THE DEPUTY DIRECTOR, EMPLOYEES STATE INSURANCE CORPORATION Vs. ERNAKULAM REGIONAL CO-OPERATIVE MILK PRODUCERS UNION LIMITED (ERCMPU LTD. MILMA)

JUDGEMENT

(1.) When does the liability to pay interest for the contributions determined as due in a proceeding under S.45A of the Employees' State Insurance Act commence, is the short question that falls for consideration in this appeal.

(2.) The respondent is an establishment covered under the Employees' State Insurance Act (hereinafter referred to as 'the Act'). The respondent failed to pay contributions payable under the Act for certain items of wages for the period from 1999 to 2005. On detecting the failure, the designated authority of the Employees' State Insurance Corporation (hereinafter referred to as 'the Corporation') issued an order determining the contributions payable in respect of the said items of wages, as provided for under S.45A of the Act. The amounts so determined as due was remitted by the respondent on 07/11/2008. Later, the Corporation raised a demand against the respondent for interest for the delayed payment of the contributions determined as due. The said demand notice was challenged by the respondent before the Insurance Court. According to the respondent, since their liability to pay contributions in respect of the disputed items of wages was crystallised only by virtue of the decision in the proceeding initiated under S.45A of the Act, they are not liable to pay interest for the contributions determined as due for the period prior to the determination. The Insurance Court held that the contributions determined as due in the proceeding under S.45A of the Act have ripened into a claim only on issuing the order under S.45A of the Act and therefore, the employer is not liable to pay interest for the contributions determined as due up to the date of the order determining the dues and 21 days thereafter.

(3.) Sub-section (4) of S.39 of the Act dealing with the time at which the contribution payable under the Act falls due and sub-section (5) of S.39 of the Act, dealing with the liability to pay interest for delayed payment of contribution, read thus: