Regional Director, E.S.I Corporation v. M/S. Shoba Engineers And Others

The Judgment of the Court was delivered by

Sabhahit, J.:— These appeals by the Employees' State Insurance Corporation, Bangalore (hereinafter referred to as ‘the Corporation’), are directed against the orders, dated 30th August 1980, passed by Employees' Insurance Court, Bangalore, (hereinafter referred to as ‘the Court’) in Employees' State Insurance Applications Nos. 19/1980, 78/1979, 34/1980, 16/1980, 15/1980, 65/1979, 18/1980, 24/1979, 29/1979, 77/1979, 32/1980 and 38/1980, and against the orders, dated 5th November 1980, passed by the Court in Employees' State Insurance Applications Nos. 71/1979 and 51/1980, respectively.

2. The Regional Director of the Corporation passed orders under Section 85-B(1) of the Employees' State Insurance Act, 1948 (Hereinafter referred to as ‘the Act’), against the various industrial concerns, arrayed as respondents in these appeals, demanding damages. The orders were challenged by the industrial concerns, the present respondents in these appeals, by filing the various Employees' State Insurance applications before the Court under Section 75 of the Act, challenging the order passed by the Regional Director demanding damages, on similar grounds. They contended that the Regional Director has no authority to pass orders under Section 85-B of the Act. According to them, the delegation of power made by the Director General on 3rd May 1976 in favour of Regional Directors and others, to exercise the powers for recovery of damages under Section 85-B of the Act was void in law as he had no authority to sub-delegate and further, assuming that he had the power, he had not taken the approval of the Standing Committee as contemplated under Rule 16(2) of the Employees' State Insurance (Central) Rule, 1950 (hereinafter referred to as ‘the Rules’). They further contended that the order for damages could not be passed when there was no default existing on the date of passing the order. Further, they contended that reasonable opportunity was not given to them before passing the order. According to them the orders passed by the Regional Director in various cases were not speaking orders.

3. These applications were resisted by the Regional Director of the Corporation, before the Court. He submitted that the applications were not maintainable under Section 75 of the Act while denying the various contentions raised in the application.

The Court raised the following similar issues in the cases.

1. Whether the respondent proves that the present application is not maintainable for the reason stated in para-1 of the objections statement?

(2) Whether the applicant proves that the show cause notice issued by the respondent to the applicant is bad in law?

(3) Whether the applicant proves that the order levying damages is illegal and beyond the powers vested by the Act?

(4) Whether the applicant proves that the power to levy damages cannot be exercised by the Regional Director and so the impugned order is invalid?

(5) Whether any amount is payable by the applicant by way of damages?

4. No oral evidence was adduced by either party before the Court. Arguments were addressed. Examining the various contentions in the light of the arguments addressed by the parties, the Court answered the issues as under:

“Issue No. 1: No; Issue No. 2: Yes; Issue No. 3: Yes; Issue No. 4: Yes and Issue No. 5: No.”

And, in that view, the Court allowed the applications filed by the industrial concerns and declared that the impugned orders of the Regional Director levying damages were not valid, being not in accordance with law. In that view, the Court held that the applicants were not liable to pay any amount under the orders of the Regional Director; and directed the parties to bear their respective costs.

5. Aggrieved by the said orders, the Regional Director of the Corporation has instituted the above appeals before this Court.

6. Learned Advocate Sri M. Papanna, appearing for the Appellant/Corporation, strenuously urged before us the following grounds:

(1) That the Court was not justified in holding that the contentions raised by the Industrial concerns could be raised under Section 75 of the Act;

(2) That the Court erred in holding that there was no valid sub-delegation of the powers under Section 85-B of the Act by the Director General to the Regional Directors and others; and

(3) That the Court was not justified in holding that the Director General did not issue the delegation with the approval of the Standing Committee as required under Rule 16(2) of the Rules.

