PERMOD KOHLI, J. - (1.) PETITIONER is a proprietorship firm and an ancillary unit engaged with the manufacturing of sheet metal etc. Petitioner was served with a notice of demand dated 02 nd of July, 1997 in respect to employers contribution towards the employees State Insurance Fund for the period September, 1984 to May, 1994. It is mentioned that petitioner is liable to pay an amount of Rs. 43,534 -76 out of which Rs. 4,210 -15 has been paid and the balance amount of Rs. 39,325/ - was demanded. On receipt of this demand, petitioner deposited the said amount of Rs. 39,325/ - on 5 th of July, 1997. In the meanwhile the account of the petitioner had been attached to enforce the demand. Petitioner was served with another order dated 15 th of June, 1999 asking him to pay an amount of Rs. 39,816/ - on account of interest payable under Section 39(5)(a) of the E.S.I. Act from January, 1988 to July, 1997 and an amount of Rs. 44,623/ - on account of damages under Section 85(B) of the E.S.I. Act for the said period. These two demands are under challenge in the present writ petition.
(2.) VIDE interlocutory order dated 22 nd of September, 2000 passed by this Court, the attachment was vacated except an amount of Rs. 84,439/ - equivalent to the demand. Petitioner has raised two contentions challenging the demands. (i) That he received a demand for the first time in July, 1997 and within a period of three days, the demand was satisfied, hence he is not liable to pay the interest. (ii) That with a view to enforce the damages in terms of Section 85(B), it is mandatory to issue show cause notice under proviso to Section 85(B) of the Act. From perusal of Section 39(5)(a) of the E.S.I. Act, it is apparent that the interest becomes payable @ 12 per cent simple interest from the date the amount becomes due. The amount is said to be due from September, 1984 to May, 1994 and the total amount due at that relevant time was Rs. 43,534 -76 out of which an amount of Rs. 4210.15 was paid by the petitioner. How the interest (sic) amount of Rs. 39,325/ - has been calculated is not clear. As a matter of fact, the interest has to be calculated on the basis of liability to pay which is recurring in this case. The mode and method of calculation of interest has not been clarified. Matter needs to be reconsidered by the respondents. As far the claim of damages is concerned, there is nothing on record to show that any show cause notice was served upon the petitioner seeking his explanation in terms of mandatory provision of Section 85(B) of the E.S.I. Act. Therefore, the demand of damages is not sustainable. The second notice of demand dated 15 th of June, 1999, where under an amount of Rs. 44,623/ - has been demanded as damages is hereby quashed. This case is, accordingly, remanded to the respondent - Corporation to re -determine the amount of interest payable. Respondent - Corporation will also comply the provisions of Section 85(B) of the E.S.I. Act before any claim of damages is made. The amount already attached will remain attached till the matter is finally determined by the Corporation. It is made clear that petitioner shall be heard both on the question of liability to pay interest and damages.;