REGIONAL DIRECTOR E S I CORPORATION Vs. KERALA ELECTRICAL AND ALLIED ENGINEERING CO LTD
LAWS(KER)-2003-7-25
HIGH COURT OF KERALA
Decided on July 09,2003

REGIONAL DIRECTOR, E.S.I.CORPORATION Appellant
VERSUS
KERALA ELECTRICAL AND ALLIED ENGINEERING CO.LTD. Respondents

JUDGEMENT

- (1.) DOES the proviso to Section 77 (1-A) (b) of the Employees' State Insurance Act, 1948, debar the Corporation from making any claim after five years from the date on which it had arisen? This question was answered in the negative by a Division Bench of this Court in Vijayan Pilial N. v. ESI Corporation 1998-I-LLJ-1190 (Ker-DB ). It was held that at p. 1192: "4. . . . By a legal fiction contained in Clause (b) the cause of action in respect of a claim by the Corporation from the principal employer arises on the date on which the Corporation makes the claim for the first time. The words 'five years of the period to which the claim relates' contained in the said proviso shall not be interpreted to mean that five years of the period in relation to which the amount of contribution is due. " The correctness of this view was doubted by a Division Bench. It was observed that: "the proviso to Clause (b) shows that no claim shall be made by the Corporation after five years of the period to which that claim relates. " The Bench further observed that: "the effect of the proviso is that no claim shall be made by the Corporation after five years of the period to which the claim relates. The period of limitation is not linked with the date on which the cause of action arises. It refers to the period to which the claim relates. " Thus, the matter was referred to a Full Bench. The scope of the provision contained in the proviso to Section 77 (1 A) (b) is the core of the controversy arising in this bunch of five appeals.
(2.) THE factual matrix of these cases may be briefly noticed. In M. F. A. No. 1094 of 1991, the Corporation had passed an order on February 9, 1990. By this order, it had demanded arrears of contribution for the period from April 1, 1976, to March 31, 1979. In M. F. A. No. 680 of 1992, the demand had been made by the Corporation on April 2, 1991, for contribution for the period from April 1, 1984, to September 30, 1985. In M. F. A. No. 1285 of 1995, the demand was made, vide notice dated December 28, 1993, for the period from December, 1977 to 1990. In M. F. A. No. 482 of 1996, the demand was raised on July 16, 1992 for the period from January 1, 1982, to January 31, 1990. Similarly, in M. F. A. No. 965 of 1999, the respondent was called upon to make the deposit, vide Order dated November 23, 1992. It related to the period from March 28, 1983, to March 31, 1987. The employers challenged the validity of the demand notices on various grounds. It was, inter alia, alleged that the claim of the Corporation was barred by limitation. Thus, the notices were challenged before the Insurance Court.
(3.) THE Employees' Insurance Court examined the matter. It was held that in view of the provisions of Section 77, the claim for a period beyond five years preceding the date of the demand was not tenable. Aggrieved by the orders passed by the Court, the Corporation has filed these five appeals. Learned counsel for the parties have been heard. On behalf of the appellant Corporation, it was contended by Mr. Ajaya Kumar that the Act is a piece of beneficial legislation. Its provisions have to be liberally construed. Any interpretation, which is likely to defeat the objects of the enactment, should be avoided. The provisions of the Act apply automatically to every establishment or factory falling within the ambit of the Act. Under the provisions, the Corporation is entitled to determine the liability of the employer. It can order recovery by issue of a certificate to the Recovery Officer. The amount can be recovered as arrears of land revenue. If a limitation of time is imposed, the object of the enactment shall be defeated. Thus, it was contended the view taken by the Division Bench in Vijayan Pillai's case (supra) deserves to be sustained. These arguments were reiterated by Ms. T. D. Rajalakshmi who appeared for the appellant in some of these appeals.;


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