Madras HC Rejects ESIC Appeal, Gives Corporation 4 Weeks To Reconsider Engineering College’s COVID-Era Late-Payment Damages Or Process Amnesty Plea

ESIC sought contributions from the respondent educational institution. Following the Full Bench’s decision that educational institutions were liable to pay contributions, the respondent paid the contributions belatedly, with interest, but disputed the damages imposed.

It relied on the COVID-19 pandemic and the pendency of the proceedings before the Full Bench as reasons for the delay.

The Single Judge directed ESIC to reconsider the damages issue in light of the pandemic and the Full Bench’s observations. ESIC appealed.

The respondent alternatively asked ESIC to consider its proposal under the Amnesty Scheme, which it said it had submitted on 30 September 2020.

Section 91C of the Employees’ State Insurance Act and Rule 53 of the Employees’ State Insurance (Central) Rules, 1950 governed the consideration of waiver or write-off of contributions, interest and damages.

The Court referred to the Full Bench decision in All India Private Education Institutions Association v. State of Tamil Nadu, (2020) 5 CTC 93 (FB), which had held that educational institutions were liable to pay contributions and that delay and damages were subject to Section 91C and Rule 53.

The Court considered that ESIC should not construe those provisions so narrowly as to foreclose reconsideration of the damages claim or consideration of the Amnesty Scheme proposal.

The Court found no illegality or infirmity in the Single Judge’s direction to reconsider whether the extraordinary and unforeseen circumstances of the COVID-19 pandemic could bring the respondent’s case within Rule 53 and justify full or partial waiver.

Rather than decide whether damages must be waived, the Court left ESIC to choose between reconsidering the damages proposal in light of the Single Judge’s observations and processing the Amnesty application.

ESIC was given liberty either to reconsider the proposal to impose damages in light of the Single Judge’s observations or to process the respondent’s Amnesty Scheme application and pass appropriate orders. ESIC was directed to communicate the outcome to the respondent within four weeks. No order as to costs was made.