said communication to the authorities not to
take any penal action for the previous non-contributed
period from March, 2017 to November, 2018, citing the
reason of employees' protest and practical difficulties.
2.3. The Petitioner, on multiple occasions, requested the
Opposite Parties-E.S.I.C. to ensure the availability of
medical facilities for the employees of his Establishment in
nearby area, considering the fact that regular contributions
are being made under the E.S.I Scheme. However, despite
such contributions, no E.S.I Hospital, Dispensary or
empanelled private medical facilities were made available to
its employees, thereby depriving them from the statutory
benefits. Subsequently, on 01.09.2021, the Opposite Party -
E.S.I.C issued a demand notice requiring payment of
Rs.4,55,844/- towards employer and employees'
contributions for the period from March, 2017 to January,
2020, citing provisions under Sections 39 & 40 of the ESI
Act, 1948, r/w Regulations 29,31 & 33 of the ESI (General)
Regulations, 1950, shortly, the Regulation, 1950. In
compliance with the above letter, the Petitioner deposited
the full amount of Rs. 4,55,844/- under protest on
20.09.2021. However, the Opposite Party No.2, through
letter dated 19.10.2021, demanded payment of interest
towards delayed payment of contribution of
Rs.1,86,279/- U/s 39(5) of the E.S.I Act, r/w Regulation-31-
A of the Regulation, 1950 and threatened to recover the
same as arrears of land revenue under Sections 45-C to 45-I
of the E.S.I Act, which was deposited by the Petitioner on
16.11.2021. On the same date, i.e. on 19.10.2021,
another letter was issued under Regulation 31-C of the
Regulations, 1950, r/w Section-85-B(1) the ESI Act, by the
Opposite Party No. 2 seeking recovery of damages to the
tune of Rs.3,83,999/- and calling upon to show cause as to
why maximum damages should not be imposed.
2.4. The Petitioner on 26.10.2021 submitted a detailed
grievance petition praying for waiver of interest and
damages, citing genuine hardship, prior representations,
non-assessment of medical services by its employees.
2.5. Pursuant to notice dated 10.11.2021, though the
Petitioner appeared before the Opposite Party No.2 on
07.12.2021, but the request for waiver was rejected. The
Petitioner was directed to pay damages amounting to
Rs.3,83,999/- within 30 days, failing which it was warned
that recovery proceeding would be initiated under Sections
45-C to 45-I of the E.S.I Act.
2.6. The case of the Petitioner is that, its employees were
reluctant to participate under the Scheme, due to absence
of any E.S.I medical infrastructure around Gumadera or
Belpahar. Hence, he was unable to deduct E.S.I.
contributions earlier and started compliance only from
December, 2018.
3. The writ petition has been preferred basically to decide
the legal issue regarding justification of the E.S.I.
Corporation to impose maximum damages under Regulation
31-C of the Regulations, 1950, which is not mandatory.
Further, the grounds urged in the writ petition to challenge
the demand notice are, Section 85-B of the E.S.I Act uses
the words "May Recover", indicating discretion and not
compulsion. Moreover, computation and imposition of
damages must be based on Section 85-B of the ESI Act and
cannot derive authority solely from Regulation 31-C of the
Regulations, 1950, which is a subordinate legislation.
Further, substantial compliance of the provisions has
already been made by paying Rs.4,55,844/- towards
contribution so also Rs.1,86,279/- towards interest. The
delay was due to non-availability of E.S.I medical services
and employees' resistance, so also genuine hardships
beyond the Petitioner's control.
4. A Counter Affidavit has been filed by the Opposite
Parties-Corporation taking a stand therein that, as per the
Orissa Employees' Insurance Court Rules, 1951, disputes
between the Employer and ESIC must be adjudicated before
the Employees' Insurance Court under Section 75 of the
E.S.I Act. Only the aggrieved party can knock the doors of
this Court on appeal. Further, before invoking the
jurisdiction of this Court, the Employer must have deposited
50% of the amount claimed by E.S.I.C. Moreover, E.S.I
Medical Services are not confined to primary care. Insured
employees can access tie-up hospitals anywhere in India,
including for super-specialized treatment. The Petitioner
failed to pay statutory contributions for an extended period,
i.e., from 583 to 1613 days, causing denial of benefits to
eligible employees. The delay on part of the Employer is
deliberate and intentional, establishing the mens rea,
justifying imposition of damages U/s 85-B of the ESI Act.
