Some Thoughts and Counter-Thoughts on Claims and Counter-claims

(By K.G. Balasubramanian,  Advocate,  High  Court  of  Kerala)

 

11.4.2014 was welcome despite my lack of predilection for holidays. Court was about to close. Lawyers were busy, greeting each other with relieved urgency, voicing the cautious “Sir, may we have item - in Court - after vacation” and the noncommittal “how else”. I too was verifying the last rites on to-be-filed-on-closing-day files and those which could wait till reopening. I try not to fall prey to “it is vacation-it can-wait-till-reopening” syndrome, though it affects me also.

 

My eyes fell upon the latest part of KLT, unopened and unruffled on my table, with the seductive command “open me”. I hesitated, looking at it furtively, looking at the clock simultaneously. Well, KLT won, the clock lost. I scanned through the pages as usual, to devour them later. The unusual number of head notes in Thankamma v. Sajitha G. Nair (2014 (2) KLT 110) engaged my attention, reminding me of an extempore discussion on the point a few days ago. I ended up reading the entire decision, regardless of “closing day” mania. It set some wheels turning, spinning my mind into a warp of good ole C.P.C. 

 

I was euphoric at the decision for two reasons. One, here was sumptuous food for thought. Two, the learned Judge had cautiously left the door open. I had an apprehension that the door was open to all, like “two of every sort” Noah was ordained to take in his Ark and usher in the Mother of all legal floods.

 

With the crescendo of heavenly melam at Chittoor temple festival reverberating rhythmically in mind, I leisurely went through the ruling later, with much interest. 

 

While reminiscing on the law on the point, reference to Sections 11, 26, 96 and 115, Order I, II, VI, VII, VIII, XIV and XX CPC is obligatory, aided by some precedents, keeping in mind that maintainability of a suit and jurisdiction of court to try it are different concepts. But, these two concepts overlap, supplement and intertwine with each other in Section 6 suits and counter claim/s attempted to be set up therein, considering the fact also that a counter-claim has to be treated as a plaint. In the scheme of Section 6 and C.P.C., consolidation of a S. 6 suit and counter-claim therein will not be wholesome or welcome. While not dissenting from the principle that different yardsticks apply to amendment of plaint and written statement,  I have the humble view that Thankamma did not deserve to be burdened with an amendment and subsequent application for exclusion.

 

Section  26 :  Institution  of  suits:

(1) Every suit shall be instituted by the presentation of a plaint or in such other manner as may be prescribed.

(2) In every plaint, facts shall be proved by affidavit.

 

Section  96:  Appeal  from  original  decree:

(1) Save where otherwise expressly provided in the body of this Code or by any other law for the time being in force, an appeal shall lie from every decree passed by any Court exercising original jurisdiction to the Court authorized to hear appeals from the decisions of such Court. 

 

Order  II  Rule  3: Joinder  of  causes  of  action:

(1) Save as otherwise provided, a plaintiff may unite in the same suit several causes of action against the same defendant, or the same defendants jointly; and any plaintiffs having causes of action in which they are jointly interested against the same defendant or the same defendants jointly may unite such causes of action in the same suit.

 

(2) Where causes of action are united, the jurisdiction of the Court as regards the suit shall depend on the amount or value of the aggregate subject-matters at the date of instituting the suit.

 

Rule 6: Where it appears to the Court that the joinder of causes of action in one suit may embarrass or delay the trial or is otherwise inconvenient, the Court may order separate trials or make such other order as may be expedient in the interests of justice.

 

Order  VI  Rule  16:  Striking  out  pleadings:

The Court may at any stage of the proceedings order to be struck out or amended any matter in any pleading

(a) which may be unnecessary, scandalous, frivolous or vexatious, or

(b) which may tend to prejudice, embarrass or delay the fair trial of the suit, or

(c) which is otherwise an abuse of the process of the Court.

 

 Order  VI  Rule 17:  Amendment  of  pleadings:

The Court may at any stage of the proceedings allow either party to alter or amend his pleadings in such manner and on such terms as may be just, and all such amendments shall be made as may be necessary for the purpose of determining the real questions in controversy between the parties:

 

Provided that .............

 

ORDER  VII  Rule  11: Rejection  of  plaint:

The plaint shall be rejected in the following cases:

a) ....................................................

b) ....................................................

c) ....................................................

d) where the suit appears from the statement in the plaint to be barred by any law 

e) ....................................................

f) ....................................................

Provided that ....................................................

