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CASE NO.: Appeal (civil)  4291 of 2000

PETITIONER: E.S.I.C.

RESPONDENT: C.C. Santhakumar

DATE OF JUDGMENT: 21/11/2006

BENCH: ARIJIT PASAYAT & TARUN CHATTERJEE

JUDGMENT: J U D G M E N T

With (C.A.Nos.6295/2004, 6297/2004, 6298/2004,  4810-11/2005, 6299/2004, 6300/2004,  6301/2004, 7366/2005, 1798/2006, 1799/2006,  1800/2006, AND 2453/2006)

ARIJIT PASAYAT, J.  

       All these appeals involve identical questions and are,  therefore, taken up together for disposal.  Some of the appeals  are by the Employees State Insurance Corporation (in short  ’the Corporation’) while some others are by the employers.   The Corporation questions correctness of the judgment  rendered by the full Bench of the Kerala High Court while the  employers question correctness of the judgment rendered by a  Division Bench of the Madras High Court.   

Basic question before the two High Courts were as  follows :-

       Proviso to Section 77(1A)(b) of the Employees State  Insurance Act, 1948 (in short the ’Act’) provided limitation of 5  years for claiming contribution and restricts the Corporation’s  right from recovering the arrears of contribution as arrears of  land revenue under Section 45 (B) in pursuance of an order  under Section 45(A) of the Act.  The Corporation claimed ESI  Contributions as arrears from various employers. Assailing  those orders, some of the employers moved the Employees  State Insurance Court (in short the ’E.S.I. Court’) in the State  of Kerala. The employers in the State of Tamil Nadu, however,  filed writ petitions before the Madras High Court. The Writ  Petitions were dismissed by learned Single Judge. Writ appeals  filed before the High Court did not bring any result. The  judgment of the Division Bench affirming that of learned  Single Judge is the subject matter of challenge in some of the  appeals. Corporation on the other hand has questioned the  correctness of the judgment of the full Bench of the Kerala  High Court, which held that the limitation prescribed under  Section 77 restricting the claim for a period of five years clearly  indicated by the fact that the contribution for a period of more  than five years cannot be claimed by the Corporation. With  reference to the proviso to Section 77(1A)(b) it was held that a  period of limitation has to be read into the provision; otherwise  the employers would be greatly handicapped and would not be  in a position to establish its case as regards the number of

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employees working under it.  In such a situation the employer  would be left defenceless. With reference to Regulation 66 of  the Employees State Insurance (General) Regulations, 1950 (in  short the ’Regulation’) it was held that the maintenance of the  register in terms of Regulation 66 was for a period of 5 years.   That being so, it is clear that the complaint is confined to a  period of 5 years and the employer is not bound to preserve its  records for the periods prior to that. The Madras High Court  on the other hand held that the language of Section 77(1A)(b)  is very clear and it did not provide for any period of limitation  for raising the demand or making the assessment. Learned  counsel for the employers supported the view of the Kerala  High Court. It was submitted that any other view  would make  the provisions confiscatory; it would also lead to an absurd  result that the Corporation can theoretically make a claim  even after decade, thereby causing prejudice to the employers.   It was submitted that even if it is conceded for the sake of  argument that Section 77(1A)(b) does not provide for a period  of limitation the concept of claim being raised during a  reasonable period of time is inbuilt, otherwise the action would  be arbitrary.  That being so it was submitted that the view  expressed by the Kerala High Court should be accepted and  not that of the Madras High Court.   

Per contra, learned counsel for the Corporation  submitted that the Kerala High Court failed to take notice of  the fact that Section 77(1A) operates in different background  and has no relation to a dispute raised by an employer to the  demand raised for contribution by the Corporation.  It was  pointed out that the employers in the State of Tamil Nadu  instead of moving the E.S.I. Court directly filed writ petitions  without availing the alternative remedy available. Since factual  disputes were involved regarding the actual number of  employees, the writ petitions were not maintainable and the  High Court has rightly clarified the position in law though it  could have thrown out the writ petitions on the ground that  alternative forum of redressal was available.  

