Once Statute Has Fixed Condition Of Pre-Deposit Before Filing Appeal Such Condition Is Required To Be Satisfied: Supreme Court

The bench of Justices Hemant Gupta and V Ramasubramanian rendered this observation while considering SLP assailing Punjab and Haryana High Court's order dated October 27, 2016 wherein the High Court had held that the requirement of pre-deposit under Section 45-AA of the Employees State Insurance Act, 1948 is not mandatory.

Relying on the judgement in Punjab State Power Corporation Limited v. The State of Punjab & Ors 2015 SCC OnLine P&H 2053, the High Court had further held that that the appellate authority is empowered to waive, either partially or completely, the requirement of pre-deposit in the same circumstances and conditions.

Section 45AA of the Employees State Insurance Act, 1948 which deals with "Appellate Authority" states that, "If an employer is not satisfied with the order referred to in Section 45-A, he may prefer an appeal to an appellate authority as maybe provided by regulation, within sixty days of the date of such order after depositing twenty five per cent of the contribution so ordered or the contribution as per his own calculation, whichever is higher, with the Corporation. Provided that if the employer finally succeeds in the appeal, the Corporation shall refund such deposit to the employer together with such interest as maybe specified in the regulation."

In the present matter, the Deputy Director of Employees State Insurance Health Care passed an order on December 30, 2013 calling upon Maruti Suzuki India Limited ("employer") to pay a sum of Rs.48,81,884/- for a period from October, 2009 to August, 2010 in respect of trainee/apprentices. The employer filed an appeal along with an application to seek exemption from depositing 25% of the said contribution.

Since the employer did not deposit 25% of the compensation as assessed, the appellate authority passed an order declining such request inter alia for the reason that there is no provision under the Act to consider an appeal without the pre-deposit. Thereafter, the recovery certificate was issued to recover the amount assessed along with interest. However, instead of depositing the amount, the employer invoked the writ jurisdiction of the High Court.

Relying on the judgement in Punjab State Power Corporation Limited v. The State of Punjab & Ors the High Court held that the State was empowered to enact Section 62(5) of the Punjab Value Added Tax Act, 2005 ("PVAT Act") and that condition of pre-deposit of 25% for hearing first appeal was not onerous, harsh, unreasonable and violative of the provisions of Article 14 of the Constitution of India.

Referring to the ratio laid down in Ranjit Singh v. State of Haryana & Ors. 2011 SCC OnLine P&H 15, the bench said that even when no express power has been conferred on the first appellate authority to pass an order of interim injunction/protection, by necessary implication and intendment in view of various pronouncements, such power to grant interim injunction/protection was embedded under Section 62(5) of the PVAT Act.

In Ranjit Singh v. State of Haryana & Ors. 2011 SCC OnLine P&H 15, the High Court while dealing with Section 13B of the Punjab Village Common Lands (Regulation) Act, 1961 mandating that no appeal shall lie unless the amount of penalty is deposited with the Collector had held that, "56.

In order to save the validity of this proviso, it may have to be read down for which there are precedents. As observed in Shyam Kishore's case (supra), the appellate Judge would have incidental and ancillary power, which should not be curtailed except to the extent specifically excluded by the statute. There is no indication in the proviso that jurisdiction of the appellate Judge is excluded altogether to waive the penalty and, thus, the inherent rights of the appellate Judge to waive the condition in appropriate case can be read into the provision..."

To adjudicate on the issue the bench in the order authored by Justice Hemant Gupta, said, that the view taken by the High Court, while relying on its earlier judgment in Ranjit Singh, that appellate authority would have the implied power to grant interim relief was not tenable.

The Top Court while allowing the appeal further said, "Once the statute has fixed the condition of pre-deposit before filing an appeal, such condition is required to be satisfied. The judgments of the High Court in Ranjit Singh and Punjab State Power Corporation Limited observing that the appellate authority has the implied power to waive the amount determined cannot be said to be in accordance with law. Hence, the condition of pre-deposit, said to be not mandatory and giving appellate authority a discretion to waive of the amount determined, is clearly not sustainable and is thus set aside. Consequently, the present appeal is allowed."

Noting that the employer has not deposited 25% of the determined amount which had led to dismissal of the appeal the Top Court granted four weeks' time to the employer to deposit 25% of the amount so determined.

"If the said amount is deposited, the appellate authority shall consider the appeal on merits in accordance with law," the Court further said.

Case Title: THE DIRECTOR, EMPLOYEES STATE INSURANCE HEALTH CARE & ORS. v. MARUTI SUZUKI INDIA LIMITED & ORS. | CIVIL APPEAL NO. 3464 OF 2022

Coram: Justices Hemant Gupta and V Ramasubramanian

Citation : 2022 LiveLaw (SC) 453

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