 

ORDER  VIII  Rule  6A:  Counter-claim  by  defendant: 

(1) A defendant in a suit may, in addition to his right of pleading a set-off under Rule 6, set up, by way of counter-claim against the claim of the plaintiff, any right or claim in respect of a cause of action accruing to the defendant against the plaintiff either before or after the filing of the suit but before the defendant has delivered his defence or before the time limited for delivering his defence has expired, whether such counter-claim is in the nature of a claim for damages or not:

Provided that such counter-claim shall not exceed the pecuniary limits of the jurisdiction of the Court.

(2) Such counter-claim shall have the same effect as a cross-suit so as to enable the Court to pronounce a final judgement in the same suit, both on the original claim and on the counter-claim.

(3) The plaintiff shall be at liberty to file a written statement in answer .........

(4) The counter-claim shall be treated as a plaint and governed by the rules applicable to plaints.

 

Rule  6C:  Exclusion  of  counter-claim:

Where a defendant sets up a counter-claim and the plaintiff contends that the claim thereby raised ought not to be disposed of by way of counter-claim but in an independent suit, the plaintiff may, at any time before issues are settled in relation to the counter-claim, apply to the Court for an order that such counter-claim may be excluded, and the Court may, on the hearing of such application make such order as it thinks fit.

 

Rule  6D:  Effect  of  discontinuance  of  suit:

If in any case in which the defendant sets up a counter-claim, the suit of the plaintiff is stayed, discontinued or dismissed, the counter-claim may nevertheless be proceeded with.

 

Rule 6F:  Relief  to  defendant  where  counter-claim  succeeds:

Where in any suit a set-off or counter-claim is established as a defence against the plaintiff’s claim, and any balance is found due to the plaintiff or the defendant, as the case may be, the Court may give judgment to the party entitled to such balance. 

 

Order  XX  Rule  19:  Decree  when  set-off or  counter-claim  is  allowed

(1) Where the defendant has been allowed a set-off or counter-claim against the claim of the plaintiff, the decree shall state what amount is due to the plaintiff and what amount is due to the defendant, and shall be for the recovery of any sum which appears to be due to either party.

(2) Appeal from decree relating to set-off or counter-claim: Any decree passed in a suit in which a set-off or counter-claim is claimed shall be subject to the same provisions in respect of appeal to which it would have been subject if no set-off or counter-claim had been claimed.

(3)................

 

Section 6:  Suit  by  person  dispossessed  of  immovable  property:

(1) If any person is dispossessed without his consent of immovable property otherwise than in due course of law, he or any person claiming through him may, by suit, recover possession thereof, notwithstanding any other title that may be set up in such suit.

(2) No suit under this section shall be brought

(a) .........................................

(b) .........................................

(3) No appeal shall lie from any order or decree passed in any suit instituted under this section, nor shall any review of any such order or decree be allowed.

(4) Nothing in this section shall bar any person from suing to establish his title to such property and to recover possession thereof.

 

Order  XIV  Rule 2:  Court  to  pronounce  judgment  on  all  issues:

(1) ................................................

 

(2) Where issues both of law and of fact arise in the same suit, and the Court is of opinion that the case or any part thereof may be disposed of on an issue of law only, it may try that issue first if that issue relates to

 

(a) the jurisdiction of the Court, or

 

(b) a bar to the suit created by any law for the time being in force, and for that purpose may, if it thinks fit, postpone the settlement of the other issues until after that issue has been determined, and may deal with the suit in accordance with the decision on that issue.

 

Rule 5:  Power  to  amend,  and  strike  out  issues:

(1) The Court may at any time before passing a decree amend the issues or frame additional issues on such terms as it thinks fit, and all such amendments or additional issues as may be necessary for determining the matters in controversy between the parties shall be so made or framed.

 

Gurbachan Singh v. Bhag Singh & Ors. (1996) 1 SCC 770: AIR 1996 SC 1087) had laid down that “....... Preceding the amendment it was settled law that except in a money claim counter-claim or set off cannot be set up in other suits. The Law Commission of India had recommended, to avoid multiplicity of the proceedings, right to the defendants to raise the plea of set off in addition to a counter-claim in R.6 in the same suit irrespective of the fact whether the cause of action for counter-claim or set off had accrued to defendant either before or after the filing of the suit. The limitation was that the counter-claim or set off must be pleaded by way of defence in the written statement or before the time limit for delivering the written statement has expired, whether such counter-claim should not exceed the pecuniary limits of the jurisdiction of the Court. In other words, by laying the counter-claim pecuniary jurisdiction of the Court cannot be divested and the power to try the suit already entertained cannot be taken away by accepting the counter-claim beyond its pecuniary jurisdiction. Thus considered we hold that in a suit for injunction, the counter-claim for possession also could be entertained by operation of O.8 R.6 (A) (1) of C.P.C.”