Learned counsel for the employers submitted that   remedy provided in the Statute is really not a efficacious  remedy as the employer would be required to deposit 50% of  the amount claimed, though the Court had discretion to  reduce the amount to be deposited. It cannot be said that an  efficacious remedy is available.    In order to appreciate the rival submissions few  provisions in the Act need to be noted. They are as follows:

       "Section 45A.  It was inserted by Act 44 of 1966  and enforced with effect from 17.06.1967. It  reads as under:

"Determination of contributions in  certain cases (1) Where in respect of a  factory or establishment no returns,  particulars, registers or records are  submitted furnished or maintained in  accordance with the provisions of S.44  or any Inspector or other official of the  Corporation referred to in Sub-sec.(2)  of Section 45 is prevented in any  manner by the principal or immediate  employer or any other person, in  exercising his functions or discharging  his duties under Section 45, the  Corporation may, on the basis of

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information available to it, by order,  determine the amount of contributions  payable in respect of the employees of  that factory or establishment.

       Provided that no such order shall  be passed by the Corporation unless   the principal or immediate employer or  the person in charge of the factory or  establishment has been given a  reasonable opportunity of being heard.

       An order made by the  Corporation under sub-section (1)  shall be sufficient proof of the claim of  the Corporation under Section 75 or  for recovery of the amount determined  by such order as an arrear of land  revenue under Section 45B or the  recovery under Sections 45C to 45-I."

45B. Recovery of contributions.--Any  contribution payable under this Act may be  recovered as an arrear of land revenue.

74. Constitution of Employees’ Insurance  Court.--(1) The State Government shall, by  notification in the Official Gazelle, constitute  an Employees’ Insurance Court for such local  area as may be specified in the notification. (2) The Court shall consist of such number of  Judges as the State Government may think fit. (3) Any person who is or has been a judicial  officer or is a legal practitioner of five years’  standing shall be qualified to be a Judge of the  Employees’ Insurance Court. (4) The State Government may appoint the  same Court for two or more local areas or two  or more Courts for the same local area. (5) Where more than one Court has been  appointed for the same local area, the State  Government may by general or special order  regulate the distribution of business between  them. 75. Matters to be decided by Employees’  Insurance Court.--(1) If any question or  dispute arises as to-- (a) whether any person is an employee within  the meaning of this Act or whether he is liable  to pay the employee’s contribution, or

(b) the rate of wages or average daily wages of  an employee for the purposes of this Act, or   (c) the rate of contribution payable by a  principal employer in respect of any employee,  or

(d) the person who is or was the principal  employer in respect of any employee, or

(e) the right of any person to any benefit and  as to the amount and duration thereof, or

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(ee)any direction issued by the Corporation  under section 55A on a review of any payment  of dependants’ benefit, or

(g) any other matter which is in dispute  between a principal employer and the  Corporation, or between a principal employer  and an immediate employer or between a  person and the Corporation or between an  employee and a principal or immediate  employer, in respect of any contribution or  benefit or other dues payable or recoverable  under this Act, or any other matter required to  be or which may be decided by the Employees’  Insurance Court under this Act], such  question or dispute ’[subject to the provisions  of sub-section (2A) shall be decided by the  Employees’ Insurance Court in accordance  with the provisions of this Act. (2) Subject to the provisions of sub-section  (2A), the following claims shall be decided by  the Employees’ Insurance Court, namely:-- (a) claim for the recovery of contributions from  the principal employer; (b) claim by a principal employer to recover  contributions from any immediate employer;         xx              xx              xx              xx (d) claim against a principal employer under  section 68; (e) claim under section 70 for the recovery of  the value or amount of the benefits received by  a person when he is not lawfully entitled  thereto; and (f) any claim for the recovery of any benefit  admissible under this Act. (2A) If in any proceedings before the  Employees’ Insurance Court a disablement  question arises and the decision of a medical  board or a medical appeal tribunal has not  been obtained on the same and the decision of  such question is necessary for the  determination of the claim or question before  the Employees’ Insurance Court, that Court  shall direct the Corporation to have the  question decided by this Act and shall  thereafter proceed with the determination of  the claim or question before it in accordance  with the decision of the medical board or the  medical appeal tribunal, as the case may be,  except where an appeal has been filed before  the Employees’ Insurance Court under sub- section (2) of section 54A in which case the  Employees’ Insurance Court may itself  determine all the issues arising before it. (2B) No matter which is in dispute between a  principal employer and the Corporation in  respect of any contribution or any other dues  shall be raised by the principal employer in the  Employees’ Insurance Court unless he has  deposited with the Court fifty per cent, of the  amount due from him as claimed by the  Corporation: Provided that the Court may, for reasons to be  recorded in writing, waive or reduce the  amount to be deposited under this sub-

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section. (3) No Civil Court shall have jurisdiction to  decide or deal with any question or dispute as  aforesaid or to adjudicate on any liability  which by or under this Act is to be decided by  a medical board, or by a medical appeal  tribunal or by the Employees’ Insurance Court. "77. Commencement of proceedings .-

(1)     The proceedings before an Employees’  Insurance Court shall be commenced by  application.

