{"id":223226,"date":"2008-05-22T00:00:00","date_gmt":"2008-05-21T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/the-regional-director-vs-the-managing-director-on-22-may-2008"},"modified":"2017-06-01T06:35:24","modified_gmt":"2017-06-01T01:05:24","slug":"the-regional-director-vs-the-managing-director-on-22-may-2008","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/the-regional-director-vs-the-managing-director-on-22-may-2008","title":{"rendered":"The Regional Director vs The Managing Director on 22 May, 2008"},"content":{"rendered":"<div class=\"docsource_main\">Kerala High Court<\/div>\n<div class=\"doc_title\">The Regional Director vs The Managing Director on 22 May, 2008<\/div>\n<pre>       \n\n  \n\n  \n\n \n \n  IN THE HIGH COURT OF KERALA AT ERNAKULAM\n\nIns.APP.No. 11 of 2004()\n\n\n1. THE REGIONAL DIRECTOR,\n                      ...  Petitioner\n2. THE RECOVERY OFFICER,\n\n                        Vs\n\n\n\n1. THE MANAGING DIRECTOR,\n                       ...       Respondent\n\n                For Petitioner  :SRI.T.V.AJAYAKUMAR\n\n                For Respondent  :SRI.PIRAPPANCODE V.SREEDHARAN NAIR\n\nThe Hon'ble MR. Justice J.B.KOSHY\nThe Hon'ble MR. Justice P.N.RAVINDRAN\n\n Dated :22\/05\/2008\n\n O R D E R\n<\/pre>\n<p>             K. PADMANABHAN NAIR, J.\n<\/p>\n<p>            = = = = = = = = = = = = = = = = = = =<br \/>\n               INS. APPEAL NO.11 OF 2004<br \/>\n            = = = = = = = = = = = = = = = = = = =<br \/>\n       Dated this the 12th day of March, 2008<\/p>\n<p>               R E F E R E N C E O R D E R\n<\/p>\n<p>               &#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8211;<\/p>\n<p>     Appeal is filed by the Employees&#8217; State Insurance<\/p>\n<p>Corporation, Thrissur challenging the order passed by the<\/p>\n<p>Employees&#8217; Insurance Court, Kollam, in I.C. No.16 of 2001 by<\/p>\n<p>which the respondent, a Co-operative Society, fully owned by<\/p>\n<p>the Government, was exonerated from payment of damages.<\/p>\n<p>Respondent-Society was constituted to provide employment<\/p>\n<p>opportunities to unemployed Engineers and Technicians.<\/p>\n<p>Appellants   demanded      contribution     to   the  extent of<\/p>\n<p>Rs.1,14,396\/-.      Subsequently,      appellants     demanded<\/p>\n<p>Rs.1,84,994\/- as damages on account of delayed payment.<\/p>\n<p>Challenging that order, respondent filed I.C. No.16 of 2001<\/p>\n<p>before the EI Court, Kollam.\n<\/p>\n<p>     2.   The main contention raised was that though the<\/p>\n<p>Society is fully owned by the State Government and State<\/p>\n<p>Government have promised to make available necessary<\/p>\n<p>working capital, the same was not done and on account of<\/p>\n<p>INS. APPEAL NO.11 OF 2004<\/p>\n<p><span class=\"hidden_text\">                              -: 2 :-<\/span><\/p>\n<p>that fact delay in remitting the contribution occurred. The<\/p>\n<p>period for which contribution was claimed was from 4\/1992 to<\/p>\n<p>7\/1994. The EI Court took a view that the respondent was in<\/p>\n<p>financial crisis and it was allowed to pay the contribution in<\/p>\n<p>instalments and as such it was not liable to pay damages. <a href=\"\/doc\/156937\/\">In<\/p>\n<p>Chandrasenan           v.   Regional      Director,     E.S.I.<\/p>\n<p>Corporation<\/a> (1996 (1) KLT 243) a Division Bench of this<\/p>\n<p>Court held that the fact that employer was allowed to pay the<\/p>\n<p>contribution in instalments is not a ground to exempt it from<\/p>\n<p>paying the damages.\n<\/p>\n<p>      3.   