He further submitted that the Corporation itself delegated the powers to the various officers by its Resolution, dated 28th February 1976 and as such, there was no further delegation by the Director General. According to him, the finding of the Court that the show cause notice was bad in law was not valid in law. He further submitted that the Court was not justified in holding that the orders passed by the Regional Director were not speaking orders and, lastly, he submitted that the Court was not justified in holding that damages could not be levied as arrears were not outstanding on the date of the issue of the order.

7. As against these, the learned Advocates appearing for the various industrial concerns, argued supporting the findings and the final order passed in each case by the Court.

8. These appeals were heard together as agreed by counsel, as common questions of law are involved in these appeals.

9. The points, therefore, that arise for our consideration in these appeals are:

(1) Whether the Director General of the Corporation was competent to sub-delegate the powers delegated to him by the Corporation, to the Regional Directors and other officers by his order dated 3rd May 1976?

(2) Whether there is substance in the submission made by the learned counsel appearing for the appellant/Corporation that the Corporation itself delegated the powers to all the concerned Officers, including the Regional Directors, by its Resolution dated 28th February 1976?

(3) Whether Rule 16(2) of the Rules applies to the facts of the present cases?

(4) Whether the Court was justified in holding that the Director General of the Corporation did not follow the provisions contained in Rule 16(2) of the Rules while delegating the powers in favour of the Regional Directors and others?

(5) Whether the Court was justified in holding that orders could not be passed under Section 85-B of the Act as there was no default existing on the dates of the orders?

(6) Whether the Court was justified in holding that the show cause, notice was not legal and proper and no reasonable opportunity was given to the Industrial concerns involved before passing the orders?

(7) Whether the Court was justified in holding that the orders in different cases were not speaking orders?

10. The Corporation is established under Section 3 of the Act. Sub-section (1) of Section 3 of the Act reads:

“With effect from such date as the Central Government may, by notification in the Official Gazette, appoint in this behalf, there shall be established for the administration of the scheme of Employees' State Insurance in accordance with the provisions of this Act a Corporation to be known as the Employees' State Insurance Corporation.”

Sub-section (2) of Section 3 of the Act provides for the Corporation being body a Corporate. It reads:

“The Corporation shall be a body corporate by the name of Employees' State Insurance Corporation having perpetual succession and a common seal and shall by the said name sue and be sued.”

Accordingly the Central Government by Notification (vide Gazette of India, 1948, page 1417) established the Corporation with effect from 1st September 1948.

11. Section 4 of the Act provides for the constitution of the Corporation. Section 5 provides for the terms of office of the members of the Corporation. Section 8 of the Act provides for constitution of Standing Committee. Section 9 of the Act provides for the term of Office of members of Standing Committee.

12. The Corporation consists of more than 40 members, whereas the standing Committee consists of 14 members. Under the Act certain powers are vested in the Corporation and Regulation-3 provides for the manner in which the Corporation may exercise its powers and regulation 3A provides for exercise of powers by an Office.

13. Sections 84, 85, 85A, 85B, 85C and 86 of the Act are in Chapter VII under the rubric Penalties. We are concerned with Section 85-B of the Act on the facts of this Case, which reads:

“Power to recover damages.—

(1) Where an employer fails to pay the amount due in respect of any contribution or any other amount payable under this Act, the Corporation may recover from the employer such damages not exceeding the amount of arrears as it may think, fit to impose; provided that before recovering such damages, the employer shall be given a reasonable opportunity of being heard.”

Thus, by reading Section 85-B of the Act, it becomes clear that the Corporation is vested with the power to recover from a defaulting employer such damages not exceeding the amount of the arrears as it may think fit to impose. This Court by a Division Bench decision in the case, The Regional Director, Employees' State Insurance Corporation v. Tungabhadra Steel Products Ltd. . ILR 1980 KAR 1143. has ruled thus:

“What is contemplated in Section 85-B of the Act is exemplary or punitive damages and Regulation 31A merely provides for interest by way of compensation for the little delay in payment, when the conduct of the employer does not justify any punitive action. Thus, there is no conflict whatsoever in the provisions of Regulation 31-A and Section 85-B of the Act.”