(1A)    Every such application shall be made  within a period of three years from the date on  which  the cause of action arose.

Explanation \026 For the purpose of this sub- section \026 (a) the cause of action in respect of  the claim for benefit shall not be deemed to  arise unless the insured person or in the case  of dependants’ benefit, the dependants of the  insured person claim or claim that benefit in  accordance with the regulations made in that  behalf within a period of twelve months after  the claim became due or within such further  period as the Employees’ Insurance Court may  allow on grounds which appear to it to be  reasonable;

(b)     the cause of action in respect of a claim  by the Corporation for recovering contributions  (including interest and damages) from the  principal employer shall be deemed to have  arisen on the date on which such claim is  made by the Corporation for the first time;

        Provided that no claim shall be made by  the Corporation after five years of the period to  which the claim relates.

(c)     the cause of action in respect of a claim  by the principal-employer for recovering  contributions from an immediate employer  shall not be deemed to arise till the date by  which the evidence of contributions having  been paid is due to be received by the  Corporation under the regulations.

(2)     Every such application shall be in such  form and shall contain such particulars and  shall be accompanied by such particulars and  shall be accompanied by such fee, if any, as  may be prescribed by rules made by the State  Government in consultation with the  Corporation."

Section 45-A provides that in a case where a factory or  establishment fails to furnish the returns or maintain or  furnish the registers etc., the Corporation can determine the  amount of contributions payable in respect of the employees of  that factory or establishment. Such an order can be passed  only after giving reasonable opportunity of hearing to the  employer or the person in-charge of the factory or

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establishment.  The order passed by the Corporation shall be  sufficient proof of the claim of the Corporation under Section  75 or for recovery of the amount determined by such an order  as an arrear of land revenue under Section 45-B or under  Section 45-C to 45-I.

Section 45B provides that the contribution payable under  the Act may be recovered as arrears of land revenue.  Section  45C entitles the Authorised Officer to issue a certificate,  specifying the amount of arrears. The Recovery Officer, on  receipt of such certificate, is entitled to attach the property,  arrest the employer and appoint a receiver for the  management of the movable and immovable properties of the  factory or establishment.  The provisions contained in Sections  45-D to 45-I lay down a detailed procedure for effecting the  recovery. The next set of relevant provisions quoted above is  contained in Chapter VI.  It relates to the adjudication of  disputes and claims.  Section 74 deals with the constitution of  Courts.  Section 75(2) inter alia provides that the claim for  recovery of the contributions from the principal employer shall  be decided by the Employees’ Insurance Court.  Sub-Section  (2B) was added by Act 29 of 1989. By this, it was provided that  no matter, which is in dispute between the principal employer  and the Corporation in respect of any contribution or any  other dues, shall be raised by the principal employer in the  Employee’s Insurance Court, unless he has deposited with the  Court 50% of the amount due from him, as claimed by the  Corporation. However, in the proviso, a power has been  reserved by which the Court can waive or reduce the amount  of deposit.

Section 76 relates to the institution of the proceedings.   

Under Section 77, the pivotal provision in these cases for  commencement of proceedings has been made. A perusal of  Section 77 shows that the proceedings before an Employees’  Insurance Court commence with the filing of an application.   The application has to be filed within a period of three years  from the date on which the cause of action arises.  In Clause  (a) of the Explanation, provision for the fixation of the date on  which the cause of action for the claimant or his dependants  arises has been fixed.  In Clause (b), the starting point for the  accrual of the cause of action for the principal-employer has  been fixed.  It provides that the date on which the Corporation  makes the claim from the principal-employer for recovering the  contributions including interest and damages shall be the date  of cause of action.

In the present case, the controversy centres on the  proviso to Clause (b) of Section 77(1A). The crucial question is,  "Does the proviso to Clause (b) of Section 77(1A) fix the limit of  time, in which the Corporation can make a claim from the  employer, on the basis of the orders passed under Section  45?"

