2013 (3) TMI 881 - HC - Indian Laws

Summary

Issues:
1. Whether the order of the second respondent and the consequential order of the first respondent, demanding damages for belated payment of contribution, should be quashed?
2. Whether the BIFR order for changing the cut-off date for payment of outstanding dues to ESI Corporation from 31.3.2001 to 31.3.2003 is binding on the respondents?
3. Whether the respondents were justified in refusing to waive the damages for belated payment as per the BIFR order?

Analysis:
Issue 1:
The petitioner sought a writ to quash the order demanding damages for belated payment of contribution and to direct the respondents to waive the damages. The petitioner, a sick industrial company under BIFR, had a rehabilitation scheme where ESI Corporation dues were to be paid in installments. The BIFR order changed the cut-off date for payment to 31.3.2003. The respondents refused to waive damages, claiming it was at their discretion under ESI regulations. The court held that the BIFR order had statutory force, and the respondents could not go against it. The demand notice was deemed arbitrary and against the law, leading to the quashing of the impugned order.

Issue 2:
The BIFR order changed the cut-off date for payment of dues to ESI Corporation, which was accepted by the ESI Corporation as per the representation made by the company. The court noted that the BIFR order had statutory force and was binding on all parties. The ESI General Regulation did not prohibit complete waiver in extraordinary circumstances, and the consent of ESI Corporation was not contrary to the regulation. The court held that once ESI Corporation consented before the BIFR, they could not rely on regulations to go against the BIFR order. Therefore, the BIFR order changing the cut-off date was held to be binding on the respondents.

Issue 3:
The respondents contended that they had the discretion to waive damages as per ESI regulations, and full waiver was only in extraordinary situations. However, the court found no merit in this defense. The BIFR order, with ESI Corporation's consent, had statutory force and aimed at reconstructing the company. The court held that the respondents could not use regulations to defeat the BIFR order. Therefore, the refusal to waive damages was deemed arbitrary and against the law, leading to the setting aside of the impugned order.