EMPLOYEES STATE INSURANCE CORPORATIONKARNATAKA STATE SMALL INDUSTRIES Vs. KARNATAKA STATE SMALL INDUSTRIES DEVELOPMENT CORPORATION LTD

JUDGEMENT

(1.) ALL these appeals are filed against the common order dated 12. 9. 2000 passed by the employees State Insurance Court (hereinafter referred to as 'the ESI Court') in ESI Application no. 52/1998 and 28/1998. In the said applications, the Karnataka State Small Industries development Corporation (hereinafter referred to as 'kssidc' for short) was the applicant and the Employees State Insurance Corporation (ESI Corporation) was the respondent. The ESI application No. 28/98 relates to claim of interest and ESI Application No. 52/1998 relates to the claim of damages by the ESI Corporation. The ESI Court by its order dated 12. 9. 2000 has limited the claim of interest only to the periods from 7. 2. 1997 to 25. 10. 1997 and damages at 25% for the said period. The ESI Corporation being aggrieved by the limiting of the interest has preferred MFA No. 272/01 and in so far as reducing the damages has filed MFA No. 270/01. The KSSIDC being aggrieved in so far as granting interest even for the said period has filed mfa No. 4679/00 and in so far as granting damages has filed MFA No. 4553/00. Since MFA nos. 272/01 and 4679/00 relate to the issue pertaining to interest, the said appeals would be considered together and since the appeal Nos. 270/01 and 4553/00 relate to damages, the said appeals would be considered together.

(2.) IN order to avoid confusion and for the sake of convenience, the parties would be referred to as esi Corporation and KSSIDC respectively.

(3.) THE issue relating to the coverage of KSSIDC under the ESI Act, 1948 ('the Act' for short) for the payment of contribution in respect of employees was initially disputed by KSSIDC. The ESI corporation by an order dated 3. 1. 1989 passed under Section 45a of the Act had determined the contribution at the rate of 7. 2. % of the wages of Rs. 2,65,82,725. 58 for the period from 27. 1. 1985 to 31. 3. 1987 and thus determined the contribution in a sum of Rs. 19,27,248/ -. The kssidc being aggrieved by the said determination of contribution challenged the same before the ESI Court, Bangalore in ESI application No. 39/89. Initially, it disputed the coverage itself under Section 1 (5) of the Act and also the notitication thereof, however, the challenge to the coverage was conceded subsequently and only the quantum of the contribution determined was under challenge in the said ESI Application No. 39/89. The ESI Court, after considering the rival contentions and taking into consideration the evidence available before it more particularly salary statement maintained by KSSIDC, by its order dated 7. 2. 1997 arrived at the conclusion that the order of the ESI Corporation dated 3. 1. 1989 pasted under Section 45a determining the contribution in a sum of Rs. 19,27,248/- is to be set aside and in its place came to the conclusion that the KSSIDC was liable to pay contribution on a sum of Rs. 89,29,386/- at the rate of 7. 25% and therefore determined the contribution at Rs. 6,47,380. 48. The said order attained finality and the contribution as determined was paid by the KSSIDC to the ESI Corporation on 25. 10. 1997.