Section 45A is a part of Chapter IV.  Section 77 (1A) (b)  proviso is contained in Chapter VI. The question is whether  there is any connecting link between Chapter IV and Chapter  VI.

Sections 38 to 45-I are contained in Chapter IV while  Chapter VI relates to  Sections 74 to 83.  Sections 45A and  45B in Chapter IV were introduced by Act 44 of 1966 with  effect from 17.06.1967, in order to curb the default by the

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employers and to provide for an efficient method of recovery.   The mode of recovery is provided under Sections 45-C to 45-I.   On the other hand, Section 75 in Chapter VI relates to the  commencement of proceedings before the E.S.I. Court. Proviso  to Clause (b) of Section 77(1A) was introduced by the Act 29 of  1989 with effect from 20.10.1989.  A combined reading of the  provisions indicates that no claim shall be made by the  Corporation beyond five years, to which the claim relates.  The  relevant Section in Chapter IV, which deals with the order  passed by the Corporation is Section 45A. Similarly, the  relevant Section in Chapter VI, which deals with the resolving  of disputes between the employer and the Corporation by the  E.S.I. Court, is Section 77 (1A).

A reading of Chapter IV, as a whole, makes it clear that  there is no limitation prescribed. Section 38 imposes the  obligation on the employer to pay contribution and, upon his  failure, he is liable to pay interest on a recurring basis until it  is paid.  Section 40 imposes an obligation to pay on the  principal employer in the first instance. This means, even if  the employees were those of the contractors, it is the principal  employer who has to pay.  Section 44 mandates the employer  to furnish proper returns so that the Corporation can  scrutinize, assess and pass an order for a claim.  Section 44  does not provide for any limitation and, originally, it did not  prescribe any mode of recovery.  Therefore, Act 44 of 1966 was  introduced.  Under this Act, Sections 45A and 45B were  brought into force. Thereafter Sections 45-C to 45-I were  introduced, prescribing the mode of recovery. The apparent  purpose of introduction of these Sections is to curb default by  the employers and also to provide for an efficient method of  recovery without any delay.

Section 45A provides for determination of contributions  in certain cases. When the records are not produced by the  establishment before the Corporation and when there is no  cooperation, the Corporation has got the power to make  assessment and determine the amount under Section 45A and  recover the said amount as arrears of land revenue under  Section 45B of the Act. This is in the nature of a best  judgment assessment as is known in taxing statutes. When  the Corporation passes an order under Section 45A, the said  order is final as far as the Corporation is concerned. Under  Section 45A(1), the Corporation, by an order, can determine  the amount of contributions payable in respect of the  employees where the employer prevents the Corporation from  exercising its functions or discharging its duties under Section  45, on the basis of the material available to it, after giving  reasonable opportunity.  But, where the records are produced,  the assessment has to be made under Section 75(2)(a) of the  Act. Section 45A (2) provides that the order under Section  45A(1) shall be used as sufficient proof of the claim of the  Corporation under Section 75 or for recovery of the amount  determined by such order as arrears of land revenue under  Section 45B. In other words, when there is a failure in  production of records and when there is no cooperation, the  Corporation can determine the amount and recover the same  as arrears of land revenue under Section 45B.  But, on the  other hand, if the records are produced and if there is  cooperation, the assessment has to be made and it can be  used as a sufficient proof of the claim of the Corporation under  Section 75 before the E.S.I. Court.  So, the limitation of three  years for filing an application before the Court, introduced by  Act 44 of 1966, can only relate to the application under  Section 75 read with 77(1A). The order under Section 45A

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need not be executed by the Corporation before the E.S.I.  Court under Section 77.  As such, the amendment to Section  77(1A)(b) proviso by Act 29 of 1989 providing five year  limitation has no relevance so far as orders passed by the  Corporation under Section 45A are concerned.  Where an order is passed under Section 45A, it is the  duty of the employer and not the Corporation to approach the  E.S.I. Court. Since no application need be filed by the  Corporation after an order is passed under Section 45A, the  limitation prescribed under Section 77 does not get attracted.   The non-payment of contribution is a continuing cause, which  is clear from the fact that the employer is enjoined to pay the  interest under Section 39(5)(A), which was introduced by Act  29 of 1989, until the date of its actual payment.

