Transport Corp.Of India Ltd. … vs Employee State Insurance Corp.. … on 29 October, 2021


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Supreme Court of India

Transport Corp.Of India Ltd. … vs Employee State Insurance Corp.. … on 29 October, 2021

Author: Ajay Rastogi

Bench: Ajay Rastogi, Abhay S. Oka

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                                                                       NON-REPORTABLE


                                   IN THE SUPREME COURT OF INDIA

                                    CIVIL APPELLATE JURISDICTION

                                     CIVIL APPEAL NO. 3135 OF 2011



         THE TRANSPORT CORPN. OF INDIA LTD.
         THROUGH SANTNU PATRA MANAGER - LEGAL                              ..… APPELLANT

                                               v.

         EMPLOYEES STATE INSURANCE CORPN.
         & ORS.                                                         ..... RESPONDENTS




                                             J U D G M E N T

ABHAY S. OKA, J.

1. The appellant has taken an exception to the Judgment and Order

dated 29th March 2010 passed by a Division Bench of Gujarat High Court

in a Letters Patent Appeal. The first respondent is the Employees’ State

Insurance Corporation (for short “the Insurance Corporation”)

established under the Employees’ State Insurance Act, 1948 (for short

“the said Act of 1948”).

Signature Not Verified

Digitally signed by
NEETU KHAJURIA
Date: 2021.10.29

2. By a notice dated 6th April 1990, a demand was made by the
16:18:59 IST
Reason:

Insurance Corporation in the sum of Rs.8,01,510/- by way of contribution
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payable by the appellant for the period from 30 th 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 (for short ‘the said Regulations’). 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.

3. 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 dated 17 th

August 1993, 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 1 st April 1988 and it was not liable

for the period prior to 1st April 1988. Hence, the notices of demand were

quashed.

4. The Insurance Corporation preferred an appeal against the said

decision of the Employees’ Insurance Court. The learned Single Judge
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of the Gujarat High Court by his Judgment and Order dated 10 th July

2006 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 30 th March 1975.

5. By the notice dated 26 th July 2006, recovery proceedings were

initiated against the appellant. A writ petition was filed by the appellant

for challenging the said demand. It was withdrawn with liberty to make a

representation. On the basis of the representation made by the

appellant, the Insurance Corporation passed an order on 23 rd November

2006. 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 by the Judgment and order dated 9 th February 2010 by the

learned Single Judge. Being aggrieved by the said order, a Letters

Patent Appeal was preferred by the appellant which has been dismissed

by the impugned Judgment and order.

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6. The submission of Shri Ritin Rai, the learned Senior Counsel in

support of the appeal is that there was uncertainty about the liability of

the appellant to pay contribution and the legal position was crystallised

for the first time when by Judgment and Order dated 10 th July 2006, the

learned Single Judge of Gujarat High Court held that the appellant was

liable to pay contribution from 30th July 1975. The learned Senior

Counsel submitted that the liability of the appellant was crystalized only

on 10th July 2006 and therefore, the arrears of contribution became

payable only from that day. His submission is that interest cannot be

demanded for the period prior to the said date. He submitted that clause

(a) of sub-section (5) of Section 39 of the said Act of 1948 makes the

principal employer liable to pay simple interest at the rate of 12% per

annum or a such higher rate as may be specified in Regulations.

However, this provision was brought on the statute book with effect from

20th October 1989. He submitted that for the period prior to the said date,

interest was demanded by the Insurance Corporation by invoking

Regulation 31-A of the said Regulations. Inviting our attention to various

clauses of sub-section (2) of Section 97 of the said Act of 1948, he

submitted that there was no power therein to frame Regulations for levy

of interest. He submitted that till 28 th January 1968, there was a power
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to frame Regulations for levy of interest at a rate not exceeding 6% per

annum on the overdue contributions and from 20 th October 1989, there

was a power to make Regulations prescribing the rate of interest higher

than 12% on delayed payment of contributions. He submitted that till

20th October 1989, there was no provision in the said Act of 1948

empowering the Insurance Corporation to levy interest. In absence of

any such statutory power, by framing the Regulations under Section 97,

the power to levy interest could not have been conferred on the

Insurance Corporation.

7. Lastly, he relied upon the decision of this Court in the case of

Employees’ State Insurance Corporation and Ors. v. Jardine

Henderson Staff Association and Ors. 1 and submitted that this is a fit

case to exercise jurisdiction of this Court under Article 142 of the

Constitution of India for waiver of interest. He also relied upon another

decision in the case of Transport Corporation of India Ltd. v.

Employees’ State Insurance Corpn. and Ors.2

8. The learned counsel appearing for the respondent Shri Atul Batra

submitted that as held by this Court in the case of M/s. Goetze (India)

Ltd. v. Employees’ State Insurance Corporation 3, there is no power to

waive interest.

1 2006 (6) SCC 581
2 2000 (1) SCC 332.

3 2008 (8) SCC 705
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9. We have given careful consideration to the submissions. 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 Gujarat 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 and Order

dated 10th July 2006 of the Gujarat High Court affirming the liability of the

appellant to pay contribution from 30 th March 1975 onwards has attained

finality and therefore, the liability of the appellant to pay contribution as

demanded cannot be questioned.

10. As noted earlier, for the period up to 19 th 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 19 th 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 20 th October 1989, interest has

been claimed at the rate of 6% per annum as per unamended
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Regulation 31-A. Hence, the demand for interest cannot be faulted with

in absence of any challenge to the Regulation 31-A.

11. Now the only question is whether interest payable or a part thereof

can be waived. In the case of M/s. Goetze (India) Ltd. (supra), this

court held that there is no power under the said Act of 1948 to waive

statutory interest. However, the learned Senior Counsel appearing for

the appellant has invoked the jurisdiction of this Court under Article 142

for waiver of interest. He has mainly relied upon decision of this Court in

the case of Jardine Henderson Staff Association and Ors. (supra).

Perusal of the said decision shows that in the facts of the case, it was

found that the employer had provided better medical facilities to the

employees than what are provided under the said Act of 1948 and there

were no complaints by the employees or their Unions about the medical

services provided. It was found that without paying contribution, the

object of the said Act of 1948 was fulfilled. Therefore, the said decision

was in the peculiar facts of the case.

12. In this case, no material is brought on record to show that better

medical facilities were provided by the appellant to its employees.

Hence, this is not a fit case to exercise the power under Article 142 of

the Constitution of India.

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13. Hence, we find no merit in the appeal. The appeal fails and is

dismissed with no order as to costs.

…………..…………………J
(AJAY RASTOGI)

…………..…………………J
(ABHAY S. OKA)
New Delhi;

October 29, 2021.



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