THE EMPLOYEES STATE INSURANCE CORPORATION Vs. BINOD CASHEW CORPORATION, QUILON

JUDGEMENT

(1.) THE respondent is the owner of a cashew processing industry falling within the coverage of the Employees 'State Insurance Act,1948.Alleging delay in the payment of contributions under the said Act for the period from 30th March 1975 to 27th September 1975,1st June 1975 to 29th November 1975,27th September 1975 to 31st January 1976 and 28th September 1975 to 27th March 1976 damages under section 85B was imposed against the respondent.Thereupon the respondent moved the Employees 'State Insurance Corporation for a declaration that the claim for damages was unsustainable.The application stands allowed by the order of the Employees 'Insurance Court.In support of this conclusion the court found that through contribution cards had not been submitted to the Employees 'State Insurance Corporation in time,the amount due towards contribution had been accounted in time as it was evident that the contribution stamps required to be affixed on the contribution records had been purchased earlier.It was further found that damages were not recoverable without proof of loss and since no loss to the Corporation has been shown the claim by the Corporation must fail.This appeal is at the instance of the Employees 'State Insurance Corporation.

(2.) THIS Court had occasion to express its view on the question whether loss to the Corporation has to be shown to claim damages. This was in the judgment in M.F.A.438 of 1978( I.L.R.1980(1)Kerala 465 ). This Court noticed the provisions in the regulations for levy of interest at a rate of 6 per cent on delayed payment of contribution and in the context of such a provision and in the light of the use of the term 'imposition 'in section 85B this court held that what was levied under section 85B was not any compensation,but was in the nature of penalty.The punitive element is indicated by the term 'impose 'appearing in section 85B.If so,damages need not be taken to be compensation for loss either to the employees or to the Corporation.This answers the finding of the Employees 'Insurance Court.We may also point out that the same view has been expressed by the Supreme Court in the recent decision reported in Organo Chemical Industries v. Union of India A.I.R.1979 S.C.1803 .No doubt,that was a case where it was the provision in section 14B of the Employees 'Provident Fund Act that came up for consideration.But what has been said in the context of claim for damages under that Act would equally well apply to section 85B of the Employees 'State Insurance Act.

(3.) SECTION 85B of the Act deals with the power of the Corporation to recover damages from an employer "where an employer fails to pay the amount due in respect of any contribution or any other amount payable under this Act " ;.The quantum of such damages is such amount as the Corporation may think fit to impose.The power to impose damages would arise only if it is shown that an employer has failed to pay the amount due.It is contended for the employer that mere delay in payment would not attract section 85B.It is one thing to say that a person has failed to pay and another that he has not paid in time.Where he has failed to pay on the stipulated date he no doubt fails to pay in time.If he has paid later before he is charged with failure to pay it may be that it cannot be said that he has failed to pay.This is the contention of counsel Sri Krishnamoorthy.We are not called upon to decide this question in this case for,even without the decision of it we could dispose of the case.Among that the section applies even to delayed payment.