 

Jag Mohan Chawla v. Dera Radha Swami Satsang (1996) 4 SCC 699)  dealing with immovable property - also does not seem to have noticed the nature and limitations prescribed by Order VIII Rule 6A(2) and Order XX Rule 19 as to monetary claims.

 

The recommendation of the Law Commission is not reflected, according to me, in Rules 6A to 6G. That is a conscious and conspicuous omission while enacting Act 104/1976. The above proposition is per incuriam and rather unfortunate as it overlooks Rule 6A (2), Rule 6F and Order XX Rule 19. 

 

As anticipated by Rule 6C, it seems improper to permit alien claims to be urged in a counter-claim set up against the “plaintiff’s claim”. I feel that “cause of action” alleged in a plaint and counter-claim should be attributed intelligible nexus with each other, keeping in mind the principle of noscitur a sociis and “cause and consequence” principle of legislation. A plaint and counter-claim therein are interdependent and not independent. They should be homogeneous. Despite comprehensive amendments to the Code vide Act 46/1999, the limitations manifested in Order VIII Rule 6F and Order XX Rule 19 were not removed, only because the legislature thought it fit not to pave the way for inconvenient situations in non-monetary litigation.

 

Abraham Ajith v. Inspector of Police (2004 (3) KLT SN 123 (C.No. 162) SC = 2005 (1) KLJ 449: (2004) 8 SCC 100: AIR 2004 SC 4286) reminds us that “.....cause of action ......it is a bundle of facts, which taken with the law applicable to them, gives the allegedly affected party a right to claim relief against the opponent. It must include some act done by the latter since in the absence of such an act no cause of action would possibly accrue or would arise”.

 

Khalil Ahmed Shaikh Mannu Chaudhary v. Election Commissioner of India & Ors. (AIR 2012 Bom. 7) declares that “In the restricted sense, cause of action means the circumstances forming the infraction of the right or the immediate occasion for the action. In the wider sense, it means the necessary conditions for the maintenance of the action including not only the infraction of the right but also the infraction coupled with the right itself. .......... It has no relation whatever to the defence which may be set up by the defendant nor does it depend upon the character of the relief prayed for by the plaintiff. It refers entirely to the grounds set forth in the plaint as the cause of action or in other words to the media upon which the plaintiff asks the Court to arrive at the conclusion in his favour”.

Nahar Industrial Enterprises Ltd. & Ors. v H.S.B.C. & Ors. (2009 (3) (KLT SN 57 (C.No.59) SC  = (2009) 8 SCC 646)  & United Bank Of India, Calcutta v. Abhijit Tea Co Private Limited & Ors. (2000) 7 SCC 357) = (AIR 2000 SC 2957) dealing with counter-claims and Section 19 of Recovery Of Debts Due To Banks And Financial Institutions Act, 1993 throw much light on the topic.

 

The immemorial mandate to deliver possession of the property to the wrongfully dispossessed plaintiff will definitely be violated if the erring defendant is allowed to retain possession disregarding his obligation to surrender possession first and entitlement only thereafter to sue for recovery of possession. On facts visualised by section 6, cause of action for a suit by the defendant therein to establish title arises only when a decree for possession is satisfied by delivery of the property to the plaintiff. Section 6(4) vetoes consideration of any claim on title; title cannot form the basis of a counter-claim for any relief. It restricts the defendant with the right to file only a later suit. 

 

The right of the defendant to file a suit to establish title to the property is inexorably eclipsed till delivery of possession to the plaintiff by court. That is a situation recognized by Order VIII Rule 6C also, which refers to an “independent suit” meaning a suit “to establish his title to such property and to recover possession” in the context of Section 6 and some other similar situation. The plaintiff cannot be compelled to raise a plea of his own title or lack of title in the defendant in his reply to the counter-claim in a suit u/S. 6 in which the Court need not, cannot and ought not to frame an issue on title. A plea enjoined by law, though not strictly barred, cannot be raised or tried. I say that cause of action for the defendant’s suit is not even fertilized, that his counterclaim is premature.

In Vithalbhai (P) Ltd v. Union Bank of India  (2005 (2) KLT 491 = (2005) 4 SCC 315 = (AIR 2005 SC 1891), it was held that: “However, the court shall not exercise its discretion in favour of decreeing a premature suit in the following cases: (i) when there is a mandatory bar created by a statute which disables the plaintiff from filing the suit on or before a particular date or the occurrence of a particular event; (ii) when the institution of the suit before the lapse of a particular time or occurrence of a particular event would have the effect of defeating a public policy or public purpose; (iii) if such premature institution renders the presentation itself patently void and the invalidity is incurable such as when it goes to the root of the court’s jurisdiction; and (iv) where the lis is not confined to parties alone and affects and involves persons other than those arrayed as parties ................”