Ultimately, the Petitioner was issued with notices, granted
adequate opportunity of personal hearing before passing the
impugned order, hence, there is no procedural infirmity.
5. In response to the Counter filed by the Opposite
Parties, the Petitioner has filed a Rejoinder Affidavit stating
therein that, the writ petition involves a legal issue, as to
whether damages can be levied even after full payment of
contribution and interest, in absence of statutory mandate
or mens rea. Therefore, the writ petition is maintainable
despite availability of alternative remedy. Further, Section
85-B of the ESI Act is an enabling provision and there is no
statutory compulsion to impose damages in every case. The
factual allegations made by the Opposite Party in Para 7 to
13 of the Counter Affidavit have been denied demanding
proof of such averments. Moreover, it has been stated that
the claim of nationwide tie-up ESI hospital access is merely
theoretical and impractical for primary or daily treatment of
poor workmen residing in Belpahar in the district of
Jharsuguda.
6. Apart from reiterating the grounds urged in the
writ petition, learned Counsel for the Petitioner, drawing
attention of this Court to the various correspondences made
by the Petitioner to the ESI Authorities, dated 18.10.2018
(Annexure-2), 28.01.2019 (Annexure-4), 20.09.2021,
(Annexure-6), 26.10.2021 (Annexure-9) and 07.12.2021
(Annexure-11) submitted that from day one, the Petitioner
brought the fact to the notice of the ESI Authority that he is
not able to deduct the contributions from the Employees-
Members because of non-availability of medical facilities in
the nearby vicinity. It was also brought to the notice of the
ESI Authorities that the concerned labourers are not willing
to contribute because of lack of medical facility within 10
KMs from its Establishment. A request was made not to levy
penalty for the period of 21.03.2017 to November, 2018.
That apart, payment of such penalty for an amount of
Rs.4,55,844/- was made under protest. Despite such
bonafide conduct of the Petitioner, the impugned order
dated 20th December, 2021, as at Annexure-12, was passed
by the Deputy Director (I/C) ESI Corporation without taking
note of the said grounds urged in the reply dated 26th
October, 2021, followed by additional reply/response dated
7th December, 2021.
6.1. Learned Counsel for the Petitioner further
submitted that, apart from the grounds urged in the
response/reply dated 26.10.2021 to the show cause notice
for levy of damages, the Petitioner appeared through his
Counsel on 07.12.2021 and submitted an additional reply to
the show cause notice relying on the Judgment of the
Supreme Court reported in (2008) 3 SCC 35 (Employees'
State Insurance Corporation versus HMT Limited and
Another) to satisfy the authority concerned that Section 85-
B of the ESI Act provides for an enabling provision and does
not make it mandatory to levy damages in every case and
the words "may recover" used in Section 85-B of the ESI Act,
regarding levy of damages cannot be and should not be read
as "shall".
6.2. Learned Counsel for the Petitioner further
submitted that, in view of the settled position of law, when a
discretionary jurisdiction has been conferred on a statutory
authority to levy penal damages by reason of an enabling
provision, the same cannot be construed as imperative.
Even otherwise, an endeavour should be made to construe
such penal provisions as discretionary, unless under the
statute it is held to be mandatory in character.
6.3. Learned Counsel for the Petitioner, drawing
attention of this Court to the impugned order dated 20th
December, 2021, as at Annexure-12 further submitted that
the grounds urged in the reply submitted in response to the
show cause notice, including the legal point, were not dealt
by the Deputy Director, while passing order under Section
85 -B of the ESI Act. Such order, being perverse, deserves to
be set aside.
