- (1.) Vide order dated 21.5.2002, the appellant-Corporation demanded an interest of Rs. 1,30,875/- from respondent-establishment on the contribution relating to the period 10/81 to 9/83 and 11/83 to 10/84. It was followed by order dated 28.6.2002 issued by the Corporation to its Recovery Officer to effect the said recovery. The aforementioned orders were challenged by the establishment by filing a petition under Section 75(2) of the Employees' State Insurance Act, hereinafter referred to as "the Act". The petition was allowed by Judge, Employees' State Insurance Court, Amritsar on 26.3.2005 and the order dated 21.5.2002 was declared illegal, null and void. Resultantly, the amount of Rs. 65,438/- deposited by the establishment at the time of filing of the petition was ordered to be refunded. Aggrieved of the same, the Corporation is before this Court by way of an appeal under Section 82 of the Act.
(2.) While passing the impugned order, learned lower Court held that the Corporation could claim contribution, interest and damages within five years of the period to which the claim related and as the demand of interest pertained to the contribution relating to the period 10/81 to 9/83 and 11/83 to 10/84, therefore, the demand vide order dated 21.5.2002 was barred by Section 77 of the Act. The relevant observations from the impugned order are as follows : "It is admitted that demand of interest amounting to Rs. 1,30,875/- pertains to the contribution relating to the period 10/81 to 9/83 and 11/83 to 10/84. Counsel for the respondents argued that since the contribution was deposited by the petitioner in the year 2001 on 26.12.2001, so interest was to be calculated from the date of deposit of the amount by the petitioner, as such, the demand was raised well within the limitation, whereas, counsel for the petitioner argued that the demand of the respondent Corporation is barred by limitation as, as per the provisions of Section 77 of the E.S.I Act respondent Corporation can demand interest within a period of five years from the period for which the interest is claimed. In the present case, demand was raised after more than 16 years, so the same is illegal, null and void. Perusal of Section 77 of the E.S.I Act shows as under : "(1) The proceedings before an Employees' Insurance Court shall be commenced by application. (1A) Every such application shall be made within a period of three years from the date on which the cause of action arose. and as per explanation (a) the cause of action in respect of claim for benefit shall not be deemed to arise unless the insured person or in the case of defendants' benefit, the dependents of the insured person claims or claim that benefits in accordance with the regulations made in that behalf within the period of twelve months after the claim became due or within such further period as the Employees Insurance Court may allow on grounds which appears to it to be reasonable. Explanation (b) which is relevant for the decision of the present case is reproduced as under : "The cause of action in respect of a claim by the Corporation for recovering contributions (including interest and damages) from the principal employer shall be deemed to have arisen on the date on which such claim is made by the Corporation for the first time :- Provided that no claim shall be made by the Corporation after five years of the period to which the claim relates." So as per these provisions, the Employees' State Insurance Corporation can claim contribution, interest and damages within a period of five years of the period to which the claim relates and the employer or employee can file application within a period of three years from the date of demand by the Corporation for the first time. So in the present case the Corporation has raised the demand much after the period of five years from the period to which the claim relates. So the demand by the Corporation is barred by the provisions of Section 77 of the E.S.I Act. There is no weight in the argument of the counsel for the respondents that Corporation can calculate interest only after the contribution has been paid by the petitioner rather Corporation could have raised the demand for contribution, interest and damages within the period of five years of the period to which the claim relates, by issuing a notice to the employer regarding non-deposit of contribution by the employer within the stipulated period and after getting record produced from the employer. Contribution, interest and damages could have been calculated within the stipulated period but now when the demand has been raised much after the period allowed by the Act, then this demand is not sustainable in law."
(3.) It is an admitted fact that contribution for the period 10/81 to 9/83 and 11/83 to 10/84 was deposited by the establishment on 26.12.2001. Therefore, the cause of action for the Corporation to demand interest on the late payment arose only on 26.12.2001 and the demand so made on 21.5.2002 was well within the period of limitation of five years as provided by proviso to Explanation (b) under Section 77 (1A) of the Act.;