 

In Kamala & Ors. v. K. T. Eshwara Sa & Ors. (2008 (7) SCALE 436: AIR 2008 SC 3174: (2008) 12 SCC 661), following (2004) 9 SCC 512) that “............... when no cause of action is disclosed, the courts will not unnecessarily protract the hearing of a suit. Having regard to the changes in the legislative policy as adumbrated by the amendments carried out in the Code of Civil Procedure, the courts would interpret the provisions in such a manner so as to save expenses, achieve expedition and avoid the court’s resources being used up on cases which will serve no useful purpose. A litigation which in the opinion of the court is doomed to fail would not further be allowed to be used as a device to harass a litigant ...........”, it was held that “........... Absence of jurisdiction on the part of a court can be invoked at different stages and under different provisions of the Code. O.7 R.11 of the Code is one, O.XIV R.2 is another”. 

 

Order VII Rule 11 (d) can be invoked by Court suo motu as regards a plaint before it is registered as a suit. A counter-claim, governed by rules applicable to plaints and filed with notice to plaintiff, is not registered as a suit. The plaintiff can object to it by invoking Section 6(4). He need not wait till Rule 6C stage. The bar contemplated by Order 7 Rule 11(d) need not be one of limitation alone. It can be a bar of jurisdiction or absence of a cause of action.

 

I do not hold that a litigant should be denied opportunity to challenge a decree or order he considers unacceptable or that proceedings will be unfathomably buried or live timelessly. A Court may be right or wrong. The words of Sri K.S. Radhakrishnan J. in Shahid Bawa v. Union of India  (2014) 2 SCC 687) that “large backlog of cases in the courts is often an incentive to the litigants to misuse the court’s system by indulging in unnecessary and fraudulent litigation, thereby delaying the entire trial process. The criminal justice system’s procedure guarantees and elaborateness sometimes create openings for abusive, dilatory tactics, and confer an unfair advantage on better heeled litigants to cause delay to their advantage” are very relevant in civil cases also, with a skilful lawyer being able to kick up legal storms even in a small cause suit or (excuse me, it can happen to any of us) when advocates and learned judges omit to notice decisions by another bench or apex court or some legal provisions. 

 

Or, think of the unscrupulous litigant who declines to pay court fee on the counter-claim or fails to appear, gets it rejected/dismissed and gives the plaintiff a first round of appeal! Think also of him when he perhaps challenges an order excluding his counter-claim. Another piquant situation I can straightaway identify is a suit for a decree for partition of co-ownership property wherein defendants may set up counter-claims, collusively or otherwise, against each other regarding their ventures or other unearthly claims in different legal relationships wherein the plaintiff has neither an interest nor any stake. A counter-claim will enable the defendant to bombard the plaintiff with every arrow conceived by ancient Mother Fairy C.P.C. pregnant with unpredictably prodigious issues. Sherlock Holmes said: Elementary, my dear Watson.

 

 I would say: Dilatory, my dear plaintiff!

 

To come back to the instant case, we are not aware whether the counter-claim was brought on record by design. The nature of the counter-claim is irrelevant and irreverent. Having taken it on file without adverting to Order VII Rule 11 read with Section 6(4), can the trial court apply Rule 6C? Rule 6C can be applied only in the case of a counter-claim that is cognizable in law and not in the case of one that is not maintainable at all. I would say that the bar under Order 7 Rule 11 (d) applies to counter-claim/s in Section 6 suits, entailing rejection thereof. The only suit accorded by Section 6(4) to the defeated defendant is one to obligatorily establish his title and pray for recovery of possession. 

 

Referring to Bollepanda P. Poonacha & Anr. v. K. M. Madapa (2008 (2) KLT 9 (SC) = (2008) 13 SCC 179), which lays down that “While considering that subservance of justice is the ultimate goal, the statutory limitation shall not be overstepped. Grant of relief will depend upon the factual background involved in each case. The Court, ....... nevertheless should bear in mind that a provision for amendment of pleadings is not available as a matter of right under all circumstances. One cause of action cannot be allowed to be substituted by another”, it was held in Jayalakshmi v. Saradha& Ors. (2009 (3) KLT SN 51 (C.No. 54) SC = (2009) 14 SCC 525 : 2009 (9) SCALE 759) that “It is the primal duty of the court to decide as to whether such an amendment is necessary to decide the real dispute between the parties. Only if such a condition is fulfilled, the amendment is to be allowed”.