Learned counsel appearing for the respondent has<\/p>\n<p>placed    reliance  on   a   decision     reported  in  E.S.I.<\/p>\n<p>Corporation v. Premanandan (2007 (2) KLT 666) in<\/p>\n<p>which it was held that if imposition of damages is by way of<\/p>\n<p>penalty, then such damages can be imposed only in<\/p>\n<p>accordance with the principles applicable for imposing penalty<\/p>\n<p>for failure to carry out a statutory obligation. It was further<\/p>\n<p>held that damages cannot be imposed unless the party acted<\/p>\n<p>either deliberately or in defiance of law or was guilty of<\/p>\n<p>INS. APPEAL NO.11 OF 2004<\/p>\n<p><span class=\"hidden_text\">                            -: 3 :-<\/span><\/p>\n<p>contumacious or dishonest conduct. The Division Bench also<\/p>\n<p>considered Regulation 31C     of Employees State Insurance<\/p>\n<p>(General) Regulations, 1950 and held that Regulation 31C<\/p>\n<p>would only be guidelines in the matter of imposition of<\/p>\n<p>damages and percentage fixed is not absolute.             Shri<\/p>\n<p>T.V.Ajayakumar, learned counsel appearing for the appellants,<\/p>\n<p>argued that       in <a href=\"\/doc\/1835058\/\">M\/s. Prestolite of India Ltd. v.<\/p>\n<p>Regional Director (AIR<\/a> 1994 SC 521) the Apex Court held<\/p>\n<p>that while adjudicating damages, the adjudicating authority<\/p>\n<p>can take mitigating circumstance into consideration, but<\/p>\n<p>should not act mechanically in applying upper most limit of<\/p>\n<p>damages. It is argued that in Sovin Knit Works v. E.S.I.<\/p>\n<p>Corpn. (AIR 1997 SC 1771) the Apex Court had taken a view<\/p>\n<p>that in the case of non-compliance of the provisions of the<\/p>\n<p>Act by the employer, the demand is valid.            <a href=\"\/doc\/1899862\/\">In M\/s.<\/p>\n<p>Hindustan Times Ltd. v. Union of India (AIR<\/a> 1998 SC<\/p>\n<p>688) it was held that financial difficulties of the employer is<\/p>\n<p>not a ground to exempt it from payment of damages. Learned<\/p>\n<p>counsel also relied on an unreported decision of this Court in<\/p>\n<p>INS. APPEAL NO.11 OF 2004<\/p>\n<p><span class=\"hidden_text\">                             -: 4 :-<\/span><\/p>\n<p>R.P. No.732 of 2007 in Ins. Appeal No.25 of 2003<\/p>\n<p>decided on 14.9.2003. In Ins.Appeal No.25 of 2003 a Division<\/p>\n<p>Bench of this Court took a view that unless the employer is<\/p>\n<p>guilty of contumacious or dishonest conduct or acted in<\/p>\n<p>conscious disregard of its obligation, damage is not leviable.<\/p>\n<p>Appellant in that appeal filed R.P. No.732 of 2003 and in the<\/p>\n<p>R.P. the Division Bench has clarified that the legal principles<\/p>\n<p>laid down by this Court in the present case shall not be treated<\/p>\n<p>as having general application and it shall not be a precedent.<\/p>\n<p>      4.  <a href=\"\/doc\/1060898\/\">In Emp. State Insurance             Corporation v.<\/p>\n<p>H.M.T. Ltd. &amp; Anr.<\/a> (2008 (1) SCALE 341) the Apex Court<\/p>\n<p>has held that the ESI Act was enacted         to provide certain<\/p>\n<p>benefits to the employees of an establishment in case of<\/p>\n<p>sickness, maternity and employment injury and to make<\/p>\n<p>provisions for certain other matters in relation thereto.<\/p>\n<p>      5.  It was also held that existence of mens rea or actus<\/p>\n<p>reus to contravene a statutory provision must also be held to<\/p>\n<p>be a necessary ingredient for levy of damages and\/or the<\/p>\n<p>quantum thereof.\n<\/p>\n<p>      6.  