M/S. Goetze (India)
Ltd. Vs. Employees State Insurance Corporation [2008] INSC 1042 (7 July 2008)
Judgment
IN THE SUPREME COURT
OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 8432 OF 2001 M/s. Goetze
(India) Ltd. ...Appellant Versus Employees State Insurance Corporation
...Respondents
Dr. ARIJIT PASAYAT,
J.
- Challenge
in this appeal is to be order passed by a Division Bench of the Punjab and
Haryana High Court dismissing the writ petition filed by the appellant.
- Controversy
lies within a very narrow compass.
Employees State
Insurance Corporation (in short the `Corporation'), the respondent herein
raised a demand for contribution under the Employees State Insurance Act, 1948
(in short the `Act') on the component of efficiency bonus for the period
January 1988 to September, 1989 by order dated 23.7.1992. The demand was
challenged before the ESI Court under Section 75 of the Act. Pending the
proceedings before the ESI Court, Corporation by letter dated 1.3.1997 asked
for production of record for the purpose of re-verification for the period from
1989 to 1991 and from 1992 to 1994 to determine the amount payable.
The respondent
Corporation on re-verification determined the actual amount payable as follows:
|
a.
|
1/88
to 3/89 as Rs.
|
2,26,454/-
|
|
b.
|
4/89
to 3/94 as Rs.
|
5,28,071/-
|
|
|
Total
Rs.
|
7,54,525/-
|
Appellant agreed to
pay the contribution and paid the same in October/November, 1997. Appellant
took the stand that there was a bonafide dispute about eligibility. Since
eligibility to "efficiency bonus" under the scheme was subject to
attendance of 50 days in a quarter is payable and paid quarterly. Appellant
took the stand that it falls outside the definition of wages under Section
2(22) of the Act. Appellant took the plea that its stand was supported by a
judgment of this Court in Whirlpool of India Ltd. v. Employees' State Insurance
Corporation [2000(3) SCC 185]. The ESI Court disposed of the matter on 6.1.1998
taking note of the stand of the appellant that it had deposited the definite
amount after re-verification and the bank guarantee furnished by the appellant
was released. On 11.1.2000 the Corporation wrote a letter to the appellant
demanding payment of interest on the amount paid to the Corporation for the
period from 1988 to 1994 as covered by order dated 6.1.1998 and directed
payment of interest amounting to Rs.4,61,825/-. The appellant questioned the
demand before the High Court by filing a writ petition. The appellant's stand
was that a compromise had been arrived at as is apparent from the order of the
ESI Court to the effect that nothing was payable by the appellant. Corporation
took the stand that the liability to pay interest was statutory and, therefore,
there could not have any compromise. In any event the submission of the
appellant that nothing further was payable as ESI contribution was noted and
therefore, the bank guarantee was released. There was no question of any
compromise to waive the interest which is not statutorily permissible. The High
Court accepted the stand and dismissed the writ petition.
- In
support of the appeal learned counsel for the appellant submitted that
there was an order of stay and therefore the question of any interest does
not arise. Further when the counsel for the Corporation himself stated
that nothing further was payable, it clearly indicated that there was a
statement on the compromise for waiver of interest. It was pointed out
that with a view to buy peace the appellant had agreed to pay the amount
though this case was clearly covered by Whirlpool's case (supra).
- Learned
counsel for the respondent on the other hand submitted that there is no
question of any compromise to waive interest because the same is
statutorily payable. There cannot be any compromise without any authority
when there is no provision for any compromise or statement. It is
therefore stated that the High Court's view is right.
- In
order to appreciate rival submissions it would be necessary to take note
of few provisions, Sections 39 and Regulations 31 and 31A reads as
follows:
"Section 39-
Contributions xx xx xx 5(a) If any contribution payable under this Act is not
paid by the principal employer on the date on which such contribution has
become due he shall be liable to pay simple interest at the rate of 12% per
annum or at such higher rate as may be specified in the regulations till the
date of its actual payment."
"Regulation 31 -
Time for payment of contribution An employer who is liable to pay contributions
in respect of any employee shall pay those contributions within 21 days of the
last day of the calendar month in which the contributions fall due;
Provided that where a
factory/establishment is permanently closed, the employer shall pay
contribution on the last day of its closure."
"Regulation 31A
- Interest on contribution due, but not paid in time An employer who fails to
pay contribution within the periods specified in regulation 31, shall be liable
to pay interest at the rate of 12% per annum in respect of each day of default
or delay in payment of contribution."
- As
there was delay in making the payment of the contribution the Corporation
had issued notice on 29.6.1990 at the first instance and thereafter the
order was passed under Section 45(A) of the Act on 23.7.1992. The same was
challenged before the ESI Court in which an interim stay was granted on
9.10.1992. During the pendency of the matter there was re-verification and
the quantum payable by the payment was worked out. The liability to pay
interest is statutory. There is no power of waiver. The question of any
compromise or settlement does not really arise. Even otherwise the order
of the ESI Court referred to and relied upon by the appellant is of no
assistance to the appellant. It only noted statement of the appellant that
he had deposited contribution payable. The reference to "no further
due" is obviously relatable to the contribution payable and nothing
beyond that.
- Above
being the position, the appeal is sans merit, deserves dismissal, which we
direct. There shall be no order as to costs.
..............................J.
(Dr. ARIJIT PASAYAT)
............
..................J.
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