M/s. S.J. Knitting and Finishing Mills (P) Ltd. vs Employees State Insurance Corporation

V.K. Bali, J.—By this common order, we propose to dispose of five connected Letters Latent Appeal Nos. 597, 598, 678, 690 and 75? of 1986, as common questions of law and fact are involved in all these appeals. Learned counsel representing the parties also suggest likewise.

The bare minimum facts that may, however, need a mention have been extracted from LPA No. 597 of 1986 (M/s. S.J. Knitting and Finising Mills (P) Ltd. v. Employees State Insurance Corporation).

Challenge in this Letters Patent Appeal is to a judgment of a learned Single Judge of this court dated 24th January, 1986 vide which first appeal bearing No. 793 of 1985 that came to be preferred in this Court against order dated 10th of April, 1985, was dismissed. The appeal aforesaid was preferred against the order of Employees Insurance Court, Faridabad, vide which petition u/s 75 of the Employees State Insurance Act, 1948 (hereinafter to be referred to as the E.S.I. Act) for quashing of the order of the Regional Director imposing damages amounting to Rs. 56,993/-, was dismissed.

The appellant challenged the order imposing damages for the period/sets ending September 1975 to November, 1977 on 21st of January, 1983. It was pleaded in the petition u/s 75 of the E.S.I. Act that the appellant-Company had purchased contribution stamps in respect of the period/sets ending September 1975 to November 1977 in respect of the amount on account of contribution on actual basis and affixed the same on contribution cards and after cancelling the same despatched the contribution cards to the respondent which were received in its office at Chandigarh and that the respondent imposed damages amounting to Rs. 56,993/- for the period/sets referred to above in an unjustified manner. The order imposing damages was challenged on as many as eight grounds as have been enumerated by the E.S.I. Court in its order dated 10th of April, 1985. One of the grounds listed as ground No. (vi) reads thus :-

"(vi) that the delegate could not delegate such functions to any other person and, therefore, the delegation in this case by the Corporation to its Regional Director is bad in the eyes of law."

While dealing with issue No. 1, the E.S.I. Court in the very first sentence recorded that "validity of the impugned order has been assailed on several grounds in the petition as noticed above but at the time of arguments, learned Counsel for the petitioner confined his challenge only to 3/4 points and, therefore, I am dealing with those points only."

The first point was with regard to limitation whereas the second was that the impugned order was not a speaking one. The third point pertained to quantum of damages. It was the case of the appellant that the damages could be only at the rate of 19 per cent of the amount of arrears as per notification dated 29th of April, 1983. The appellant further pressed into service Regulation 26 by which an employer being in possession of a contribution card in respect of any person had to send it by registered post or messenger together with a return in duplicate in From-6 to the appropriate office within 42 days of the termination of contribution period to which it related. On the basis of Regulation 26 it was the contention of the appellant that the payment of contribution in this case was not delayed. It was clearly mentioned in paragraph 16 of the order passed by EST Court that no other point was urged before it.

Aggrieved against the order passed by the E.S.I. Court, as mentioned above, appeal came to be filed in this court with the result already indicated above.

Limitation and the order being non-speaking one, the imposition of damages upto 19 per cent alone as per notification issued in April 1993 were re-agitated. It was also the contention of the learned Counsel through whom the appeal was filed that the damages could not be more than 100 per cent which contention was rejected being factually incorrect.

From the records of the case, it is apparent that ground No. vi as enumerated by the learned E.S.I. Court, Faridabad in its order dated 10th April, 1985, was neither pressed before the said Court nor before the learned Single Judge in the appeal that came to be filed against the said order. Even the grounds of appeal do not contain the point enumerated in ground No. vi. Despite this, Mr. A.P. Bhandari, learned Counsel representing the appellant vehemently contends that impugned orders imposing damages in this case have been passed by an authority which was not competent and for that reason alone the said order needs to be quashed. He contends that even though the point with regard to authority/jurisdiction of the concerned officer failed in another case not connected with the present bunch of petitions before a Division Bench of this High Court, but before the Hon''ble Supreme Court, the same was argued successfully. It requires to be mentioned here that the points pressed into service either before the E.S.I. Court or before the learned Single Judge have not been reiterated before us.

We have heard the learned Counsel for the parties and examined records with their assistance.