 

Gayathri Women’s Welfare Association v. Gowramma & Anr. (2011 (1) KLT Suppl. 43 (SC) =  (2011) 2 SCC 330 :  AIR 2011 SC 785) held that “..............If the consequence of permitting a counter-claim either by way of amendment or by way of subsequent pleading would be prolonging of the trial, complicating the otherwise smooth flow of proceedings or causing a delay in the progress of the suit by forcing a retreat on the steps already taken by the Court, the Court would be justified in exercising its discretion not in favour of permitting a belated counter- claim. The framers of the law never intended the pleading by way of counter - claim being utilized as an instrument for forcing upon a reopening of the trial or pushing back the progress of proceeding”.

 

I would like to imagine that Courts can invoke Order VI Rule 16, suo motu or on application and keep a recalcitrant defendant at bay. A suit u/S. 6 is of a special nature, permitting payment of court fee at a reduced rate and excluding right of appeal/review/consideration of title. That being so, permitting it to be converted into a regular suit on title (for whatever relief), at the instance of the defendant by his defence, is against legislative intent. Order VIII Rule 6A should not be an avenue for injustice. Will not the Court be crossing the Rubicon by granting an amendment to incorporate a counter-claim overlooking Section 6 and Order VII Rule 11(d), because principles which then weigh with it cannot be displaced by Rule 6C afterwards?

 

I believe that a counter-claim is not maintainable at all in Section 6 suits. It need be excluded only if it is maintainable. We have to keep in mind that the whole exercise of excluding a counter-claim is to permit and persuade the defendant to pursue his remedy elsewhere. Exclusion is the prelude to another suit, not an epitaph of the defendant’s cause of action. The consequence of an order under Rule 6C is a separate trial. My doubt is whether a counter-claim, otherwise in order, can be returned under Order VII Rule 10. I think not. There is no precedent, to my notice, of a counter-claim being represented as a plaint in another court.

 

A defendant, whose counter-claim is excluded, may not be entitled to refund of court fee (QUAERE).

 

Kallamkunnu S.C.B.  Limited v. Ukkens Copra Centre and Oil Mills  (2014 (2) KLT 692) dealt with a situation under Trade Marks Act. It was held therein, inter alia, that “The Act provides for institution of suit for infringement of a registered trade mark or any right in a registered trade mark or passing off arising out of the use by the defendant of any trade mark which is deceptively similar or identical with the plaintiff’s trade mark, whether registered or unregistered. ……A counter-claim can be treated as a plaint, but, it cannot be considered as a claim instituted on a suit. …… However, where the statute specifically mandates under   Section  134 that suit for infringement etc. has to be instituted as a suit that will prevail and no claim thereof can be entertained otherwise than by a suit. A counter claim can be treated as a plaint as provided under Order VIII Rule 6-A (4) of the Code of Civil Procedure or even as a suit under Section 3(2) (b) by the Limitation Act, 1963 would not be of any assistance where statutory mandate under the Act is for institution of a suit itself for the reliefs provided under the Act before the district court. When that be the case, counter-claim raised by the defendant in the suit should not have been entertained, and it warranted an outright rejection”. It is possible to contend that “Kallamkunnu” and “Thankamma” are divergent, though distinguishable on facts.

 

The object of Rule 6A(2) “Such counter-claim shall have the same effect as a cross-suit so as to enable the Court to pronounce a final judgement in the same suit, both on the original claim and on the counter-claim” is to bring finality to litigation by reducing multiplicity of proceedings. To put it pithily, there can be only a composite decree both on the plaint and counter-claim. The rule contemplates a full-fledged trial as in regular suits, contrary to summary suits u/S.6. Rule 6D points in this direction. Section 96 also recognises the limited right of appeal in Section 6 situations and many other statutes. Order XX Rule 19 is an exception to section 96 C.P.C. and an addendum to Section 6(3). It denies a right of appeal against a decree in a counterclaim in a suit u/S.6. Hence clubbing a revision and appeal may not be possible. Parameters for hearing a C.R.P. and an appeal are also perceptibly different. The finding on possession or dispossession will attain finality if not challenged. There cannot be contradictory decrees for possession in the suit and counter-claim. I will identify some random situations: 

 

A: Suit u/S. 6 is decreed. The counter-claim is dismissed. B: Suit u/S. 6 is dismissed. The counter-claim is decreed. C: Suit u/S. 6 and counter-claim are dismissed. D: Suit u/S.6 and counter-claim are decreed.

 

In situations A and D, the plaintiff cannot be denied right of execution. In situation D, if the defendant is allowed to enforce the decree in his counter-claim, that will deny right of execution to the plaintiff. In situation B, the plaintiff loses his right to challenge the decree in his suit unless he gets the finding on possession or dispossession reversed by appealing against the decree in the counter-claim also. A successful litigant has no right of appeal. Despite Narahari v. Shanker  (1950 (1) SCR 754), the vexing question of res judicata was left open in Ramagya Prasad Gupta & Ors. v. Murli Prasad & Ors. (1974) 2 SCC 266 =  AIR 1974 SC 1320). But, it was held in Chandramathy v. Arundhathi & Anr. (2012 (3) KLT SN 36 (C.No. 36)  that “Challenge against the correctness of the decision in one such first appeal without assailing the adverse decision rendered in the other first appeal when both such appeals arose from the common judgment rendered in the two suits, after joint trial, and as such, there being only one decision, would foreclose and interdict the plaintiff from assailing any further the judgment rendered in her two appeals by the learned District Judge”.