Prior to the incorporation of Section 45A under Act 44 of  1966, the only resort available to the Corporation was Section  75, for recovery of contribution through the Court.  Since this  procedure was found to be impracticable and delayed process  involved, a special provision was contemplated whereunder  adjudication is to be made by the Corporation itself. By reason  of incorporation of Section 45A with effect from 17.06.1967, it  became possible for the Corporation to have determination of  the question, binding on the principal employer, without  resorting to the E.S.I.Court. In regard to the order under  Section 45A, the same is enforced, as envisaged under Section  45B, which was similarly brought into the Act, by which the  contribution may be recovered as arrears of land revenue.   With regard to the decision reached by the E.S.I. Court in the  application under Section 75, the said decision is enforced, as  envisaged in sub-section (4) of Section 75 as if it is a Civil  Court. The mode of recovery under Section 45B of the  Corporation and the mode of recovery as per Section 75(4) by  the E.S.I. Court as the Civil Court are entirely different as both  Sections 45 and 75 operate in different spheres.

In this context, it would be worthwhile to refer to  Chapter V also.  Chapter V contains Sections 46 to 73.  The  relevant Section is 68, which reads as follows:

"68.    Corporation’s rights where a principal  employer fails or neglects to pay any  contribution :- (1) If  any principal employer  fails or neglects to pay any contribution which  under this Act he is liable to pay in respect of  any employee  and by reason thereof such  person becomes disentitled to any benefit or  entitled to a benefit on a lower scale, the  Corporation may, on being satisfied that the  contribution should have been paid by the  principal employer, pay to the person the  benefit at the rate to which he would have  been entitled, if the failure or neglect had not  occurred and the Corporation shall be entitled  to recover from the principal employer either \026

(i)     the difference between the amount of  benefit which is paid by the Corporation to the  said person and the amount of the benefit  which would have been payable on the basis of  the contributions which were in fact paid by  the employer; or

(ii)    twice the amount of the contribution  which the employer failed or neglected to pay,

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whichever is greater.

(2)   the amount recoverable under this Section  may be recovered as if it were an arrear of  land-revenue (or under section 45-C to Section  45-I)"

Section 68 of the Act in Chapter V deals with the  Corporation’s rights, where an employer fails to pay any  contribution.  Sub-section (2) to Section 68 provides  that the  amount recoverable under this Section may be recovered as if  it were an arrear of land revenue or under Sections 45-C to  45-I. The said Chapter does not impose any fetter or limitation  for the Corporation to recover the amounts by coercive  process.  In view of the addition of the words in Section 68 "or  under Section 45-C to 45-I" to sub-section (2) of Section 68 by  Act 29 of 1989 with effect from 20.10.1989, the said claim  could be recovered under Section 45-C to 45-I of the Act.   There is no limitation prescribed in the language of Section 68.   Section 60 prescribes that the benefits are not assignable to  anyone else.  Section 71 provides that the benefits under the  Act are payable to the employee up to the date of his death.   Thus, the Legislature, in its wisdom, did not want to impose  by fetter or limitation on the Corporation to recover the  amounts by coercive process under Chapter V.

Section 68 of the Act has been elaborately dealt with by  this Court in Bharat Barrel and Drum Mfg. Co. Ltd. and Anr.  v. E.S.I. Corporation (1971 (2) SCC 860).  It was inter alia  observed as follows:  

               "Chapter VI deals with the adjudication of  disputes and claim, of which Section 74  provides for the constitution of the Insurance  Court.  Section 74 specifies the matters to be  decided by that Court.  Sections 76 and 77  deal with the institution and commencement  of proceedings and Section 78 with the powers  of the Insurance Court.

       These provisions in our view unmistakably  indicate that the whole scheme is dependent  upon the contributions made by the employer  not only with respect to the amounts payable  by him but also in respect of those payable by  the employee.  No limitation has been fixed for  the recovery of these amounts by the  Corporation from the employer; on the other  hand, Section 68 empowers the Corporation to  resort to coercive process.  If any such steps  are proposed to be taken by the Corporation  and the employer is aggrieved, he has a right  to file and apply to the Insurance Court and  have his claim adjudicated by it in the same  way as the Corporation can prefer a claim in a  case where the liability to pay is disputed."

       It is clear, therefore, that the right of the Corporation to  recover these amounts by coercive process is not restricted by  any limitation nor could the Government by recourse to the  rule-making power prescribe a period in the teeth of Section  68.

