E.S.I.C versus C.C. SANTHAKUMAR

Citation: [2006] SUPP. 9 S.C.R. 212 · Decided: 21-11-2006 · Supreme Court of India · Bench: ARIJIT PASAYAT · Disposal: Disposed off

Judgment (excerpt)

A 
E.S.I.C 
v. 
C.C. SANTHAKUMAR 
NOVEMBER 21, 2006 
B 
[ARIJIT PASA YAT AND TARUN CHATTERJEE, JJ.] 
Labour Laws: 
Employees State Insurance Act, 1948: Sections 45-A, 45-B and 77(1-
C A)(b) proviso. 
Recovery of arrears of contributions as arrears of land revenue-Right 
of Corporation-Period of limitation-Reasonable period-The employees 
State Insurance Corporation claimed ES.I. contributions from the employers 
D as arrears of land revenue-The High Court held that the limitation prescribed 
under Section 77 of the Act restricted the claim for a period of jive years 
which was clearly indicated by the fact that the contribution for a period of 
more than jive years could not be claimed by the Corporation-Correctness 
of-Held: no period of limitation has been prescribed under proviso to 
Clause (b) of S. 77(1 A) to make a claim for recove1y of ES.I. contributions-
£ However, a concept of reasonable time can he read into the provision even 
though not specifically provided for-Hence, ES.I. Court directed to determine 
the quantum of contribution, if any, payable and consider the question as to 
whether demands were raised within a reasonable period of time or not-
Employees State Insurance (General) Regulations, 1950, Regn. 66. 
F 
The appellant-Corporation claimed Employees State Insurance arrears 
of contributions from the respondent-employers as arrears of land revenue 
under Section 45-B of the Employees State Insurance Act, 1948 in pursuance 
of an order under Section 45-A of the Act. A full Bench of the Kera la High 
Court held that the limitation prescribed under Section 77 of the Act restricted 
G the claim for a period of five years which was clearly indicated by the fact 
that the contribution for a period of more than five yes could not be claimed 
by the appeflant-Corporation. With reference to the proviso to Section 
77(1A)(b) of the Act it was further held that a period of limitation had to be 
read into the provision. On the other hand, the Madras High Court held that 
the language of Section 77(1A)(b) of the Act was very clear and it did not 
I-I 
212 
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E.s.r.c v. C.C. SANTHAKUMAR 
213 
provide for any period of limitation for raising the demand or making the A 
assessment. Hence the appeal. 
The following questions arose before the Court:-
1. Does the proviso clause (b) of Section 77(1A) of the Employees State 
Insurance Act, 1948 fix the limit of time, in which the Employees State B 
Insurance Corporation can make a claim from the employer, on the basis of 
the orders passed under Section 45 of the Act? 
2. Whether a concept of reasonable time can be read into the provision 
even though not specifically providPd for ? 
Disposing of the appeal, the Court 
c 
HELD: 1. When there is a failure in the production of records and when 
there is no cooperation, then Corporation can determine the amount and 
recover the same as arrears of land revenue under Section 45-B of the 
Employees State Insurance Act, 1948. But, on the other hand, if the records D 
are produced and if there is cooperation, the assessment has to be made and 
it can be used as sufficient proof of the claim of the Corporation under Section 
75 before the Employees State Insurance Court. So, the limitation of three 
years for filing an application before the Court, introduced by Act 44of1966, 
can only relate to the application under Section 75 read with Section 77(1A). E 
The order under Section 45-A need not be executed by the Corporation before 
the E.S.I. Court under Section 77. As such, the amendment to section 77(1A)(b) 
proviso by Act 29of1989 providing five year limitation has no relevance so 
far as orders passed by the Corporation under Section 45-A are concerned. 
(224-E, F,GJ 
2.1. Where an order is passed under Section 45-A, it is the duty of the F 
employer and not the corporation to approach the E.S.I. Court. Since no 
application need be filed by the Corporation after an order is passed under 
Section 45-A, the limitation prescribed under Section 77 does not get 
attracted. The non-payment of contribution is a continuing cause, which is 
clear from the fact that the employer is enjoined to pay the interest under G 
Section 39(5)(A), which was introduced by Act 29of1989, until the date of 
its actual payment. (225-A, Bl 
2.2. It is clear, therefore, that the right of the Corporation to recover 
these amounts by coercive process is not restricted by any limitation nor could 
the Government by recourse to the rule-making power 

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