EMP. STATE INSURANCE CORPORATION versus H.M.T. LTD. AND ANR.

Citation: [2008] 1 S.C.R. 646 · Decided: 11-01-2008 · Supreme Court of India · Bench: S.B. SINHA, J.M. PANCHAL · Disposal: Case Allowed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

[2008] 1 S.C.R. 646 
A 
EMP. STATE INSURANCE CORPORATION 
~ 
v. 
H.M.T. L TO. ANO ANR. 
(C.A. No. 340 of 2008) 
B 
JANUARY 11, 2008 
[S.B. SINHA AND J.M. PANCHAL, JJ.] 
Employees State Insurance Act, 1948- ss. 858 and 2(17) 
"-' 
-
D~posit of contribution payable under the Act - Delay in 
c deposit by employer - Levy of damages - Held: Is not 
imperative in all cases - s. 858 provides for an enabling 
provision - It does not envisage mandatory levy of damages 
- When discretionary jurisdiction is conferred on a statutory 
authority.to levy penal damages by reason of an enabling 
D provision, the .same cannot be construed as imperative -
Regn. 31 C to be construed keeping in view language used in 
Legislative Act and not de hors the same - Employees State 
• 
Insurance (General) Regulations, 1950 - Regn.31C. 
Interpretation of statutes- Subordinate legislation - Held: 
E Must conform to provisions of the Legislative Act. 
Penalty/Damages - Levy of - Necessary ingredients for 
- Held: Existence of mens rea or actus reus to contravene a 
statutory provision is a necessary ingredient for levy of 
F 
damages. 
Respondent-employer failed to deposit the amount 
1 
due in respect of contribution payable under the 
' 
Employees State Insurance Act, 1948 within the specified 
period. Appellant-Corporation raised claim for payment 
G of interest for delayed payment and furthermore le· ·ied 
damages in terms of Section 858 of the Act. 
High Court held that although period of delay was 
-..--
slightly more than two years, some reasonable time 
should be allowed for deposit of contributions and, thus, · 
H 
646 
t ""· 
EMP. STATE INSURANCE CORPORATION v. 
647 
H.M.T. LTD. AND ANR. 
restricted the period of payment of interest to two years A 
only. It furthermore held that in the facts and 
circumstances of the case, no damage should be directed 
to be levied as Section 858 of the Act provides for an 
enabling provision and does not make it mandatory to 
levy damages in every case. 
B 
In appeal to this Court, it was contended that the 
High Court while passing the said judgment erred in failing 
to take into consideration the purported effect of 
Regulation 31 C of the Employees State Insurance 
(General) Regulations, 1950 which provides for levy of C 
interest as well as damages. 
Interpretation and application of Section 85-B of the 
Act and Regulation 31 C of the Regulations was thus in 
question in the present appeal. 
D 
Allowing the appeal and remitting the matter to High 
.J 
Court, the Court 
HELD:1.1. Section 858 of the Employees State 
Insurance Act, 1948 provides for an enabling provision. It 
does not envisage mandatory levy of damages. It does · E 
not also contemplate computation of quantum of damages 
in the manner prescribed under the regulations. [Para 12] 
[652-B] 
1.2. An employee being required to be compulsorily 
/' 
insured, the employer is bound to make his part of the F 
~ 
contribution. An employee is also bound to make his 
contribution under the Act. But the same does not mean 
that levy of damages in all situations would be imperative. 
[Para 13] [652-C, D] 
1.3. Section 858 of the Act uses the words 'may G 
recover'. Levy of damages thereunder is by way of 
penalty. The Legislature limited the jurisdiction of the 
authority to levy penalty, i.e., not exceeding the amount 
of arrears. Regulation 31 C of the Employees State 
Insurance (General) Regulations, 1950 therefore must be H 
648 
SUPREME COURT REPORTS 
[2008] 1 S.C.R. 
A construed keeping in view the language used in the 
... 
Legislative Act and not de hors the same. It is a well known 
principle of law that a subordinate legislation must 
conform to the provisions of the Legislative Act. [Paras · 
12, 14] [652-D, E] 
B 
1.4. A penal provision should be construed strictly. 
Only because a provision has been made for levy of 
penalty, the same by itself would not lead to the 
" 
i 
conclusion that penalty must be levied in all situations. 
c 
Such an intention on the part of the legislature is not 
decipherable from Section 858 of the Act. When a 
discretionary jurisdiction has been conferred on a 
statutory authority to levy penal damages by reason o'f 
an enabling provision, the same cannot be construed as 
imperative. Even otherwise, an endeavour should be 
D made to construe such penal provisions as discretionary, 
unless the statute is held to be mandatory in character. 
[Para 17] [653-E, F, G] 
1.5. The statute itself does not say that a pe

Excerpt shown. Read the full judgment & AI analysis in Lexace.