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       In the above judgment this Court has clearly held that  Section 68 of the Act empowers the Corporation to resort to  coercive process, to recover the contribution from the employer  as if it were an arrear of land revenue and the said right is not  restricted by any limitation.  This is a crucial Section.  

Similarly, no limitation is provided in Chapter VII.  It  deals with the imposition of penalty or levy of damages upon  failure to pay contributions.  It consists of Sections from 84 to  86A.

When the Act itself does not provide for any limitation on  the Corporation’s right to claim, the employers cannot rely  upon Regulations 32 to 66, dealing with the period for  maintenance of registers, to imply any limitation.

Section 45A of the Act contemplates a summary method  to determine contribution in case of deliberate default on the  part of the employer.  By amendment Act 29 of 1989, Sections  45-C to 45-I were inserted in the Principal Act, for the purpose  of effecting recovery of arrears by attachment and sale of  movable and immovable properties or establishment of the  principal or immediate employer, without having recourse to  law or E.S.I Court. Therefore, it cannot be said that a  proceeding for recovery as arrears of land revenue by issuing a  certificate could be equated to either a suit, appeal or  application in the Court. Under Section 68(2) and Sections 45- C to 45-I, after determination of contribution, recovery can be  made straightaway.  If the employer disputes the correctness  of the order under Section 45A, he could challenge the same  under Section 75 of the Act before the E.S.I. Court.

On a plain reading of Sections 45A and 45B in Chapter  IV and 75 and 77 in Chapter VI of the Act, as indicated above,  there cannot be any doubt that the area and the scope and  ambit of Sections 45A and 75 are quite different.

If the period of limitation, prescribed under proviso (b) of  Section 77(1A) is read into the provisions of Section 45A, it  would defeat the very purpose of enacting Sections 45A and  45B.  The prescription of limitation under Section 77(IA)(b) of  the Act has not been made applicable to the adjudication  proceedings under Section 45A by the legislature, since such a  restriction would restrict the right of the Corporation to  determine the claims under Section 45A and the right of  recovery under Section 45B and, further, it would give a  benefit to an unscrupulous employer.  The period of five years,  fixed under Regulation 32(2) of the Regulations, is with regard  to maintenance of registers of workmen and the same cannot  take away the right of the Corporation to adjudicate,  determine and fix the liability of the employer under Section  45A of the Act, in respect of the claim other than those found  in the register of workmen, maintained and filed in terms of  the Regulations.

What Section 75(2) empowers is not only the recovery of  the amounts due to the Corporation from the employer by  recourse to the E.S.I. Court, but also the settlement of the  dispute of a claim by the corporation against the employer.   While this is so, there is no impediment for the Corporation  also to apply to the E.S.I. Court to determine a dispute against  an employer where it is satisfied that such a dispute exists.  If  there is no dispute in the determination either under Section  45A(1) or under Section 68, the Corporation can straightaway  go for recovery of the arrears.

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Section 77 of the Act relates to commencement of  proceedings before the E.S.I. Court. The proviso to sub-Section  77 of the Act cannot independently give any meaning without  reference to the main provision, namely, Section 77 of the Act.   Therefore, the proviso to Clause (b) of Section 77(1A) of the  Act, fixing the period of five years for the claim made by the  Corporation, will apply only in respect of claim made by the  Corporation before the E.S.I. Court and to no other  proceedings.

The Legislature has provided for a special remedy to deal  with special cases. The determination of the claim is left to the  Corporation, which is based on the information available to it.   It shows whether information is sufficient or not or the  Corporation is able to get information from the employer or  not, on the available records, the Corporation could determine  the arrears.  So, the non-availability of the records after five  years, as per the Regulation, would not debar the Corporation  to determine the amount of arrears. Therefore, if the  provisions of Section 45A are read with Section 45B of the Act,  then, the determination made by the Corporation is  concerned.  It may not be final so far as the employer is  concerned, if he chooses to challenge it by filing an application  under Section 75 of the Act.  If the employer fails to challenge  the said determination under Section 75 of the Act before the  Court, then the determination under Section 45A becomes  final against the employer as well.  As such, there is no hurdle  for recovery of the amount determined under Section 45B of  the Act, by invoking the mode of recovery, as contemplated in  Sections 45C to 45-I.   