 

Think of volumes upon volumes written by civilized man on right, title and possession of property, suit and counter suit. It is amusing to compare selfless Bushmen and Red Indians who never bothered about individual title or possession of anything, other than the air to breath, food to eat and water to drink to selfish modern clans and urban tribes who fight for land as if gifted by God to only them exclusively, Kasturi Rangan notwithstanding.

 

Oh, Thankamma!

Your name is golden

Your name is motherly

Your frame is pregnant

With issues unprecedented

Single, twins, triplets or more

Their umbilical cords

Enmeshed and entwined

In precedents and provisions

I do not yet know of!

But I long to see them delivered

By the glorious Themis

Without prejudice and rancour

With precision and pride!

Employees' State Insurance Act & General Regulations -- Its Application

(By: U. Ravisankar, Advocate, Trichur)

 

The Employees’ Insurance Act (in short ‘Act’) is no doubt an Act enacted by the Parliament that provides social beneficial scheme to employees who have been employed in Factories or Establishments to which the Act applies. Section 40 of the Act casts a responsibility upon an employer to pay his part of E.S.I. contribution and that part of amount deducted from the wages of his employee(s)towards contribution in the E.S.I. Corporation. Going by Section 40(4)of the Act, it is very clear that an employee who is benefited by the scheme has indirectly entrusted with the employer, his part of contribution amount to be remitted in the E.S.I. Corporation. In other words, it shall be the duty and responsibility of the employer to pay the already deducted amount from the wages of employees in the Corporation by way of ‘contribution’ within the statutory period. It is for making surethe remittance within the prescribed period, Regulation 31 of E.S.I. (General) Regulation 1950 was enacted.

 

Section 39(4)of the E.S.I. Act stipulates the due date of contribution as follows:

 

“The contributions payable in respect of each wage period shall ordinarily fall due on the last day of the wage period, and where an employee is employed for part of the wage period, or is employed under two or more employers during the same wage period, the contributions shall fall due on such days as may be specified in the regulations.”

 

Regulation 31 of the E.S.I. (General) Regulations, 1950 made for the above purpose has categorically fixed the time limit for payment of such contribution as follows :

 

 “ Time for Payment of Contribution :An employer who is liable to pay contribution in respect of an employee shall pay those contribution within 21 days of the last day of the calendar month in which the contribution fall due..”

 

If there is a violation of payment/remitting the contribution on the part of an employer within the statutory period, whether it amounts to an offence? If so, is he liable to be punished in accordance with law?

 

In a very recent ruling reported in 2014 (1)KLT 614 (Part 7) (Biju Ramesh v. Employees State Insurance Corporation) the Hon’ble High Court of Kerala has observed, “………… Regulations permit belated payments, subject, of course, to the condition of paying interest, damages etc…..” The Hon’ble Court further opined “……………….Therefore I am of the view that before institution of a complaint by the authorized officer, the Principal Employer can pay off the liability under the Act and in that event no offence under Section 85(a) of the Act will be attracted …..” With due respect I would submit that this observation seems incorrect. Question of maintainability of criminal prosecution is elaborately discussed by Apex Court in its various decisions.

 

Launching of prosecution should not be based on the fact as to whether the liability has been “merely paid off”. Law (E.S.I. Act) does not permit an Employer to pay the amount of contribution of an employee at his whims and fancy. In other words, he has no option to decide when the employee’s share of contribution is to be remitted. It is for the said purpose Regulation 31 of E.S.I. (General) Regulation 1950 has been enacted which stipulates a statutory obligation on the part of an employer to comply with the provision.