6.4. So far as maintainability of the writ petition,
learned Counsel for the Petitioner submitted that the sole
point involved in the present lis is a legal point, as the
averments made in the writ petition regarding reason for the
delayed payment of ESI Corporation has not been disputed
by the Corporation. The only point to be decided is whether
the ESI Corporation was justified to levy damages in view of
the wordings "may recover" used under section 85-B of the
ESI Act, 1948. The said point being a substantial question of
law, even if there is alleged an alternative remedy under
Section 75 (1) of the ESI Act, the writ petition is
maintainable.
6.5. He further submitted that, apart from the prayer to
quash the order dated 20.12.2021, a further prayer has
been made by the Petitioner to direct the Opposite Parties to
provide medical facilities to its employees in a nearby place
for which, they are contributing and such a prayer cannot
be made before the EI Court, as a Writ Court can only give
such a direction to the ESI Corporation.
6.6. Learned Counsel for the Petitioner further
submitted that, pursuant to communication dated
30.11.2018, the Petitioner's Establishment deposited the
contribution pertaining to its employees from the month of
December, 2018 with a request not to take any action
regarding nonpayment of contribution and other related
matters on the ground of non-availability of medical facilities
in and around village Gumadera and protest of the
concerned workmen regarding deduction for the previous
period. However, without any further communication in
response to such compliance report dated 28.01.2019, after
about two years of such communication, a demand was
made towards unaccounted wage/salary contribution for the
period from 21.03.2017 to 30.11.2018 to the tune of
Rs.4,54,349/- and alleged differential contribution of
Rs.1,495/- for the months of December, 2018, December,
2019 and January, 2020 and the said amount was also paid
immediately thereafter on 20th September, 2021 under
protest. Again, reiterating therein, vide letter dated 20th
September, 2021, it was brought to the notice of the
Authority concerned regarding non-availability of medical
facility in the nearby vicinity and availability of the same
only 22 KMs away from Belpahar, with a request not to levy
any penalty. However, without dealing with those grounds
urged in the reply dated 26th October, 2021, followed by
reply dated 7th December, 2021, the Authority concerned
mechanically passed the impugned order dated 20th
December, 2021 under Section 85-B of the ESI Act solely on
the grounds that the Petitioner did not deposit the
contribution for the aforesaid period within the stipulated
time, for which, return of contribution could not be
submitted/generated for the contribution periods resulting
therein the inability of employees to avail the benefit under
the ESI Scheme during the corresponding benefit period.
The said order is also perverse for not taking into
consideration the grounds urged in the show cause notice so
also the Judgment of the Supreme Court reported in HMT
Limited (supra), wherein it was categorically held that the
provisions enshrined under Section 85 -B of the ESI Act,
when for the levy of damages uses the words "May recover",
should not be read as "shall".
6.7. He further submitted that the impugned order was
passed mechanically solely on the basis of the provisions
enshrined under regulation 31-C of the Regulations, 1950
and is a product of non-application of mind. Though, there
was sufficient cause for non-deposit of ESI contribution,
delayed payment of ESI contribution for the period of March,
2017 to till November, 2018, the Deputy Director, ESIC
failed to take note of the said admitted fact on record so also
the settled position of law as held in HMT Limited (supra).
7. To substantiate his submissions, learned Counsel
for the Petitioner relied on the judgment of the Supreme
Court in HMT Limited (supra), in A.K. Industries Vrs.
Employees Insurance Corporation, Faridabad & others
reported in 2011(131) FLR-894 of the Punjab & Haryana
High Court so also of this Court in M/s Samrat Industries
Vrs. Regional Director, Employees State Insurance
Corporation reported in 1994(II) OLR-328.
8. Apart from reiterating the facilities provided by the
Corporation under the ESI Act, learned Counsel for the
Corporation submitted that in view of the alternative remedy
under Section 75 of the ESI Act, the writ petition is not
maintainable. It was further submitted that the impugned
order was passed by the Authority concerned after giving
due opportunity of hearing to the Petitioner. There being no
infirmity in the impugned order dated 20th December, 2021,
as at Annexure-12, the writ petition deserves to be
dismissed.
