2008 (7) TMI 966 - SC - Indian Laws

Whether there was delay in making the payment of the contribution? Whether there cannot be any compromise without any authority when there is no provision for any compromise or statement?

Summary

Issues:
Challenge to order of High Court dismissing writ petition on demand for contribution under Employees State Insurance Act, 1948 and payment of interest on delayed contribution.

Analysis:
1. The main issue in this case was the challenge to the order passed by the High Court dismissing the writ petition filed by the appellant regarding the demand for contribution under the Employees State Insurance Act, 1948. The Employees State Insurance Corporation raised a demand for contribution on the efficiency bonus component for a specific period. The appellant contested the demand, citing a bonafide dispute about eligibility for the efficiency bonus under the Act.

2. The appellant argued that the eligibility for the efficiency bonus was subject to specific conditions and fell outside the definition of wages under the Act. The matter was taken to the ESI Court, which disposed of it after re-verification and the appellant paid the determined amount. However, the Corporation later demanded interest on the amount paid for the specified period. The appellant contended that there was a compromise as indicated by the ESI Court's order, but the Corporation insisted on the statutory liability to pay interest.

3. The appellant further argued that there was an order of stay in place, and the Corporation's statement that nothing further was payable implied a compromise for waiving interest. The appellant claimed that the payment was made to avoid further disputes, even though the case was similar to a precedent judgment. On the other hand, the respondent contended that there was no provision for compromise regarding interest, as it was statutorily payable, and supported the High Court's decision.

4. The statutory provisions regarding contributions and interest were crucial in this case. Sections 39 and Regulations 31 and 31A of the Act specified the liability of the principal employer to pay contributions on time and the consequences of delayed payments, including the payment of interest at a specified rate. The Corporation had issued notices and orders due to delays in contribution payments, emphasizing the statutory nature of the interest liability.

5. The Supreme Court, after considering the arguments and statutory provisions, concluded that the liability to pay interest on delayed contributions was statutory, and there was no provision for compromise or waiver. The Court noted that the ESI Court's order only referred to the contribution payable and did not absolve the appellant from the statutory interest payment. Therefore, the appeal was dismissed, and no costs were awarded.

In summary, the judgment upheld the statutory liability of the appellant to pay interest on delayed contributions under the Employees State Insurance Act, rejecting the appellant's argument of a compromise to waive interest and affirming the decision of the High Court.