Supreme Court of India
Transport Corp.Of India Ltd. … vs Employee State Insurance Corp.. … on 29 October, 2021Author: Ajay Rastogi
Bench: Ajay Rastogi, Abhay S. Oka
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
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
2. By a notice dated 6th April 1990, a demand was made by the
Insurance Corporation in the sum of Rs.8,01,510/- by way of contribution
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
4. The Insurance Corporation preferred an appeal against the said
decision of the Employees’ Insurance Court. The learned Single Judge
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.
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
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
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
1 2006 (6) SCC 581
2 2000 (1) SCC 332.
3 2008 (8) SCC 705
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
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.
13. Hence, we find no merit in the appeal. The appeal fails and is
dismissed with no order as to costs.
(ABHAY S. OKA)
October 29, 2021.