Case Note & Summary
The Regional Director of the Employees' State Insurance Corporation (ESIC) appealed against an order of the ESI Court which, while disposing of an application challenging an order under Section 45A of the ESI Act, directed the appellant to recover a specific amount of Rs. 90,908/- withheld by the bank and held that the appellant was not entitled to claim any further interest. The appellant contended that the ESI Court had no power to waive statutory interest under Regulation 31A of the ESI (General) Regulations, 1950. The High Court, after hearing the appellant's counsel and perusing the impugned order and relevant regulations, held that Regulation 31A mandates payment of interest at 15% per annum in case of default, and the ESI Court has no jurisdiction to waive such interest. The court relied on the Supreme Court judgment in Goetze (India) Limited vs. Employees' State Insurance Corporation (2008) 8 SCC 705. The appeal was allowed, the impugned order was quashed and set aside, and the matter was remanded to the ESI Court for fresh disposal in accordance with law.
Headnote
A) Employees' State Insurance - Interest on Delayed Contributions - Regulation 31A of ESI (General) Regulations, 1950 - Mandatory Nature - The ESI Court has no discretion to waive statutory interest payable under Regulation 31A when an employer defaults in paying contribution within the time prescribed under Regulation 31. The interest is mandatory and cannot be bypassed. (Paras 2-5)
Issue of Consideration
Whether the ESI Court has discretionary power to waive interest under Regulation 31A of the Employees' State Insurance (General) Regulations, 1950, when an employer commits default in paying contribution.
Final Decision
Appeal allowed. Impugned order of ESI Court dated 21.06.2006 quashed and set aside. Matter remanded to ESI Court for fresh disposal in accordance with law.
Law Points
- Statutory interest under Regulation 31A is mandatory
- ESI Court has no discretion to waive interest
- Regulation 31A overrides any discretionary power
Case Details
2012 LawText (BOM) (04) 74
Appeal Under E.S.I. No. 7 of 2006
Mr. P. A. Kholkar for the Appellant
The Regional Director, Employees' State Insurance Corporation, Regional Office Goa
Shri Shaikh Mustafa Kadar, M/s. Hotel Neptune, Shri Gurudas Mahadev Madkaikar, Indian Overseas Bank
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Nature of Litigation
Appeal against order of ESI Court waiving statutory interest on delayed ESI contributions.
Remedy Sought
Appellant sought quashing of ESI Court order that directed recovery of Rs. 90,908/- and barred claim for further interest.
Filing Reason
Appellant challenged ESI Court's order as without jurisdiction to waive statutory interest under Regulation 31A.
Previous Decisions
ESI Court disposed of application under Section 45A directing appellant to recover Rs. 90,908/- and not to claim further interest.
Issues
Whether the ESI Court has discretionary power to waive interest under Regulation 31A of the ESI (General) Regulations, 1950.
Submissions/Arguments
Appellant argued that under Regulation 31A, interest at 15% per annum is mandatory on default, and ESI Court has no power to waive it.
Appellant relied on Goetze (India) Limited vs. ESIC (2008) 8 SCC 705.
Ratio Decidendi
The ESI Court has no discretion to waive statutory interest payable under Regulation 31A of the ESI (General) Regulations, 1950, as the interest is mandatory and must be recovered in case of default.
Judgment Excerpts
the learned E.S.I. Court has no powers or jurisdiction to waive such amount on statutory interest
the impugned Order passed by the E.S.I. Court deserves to be quashed and set aside.
Procedural History
The ESI Court passed an order on 21.06.2006 in an application under Section 45A, directing the appellant to recover Rs. 90,908/- and not to claim further interest. The appellant appealed to the High Court on 21.06.2006, which admitted the appeal on the substantial question of law. The High Court heard the appeal and delivered judgment on 09.04.2012.
Acts & Sections
- Employees' State Insurance Act, 1948: Section 45A
- Employees' State Insurance (General) Regulations, 1950: Regulation 31, Regulation 31A
