Having found that it had no power to waive interest or damages following its order of December 26, 2002, rejecting an application from Rane Engine Valves Ltd for grant of exemption from paying interest and damages in terms of Section 88 of the ESI Act, the Labour Department of the Tamil Nadu Government, “cannot usurp the power which had not been conferred on it by law”, the Madras High Court has held.

Even where any contribution, interest or damages due to the ESI Corporation was irrecoverable, it can be written off only by Central Government under Section 91-C of the Act, Mr Justice K. Chandru ruled while hearing writ petitions from the management of the company.

In one of the petitions, the management challenged order dated July 6, 2005, of the ESI Corpn (R-3) claiming interest for delayed payment of dues. In another petition, the TN Govt, Labour Dept's order of June 24, 2005 was challenged, which cancelled its earlier order of December 26, 2002, granting exemption from payment of interest and damages in respect of some workers and staff from January 1997 to September 1999.

The case of the petitioner (the management) was that it had 389 workers in its factory at Alandur. During April 1996, workmen ceased to be covered under the ESI Act as they had started drawing over and above coverage provided under the Act.

Ceiling increased

A notification was issued on December 23, 1996, increasing the ceiling limit for coverage up to Rs 6,500 with effect from July 1, 1997. They filed an application under Section 87 of the Act before the TN Government seeking exemption from purview of the Act.

The respondent (ESI) took up issue with the TN Government. The Government found that there was no power vested with it to waive interest or damages. Attacking this order, the management filed the writ petition (WP No 22417 of 2005).

The Judge said that on question of grant of waiver or reduction of damages, the aggrieved party could only approach the ESI Court under Section 75 failing which an appeal to this Court under Section 82. But the power to grant either reduction or waiver towards damages under Section 85-B vested only with the ESI Corpn.

In the guise of attacking revocation of illegal exemption order, the petitioner had come up with the plea for refund of the amount already paid. Such writ petitions were not maintainable. There was no case with reference to liability to pay under the ESI Act. When once that position was made clear, interest component would automatically enure to the benefit of ESI as held by Supreme Court in Goetze (I) Ltd vs ESI Corpn (reported in 2008 (8) SCC 705).

This Court was of the view, the Judge observed, that the petitioner had not made out any case either to quash the demand notice or for refund of amount already paid. All writ petitions would stand dismissed.

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