IN THE HIGH COURT OF KERALA AT ERNAKULAM
Ins.APP.No. 37 of 2008(A)
1. THE ASSISTANT REGIONAL DIRECTOR,
... Petitioner
2. THE RECOVERY OFFICER, E.S.I.CORPORATION,
Vs
1. SRI.ROY.M.MATHEW, MOTHOOTTU HOUSE,
... Respondent
For Petitioner :SRI.T.V.AJAYAKUMAR
For Respondent :SRI.P.RAMAKRISHNAN
The Hon'ble MR. Justice M.SASIDHARAN NAMBIAR
Dated :01/04/2009
O R D E R
M.SASIDHARAN NAMBIAR,J.
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INS.APPEAL NO. 37 OF 2008
===========================
Dated this the 1st day of April,2009
JUDGMENT
Respondents in I.C.14/1996 before the
Employees Insurance Court, Kollam are the
appellants. The applicant therein is the
respondent. Respondent filed the application
under Section 75 and 77 of Employees State
Insurance Act challenging the demand made by
the appellants. When the Employees Insurance
Court rejected his contentions and dismissed
the application,respondent filed MFA 1208/1999.
As per judgment dated 12.7.2005, this court
upheld the claim of the appellant Corporation
that first respondent is liable to pay
contribution for the omitted wages. But the
appeal was allowed to the limited extent of
considering the question of bar of limitation
on the demand made, as it was contended that
INSA 37/2008 2
the claim raised by the appellant Corporation is
barred under proviso to Section 77(1A) (b) of the
Employees State Insurance Act. After remand the
E.I. Court relying on the Full Bench decision of
this Court in E.S.I. Corporation v. Excel Glasses
Ltd (2003(3) KLT 42 declared that the claim for
contribution for the omitted wages is sustainable
only with regard to five years prior to the date
of demand and the claim beyond that period is
unsustainable. The appeal is filed by the ESI
Corporation challenging the judgment.
2. Learned counsel appearing for the
appellants and respondent were heard.
3. The E.I. Court relying on the Full Bench
decision in E.S.I. Corporation Case (supra) held
that the Corporation is entitled to claim arrears
only for a period of five years prior to the date
of demand in view of Section 77(1A) (b) of E.S.I.
Act. As rightly pointed out by the learned counsel
appearing for the appellant that decision was
INSA 37/2008 3
overruled by the Apex Court in Employees State
Insurance Corporation v. Santhakumar (2007(1) KLT
133.
4. The Full Bench of this court had held that
a plain reading of the statutory provision
contained in Section 77 and the Regulation show
that the Corporation can make a claim within five
years from the date on which that had arisen and if
the proviso to Section 77(1A)(b) was construed as
the period for the Corporation to approach the E.I.
Court, it would be open to the Corporation to make
a claim at any time and if that is permitted the
employer would be greatly handicapped as it would
not have the records for a period beyond five
years. Their Lordships of the Supreme Court
disagreed with the view and construing the
provisions of Section 77(1A) held:-
“29. S.77 of the Act relates
to commencement of proceedings
before the E.S.I. Court. The
INSA 37/2008 4
proviso to sub-section 77 of
the Act cannot independently
give any meaning without
reference to the main
provision, namely S.77 of the
Act. Therefore, he proviso to
Clause (b) of S.77 (1A) of the
Act, fixing the period of five
years for the claim made by the
Corporation, will apply only in
respect of claim made by the
Corporation before the E.S.I.
Court and to no other
proceedings."
It was also held that Section 75(2) empowers the
Corporation to apply to E.S.I Court to determine a
dispute against an employer where it was satisfied
that such a dispute exists and if there is no
dispute in the determination either under Section
45A(1) or under Section 68, the Corporation can
INSA 37/2008 5
straightaway go for recovery of the arrears. Their
Lordships also held that proviso to Section 77
(1A)(b) would apply only to a case where the
Corporation approaches the E.S.I. Court under
section 75(2). In the light of the decision of
the Supreme Court the finding of the E.I Court is
not sustainable.
5. Learned counsel appearing for respondent
then pointed out that even if proviso to Section 77
(1A)(b) is not applicable, the claim for
contribution should have been raised by the
Corporation within a reasonable period and as the
reasonable period depends on the facts of the case
and the E.I. Court did not consider this aspect,
E.I. Court may be directed to consider whether the
demand made was within a reasonable period.
6. The Supreme Court in the said decision
considered the question whether the concept of
reasonable time can be read into the provision,
eventhough it is not specifically provided. After
INSA 37/2008 6
elaborately considering the meaning of reasonable
time, it was held that the factual aspect has to be
examined to decide whether the claim is made within
a reasonable period. As in this case, that
question was not considered and focus was made only
on Section 77(1A) (b) of E.S.I Act. Hence the
employer was permitted to move the E.S.I. Court
within a period of two months and the E.S.I. Court
was directed to determine whether demand was raised
within a reasonable period of time or considering
the question of prejudice, if any, for the delayed
action taken by the Corporation. As this question
was not considered by the E.I.Court and the E.I.
Court solely relied on the Full Bench decision of
this court which was subsequently overruled by the
Apex Court, the question is to be considered
afresh.
The appeal is allowed. The order passed by the
E.I. Court in I.C.NO.14/1996 dated 6.6.2006 is set
aside. E.I. Court, Kollam is directed to
INSA 37/2008 7
determine whether the demand raised by the
Corporation is within a reasonable period of time
and whether the delayed action taken by the
Corporation has resulted any prejudice to the
respondent. It is made clear that respondent has
to deposit the amount covered by the demand less
the disputed amount then only E.I. Court need
consider the question.
M.SASIDHARAN NAMBIAR
JUDGE
tpl/-
M.SASIDHARAN NAMBIAR, J.
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W.P.(C).NO. /06
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JUDGMENT
SEPTEMBER,2006