 

 It is Regulation 31 of E.S.I. (General) Regulation 1950 that regulates the penal provision envisaged under Section 85 (a)of E.S.I. Act. Section 85(a) of the Act says “……(a) fails to pay any contribution which under the Act he is liable to pay………”. The very term “fails” indicates the “failure” on the part of an employer in payment of contribution. The term “fails” come into play only when an employer did not comply with the statutory obligation of payment. The undisputed fact herein is that such employer was committing the offence during the period from the time limit fixed by the Statute till actual date of payment. Thus, the delay in payment of E.S.I. contribution will also come under the ambit of offense punishable under Section 85(a) of the E.S.I. Act. Therefore no doubt that such Principal Employer is liable to be punished under sub-clause ‘a’ of Section 85 of the Act. Let us examine the punishment prescribed in the Act under Section 85 (a). On a close reading it is crystal clear that the awarding punishment is ‘mandatory’. The term used is ‘shall’. So, if all or any of the Clauses (a) to (g) of Section 85 is committed, he (principal employer) shall be punishable. If offence alleged to have been committed is under Section 85 (a) [i (a) or (b)], imprisonment is mandatory whereas if the offence alleged to have been committed is under Section 85 ( b to g ) of Clause ii, imprisonment is not mandatory. Therefore, in short, I am of the opinion that if an employer commits an offence by not remitting the amount of contribution in respect of his employees within the statutory period prescribed under Regulation 31 of E.S.I. (General) Regulation, 1950, he shall be punished. In other words, if the statutory compliance under Regulation 31 is not done by an employer that amounts to an offence punishable under Section 85(a) of the Act for which awarding imprisonment is mandatory. If that be so, the observation made by the Hon’ble High Court of Kerala inBiju Ramesh v. Employees State Insurance Corporation(reported in 2014 (1) KLT 614) may not be sustainable. The observation made by the Hon’ble High Court was mainly based on the fact that there are Regulations 31A & 31C. Regulation 31A is payment of interest on contribution, if it is not paid in time and Regulation 31C is payment of damage on contribution if it is not paid in time. Simply because levying of interest and damage are provided, does it not absolve the liability of a defaulter employer being awarded punishment under Section 85(a)? So, if circumstances for levying interest and damages from an employer arise, it means he has remitted the amount of contribution only after statutory period in violation of Regulation 31 of E.S.I. (General) Regulations 1950. If such violation is proved, he has to be prosecuted under Section 85 (a) of the Act.

 

It is pertinent herein that the liability for punishment under Section 85 of the E.S.I. Act survives notwithstanding imposition of damages under Section 85-B and payment of interest under Regulation 31-A. It has been held in the case of E.S.I. Corporation v. Dhanda Engineers (P) Ltd., Faridabad(1981 Lab.I.C.658) that ‘in case of failure to pay contribution within the periods specified in Regulation 31 of the E.S.I. (General) Regulations, 1950, the defaulter employer is liable to punishment under Section 85 irrespective of his obligation to pay interest under Regulation 31-A and his liability to pay damages under Section 85-B’.

 

In Renuka v. E.S.I.C.(1992 (2) KLT 26/1994-III-LLJ (Suppl.)741/1992-Lab.IC-2310) Hon’ble High Court of Kerala has held that belated payment with interest and damges would not absolve them of their original guilt but might perhaps snaps recurrence of the offence. E.S.I. Corporation was justified to file complaint.

 

InZainul Abdeen Musaliar v. E.S.I.C. (decided in Crl.M.C. 205/92 dated 14/12/1991), Hon’ble High Court of Kerala has also held, “…. the fact that the amount due with interest was paid will not absolve the guilt of the petitioner. He was expected to submit the return and pay the amount due within the stipulated date. He had failed to do so, as the allegation in the complaint prima facie showed. I am unable to accept the petitioner’s contention...”

 

Relying upon the rulings of the Hon’ble High Court of Kerala reported in Renuka v. E.S.I.C. (1992 (2) KLT 26), the Hon’ble High Court of Karnataka in E.S.I. Corporation v. Krish Chand Shetty & Others [2005-Lab.IC-2984] with respect to the penalty under Section 85 of the E.S.I. Act for non-payment of contribution, has held that the offence committed by accused employer does not get wiped off with belated payment. Launching of prosecution does not get stopped. Act is aimed at giving benefits to employees. By delayed payment, ultimately employees would be put to hardship.

 

My humble view therefore, is the observation made by the Hon’ble High Court of Kerala in Biju Ramesh v. Employees State Insurance Corporationreported in 2014 (1) KLT 614 that the paying off the contribution before prosecution case is initiated will absolve the liability of the Principal Employer under Section 85(a) of the Act in view of Regulation 31-A & 31-C of E.S.I. (General) Regulations, 1950 may be suo moto reviewed.

