Supreme Court: Period During Which The Interest Is Payable U/Sec 39(5)(a) ESI Act Cannot Be Reduced

The Supreme Court in the case Regional Director/ Recovery Officer vs Nitinbhai Vallabhai Panchasara observed and has stated ESI Court has no authority to restrict the period during which the interest needs to be payable under Section 39( 5)(a) of Employees State Insurance Act, 1948.
In the present case, the court observed that Section 39( 5)(a) of the Act provides that if any contribution payable is not paid by the principal employer on the date on which such contribution has become due, thus, he shall be liable to pay simple interest at the rate of twelve per cent per annum or at such higher rate as which may be specified in the regulations till the date of its actual payment is to be made.
In the said case, it has been restricted by the Employees State Insurance (ESI) Court that the levy of interest leviable under Section 39(5)(a) of the Employees State Insurance Act, 1948 for two years only. The Allahabad High Court dismissed the appeal in the said order. In an appeal filled by the Employees State Insurance Corporation, the main issue which has been raised was whether the ESI Court was justified in restricting the levy of interest under Section 39(5)(a) of the ESI Act for a period of two years only.
The bench comprising of Justice MR Shah and Justice MM Sundresh observed and has stated that reduction of period to two years is not supported by any statutory provision, while referring to Section 39(5).
The bench observed that the interest payable/leviable being a statutory liability for paying of the interest. Nor the authority and neither the court have any authority to either waive the interest and/ or reducing the int the interest and/or the period during which the interest is payable. The court while going on through Section 39(5)(a) of the ESI Act, the liability to pay the interest is from the date on which such contribution has become due and till the date of its actual payment to be made.
Further, it has been stated by the court that the ESI Court erred in relying upon the decision in the case Employees State Insurance Corporation Vs. HMT Ltd, wherein the court while considering the levy of interest under Section 39(5)(a) of the ESI Act. Therefore, the court added that the said judgment dealt with Section 85- where the word used is “may” and the word which is used in Section 39(5)(a) of the ESI Act is “shall”.

The post Supreme Court: Period During Which The Interest Is Payable U/Sec 39(5)(a) ESI Act Cannot Be Reduced appeared first on The Daily Guardian.