9. As is revealed from the pleadings on record,
admittedly, the Petitioner's Establishment is engaged in the
process of packing of Refractories bricks at TRL Korasaki
Refractory Limited at Gumadera, Belpahar since 1994. It
was brought under the coverage of the ESI Act with effect
from March, 2017. Immediately thereafter, vide letter dated
18th October, 2018, the Proprietor of the Petitioner-
Establishment brought to the notice of the Additional
Commissioner and Regional Director, ESIC, Bhubaneswar
regarding non-availability of medical facility to its
employees, who became members under the ESI Scheme so
also its inability to deduct contribution from the
members/employees because of non-availability of medical
facilities in the nearby vicinity. Instead of mitigating the
grievance of the Petitioner regarding providing medical
facilities in nearby area, a letter was given to the Petitioner
by the Assistant Director (Revenue-II) indicating that he is
liable to comply with the provisions under the ESI Act to
enable its employees to avail the benefits under the
provisions of the ESI Scheme with effect from 21.03.2017.
Accordingly, a request was made to comply the provisions
under the ESI Act with effect from 21.03.2017. On getting
such communication, again the Petitioner wrote a letter
dated 28.01.2019 to the Additional Commissioner and
Regional Director, ESIC, Bhubaneswar, indicating therein
that the medical facilities are available 22 KMs away from
Gumadera and the workmen are reluctant to pay under the
scheme so also regarding compliance of the recovery under
the scheme with effect from December, 2018, with a request
not to take any action regarding nonpayment of contribution
and other related matters on the ground of non-availability
of medical facility around village Gumadera and protest of
the workman for deduction of ESI contribution from them
for the previous period.
10. Admittedly, after receiving the letter dated
28.01.2019 till 01.09.2021, no communication was made to
the Petitioner's Establishment for non-payment of ESI
contribution for the period from 21.03.2017 till November,
2018. However, on 01.09.2021 a communication was made
to the Petitioner to deposit an amount of Rs.4,54,349/-
towards contribution on unaccounted wage/salary for the
period from 21.03.2017 till November, 2018, indicating
therein that if the Petitioner fails to make the payment
within 15 days thereof under intimation to the Office of the
Deputy Director, ESI Corporation, the same will be
recovered under Section 45-C to 45-I of the ESI Act.
11. On getting such communication, reiterating the
grounds/reasons, as communicated earlier, the Petitioner
deposited an amount of Rs.4,55,844/- towards contribution
for the aforesaid period under protest and made a
communication to the said effect on the very same day to
the Deputy Director, ESI Corporation, Regional Office,
Bhubaneswar. As it seems from the record, immediately
thereafter, a demand was made vide demand notices, both
dated 19th October, 2021, claiming therein an amount of
Rs.1,86,279/- towards interest of delayed payments for the
period from 21.03.2017 till 20.09.2021, so also
Rs.3,83,999/- towards damages for the said period. Though
the Petitioner's Establishment paid the interest of
Rs.1,86,279/- as per demand Notice No.5149 dated 19th
October, 2021, but contested the demand made vide notice
no.5149 dated 19.10.2021 towards damages by filing a
detailed reply on 26.10.2021, followed by further reply dated
7th December, 2021 in response to the notice dated
10.11.2021, coupled with the judgment of the Supreme
Court in HMT Limited (supra).
12. As it reveals seems from the record, the impugned
order under Section 85-B of the ESI Act was passed on 20th
December, 2021 after hearing the learned Counsel for the
Petitioner, who appeared before the authority concerned on
7th December, 2021 and filed reply/response with a prayer
to waive the damages.
13. As it further reveals from the reply/response of the
Petitioner to the show cause notice, the Petitioner's
Establishment though was registered in the month of
March, 2017 under the ESI Act, the employees raised
objection for deduction of employees contribution from their
wages with an allegation that they are not getting ESI
facilities in the nearby vicinity and they have to travel a long
distance for medical treatment. Since the employees
concerned (contract labourers) raised objections, no
deduction could be made timely towards employees'
contribution, thereby causing delay in deposit of ESI
contribution and such delay caused in making payment of
contribution is neither intentional nor deliberate, but due to
bona fide facts as detailed above.
14. As is revealed from the impugned order dated 20th
December, 2021, the Deputy Director, ESI Corporation
ordered for a damages to the tune of Rs.3,83,999/- with the
following observations.
