JUDGMENT R.K.Mahajan, J.
1. This is an appeal against the order of Employees' State Insurance Court, Ghaziabad dated February 3, 1981 in case No. 3 of 1980 by virtue of which damages amounting to Rs. 5,618/- were levied under Section 85B of the Employees' State Insurance Act, 1948 (hereinafter referred to as the Act) on account of making late payment of contribution for the period September, 1975 to January, 1976. The grievance of the appellant is that the payment of the contribution due on the part of the employer along with interest for delayed payment has been paid and it was illegal and not warranted under law to levy the damages. The appellant is a Company which is covered under the Act and there is no dispute. It is also not disputed that they have been paying the contribution and there was delay in making contribution for the period of March, 1976 to July, 1977. This fact is also not disputed. Rather the interest was paid under Regulation 31-A of E.S.I.(General) Regulations, 1950 for late payment.
2. The only point which has been taken in the appeal is regarding the levying of damages under Section 85B(1) of the Act, it has been also argued during the course of arguments that the power under Section 85B of the Act cannot be delegated to Regional Director in view of the latest Supreme Court ruling reported in Sahni Silk Mills Pvt. Limited v. E.S.I. Corporation (1994-II-LLJ-1105).
3. Shri Rakesh Tiwari and Shri J.N.Tiwari, Senior Advocate appeared for the appellant. None appeared for the respondents.
4. This appeal deserves to be accepted on the following points: Firstly, by virtue of ruling of Superme Court the Director General cannot authorise Regional Directors to exercise the power under Section 85B imposing damages by way of resolution. Section 83-B is quoted with an advantage:-
"85-B. Power to recover damages (1) Where an employer fails to pay the amount due in respect of any contribution or any other amount payable under this Act, the Corporation may recover from the employer by way of penalty such damages not exceeding the amount of arrears as may be specified in the regulation:
Provided that before recovering such damages, the employer shall be given a reasonable opportunity of being heard".
5. Section 94A of the Act deals with the delegation of powers. Section 94A of the Act is quoted with advantage:-
"94-A. Delegation of powers-The Corporation , and, subject to any regulations made by the Corporation in this behalf, the Standing Committee may direct that all or any of the powers and functions which may be exercised or performed by the Corporation or the Standing Committee, as the case may be, may, in relation to such matters and subject to such conditions, if any, as may be specified, be also exercisable by any officer or authority subordinate to the Corporation."
6. The Hon'ble Supreme Court in Sahni Silk Mitts case (Supra) held the resolution dated February 28, 1976 invalid by which the Director General authorised the Regional Directors to exercise the powers under Section 85B of the Act. The Hon'ble Supreme Court further observed that in the absence of enabling provision in Section 94A of the Act the latter part of the resolution empowering the Director General to authorise any other officer to exercise such power, held ultra vires Section 94A. Held that the Director General's order authorising other officer to exercise such power also bad.
7. So in view of the invalid delegation the damages could not have been levied. The damages also in the facts and circumstances of the case were not proper as interest has been paid and delay has been explained on account of reasons beyond the control of the company. It is mentioned that the delay was caused due to recession in market, labour trouble and non-supply of forms by the Employees' State Insurances Corporation. This was a reasonable cause which could have been taken into consideration while imposing the damages and discretion has not been exercised rightly specially when the interest has been paid.
8. In view of the above observations the appeal is accepted and the order imposing the damages is set aside.