This Court has further made it clear in the aforesaid decision that ingredients of Section 85-B of the Act establish that the proceeding under the Section is a quasi judicial proceeding and the Employees' State Insurance Corporation should follow the principles of natural justice in imposing the penalty. It means that the employer should be given an opportunity to show cause for the default and against the levy of penalty and quantum of damages proposed to be levied. It further means that the said Corporation shall consider in a judicial manner the explanation offered by the employer, if any, to find out whether it provides for a reasonable excuse for the delay or the default. Further, the Corporation must consider the gravity of the situation in each case and shall levy the damages as found proper and fit on the facts of the case. The desert shall be just and not excessive. The authorised officer of the Corporation shall pass a speaking order giving reasons for the levy of damages and for accepting or not accepting the explanation offered by the employer. One of the considerations that should enter the mind of the Employees' State Insurance Corporation in fixing the liability by way of punitive damages is to see whether the employer has made profits by retaining the money due to the Corporation and if so, to what extent. The said Corporation must be satisfied that his conduct is punishable and it should so adjust the imposition of damages as to appear fit and proper to an average prudent man on the facts of the case.

14. There was no provision earlier to delegate this power of the corporation to any subordinate officer or authority. Hence, the parliament thought it proper to amend the Act by introducing Section 94-A by Act 53/1951 which reads:

“Delegation of Powers.—The Corporation and, subject to any regulations made by the Corporation in this behalf, the Standing committee may direct that all or any of the powers and functions which may be exercised or performed by the Corporation or the Standing Committee, as the case may be, may, in relation to such matters and subject to such conditions, if any, as may be specified, be also exercisable by any officer or authority subordinate to the Corporation.”

Pursuant to the provision, the Corporation in its meeting held on 28th February, 1976 adopted the following resolution:

“Resolved that for the purpose of levy of damages under Section 85-B(1) of the Employees' State Insurance Act, 1948, as amended upto date, the Director General or any other officer authorised by him may levy and recover damages from the employers not exceeding the rates as per table annexed”.

15. Pursuant to the powers conferred on him by the resolution, the Director General, on May 3, 1976, issued the following Order:

“In pursuance of the resolution passed by the Employees' State Insurance Corporation at its meeting held on 28th February 1976, I, T.N Laxminarayan, Director-General, Employees State Insurance Corporation, hereby authorise all Regional Directors including Joint Regional Director in-charge Pune Sub-region and Deputy Regional Director in charge, Nagapur Sub-Region to exercise all powers for levy of damages on factories established within their region under Section 85-B(i) of the Employees' State Insurance Act, 1948 as amended vide Act 38/1975”

Thus by reading the resolution of the Corporation and the office order issued by the Director General, it becomes amply clear that the Corporation delegated its powers in favour of Director General and further the Corporation empowered the Director General to authorise various subordinates under him to exercise the powers under Section 85-B(1) of the Act.

16. In this conspectus of facts, the points that arise for our decision are:

(1) Whether the resolution of the Corporation delegates the powers not only in favour of the Director General but also in favour of officers sub-ordinate to him?

(2) Whether the Director General is authorised to sub-delegate the powers in favour of officers under him?

(3) If so, whether the Director General is competent on the facts of this case to sub-delegate the powers delegated to him?

17. Before we proceed to deal with the points raised, it would be necessary to recall briefly the law on the subject. The maximum ‘delegatus non potest delegare’ is well established. It applies not only in the field of Legislation but also in matter of administration. It means that a delegate is incapable of making further delegation of the delegated authority.

18. In Mahindra Nath v. Anil Chandra . A.I.R 1953 Calcutta, 689., it is held by the High Court, Calcutta, that it is the first principle of law that a delegated authority cannot be further delegated unless he has been given power to sub-delegate such delegated authority, by statute.

