Courts have no discretion to reduce fine amount prescribed in ESI Act: Supreme Court [Read Judgment]

Supreme Court in Employees State Insurance Corporation vs. A.K. Abdul Samad & Anr, has held that the Courts have no discretion to reduce the fine prescribed in Sec 85 (a) (i) (b) of the Employees’ State Insurance Corporation Act, once the offence has been established. Apex Court Bench comprising of Justices Dipak Misra and Shiva Kirti Singh held that discretion as per proviso to Section 85 (a) (i) (b) is confined only in respect of term of imprisonment.

The Law

85(a)(i)(b) of the Employees’ State Insurance Corporation Act prescribes punishment for a particular offence under ESI Act as imprisonment which shall not be less than six months and the convict shall also be liable to fine of five thousand rupees. The proviso however empowers the court that it may, “for any adequate and special reasons to be recorded in the judgment, impose a sentence of imprisonment for a lesser term;”

Background Facts

The appellants were found guilty and were punished by imposing a fine of Rs.1000/- and with imprisonment till rising of the Court. Contending that the Court has no power to reduce the fine amount prescribed in the ESI Act, the ESI Corporation approached Karnataka High Court by filing revision. Relying upon Kerala and Patna High Court judgments viz. Sebastian @ Kunju v. State 1992 Cri LJ 3642 and Tetar Gope v. Ganauri Gope AIR 1968 Pat 287 as well as two Supreme Court judgments in the case of Surinder Kumar v. State (1987) 1 SCC 467 and Palaniappa Gounder v. State of Tamil Nadu (1977) 2 SCC 634, the High Court dismissed the revision, apparently holding that the fine amount can be reduced. The Corporation approached Supreme Court.

No discretion of awarding less than specified fine

Referring to Chern Taong Shang v. S.D. Baijal (1988) 1 SCC 507 The bench said that the object of creating offence and penalty under the Employees’ State Insurance Act, 1948 is clearly to create deterrence against violation of provisions of the Act which are beneficial for the employees. The court also said that non-payment of contributions is an economic offence and therefore the Legislature has not only fixed a minimum term of imprisonment but also a fixed amount of fine of five thousand rupees under Section 85(a) (i) (b) of the Act. “There is no discretion of awarding less than the specified fee, under the main provision. It is only the proviso which is in the nature of an exception where under the court is vested with discretion limited to imposition of imprisonment for a lesser term. Conspicuously, no words are found in the proviso for imposing a lesser fine than that of five thousand rupees. In such a situation the intention of the Legislature is clear and brooks no interpretation. The law is well settled that when the wordings of the Stature are clear, no interpretation is required unless there is a requirement of saving the provisions from vice of unconstitutionality or absurdity. Neither of the twin situations is attracted herein”, the bench said.

Read the Judgment here.