Usha, J.
1. Appeal is at the instance of Employees' State Insurance Corporation challenging the judgment in I.C.No.6 of 1985 of the Employees' Insurance Court, Alleppey. Respondent herein challenged before the court below proceedings initiated by the appellant under Section 85B of the Employees' State Insurance Act claiming damages to the extent of Rs. 3,921/- for the delayed payment of contribution for the period ended on September 1976, March 1977, September 1977, November 1977, January 1978, March 1978, May 1978, September 1978, November 1978 and January 1979. The Employees' Insurance Court found that there was no delay in paying the contribution and therefore the appellant was not justified in assessing the j damages. It is this finding that is under challenge in this appeal.
2. The relevant facts are as follows:- The respondent was a contractor of Toddy Shop Nos. 6 and 7 at Alleppey Range. When the appellant took steps to cover the two toddy shops by combining them, the respondent challenged the proceedings before the E.I.Court. By judgment dated June 23, 1977 the E.I.Court took the view that the two toddy shops should be treated as one and the same. The above judgment was taken in appeal by the respondent before this Court. The appeal was dismissed on March 15, 1979. These facts are undisputed. During the pendency of the appeal before this Court since there was no order of stay, a notice under Section 45A of the E.S.I. Act was issued assessing the contribution from the respondent for the period from March 28, 1976 to March 31, 1977. Originally a notice was issued on July 14, 1977 and later another notice on February 12, 1979. Thereafter proceedings were issued imposing damages for delay in making the payment. These proceedings were challenged by the respondent herein before the E.I.Court as I.C.No. 15/78 and I.C.No. 90/79. The E.I. Court set aside the proceedings holding that the show cause notice was defective. Thereafter, fresh show cause notice was issued by the appellant on June 1, 1982, which was also set aside by the E.I. Court in I.C.No. 12/83. While setting aside the order imposing damages the E.I. Court observed that the appellant herein was at liberty to issue fresh notice and to impose damages in accordance with law.
3. Pursuant to the above judgment, a fresh show cause notice was issued by the appellant on September 24, 1984. Thereafter the order dated October 27, 1984 was issued levying damages to the extent of Rs. 3,921 /- which was challenged in I.C.No.6/85. Going by the show cause notice dated September 24, 1984 the period of delay in making payment of contribution were between 16 days to 2 years and 4 months. For computing the delay, in the show cause notice, what was taken into consideration was the provisions contained under Regulation 31 of Employees' State Insurance (General) Regulations, 1950, as it stood at the relevant time. The court below found that the assessment of delay can be made only with reference to the proceedings dated February 12, 1979, under which the contribution for the period upto March 31, 1977 was assessed on adhoc basis. The Court below also noted that under the proceedings dated February 12, 1979 the applicant was asked to discharge the liability within ten days and after granting such time to the applicant it cannot be held that there was no delay in payment of contribution, if the amount has been paid within 10 days. Therefore, according to the Court below, the delay of more than one year calculated in the show cause notice was unsustainable. The court below took the view that there was no apparent delay after the issuance of demand notice under Section 45A and therefore the appellant herein was not justified in invoking powers under Section 85B of the E.S.I. Act. The order dated October 25, 1984 was therefore set aside.
4. We find merit in the contention raised by the appellant that the finding of the Court below that there was delay in making the payment is incorrect and against the provisions of law. The liability of the employer under the Statute to remit the contribution to the Corporation within 21 days of the last date of the wage period in which the contribution falls due is made clear from the then existing provisions of Regulation 31 of the Employees' State Insurance (Genera!) Regulations, 1950. Section 30 of the Employees' State Insurance Act, 1948 provides that the contribution payable under the Act in respect of an employee shall comprise contribution payable by the employer and contribution payable by the employee to the Corporation. The contribution payable in respect of each week shall ordinarily fall due on the last day of the week, and where an employee is employed for part of the week, or is employed under two or more employers during the same week, the contributions shall fall due on such days as may be specified in the regulations. Section 43 empowers the Corporation to make regulations for any matter relating or incidental to the payment and collection of contributions payable under the Act including the manner and time of payment of contributions. Provisions contained under Regulation 31 which stood during the relevant period read as follows:-
'31. Time for payment of contribution. -An employer who is liable to pay contribution in respect of any employee, shall paythose contributions within the following periods:
(a) Within 21 days of the last day of the wage-period in which the contribution falls due,
(b) Within 14 days of the termination of employment, irrespective of whether the employment is terminated with or without notice,
(c) Within 21 days after the termination of the contribution period in respect of every employee, whichever period is earlier;
Provided that in the case of an exempted employee the token stamp in respect of any week shall be affixed within such time as the contribution in respect of that week would have been payable if the provisions of Chapter V-A of the Act had not been in force.
Explanation - For the purpose of this regulation, the expression 'wages period' shall have the meaning assigned to it in Schedule 1 to the Act'.
The above would show that the contribution would become due within the period prescribed under regulation 31 and not when demand notice under Section 45A was issued by the Corporation as held by the E.I.Court. We are of the view that the E.I. Court has committed an error in finding that there was no delay in making the payment of contribution.
5. Further question to be considered is whether the respondent is liable to pay damages in the facts and circumstances of this case even if there was a delay in making the payment of the contribution. This aspect has is be considered in the light of the principles laid down by this Court in the Regional Director, E.S.I. Corporation v. Sakthi Tiles, 1988 (2) KLT 280. This Court has held that the Corporation will not be justified in levying the damages in cases where the employer, or the person, who is bound to pay the amount in respect of the contribution payable in this regard, is able to offer sufficient or cogent explanation for non-remittance, or in cases where there is only a technical or venial breach of the provision of the Act, or there exists bona fide circumstances, which will point out that there was no deliberate omission on the part of the employer. Since the failure to carry out the statutory obligation should be adjudicated by a quasi judicial enquiry and the levy of damages is quasi penal in character, such damages will not ordinarily be imposed unless the party obliged to pay the amount due, acted either deliberately or in defiance of law, or was guilty of contumacious or dishonest conduct, or acted in conscious disregard of its obligation. In this case, as mentioned earlier, admittedly the question of coverage of two toddy shops clubbing together was under challenge before the E.I.Court and thereafter before this Court. The judgment of the E.I. Court is dated June 23, 1977 and that of this Court is dated March 15, 1979. The arrears of contribution were paid by the respondent herein on February 22, 1979. The above would show that the respondent herein was bona fide agitating the question of coverage of the two toddy shops by clubbing them together before the E.I. Court as well as this Court. Even before the final decision was given by this Court they remitted the amount pursuant to the second notice dated February 12, 1979. It has also come out that the respondent had paid the interest due on the above amount. Since the facts in this case would show that there was no contumacious conduct on the part of the respondent herein in not paying the contribution within the period prescribed under regulation 31. But he was agitating the question of coverage itself bona fide during the entire period. We are of the view that no damages under Section 85B is liable to be imposed on the respondent under these circumstances.
6. Thus, even though we are not agreeing with the finding of the Court below that there was no delay in paying the contribution, we sustain the order for a different reason that there was no circumstances in this case justifying imposition of damages as contemplated by Section 85B of the Employees' State Insurance Act. In the result, the appeal stands dismissed, but in the circumstances without any order as to costs.