19. In Peerajade Husensab Mohadin v. The Commissioner of Labour . A.I.R 1965 Mysore, 39. a Division Bench of this Court has held that Rule 58 of the Industrial Disputes (Mysore) Rules, 1957, contemplates that it is the Labour Commissioner who himself must hold the enquiry and it is not permissible for him to delegate this power to any other person.

20. In Barium Chemicals Ltd. v. Company Law Board . A.I.R 1967 Supreme Court, 295. at page 306 the Supreme Court has laid down that a delegate cannot further delegate his powers. This is what is observed in para 10 of the judgment:

“Bearing in mind that the maxim delegatus non potest delegate sets out what is merely a rule of construction, sub-delegation can be sustained if permitted by express provision or by necessary implication.”

Again in Mangulal Cluinilal v. Manilal Maganlal . A.I.R 1968 Supreme Court, 822. the Supreme Court was dealing with clauses by which a Commissioner of the Ahmedabad Municipal Corporation had delegated his powers and function under Section 481(1)(a) of the Bombay Provincial Municipal Corporation Act (59 of 1949), to Municipal Officer and it was held that in such a case, it was that officer alone who could launch proceedings against a person charged with offences under the Act or the rules, regulations or bye-laws, made under it and that the Officer to whom these functions were delegated could not further delegate the same to another.

21. In Shri H.K Agnihotri…Petitioner v. Delhi High Court & Others…S . I.L.R 1974 II DELHI, 450. a Division Bench of the Delhi High Court following these decisions held thus:

“that the power of the High Court under Act 229 of the Constitution of India to make appointment of its officers and servants and to frame rules to regulate the conditions of their service is a constitutional power conferred on the High Court and the Constitution it-self provides that such power can be exercised by the Hon'ble the Chief Justice of the Court or his nominee Judge. The power conferred on the Hon'ble Judges of the High Court being a delegated power of the Governor or the Governor General in Council, as the case may be, could not be further delegated because a delegate was incapable of further delegating the delegated authority and such delegated powers must be exercised by the delegate alone and only in the manner laid down in the Charter of the instrument by which the delegation had been made.”

Thus, it is clear that unless the Statute so authorises a delegate, he cannot sub-delegate his powers. It is all the more so in the case of judicial or quasi-judicial powers. In the case of Bombay Municipal Corporation v. Dhondu Narayan Chowdhary . A.I.R 1965 Supreme Court 1486., the Supreme Court has held that Section 68 of the Bombay Municipal Corporation Act, 1888 as amended in 1961, showed the that Judicial or quasi-Judicial powers contained in Chapter VI-A were expressly intended to be delegated and in that context the Supreme Court has observed that normally Judicial or Quasi-judicial powers cannot be delegated unless specifically authorised by the Statute (See also AIR 1978 Punjab 294 FB).

22. Halsbury's Laws of England, 4th edition, Volume-I, dealing with Administration law, at para 32, deals with sub-delegation of Powers. It reads:

“In accordance with the maxim delegatus non potest delegare, a statutory power must be exercised only by the body or officer in whom it has been confided, (H. Lavender & son Ltd. v. Minister of Housing and Local Government (1970) 3 All ER 871) unless sub-delegation of the power is authorised by express words or necessary implication (Customs and Excise Comrs. v. Cure and Deeley Ltd. (1962) I QB 340, (1961) 3 All ER 641) and Mungoni v. A.G of Northern Rhodesia (1960) 1 All ER 446 PC etc.). There is a strong presumption against construing a grant of legislative, judicial, or disciplinary power as impliedly authorising sub-delegation; and the same may be said of any power to the exercise of which the designated body should address its own mind. (Allam & Co. Ltd. v. Europa Poster Services Ltd. (1968) 1 All ER 826”.

