The Transport Corpn. of India Ltd. vs. Employees State Insurance Corpn. and Ors. - (Supreme Court) (29 Oct 2021)
No power under the Employees' State Insurance Act to statutory interest
In facts of present case, by a notice dated 6th April 1990, a demand was made by the Insurance Corporation in the sum of Rs.8,01,510 by way of contribution payable by the Appellant for the period from 30th July 1975 to 31st March 1988. The contribution was demanded as per the provisions of Regulations 29, 31 and 33 of the Employees’ State Insurance (General) Regulations, 1950. The notice referred to unamended Regulation 31-A of the said Regulations under which interest at the rate of 6% per annum was payable on the overdue amount. Another notice dated 16th July 1990 was issued by the Insurance Corporation by invoking Section 45-A of the said Act of 1948 demanding interest at the rate of 6% per annum on the sum of Rs.7,79,491 up to 19th of October 1989 and interest at the rate of 12% per annum up to 31st July 1990.
The Appellant filed an application under Section 75 of the said Act of 1948 before the Employees’ Insurance Court at Ahmedabad for challenging the said demand. By the Judgment and order, the learned Judge of the Employees’ Insurance Court declared that the Appellant was liable to comply with the provisions of the said Act of 1948 with effect from 1st April 1988 and it was not liable for the period prior to 1st April 1988. Hence, the notices of demand were quashed.
The Insurance Corporation preferred an appeal against the said decision of the Employees’ Insurance Court. The learned Single Judge of High Court by his Judgment and Order allowed the said appeal by holding that Head Office of the Appellant was covered by the said Act of 1948 in the year 1975 and therefore, employees working in Branch Office of the Appellant in Gujarat get covered by the beneficial sweep of the said Act of 1948. Hence, the Appellant was held liable to pay contribution from 30th March 1975.
On the basis of the representation made by the appellant, the Insurance Corporation passed an order. By the said order, the Insurance Corporation directed the Appellant to pay interest on the delayed payment of contribution for the period from 30th March 1975 to 31st March 1988 amounting to Rs.21,27,087 and interest of Rs.3,97,722 at the rate of 12% per annum from 1st March 2006 to 2nd August 2006 within fifteen days. The Appellant challenged the said order by filing a writ petition which was dismissed. Being aggrieved by the said order, a Letters Patent Appeal was preferred by the Appellant which has also been dismissed by the impugned Judgment and order.
There is no dispute that, the interest demanded from the appellant is in terms of Regulation 31-A of the said Regulations. In the writ petition filed by the appellant before the High Court, in Letters Patent Appeal and in this appeal, the Appellant has not challenged the validity of the Regulation 31-A. It must be noted here that, the Judgment of the High Court affirming the liability of the Appellant to pay contribution from 30th March 1975 onwards has attained finality and therefore, the liability of the Appellant to pay contribution as demanded cannot be questioned.
For the period up to 19th October 1989, interest at the rate of 6% per annum was demanded as per unamended Regulation 31-A. Only for the arrears of contribution payable after 19th of October 1989, interest at the rate of 12% has been claimed. Interest at the rate of 12% is payable as per clause (a) of sub-section 5 of Section 39 of the said Act of 1948 which was brought on the statute book with effect from 20th October 1989. For a period prior to 20th October 1989, interest has been claimed at the rate of 6% per annum as per unamended Regulation 31-A. Hence, the demand for interest cannot be faulted with in absence of any challenge to the Regulation 31-A.
Now the only question is whether interest payable or a part thereof can be waived. In the case of M/s. Goetze (India) Ltd. vs. Employees’ State Insurance Corporation, this court held that, there is no power under the said Act of 1948 to waive statutory interest. In this case, no material is brought on record to show that better medical facilities were provided by the appellant to its employees. Hence, present is not a fit case to exercise the power under Article 142 of the Constitution of India, 1950. There is no merit in the appeal. Appeal dismissed.
Tags : INTEREST WAIVER ENTITLEMENT