"That, as the employer did not file
contribution for the above contribution period
within stipulated, the same cannot be filed later
on, for which, Return of Contribution could not be
submitted/generated for the contribution periods
resulting therein the ineligibility of the employees
for benefit under the ES! Scheme during the
corresponding benefit period.
That the grounds of non-compliance, i.e.,
non-deduction of employee's contribution from the
wages, does not absolve the employer with
liability to pay the contribution under the Act.
That, it shows that the delay caused
in making payment of contribution is
intentional and deliberate, which
establishes mens rea (wilful intention) of the
employer to contravene the statutory
provisions of the Act.
That the extent of delay ranges from 583
to 1613 days for payment of contribution for the
period from 03/2017 to 01/2020, has not been
challenged by the employer. Whereas, the
submission of the employer,that the amount of
damages is bit substantial to which they cannot
pay, as their financial health is not sound, is not
tenable as the financial health cannot absolve the
employer to pay contributions within stipulated
period.
Further, the ES! Scheme is a self-
financing Scheme and mainly depends upon the
contribution paid by the employers and
employees covered under the Scheme. An
employee who is covered under the Scheme is
entitled to certain benefits from the day one of his
insurable employment irrespective of whether
contribution in respect of him, has been deposited
in ESI Fund or otherwise. If, however, there are
constant out-flows from the ESI Fund by way of
disbursement of benefits without sufficiently
matching in-flows into the said fund by way of
timely payment of contribution, the very financial
viability of the ES! Scheme will be at stake.
Under the facts and circumstances of the
case as above, levy of penal damages is not only
a matter of necessity but also a form of deterrent
to eliminate recurrence of such delays."
(Emphasis supplied)
15. From such observation made by the Deputy
Director, ESIC, it is amply clear that such damages was
imposed on the Petitioner ignoring the ground of workers'
resistance and distance of ESI dispensary to be more than
22 KMs for non-compliance / non-deduction of employees
contribution from their wages, with an observation that
such ground does not absolve the employer with a liability to
pay the contribution under the ESI Act. The delay caused in
making payment of contribution is allegedly intentional and
deliberate, which establishes mens rea of the employer to
contravene the statutory provisions under the Act and the
levy of penal damages is not only in the matter of necessity
but also a form of deterrent to eliminate recurrence of such
delays.
16. Admittedly, the ESI Scheme is a self-financing
Scheme. The sole intent under the said Scheme is to provide
benefits to its members-workers. There is no dispute at the
bar that from day one of coverage of the Petitioner's
Establishment under the ESI Act, it was brought to the
notice of the ESI Authority in writing regarding
discontentment of the workers, who are the members under
the ESI Scheme regarding non-availability of medical
facilities in the nearby vicinity, where the Establishment of
the Petitioner exists. It was also brought to the notice of the
Authority regarding protest of workers, who are contract
labourers, for deduction of ESI contribution from their
salary, including deduction for the past period.
17. Admittedly, vide each and every communication
made by the Petitioner to the ESI Authority; it was brought
to the notice of the Authority concerned that its workers-
members are not getting proper facility under the ESI Act
because of non-availability of ESI dispensaries in the nearby
area of village Gumadera. As is revealed from the record, in
none of the replies submitted by the ESI Authority, such
grievance of the Petitioner was dealt with. Rather demands
after demands were made regarding ESI contribution,
interests, followed by damages for the said period.
