{"id":231571,"date":"2009-11-17T00:00:00","date_gmt":"2009-11-16T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/the-regional-director-vs-u-mohanan-on-17-november-2009"},"modified":"2019-03-24T10:38:43","modified_gmt":"2019-03-24T05:08:43","slug":"the-regional-director-vs-u-mohanan-on-17-november-2009","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/the-regional-director-vs-u-mohanan-on-17-november-2009","title":{"rendered":"The Regional Director vs U. Mohanan on 17 November, 2009"},"content":{"rendered":"<div class=\"docsource_main\">Kerala High Court<\/div>\n<div class=\"doc_title\">The Regional Director vs U. Mohanan on 17 November, 2009<\/div>\n<pre>       \n\n  \n\n  \n\n \n \n  IN THE HIGH COURT OF KERALA AT ERNAKULAM\n\nIns.APP.No. 26 of 2009()\n\n\n1. THE REGIONAL DIRECTOR,\n                      ...  Petitioner\n\n                        Vs\n\n\n\n1. U. MOHANAN, MANAGING PARTNER,\n                       ...       Respondent\n\n                For Petitioner  :SMT.T.D.RAJALAKSHMI\n\n                For Respondent  :SRI.K.M.FIROZ\n\nThe Hon'ble MR. Justice M.N.KRISHNAN\n\n Dated :17\/11\/2009\n\n O R D E R\n                     M.N. KRISHNAN, J.\n              = = = = = = = = = = = = = =\n                INS.APPEAL NO. 26 OF 2009\n             = = = = = = = = = = = = = = =\n       Dated this the 17th day of November, 2009.\n\n                      J U D G M E N T\n<\/pre>\n<p>      This appeal is preferred against the order of the<\/p>\n<p>Employees Insurance Court, Kozhikode in E.I.C.34\/06.        in<\/p>\n<p>E.I.C.34\/06 the E.S.I.Corporation has imposed a damage of<\/p>\n<p>Rs.47,287\/- by way of penalty for the delayed payment of<\/p>\n<p>contribution. It was to set aside that order the E.I.C. was<\/p>\n<p>filed. The establishment would contend that though it had a<\/p>\n<p>very steady growth due to the change of the political<\/p>\n<p>scenario and the belligerent stand of the trade unions<\/p>\n<p>coupled with general problems like economic deprivation,<\/p>\n<p>non availability of market for the products, scarcity of<\/p>\n<p>materials and unhealthy business competition had adversely<\/p>\n<p>affected the industry and the industry started to sustain loss<\/p>\n<p>every year. Large amounts became due to financial<\/p>\n<p>institutions, E.S.I Corporation, Employees Provident Fund,<\/p>\n<p>INS.APPEAL NO. 26 OF 2009<br \/>\n<span class=\"hidden_text\">                              -:2:-<\/span><\/p>\n<p>Sales Tax Department, Income Tax Department etc.       It was<\/p>\n<p>only on account of the absolute financial stringency the<\/p>\n<p>situation arose.\n<\/p>\n<p>     2.    Now let me consider about S.85B of the E.S.I.Act.<\/p>\n<p>It is the provision under which power is granted to the<\/p>\n<p>Corporation to impose damages by way of penalty. The word<\/p>\n<p>used under 85B is &#8216;may&#8217; and not &#8216;shall&#8217;.     There had been<\/p>\n<p>decisions of the Apex Court wherein it is held that imposition<\/p>\n<p>of damages being of a plenary nature the judicial discretion<\/p>\n<p>has to be exercised properly and therefore it is always not<\/p>\n<p>mandatory to impose damages for delayed payment of<\/p>\n<p>contribution.   The matter again came up before various<\/p>\n<p>Benches of this court as well as the Apex Court and right<\/p>\n<p>from 1988 onwards the stand is to the effect that there must<\/p>\n<p>be a willful evadement of payment or contumacious conduct.<\/p>\n<p>In the recent decision of the Division Bench of this court<\/p>\n<p>reported in <a href=\"\/doc\/1533427\/\">Regional Director, ESI Corporation v.<\/p>\n<p>Managing Director, M\/s Qetcos Ltd. (ILR<\/a> 2008 (3)<\/p>\n<p>Kerala Series 132) the Division Bench held that it is not<\/p>\n<p>INS.APPEAL NO. 26 OF 2009<br \/>\n<span class=\"hidden_text\">                                 -:3:-<\/span><\/p>\n<p>always mandatory to impose damages and further financial<\/p>\n<p>stringency can be taken as a ground to waive the entire<\/p>\n<p>damages. The Division Bench also considered the decision of<\/p>\n<p>the Supreme Court reported in E.S.I. Corporation v. HMT<\/p>\n<p>Ltd. (AIR 2008 (SC) 1322) and quoted paragraph 21<\/p>\n<p>which reads as follows.\n<\/p>\n<blockquote><p>           &#8220;Existence of mensrea or actus reus to<\/p>\n<p>           contravene a statutory provision must<\/p>\n<p>           also be held to be a necessary<\/p>\n<p>           ingredient for levy of damages and\/or<\/p>\n<p>           the quantum thereof.&#8221;<\/p><\/blockquote>\n<p>      3.   So from the enunciated principles one has to<\/p>\n<p>establish that there has been a contumacious conduct or<\/p>\n<p>deliberate intention to evade payment or the mensrea not to<\/p>\n<p>comply with the statutory mandate. As far as applying the<\/p>\n<p>said principles to the facts of this case it can be seen that it<\/p>\n<p>was on account of the growing labour problem coupled with<\/p>\n<p>the acute financial stringency the establishment was not in a<\/p>\n<p>position to make the payment.          Therefore there is no<\/p>\n<p>deliberate evadement or contumacious conduct or mensrea<\/p>\n<p>INS.APPEAL NO. 26 OF 2009<br \/>\n<span class=\"hidden_text\">                                -:4:-<\/span><\/p>\n<p>and so the imposition of damages by the E.S.I.Corporation<\/p>\n<p>was not done judiciously and that has been correctly<\/p>\n<p>interfered by the E.I.Court.     Therefore the order of the<\/p>\n<p>E.I.Court does not call for any interference and the appeal is<\/p>\n<p>dismissed.\n<\/p>\n<\/p>\n<p>                            M.N. KRISHNAN, JUDGE.\n<\/p>\n<p>ul\/-<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Kerala High Court The Regional Director vs U. Mohanan on 17 November, 2009 IN THE HIGH COURT OF KERALA AT ERNAKULAM Ins.APP.No. 26 of 2009() 1. THE REGIONAL DIRECTOR, &#8230; Petitioner Vs 1. U. MOHANAN, MANAGING PARTNER, &#8230; Respondent For Petitioner :SMT.T.D.RAJALAKSHMI For Respondent :SRI.K.M.FIROZ The Hon&#8217;ble MR. Justice M.N.KRISHNAN Dated :17\/11\/2009 O R D [&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-231571","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 v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>The Regional Director vs U. 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