Q: I work in a public limited company and am seeking advice on behalf of my colleagues covered under the Employees’ State Insurance (ESI) Act, 1948. The company has not made any contribution in line with the act for 2009-2010. In February, the management referred their case to the Board for Industrial and Financial Reconstruction (BIFR) under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 (Sica). We wrote to the management asking them to make the statutory contribution under the ESI Act, failing which we would approach the ESI Court for relief. The company maintained that since it is a sick company and its case is pending before the BIFR, it is not liable to pay the ESI contributions and no legal proceedings will be maintainable against it in view of Section 22 of the Sica. Is this stand legally tenable?
Debjani Roy
A: The stand of the company is not sustainable in law. It is now judicially settled that pendency of a company’s case before the BIFR does not absolve it of its liability to make requisite contribution under the ESI Act. Though certain legal proceedings are barred against a sick company under Sica, proceedings before the ESI Court are not barred. In fact your only remedy is to approach the appropriate ESI Court under Section 75 of the ESI Act. Note that interest on delayed payment of requisite contribution under the ESI Act is automatically a liability of the employer. You may refer to a recent judgement of Madras High Court reported in 2011 (129) Indian Factories and Labour Reports 468.
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