18. Admittedly, on being so demanded, the Petitioner
not only deposited the ESI contribution but also the interest
payable on the said ESI contribution for the aforesaid period
under protest. So far as levy of damages for the said period,
is under challenge in the present writ petition. While dealing
with the show cause reply submitted by the Petitioner's
Establishment, as it appears from the impugned order
passed by the Deputy Director In-charge ESI Corporation
dated 20th December, 2021, without applying mind and
taking into consideration the real difficulty faced by the
Petitioner's Establishment to convince its employees/
contract labourers for deduction of employees' contribution
from their salary/wages and deposit the same with the ESI
Corporation, the impugned order has been passed
mechanically referring to the provisions under Regulation
31(C) of the ESI (General) Regulation, 1950, which is
extracted below for ready reference:
"31-C. Damages or contributions or any
other amount due, but not paid in time- If
an employer who fails to pay contribution within
the periods specified under regulation 31, or any
other amount payable under the Act, the
Corporation may recover damages, not
exceeding the rates mentioned below, by way of
penalty:
Period of delay Maximum rate
of damages in
per cent per
annum of the
amount due
(i) Less than 2 months 5%
(ii) 2 months and above but 10%
less than 4 months
(iii) 4 months and above but 15%
less than 6 months
(iv) 6 months and above 25%
[Provided that the Corporation in relation
to a company in respect of which a Resolution
Plan has been sanctioned by the National
Company Law Tribunal under the Insolvency
and Bankruptcy Code, 2016, may:-
(a)Waive up to 50 percent of the
damages levied or leviable depending
upon merits of the case.
(b) In exceptional hard cases, waive
either totally or partially the damages
levied or leviable]"
(Emphasis Supplied)
19. That apart, the grievance of the Petitioner's
Establishment regarding distance of the ESI Dispensary
from the Petitioner's Establishment, which causes hardship
to the employees/contract labourers to avail the benefits
under the ESI Scheme, was never redressed by any of the
communications made by the Corporation, as detailed
above, till passing of the impugned order under Section 85-
B of the ESI Act. That apart, it is amply clear from the
impugned order dated 20th December, 2021 that though the
learned Counsel for the Petitioner, in order to substantiate
the prayer made in the show cause reply not to levy of
damages on it, relied on the Judgment of the Supreme Court
in HMT Limited (supra), the impugned order is silent about
such legal point urged before the Authority concerned.
20. As is further revealed from the impugned order,
despite such settled position of law and the undisputed
stand of the Petitioner regarding delayed payment, the
Authority concerned, vide the impugned order, observed
that the "delay caused in making payment of contribution is
intentional and deliberate and the same establishes mens
rea (willful intention) of the Employer to contravene the
statutory provisions", which is perverse.
21. Though under Regulation 31(C) of the Regulation,
1950, the rates of damages to be levied have been detailed,
which varies depending on the period of delay, in HMT
Limited(supra), the Supreme Court held as follows:
16. It is a well-known principle of law
that a subordinate legislation must
conform to the provisions of the legislative
Act. Section 85-B of the Act provides for an
enabling provision. It does not envisage
mandatory levy of damages. It does not
also contemplate computation of quantum
of damages in the manner prescribed under
the Regulations.
17. The statutory liability of the employer is
not in dispute. An employee being required to be
compulsorily insured, the employer is bound to
make his part of the contribution. An employee is
also bound to make his contribution under the
Act. But the same does not mean that levy
of damages in all situations would be
imperative.
18. Section 85-B of the Act uses the
words "may recover". Levy of damages
thereunder is by way of penalty. The
legislature limited the jurisdiction of the
authority to levy penalty i.e. not exceeding the
amount of arrears. Regulation 31-C of the
Regulations, therefore, in our opinion, must
be construed keeping in view the language
used in the legislative Act and not dehors
the same.
21. A penal provision should be construed
strictly. Only because a provision has been
made for levy of penalty, the same by itself
would not lead to the conclusion that
penalty must be levied in all situations.
Such an intention on the part of the legislature is
not decipherable from Section 85-B of the Act.
When a discretionary jurisdiction has been
conferred on a statutory authority to levy
penal damages by reason of an enabling
provision, the same cannot be construed as
imperative. Even otherwise, an endeavour
should be made to construe such penal
provisions as discretionary, unless the
statute is held to be mandatory in
character.
24. We agree with the said view as also for
the additional reason that the subordinate
legislation cannot override the principal
legislative provisions.
25. The statute itself does not say that a
penalty has to be levied only in the manner
prescribed. It is also not a case where the
authority is left with no discretion. The
legislation does not provide that adjudication for
the purpose of levy of penalty proceeding would
be a mere formality or imposition of penalty as
also computation of the quantum thereof became
a foregone conclusion. Ordinarily, even such a
provision would not be held to providing for
mandatory imposition of penalty, if the
proceeding is an adjudicatory one or compliance
with the principles of natural justice is
necessary thereunder.