In Employees’ State Insurance Corporation v. F. Fibre  Bangalore (P) Ltd. (1997 (1) SCC 625) it was  observed that it  is not necessary for the Corporation to seek a resolution of the  dispute before the E.S.I. Court, while the order was passed  under Section 45A.  Such a claim is recoverable as arrears of  land revenue.  If the employer disputes the claim, it is for him  to move the E.S.I. Court for relief.  In other cases, other than  cases where determination of the amount of contributions  under Section 45A is made by the Corporation, if the claim is  disputed by the employer, then, it may seek an adjudication of  the  dispute before the E.S.I. Court,  before enforcing recovery.

The inevitable conclusion, therefore, is that the view of  the Full Bench of the Kerala High Court is not correct and that   of the Madras High Court is correct.   

That brings us to the other question i.e. whether a  concept of reasonable time can be read into the provision even  though not specifically provided for?  Similar questions have  arisen in several other statutes.  

In Hindustan Times Ltd. v. Union of India (1998 (2) SCC  242) this court dealt with the power to recover damage under  Sections 14(B) of the Employees Provident Fund and Misc.  Provisions Act, 1952 (in short the ’Provident Fund Act’). There  also the question arose as to whether in the absence of any  period of limitation the  authority under the Provident Funds  Act could recover the damages after a long period of time. It  was inter alia held as follows :

"The authority under Section 14-B has to  apply his mind to the facts of the case and the  reply to the show-cause notice and pass a

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reasoned order after following principles of  natural justice and giving a reasonable  opportunity of being heard; the Regional  Provident Fund Commissioner usually takes  into consideration the number of defaults, the  period of delay, the frequency of default and  the amounts involved; default on the part of  the employer based on plea of power-cut,  financial problems relating to other  indebtedness or the delay in realization of  amounts paid by the cheques or drafts, cannot  be justifiable grounds for the employer to  escape liability; there is no period of limitation  prescribed by the legislature for initiating  action for recovery o damages under Section  14-B.  The fact that proceedings are initiated  or demand for damages is made after several  years cannot by itself be a ground for drawing  an inference of waiver or that the employer  was lulled into a belief that no proceedings  under Section 14-B would be taken; mere  delay in initiating action under Section 14-B  cannot amount to prejudice inasmuch as the  delay on the part of the Department, would  have only allowed the employer to use the  monies for his own purposes or for his  business especially when there is no additional  provision for charging interest.  However, the  employer can claim prejudice if there is proof  that between the period of default and the date  of initiation of action under Section 14-B he  has changed his position to his detriment to  such an extent that if the recovery is made  after a large number of years, the prejudice to  him is of an "irretrievable" nature; he might  also claim prejudice upon proof of loss of all  the relevant records and/or non availability of  the personnel who were, several years back in  charge of these payments and provided he  further establishes that there is no other way  he grounds which could lead to "irretrievable"  prejudice; further, in such cases of  "irretrievable" prejudice, the defaulter must  take the necessary pleas in defence in the  reply to the show cause notice and must  satisfy the authority concerned with acceptable  material; if those pleas are rejected, he cannot  raise them in the High Court unless there is a  clear pleading in the writ petition to that  effect."

A "reasonable period" would depend upon the factual  circumstances of the case concerned.  There cannot be any  empirical formula to determine that question. The  court/authority considering the question whether the period is  reasonable or not has to take into account the surrounding  circumstances and relevant factors to decide that question.

In State of Gujarat v. Patel Raghav Natha  (1969 (2) SCC  187) it was observed that when even no period of limitation  was prescribed, the power is to be exercised within a  reasonable time and the limit of the reasonable time must be  determined by the facts of the case and the nature of the order  which was sought to be varied.  This aspect does not appear to