Sleeplessness of Executioner

(By V.K.Babu Prakash, Judge, M.A.C.T., Thalassery)

 

The executioner gazed into the mirror and read his face. There was a huge eye bag gathered beneath his red hazel eyes which had the shape of the English alphabet ‘C’ On the corner of the eyes, there has started to form wrinkles as well. He is completing 20 years of service in the Central Jail as the official executioner. Until now as many as two hundred and odd capital punishments were executed by him. He looked at his hands which looped the ligature on the noose which was then put around the neck of the death convict. On a close scrutiny, the executioner found a slight tremor in his right hand. He wondered, was it due to old age or some nervous disorder? He remembered each and every execution he carried out during his tenor. Some convicts were as cool as cucumber to face the noose. Some were fragile and nervous. Most of them were really scared and begged him not to cause much pain and to end the drama of execution as swift as possible. He smiled at them and assured that everything would be alright. He gently put the ligature around the neck of the convict over his head and made sure that the ligature is in order. He then checks the shaft of the noose where the convict has to stand. He oils the lever that has to be pulled to complete the execution process. He performs his duty in a ritualistic veneration as if a holy man performs some religious rituals with utmost devotion.

 

After ensuring that everything is in order, he informs the Jailor. The Jailor gives the nod and he pulls the lever that pushes the shaft which would be abrupt. Within the wink of an eye, the convict unable to know what is next, falls down from the shaft to the bottomless depth of the well. He will hang on the noose by the neck and death would be as sure as sunrise. Never in his career, the executioner went wrong in fixing the ligature around the neck of the convict, Never did any execution carried out by him ended in fail. But the thing which the executioner could not nurture and enjoy was the haunting look of the convict when the ligature was put around his neck. The executioner has seen such looks in the eyes of animals at the slaughter house. The convict pays a heavy look filled with despair, agony and helplessness at the executioner who used to ignore such looks and engages himself unmindful in his activities to fix the noose and ligature in proper order. But, when the shaft is pushed and the dead body hangs on the noose, the executioner gets a pang of feeling of despair and anguish in his mind, Then in the evening, when he sits alone,, the haunting look of the dead convict chases him until he falls asleep like a dead wood. 

 

Suddenly when the executioner was gazing his face in the mirror, two eye drops fell from his eyes without any premonition. He wondered how it so happened? He did not feel any remorse, guilt or sorrow over his deeds of execution so far. But he did not know why and how the tears dropped? When he looked again into the mirror, another drop of tear began to fall from the eyes. He found he was weeping in the mirror. He did not know why? He threw away the mirror and walked away. Everyone who passed by him looked at his face as if a big wart has appeared on his face. He took a kerchief from his pocket and wiped the eyes and face. But still, he began to feel the tear drops in his eyes. After roaming the street, he reached home late at night. Without thinking twice, he decided to sleep. But, alas, sleep has refused to come. He turned and tussled in the bed. He found he no longer can sleep. Besides, tear drops were appearing in the eyes making it unable to close the eyes. He somehow or other managed the night. He was suffering from a severe headache when he got up from the bed in the morning.

 

When he reached at the Jail office, the headache was unbearable. The Jailor looked at him and smiled. He asked what is the matter with him. He did not answer. The Jailor whispered to his assistant that something is troubling our executioner as he is crying. Executioner looked at the mirror in the kitchen hall of the Jail. He found the appearance of two big tear drops in his eyes. The eyes were swollen also due to lack of sleep. Nights began to follow one after another without sleep. Tears began to roll from his eyes which made him to look like a clown before others. He began to feel rotten about the hidden comments of others that he is sinned by the hanging executed by him. Hanging by the executioner is also another kind of murder like the ones committed by the death convicts as every murder is a copy of other murders, commented by others. At last, the executioner decided to consult a doctor as advised by the Jailor. The doctor an Ophthalmic Surgeon suggested to have a retino surgery. It will help stop the tear dropping and regain lost sleep. Executioner did not like the idea of surgery. He went home. During the night when he was unable to sleep, he saw a nightmare. He saw in the depth of a bottomless dark well, filled with spider web, the teeming faces of the death convicts, he executed one by one. All the faces were weeping and tear drops were pouring down from their hollow eyes. All those faces showed a haunting helpless look on the executioner. Unable to bear the brunt of the looks anymore, the executioner left the house wandering the street in the night.

 

Next morning, he walked into the Jail office with a disturbed face and wounded self. He met the Jailor and signed on the attendance register. The Jailor said to him that within a week a death convict has to be hanged. The death warrant signed by the President has come to the office. Executioner shall prepare himself for the hanging. Executioner looked at the Jailor for a moment and went away. He did not take his break fast which was served on the table in the Jail kitchen. He wandered in the Jail Wards and went out. He come in the evening and met the Jailor. The Jailor was angry that the executioner went away without his permission. Without saying anything, the executioner handed over a letter to the Jailor. It was his resignation letter. The Jailor looked at the executioner and persuaded him to withdraw the resignation as there is no substitute to carry out the execution next week. Executioner did not relent and walked away. On that day, for the first time in many months, he found in the mirror that the tear drops are stopped and that he no longer was weeping. He slept like a child in the night without any nightmare and he continued to sleep in the successive nights without any trouble at all.....................................