QUILON DISTRICT AUTOMOBILE WORKERS CO-OPREATIVE SOCIETY LTD. Vs. EMPLOYEES STATE INSURANCE CORPORATION

JUDGEMENT

(1.) The applicant before the Employees Insurance Court, Kollam in I.C.No.30/2005 is the appellant herein. The appellant is a Co-Operative Society, registered under the provisions of the Kerala Co-Operative Societies Act and it is engaged in conducting the operation of private bus services with 70 workers. It was registered in the year 1980 and the Society virtually came to a standstill during the period 1997 to 2003. As the Society was in the red, it could not remit the contributions towards the compensation payable under the Employees State Insurance Act duly and promptly during the said period. Later, the employees took over the management and they had cleared all the defaulted contribution amount in instalments from 06.04.2000 to 21.11.2004. Thereafter, invoking the power under Section 85B of the Employees' State Insurance Act, 1948 (for brevity 'the Act' only) the Regional Director, Kerala, issued notice dated 15.02.2005 calling upon the appellant upon to show cause why damages as envisaged under Section 85B of the Act should not be levied and recovered from the appellant. Admittedly, none representing the Society appeared before the competent authority despite the receipt of the said notice and in the said circumstances, Annexure-I order was passed. As per Annexure-I order dated 31.03.2005, an amount of Rs.1,13,557/- was levied as damages, evidently, invoking the power under Section 85B of the Act. The appellant thereupon, approached Employees' Insurance Court by filing Insurance Case No.30/2005 challenging Annexure-I order. However, the Insurance Court as per the judgment dated 17.07.2009 dismissed the application. It is in the said circumstances, this appeal has been preferred.

(2.) We have heard the learned counsel for the appellant and the learned counsel appearing for the respondent.

(3.) The learned counsel for the appellant contended that though the appellant failed to appear before the competent authority pursuant to the receipt of notice dated 15.02.2005 or to show cause as to why damages should not be levied and recovered the competent authority was bound to consider the question whether it was inevitable to levy damages for the delayed payment of the contribution and if at all, it is to be levied whether it should be levied at the maximum rate prescribed under Regulation 31(C) of the Employees' State Insurance (General) Regulations 1950 (for short, 'the Regulations'). It is further contended that going by the provisions under the statute and the interpretation given by this court in the decision in E.S.I. Corporation v. Moosankutty [2005 (4) KLT SN 84] the failure of the employer concerned to appear and show cause cannot be the reason for levying the maximum damages. The nub of the contention made relying on the said decision and the provisions of law is that under the Act the authority competent is under an obligation to apply the mind while deciding the question whether the damages should be levied invoking the power under Section 85B of the Act and even while ordering for its levy whether the maximum damages need to be imposed.