Regulation 31C was initially introduced in the<\/p>\n<p>INS. APPEAL NO.11 OF 2004<\/p>\n<p><span class=\"hidden_text\">                             -: 5 :-<\/span><\/p>\n<p>Regulations with effect from 1.1.1992. It reads as follows:<\/p>\n<p>                31-C.      Damages or contribution<br \/>\n          or any other amount due, but not paid<br \/>\n          in time. &#8211; An employer who fails to pay<br \/>\n          contributions within the periods specified<br \/>\n          under Regulation 31 or any other amount<br \/>\n          payable under the Act, shall be liable to<br \/>\n          pay damages as under.\n<\/p>\n<p>It is argued that Regulation 31C was amended with effect<\/p>\n<p>from 27.3.2003. It was contended that before amendment in<\/p>\n<p>2003 once the court finds that employer is liable to pay<\/p>\n<p>damage    it has no discretion at all, but damage is to be<\/p>\n<p>imposed as provided in Regulation 31C of the Regulations<\/p>\n<p>because of the mandatory provisions contained in that<\/p>\n<p>Regulation.   It is pointed out that    Premanandan&#8217;s case<\/p>\n<p>(supra) arose in the year 1999. So the provision contained in<\/p>\n<p>amended Regulation 31C has no application to the facts of<\/p>\n<p>that case and in this case.       It is also pointed out that<\/p>\n<p>challenging the decision in Premanandan&#8217;s case (supra)<\/p>\n<p>appellant had filed     SLP No.9899 of 2007 before the Apex<\/p>\n<p>Court and the same is pending.       Considering all aspects of<\/p>\n<p>the matter, I am of the view that the principles laid down in<\/p>\n<p>INS. APPEAL NO.11 OF 2004<\/p>\n<p><span class=\"hidden_text\">                             -: 6 :-<\/span><\/p>\n<p>Premanandan&#8217;s case (supra) require reconsideration.       For<\/p>\n<p>that purpose the case is to be heard by a Division Bench.<\/p>\n<p>      In the result, the appeal is adjourned to be heard and<\/p>\n<p>determined by a Bench of two Judges. The Registry is directed<\/p>\n<p>to place the file before the Honourable the Chief Justice for<\/p>\n<p>appropriate orders.\n<\/p>\n<\/p>\n<p>                         K. PADMANABHAN NAIR, JUDGE.\n<\/p>\n<p>vsv<\/p>\n<p>K. PADMANABHAN NAIR, J.\n<\/p>\n<p>=====================<br \/>\n              M.F.A.\n<\/p>\n<p>=====================<br \/>\n         J U D G M E N T\n<\/p>\n<p>&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;-\n<\/p>\n<blockquote><p>      TH MARCH, 2008<\/p>\n<\/blockquote>\n","protected":false},"excerpt":{"rendered":"<p>Kerala High Court The Regional Director vs The Managing Director on 22 May, 2008 IN THE HIGH COURT OF KERALA AT ERNAKULAM Ins.APP.No. 11 of 2004() 1. THE REGIONAL DIRECTOR, &#8230; Petitioner 2. THE RECOVERY OFFICER, Vs 1. THE MANAGING DIRECTOR, &#8230; Respondent For Petitioner :SRI.T.V.AJAYAKUMAR For Respondent :SRI.PIRAPPANCODE V.SREEDHARAN NAIR The Hon&#8217;ble MR. Justice [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[8,21],"tags":[],"class_list":["post-223226","post","type-post","status-publish","format-standard","hentry","category-high-court","category-kerala-high-court"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.0 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>The Regional Director vs The Managing Director on 22 May, 2008 - Free Judgements of Supreme Court &amp; High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/the-regional-director-vs-the-managing-director-on-22-may-2008\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Regional Director vs The Managing Director on 22 May, 2008 - Free Judgements of Supreme Court &amp; 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