ESIC Issued Circular to take necessary action and ensure strict compliance while claiming interest as per Section 39(5)(a) of the ESI Act

Reference the stated subject, this is to inform you that a Judgment was passed by the Hon’ble Supreme Court on 17.11.2022 in SLP No. 16380_2022 in the matter of ESIC Vs. Nitinbhai Vallabhai (judgment attached), wherein the Hon’ble court held that the employer is liable to pay the interest under Section 39(5)(a) of the ESI Act from the date of contribution due and payable till the actual payment, which is reproduced below for your ready reference. the Supreme Court Judgment in which–

39. Contributions –

1) ……………………

2) …………………….

3) ………………………

4) ……………………………

(5)(a) If any contribution payable under this Act is not paid by the principal employer on the date on which such contribution has become due, he shall be liable to pay simple interest at the rate of twelve per cent per annum or at such higher rate as may be specified in the regulations till the date of its actual payment:

In this regard therefore, the ESIC in light of the aforementioned judgment, had issued a Circular No. F.No. T-11/13/37/01/2022 Rev. II dated 10.01.2023, directing all AC & RD / Director I/c / JD I/c / ROs / SROs of the ESIC to take necessary action and ensure strict compliance while claiming interest as per Section 39(5)(a) of the ESI Act.

A copy of the Circular along with the Supreme Court Judgment is attached for your reference.

You may please apprise your clients to ensure strict and timely compliance under the ESI Act regarding payment of contribution to avoid interest on the due amount.

SC Judgement dated 17.11.2022 in SLP No. 16380_2022 in the matter of ESIC Vs. Nitinbhai Vallabhai Panchasara

ESIC Circular on Judgement dated 17.11.2022 in SLP No. 16380_2022 in the matter of ESIC Vs. Nitinbhai Vallabhai Panchasara