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have been specifically kept in view by the Division Bench.   Additionally, the points relating to applicability of the Andhra  Pradesh Assigned Lands (Prohibition of Transfers) Act, 1977,  and even if it is held that the Act was applicable, the  reasonableness of the time during which action should have  been initiated were also not considered.  It would be hard to  give an exact definition of the word "reasonable".  Reason  varies in its conclusions according to the idiosyncrasy of the  individual and the times and circumstances in which he  thinks. The reasoning which built up the old scholastic logic  stands now like the jingling of a child’s toy. But mankind must  be satisfied with the reasonableness within reach; and in  cases not covered by authority, the decision of the Judge  usually determines what is "reasonable" in each particular  case; but frequently reasonableness "belongs to the knowledge  of the law, and therefore to be decided by the courts". It was  illuminatingly stated by a learned author that an attempt to  give a specific meaning to the word "reasonable" is trying to  count what is not a number and measure what is not space.   It means prima facie in law reasonable in regard to those  circumstances of which the actor, called upon to act  reasonably, knows or ought to know. (See: Municipal Corpn. of  Delhi v. Jagan Nath Ashok Kumar (1987 (4) SCC 497) and  Gujarat Water Supply & Sewerage Board v. Unique Erectors  (Gujarat) (P) Ltd. (1989 (1) SCC 532).  As observed by Lord  Romilly, M.R. in Labouchere v. Dawson (41 LJ Ch 472) it is  impossible a priori to state what is reasonable as such in all  cases. You must have the particular facts of each case  established before you can ascertain what is reasonable under  the circumstances. Reasonable, being a relative term is  essentially what is rational according to the dictates of reason  and not excessive or immoderate on the facts and  circumstances of the particular case.

These aspects were highlighted in Collector and Others v.  P. Mangamma and Others (2003 (4) SCC 488).

As observed in Veerayee Ammal v. Seeni Ammal (2002 (1)  SCC 134), it is "looking at all the circumstances of the case; a  "reasonable time" under ordinary circumstances; as soon as  circumstances will permit; so much time as is necessary  under the circumstances, conveniently to do what the contract  requires should be done; some more protracted space than  ’directly’; such length of time as may fairly, and properly, and  reasonably be allowed or required, having regard to the nature  of the act or duty and to the attending circumstances; all  these convey more or less the same idea".  

       According to Advanced law Lexicon by P. Ramanatha  Aiyar  3rd Edition, 2005 reasonable time means as follows:

       "That is a reasonable time that preserves  to each party the rights and advantages he  possesses and protects each party from losses  that he ought not to suffer.

       "Reasonable Time" is defined to be so  much time as is necessary, under the  circumstances, to do conveniently what the  contract or duty requires should be done in a  particular case.

       If it is proper to attempt any definition of  the words "reasonable time", as applied to  completion of a contract, the distinction given

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by Chief Baron Pollock may be suggested,  namely, that a "reasonable time" means as  soon as circumstances will permit.

       In determining what is a reasonable time  or an unreasonable time, regard is to be had to  the nature of the instrument, the usage or  trade or business, if any, with respect to such  instrument, and the fact of the particular case.

       The reasonable time which a passenger is  entitled to alighting from a train is such time  as is usually required by passengers in getting  off and on the train in safety at the particular  station in question.

       A reasonable time, looking at all the  circumstances of the case; a reasonable time  under ordinary circumstances; as soon as  circumstances will permit; so much time as is  necessary under the circumstances,  conveniently to do what the contract requires  should be done; some more protracted space  than "directly" such length of time as may  fairly, and properly, and reasonably be allowed  or required, having regard to the nature of the  act or duty and to the attending  circumstances; all these convey more or less  the same idea.

       Reasonable time always depends on the  circumstances of the case. (Kinney)

       It is unreasonable for a person who has  borrowed ornaments for use in a ceremony to  detain them after the ceremony has been  completed and the owner has demanded their  return. (AIR 1930 Oudh 395).

       The expression "reasonable time" means  so much time as is necessary under the  circumstances to do conveniently what the  contract or duty requires should be done in a  particular case". [See: Joseph Severance v.  Benny Mathew (2005(7) SCC 667)]

In all these cases at hand the factual aspects have not  been examined, because the grievance appears to have been  focused on the applicability of Section 77 (1A)(b).   

In the circumstances we dispose of all these appeals with  the following directions :

(1)     The employers shall move the E.S.I. Court  within a period of two months, if not already done;  (2)     They shall deposit 25% of the amount  claimed with the E.S.I. Court along with the  application in terms of Sections 75 & 76 of the Act  before the E.S.I. Court. (3)     The E.S.I. Court shall determine the  quantum of contribution, if any, payable and  consider the question as to whether demands were  raised within a reasonable period of time or not  after considering the question of prejudice, if any,  for the delayed action taken by the Corporation.  

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(4)     The approach of the E.S.I. Court and the  Authorities should be that of a watch dog and not of  a blood hound, even though the legislation is a  beneficial one.   

We make it clear that we have not expressed any opinion  on the merits of the case.  Appeals are accordingly disposed of  but without any order as to costs.