1994 (7) TMI 312 - SC - Indian Laws

Whether the power of the Corporation to recover the damages under Section 85-B could have been delegated under Section 94-A aforesaid to the Regional Directors? Held that - It is an admitted position that the Regional Directors have exercised the power under Section 85-B(1) of the Act while passing the impugned orders for recovery of the damages from the appellants. The Regional Directors had been authorised to do so by the Director General of the Corporation by an office order dated 3-5-1976 made on the basis of the aforesaid resolution of the Corporation dated 28-2-1976. Once that part of the earlier resolution is held as invalid, the office order dated 3-5-1976 issued by the Director General also becomes invalid. The Regional Directors therefore could not have passed the impugned orders on the basis, of the invalid office order dated 3-5-1976. 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. However, if from some employers, the damages under Section 85-B(1), on the basis of orders passed by the Regional Directors between 3-5-1976 and 19-2-1983 have not yet been realised, they shall not be realised. In such cases, it will be open for the Regional Directors to issue fresh notices and assess and recover the damages, if any.

Issues Involved:
1. Validity of the delegation of powers under Section 85-B of the Employees' State Insurance Act, 1948.
2. Legality of sub-delegation of powers by the Director General.
3. Impact of the resolution dated 28-2-1976 and subsequent resolution dated 19-2-1983.
4. Consequences for actions taken between 28-2-1976 and 19-2-1983.

Detailed Analysis:

1. Validity of the Delegation of Powers under Section 85-B of the Employees' State Insurance Act, 1948:
The core issue was whether the Regional Directors of the Employees' State Insurance Corporation (the Corporation) had the authority to impose damages for delayed contributions under Section 85-B of the Act. The appellants argued that this power could only be exercised by the Corporation or the Director General, not by the Regional Directors.

Section 85-B(1) states: "The Corporation may recover from the employer such damages not exceeding the amount of arrears as it may think fit to impose." Section 94-A allows the Corporation to delegate its powers to any officer or authority subordinate to it. However, the contention was whether this delegation could extend to sub-delegation by the Director General.

2. Legality of Sub-delegation of Powers by the Director General:
The judgment emphasized that delegation must be exercised by the authority upon whom it is conferred. The maxim "delegatus non potest delegare" (a delegate cannot further delegate) was discussed. The court noted that while the legislature can permit statutory authorities to delegate powers, sub-delegation is generally not presumed unless explicitly stated.

The resolution dated 28-2-1976 authorized the Director General to levy and recover damages and further allowed him to authorize any other officer to exercise this power. The court held that Section 94-A did not permit such sub-delegation, making the latter part of the resolution ultra vires.

3. Impact of the Resolution Dated 28-2-1976 and Subsequent Resolution Dated 19-2-1983:
The court examined the resolution dated 28-2-1976, which allowed the Director General to sub-delegate the power to impose damages. This was deemed invalid as Section 94-A did not support sub-delegation. However, the resolution dated 19-2-1983 corrected this by directly delegating powers to specific officers, including Regional Directors, without allowing further sub-delegation.

The court noted that the 1983 resolution was valid as it directly delegated powers to officers by designation, thus complying with Section 94-A.

4. Consequences for Actions Taken Between 28-2-1976 and 19-2-1983:
Given the invalidity of the 1976 resolution, the court acknowledged that many actions had been taken based on this resolution. It was decided not to invalidate all actions retrospectively due to the significant time lapse and the potential disruption it would cause. The court ruled that damages already recovered would not be refunded, but any pending recoveries based on the invalid orders would not be pursued. Instead, fresh notices could be issued for pending cases.

Conclusion:
The appeals were allowed to the extent that the sub-delegation under the 1976 resolution was invalid. However, the court maintained the status quo for actions already completed to avoid disruption. Future actions must comply with the 1983 resolution, which properly delegated powers without sub-delegation. The appeals and special leave petitions filed by the Corporation were dismissed, with no order as to costs.

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