The Employees State Insurance ... vs M/S. Cmr Model High School
2022 Latest Caselaw 2833 Tel

            HON'BLE SMT. JUSTICE P.SREE SUDHA

      CIVIL MISCELLANEOUS APPEAL No.108 of 2022

                        JUDGMENT

1. This appeal is filed by the Employees State Insurance

Corporation-petitioner against M/s.CMR Model High School-

respondent aggrieved by the order dated 29.10.2021 passed in

EIC No.57 of 2019 on the file of the learned Employees

Insurance Court and Chairman, Industrial Tribunal-I at

Hyderabad.

2. Learned counsel for the petitioner would argue that while

claiming damages restricted its claim to beyond litigation period

and no damages were claimed for litigation period. He would

further assert that this Court dismissed batch of writ petitions

on 06.10.2015 and the petitioner claimed damages from

29.10.2015 to 11.09.2016 during which period the

contributions were paid by the respondent establishment, but

the trial Court erroneously held that the claim of damages was

made by the petitioner from February, 2010 to September, 2015

when the writ petition was pending and that the claim of the

petitioner made in Ex.R1 notice clearly indicates the period of

claim and it also mentioned the said fact in para eight of its

written statement dated 29.09.2019 and as such the petitioner

never claimed damages for the litigation period from February,

2010 to October, 2015. He would also assert that the trial Court

erroneously held that the respondent establishment paid

contributions immediately after passing 45-A order within the

period of limitation. W.P.No.12283 of 2009 and batch were

dismissed on 06.10.2015 and as such the respondent ought to

pay the contributions on or before 28.10.2015 as the limitation

comes to end as per Section 39(4) of the ESI Act, 1948 read with

Regulation 31-C of the ESI (Gen.) Regulations, 1950 but not

immediately after passing 45-A order. In fact, 45-A order was

passed on 19.07.2016 and contributions were paid on

03.08.2016 that too on different dates as shown in the

enclosure to Ex.R1 and thus the order of the trial Court is

without appreciation of the provisions. He would also contend

that the trial Court also held that there was mens rea and actus

reus present in the case. The respondent herein challenged the

notification which came into force on 14.10.2015 and it was

dismissed in a common order dated 06.10.2015 and as such the

respondent ought to have paid the entire contribution for the

entire period on or before 28.10.2015 without issuance of any

notice in Form C-18 and passing of 45-A order on 19.07.2016.

The non-compliance of payment of contributions within the

stipulated time clearly shows the existence of mens rea or actus

reus. He would also cited case law in a case reported in

ORGANO CHEMICAL INDUSTRIES V/s. UNION OF INDIA1 in

which the Hon'ble Apex Court held that imposition of damages

serves two fold purposes and it results in damnification and

also serves as a deterrent and the predominant object is to

penalize so that the employer may be thwarted or deterred from

making any further defaults, and thus the trial Court failed to

appreciate that the mens rea is not an essential ingredient. He

would finally argue that as the provisions of law under Sections

85-B(2) and 39(4) read with Regulation 31-C of the ESI Act,

1948 are involved, there is substantial question of law to prefer

this appeal and thus requested the Court to set aside the order

under challenge.

3. ESI Corporation issued an order against M/s.CMR Model

High School under Section 85-B of the ESI Act, 1948 on

21.02.2019. The Additional Commissioner levied damages

totalling to Rs.1,12,821/- for the wage period from February,

2010 to November, 2015 with a direction to deposit the same

within thirty days from the date of the order, failing which the

AIR 1979 SC 1803

entire amount will be caused to be recovered as per the

provisions of Section 45-C to 45-I of the ESI Act, 1948.

Aggrieved by the said order, EIC No.57 of 2019 was preferred by

the respondent herein before the trial Court. The trial Court

after considering the arguments of both sides, allowed the

petition and set aside the order dated 21.02.2019. Aggrieved by

the said order, the petitioner preferred this appeal.

4. The Employees' State Insurance Corporation issued a

notice to the respondent herein on 31.12.2018. The respondent

school authorities filed W.P.No.12283 of 2009 challenging the

Gazette Notification vide G.O.Ms.No.582 dated 14.10.2008

before this Court, which was dismissed on 06.10.2015.

Aggrieved by the said order, the school authorities preferred

W.A.No.208 of 2016, which was also dismissed on 16.03.2016.

Thereafter, the respondent school authorities addressed a letter

to the Regional Director stating that it paid the entire dues to

the eligible members to till date after disposal of the writ appeal

and thus requested the petitioner to waive the damages. But,

the petitioner herein for the reasons recorded in the order dated

21.02.2019 levied damages of Rs.1,12,821/-.

5. The trial Court in its order observed that the petitioner

herein issued damages notice on 31.12.2018 along with

annexure and claimed damages from February, 2010 to

November, 2015 i.e. pending period of the writ petition before

this Court and also given an opportunity of personal hearing on

30.01.2019. The representative of the respondent authorities

appeared for personal hearing and submitted a letter on

30.01.2019 and intimated about writ petitions. But the

Corporation not considered the plea taken by the respondent

herein and imposed damages without ascertaining the cause for

non-payment of contributions during the above said period and

held that there is no mala fide intention on the part of the

petitioner herein and paid contributions immediately within the

statutory period and as such imposing damages against the

respondent herein under Section 85-B does not arise and the

order dated 21.02.2019 was set aside.

6. As per the docket order dated 11.04.2022, the matter was

adjourned to 13.06.2022 at the request of the learned counsel

for the respondent. Today, when the matter is called, there is no

representation for the respondent. Hence, heard the arguments

of the learned counsel for the petitioner and orders were

reserved.

7. The petitioner mainly argued that it has not claimed

damages for the period during the pendency of the writ petitions

and also stated the same in its written statement. The petitioner

would further submit that when the writ petition was dismissed

on 06.10.2015, it is for the respondent to pay the contributions

on or before 28.10.2015 but not after passing of Section 45-A

order. The order under Section 45-A was passed on 19.07.2016

and the contributions were paid in the year 2016 that too on

different dates as shown in the annexure to Ex.R1, and thus,

the order of the trial Court dated 29.10.2021 is against the

provisions of the ESI Act and the Regulations. The petitioner

herein also stated that mens rea is an essential ingredient, but

the trial Court relying upon the case law held that there is no

mala fide intention on the part of the respondent herein. The

non-compliance of payment of contribution within the

stipulated time itself shows the existence of mens rea or actus

reus. The respondent did not pay contribution before issuance

of notice in Form C-18 and passing of order 45-A on

19.07.2016.

8. In spite of issuance of notice on 31.12.2018 the

respondent approached this Court by way of filing writ petition

and also writ appeal. Even after dismissal of the writ appeal, the

respondent did not pay the contributions within the statutory

period. As such, the petitioner is compelled to issue an order

under Section 45-A and also rightly passed an order dated

21.02.2019 under Section 85-B of the ESI Act levying penalty.

There is no infirmity in the order dated 21.02.2019. Therefore,

the order of the trial Court is liable to be set aside.

9. In the result, the Civil Miscellaneous Appeal is allowed

and the order dated 29.10.2021 passed in EIC No.57 of 2019 on

the file of the learned Employees Insurance Court and

Chairman, Industrial Tribunal-I at Hyderabad, is hereby set

aside.

10. Miscellaneous Petitions, if any, pending in this appeal

shall stand closed in the light of this final order.

____________________ P.SREE SUDHA, J.

15th JUNE, 2022.

PGS