26. Existence of the mens rea or actus
reus to contravene a statutory provision
must also be held to be a necessary
ingredient for levy of damages and/or the
quantum thereof.
(Emphasis Supplied)
22. That apart, in HMT Limited (supra) it was further
held that an employee, being required to be compulsorily
insured, the employer is bound to make his part of
contribution and the employee is also bound to make his
contribution under the Act, but the same does not mean
that levy of damages in all the situation would be
imperative. However, the Authority concerned failed to take
note of such observation made by the Supreme Court while
passing the impugned order. Rather, contrary to the said
observation made in HMT Limited (supra), it was held that
levy of penal damages is not only a matter of necessity but
also a form of deterrent to eliminate recurrence of such
delays, attributing such delays to be allegedly intentional
and deliberate act on part of the Petitioner's Establishment
to make the payment of contribution belatedly for the said
period.
23. So far as the issue regarding maintainability of the
writ petition, this Court deems it appropriate to refer Section
81 of the Employees' State Insurance Act, 1948, which is
reproduced below:
"Section 81- Reference to High Court- An
Employees' Insurance Court may submit any
question of law for the decision of the High
Court and if it does so, shall decide the question
pending before it in accordance with such
decision."
(Emphasis Supplied)
24. Admittedly, one of the controversies in the present
lis is, in view of the provisions enshrined under Regulation
31(C) of the Regulation, 1950 to impose damages, whether
the provisions under Section 85-B of the ESI Act, 1948,
concerning imposition of damages, are mandatory or
directory, which is a pure question of law .The said issue
has already been decided by the Supreme Court in HMT
Limited (supra), as detailed above. That apart, Section 81 of
the E.S.I. Act permits an Employees' Insurance Court to submit
any question of law for the decision of the High Court.
Furthermore, the second prayer made in the writ
petition is regarding facilitation of medical facilities in a
nearby area for the convenience of the beneficiaries/
insured persons. Hence, this Court is of the view that the
Employees' Insurance Court may not be competent to issue
directions to the ESI Authorities to do so in a proceeding
U/s. 75 of the E.S.I. Act like a Writ Court. In view of the
above reasons, this Court is inclined to hold that the writ
petition is maintainable.
25. In view of the reasons detailed above so also the
settled position of law, this Court is of the view that the
order dated 20th December, 2021, passed under Section 85-
B of the ESI Act at Annexure-12, is perverse and deservers
interference. Accordingly, the said order is hereby set aside.
26. So far as the second prayer regarding direction to the
Opposite Parties to provide medical facilities to the
employees of the Petitioner's Establishment in a nearby
place, as per the information available in the Official
Website of ESI Corporation, various Circulars have been
issued by the Corporation from time to time for setting up
of ESI Hospitals and Dispensaries, including the revision of
norms for up-gradation of existing Hospitals and
Dispensaries so also the determination of permissible radial
distance between proposed and existing ESI Hospitals and
Dispensaries. Admittedly, the Petitioner repeatedly
ventilated such grievance in writing, stating therein that
despite being covered under the ESI Act and complying with
all statutory obligations, no such dispensary or alternative
medical facility has been made available to the insured
persons within the nearby area of its establishment, which
resulted in undue hardship to the employees of the
Petitioner's Establishment.
27. Hence, this Court directs the Opposite Parties-
ESI Corporation to consider the grievance of the Petitioner
Establishment for setting up Hospital/Dispensary and
provide other ESI facilities in the nearby locality, wherein
the Petitioner Establishment is situated, and take necessary
steps in accordance with the guidelines issued by it from
time to time for setting up of ESI Hospitals and
Dispensaries, if the same has not already been done in the
meantime. Such action, if so required as per the guidelines,
shall be initiated and completed expeditiously preferably,
within a period of six months hence.
28. With the said observation, the writ petition stands
allowed and disposed of. No order as to cost.
..........................
S.K. Mishra, J.
Orissa High Court, Cuttack.
Dated,12th September,2025/ Mona
Location: High Court of Orissa
