A two-judge Bench of Justice Ajay Rastogi and Justice Abhay S. Oka has held that it cannot invoke its power under Article 142 of the Constitution to waive off the interest payable by the Appellant-Employer under the Insurance Act, 1948.

The Bench has also held that in the 2006 case of Employees' State Insurance Corporation and Ors. v. Jardine Henderson Staff Association and Ors, the Court waived interest using power under Article 142, due to the peculiar facts of that case.

Senior Counsel Mr. Ritin Rai appeared for the Appellant while Counsel Mr. Atul Batra appeared for the Respondent.

An appeal was preferred before the Supreme Court assailing the judgment passed by the Division Bench of the Gujarat High Court which had dismissed the Writ Petition of the Appellant and directed the Appellant to pay interest on the delayed payment of contribution from 1975 till 1988.

In this case, the Respondent-Insurance Corporation had raised a demand before the Appellant to pay a sum of Rs. 8, 01,510/- by way of contribution for the period 30th July 1975 till 31st March 1988. The contribution was demanded under the provisions of Regulations 29, 31, and 33 of the Employees' State Insurance (General) Regulations.

The demand of notice had also made a reference to the unamended Regulation 31-A of the Regulations as per which the Appellant was to pay an interest of 6% per annum on the overdue amount. Thereafter, a second notice was issued under Section 45-A of the Act demanding interest at the rate of 6% per annum on the sum of Rs.7,79,491/- up to 19th of October 1989 and interest at the rate of 12% per annum up to 31st July 1990.

The Employees' Insurance Court had quashed the two notices holding that the Appellant was liable to comply with the provisions of the Act with effect from 1st April 1988 and not prior to it.

The Single Judge of the Gujarat High Court allowed the appeal of the Respondent and held that the Appellant was liable to pay a contribution from 30th March 1975.

The Appellant contended before the Court that under Section 97(2) of the Insurance Act, 1948, there was no power to frame Regulations for levy of interest in the hands of the Insurance Corporation. It was further argued that in the absence of any such statutory power, framing Regulations under Section 97, the power to levy interest could not have been conferred on the Respondent.

Also, the Appellant relied upon the Jardine Henderson Staff Association's case and further argued that the Court can exercise its jurisdiction under Article 142 for waiver of interest.

While the Respondent contended that there was no power to waive interest.

The Apex Court observed, "The Judgment and Order dated 10th July 2006 of the Gujarat High Court affirming the liability of the appellant to pay contribution from 30th March 1975 onwards has attained finality and therefore, the liability of the appellant to pay contribution as demanded cannot be questioned."

The Court also noted that the demand for interest cannot be faulted within the absence of any challenge to Regulation 31-A.

The issue which was dealt with by the Court was whether interest payable or a part thereof can be waived.

While referring to the case of M/s. Goetze (India) Ltd., the Court opined there was no power under the Act, 1948 to waive statutory interest.

Also, the Court made a reference to the case of Jardine Henderson Staff Association and Ors., and held that there was no material on record to show that the Appellant-Employer provided better medical or other facilities to its employees, hence it was not a fit case to exercise the power under Article 142.

In the light of these observations, the Court dismissed the appeal.

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