The only point urged before us, as noted above, in our view should not be permitted to be agitated at this stage for variety of reasons. As mentioned above, the point even though taken in the petition u/s 75 of the E.S.I. Act was at no stage urged by the appellant. Secondly, the point raised by the learned Counsel is a mixed question of law and facts. The exact resolution, the date of same as also the date of impugned order of imposing penalty are all questions of fact. What was the exact delegation, if at all any, is also not known. On the records of the present case, we find an application for stay of recovery of the amount and in that alone there is an averment that the respondent-Corporation had passed the resolution to delegate fresh powers to levy and record damages from the employers u/s 85B of the E.S.I. Act to the officers of the Corporation which has been reproduced in paragraph 2 of the application aforesaid. The power to recover damages can be exercised by Director General, all Regional Directors, Jt. Regional Directors. Dy. Regional Directors, Asstt. Regional Director, Sub-Regional Office, Pune and Dy. Regional Director Incharge Sub Regional Office, Nagpur. This resolution as per the pleadings made in the application aforesaid in para 2 is by way of gazette notification dated 29th of April, 1983, whereas the impugned order levying damages came to be passed on 21st of January, 1983. The impugned order was, thus, passed prior in point of time than the resolution from which the point with regard to delegation of powers and effect thereof is sought to be made out. What was the resolution prior to passing of the order levying damages is still not known. In all fairness to the learned Counsel for the appellant, we may, however, mention that in support of his contention aforesaid, he has placed reliance on M/s. Sahni Silk Mills (P) Ltd. v. Employees State Insurance Corporation 1994(4) R S J 710. In M/s. Sahni Silk Mills (P) Ltd.''s case (supra) validity of impugned orders had been questioned on the ground that the power u/s 85B could not have been exercised by the Regional Directors of the Corporation as it could have been exercised either by the Corporation or by the Director General of the said Corporation. The controversy was as to whether this power could have been delegated u/s 94A to the Regional Directors. In exercise of the powers u/s 94A, Corporation had delegated its powers to impose and recover damages from the employers by resolution dated 28th of February, 1976. The aforesaid resolution runs thus :-

"That for purposes of levy of damages u/s 85B(i) of the Employees'' State Insurance Act, 1948, as amended up-to-date, the Director General or any other officer authorised by him may levy and recover damages from the employers not exceeding the rates as per table annexed."

The resolution came to be passed on 28th of February, 1976, whereas the notice pursuant to which the impugned order was passed came to be issued between the years 1979 to 1981. While dealing with the issue as referred to above, it was observed by the Hon''ble Supreme Court that "by the impugned resolution dated 28.2.1976, the Corporation not only delegated its power u/s 85B(i) of the Act to the Director General, but also left it to the Director General to authorise any other officer to exercise the power. Unless it is held that Section 94A of the Act enables the Corporation to delegate any of its powers and functions to any officer or authority subordinate to the Corporation, and he is his turn can sub-delegate the exercise of the said power to any other officer, the last part of the resolution dated 28.2.1976 cannot be held to be within the framework of section 94A." It was further held in paragraph 13 that, "it cannot be disputed that by the impugned resolution dated 28.2.1976, the Corporation not only delegated its power u/s 85B(i) of the Act to the Director General, but also left it (o the Director General to authorise any other officer to exercise the power u/s 85B(i). From section 94A, it does not appear that Parliament vested power in Corporation to delegate its power on any of officer or authority subordinate to the Corporation and also vested power in the Corporation to empower such officer or authority to authorise any other officer to exercise the said power u/s 85B(i). If section 94A had a provision enabling the Corporation not only to delegate its power to any other officer or authority subordinate to the Corporation, but also to empower such officer or authority in its own turn to authorise any other officer to exercise that power, the resolution could have been sustained on the principle indicated in cases of Harishankar Bagla v. State of Madhya Pradesh (supra) and Barium Chemicals Ltd. v. Company Law Board (supra). As such it has to be held that the part of the resolution dated 28.2.1976, which authorises the Director General to permit any other officer to exercise the power u/s 85B(i) of the Act is ultra vires section 94A."

It may be recalled that by virtue of resolution in M/s. Sahni Silk Mills (P) Ltd.''s (supra) the Director General or any other officer authorised by him could levy and recover damages from the employers, whereas in the case in hand, the resolution in terms of recites that power to levy and recovery of damages from the employer u/s 85B of the E.S.I. Act may be exercised by the Director General or Regional Directors etc. It is not even the case of the appellant that the resolution is in violation of Section 94A. Section 94A as inserted by the Employees'' State Insurance (Amendment) Act, 1951, on 6th of October, 1951,reads thus:

"94-5. Delegation of powers. - The Corporation and subject to any regulations made by the Corporation in this behalf, the Standing Committee may direct that all or any of the powers and functions which may be exercised or performed by the Corporation or the Standing Committee, as the case may be, may in relation to such matters and subject to such conditions, if any, as may be specified, be also exercisable by any officer or authority subordinate to the Corporation."

Section 94A as reproduced above, thus, in clear terms authorises Corporation or the Standing Committee as also any officer or authority subordinate to the Corporation to exercise or perform powers and functions. The section, thus, does contain power of delegation.

Before we may part with this order, we would like to mention that though part of resolution in M/s. Sahni Silk Mills (P) Ltd.''s case (supra) was held to be ultra vires of section 94A of the Act, yet it was observed by the Hon''ble Supreme Court that; " It will not be proper for this court to upset and unsettle the settled position at this late stage. Nor is it in public interest to do so. The orders passed are in no way erroneous on merits. Taking all facts and circumstances into consideration, we direct that no actions or proceedings shall be entertained for refund of amounts which have already been realised as damages from the employers concerned." Looked from any angle, the only contention raised by the learned Counsel for the appellant needs to be repelled.

Finding no merit in this appeal, we dismiss the same, leaving the parties to bear their own costs.

Appeal dismissed.