“In general, a delegation of power does not imply parting with authority. The delegating body will retain not only power to revoke the grant, but also power to act concurrently on matters within the area of delegated authority except in so far as it may already have become bound by an act of its delegate. It would appear that an invalid act of the delegate encroaching on individual rights cannot be validated with retrospective effect by ratification.”

23. Bearing these well settled principles of law in mind, it becomes obvious that Section 85-B(1) of the Act empowers the Corporation to levy and recover damages. Section 94-A of the Act further empowers the Corporation to delegate its powers in favour of an authority or an officer. Pursuant to the said provision of law, it was open to the Corporation to delegate its powers to levy and recover damages under Section 85-B(1) of the Act in favour of an authority or officer subordinate to it. The Corporation by its resolution quoted above has no doubt delegated its powers in favour of the Director General. To that extent it is manifest that the exercise of power by the Corporation is perfectly legal and valid.

24. What is challenged, however, before us by the learned counsel for respondents is that the Corporation has further delegated its power to delegate, in other words, to sub-delegate, in favour of Director General which is not in accordance with law being not authorised by the provision of Section 94-A of the Act. The learned counsel invited our attention to that part of the resolution which reads:

“Or any officer authorised by him may levy and recover damages”.

In this context, that clearly means that the Director General or any officer authorised by him may levy or recover damages as contemplated under Section 85-B(1) of the Act. So far as the Director General is concerned, as explained above, delegation in his favour is perfectly valid. But, further the Director General is authorised, to sub-delegate the powers in favour of his subordinate officers. In this context the words used are: ‘Officers authorised by him’.

25. The word ‘Delegate’ is defined in Stroud's Judicial Dictionary, inter alia thus:

“(1) To “delegate” to another is not to denude yourself. “In my opinion the word, in its general sense and as generally used, does not imply, or point to, a giving up authority, but rather the conferring of authority upon some one else (per Wills J. Huth V. Clarke 25 QBD 391 referring also to the use of the word in S. 201 of the Public Health Act 1875 (C. 55) See also Gordon Dords & Co. v. Morris (1945) 2 All Er 616 at 621)”.

26. Thus, the word delegate inter alia means confer authority upon some one else. The word ‘authorise’ means the same thing. It means conferring authority on some one else. Therefore, that part of the resolution which comes up for our consideration is:

“Any other Officer on whom the authority is conferred by the Director General.”

In other words, there cannot be any doubt that the resolution not only delegates powers to the Director General but authorises the Director General to confer authority on subordinates chosen by him. That means that it authorises sub-delegation. This plain interpretation put to the resolution by us finds further support by what is done by the Director General himself. In his office order referred to above, he has stated:

“I, T.N Laxminarayan, Director General of Employees State Insurance Corporation, hereby authorise all the Regional Director including Joint Regional Director-in-charge Puna Sub-Region and Deputy Regional Director-in-charge Nagpur Sub-Region to exercise powers for levy of damages on factories/establishment within their region under Section 85-B(1) of the Act as amended vide Act 38/1975”.

Thus, it admits of no doubt that the resolution of the Corporation dated 28th February 1976, delegates its powers in favour of the Director General and it further authorises him to sub-delegate the powers and pursuant to it the Director General by his office order dated 3rd May 1976 has sub-delegated the power to levy and collect damages in favour of Regional Directors and Deputy Regional Directors, named, therein.

27. Before proceeding further, to consider the legal implications of the resolution of the Corporation it would be necessary to dispose of the argument addressed before us by the learned counsel for the appellant-Corporation that the Corporation itself delegated powers in favour of the Regional Directors and Deputy Directors by necessary implication in view of the wording of the resolution of the Corporation. We have explained above that if the Corporation intended to delegate the powers itself in favour of these officer nothing was easier for the Corporation than to name them in the resolution. Otherwise the Corporation could have taken designations of these officers from the Director General and could have passed another resolution delegating the powers in their favour also. Instead of doing so, it has simply authorised the Director General to authorise his subordinate officers. We also make it clear that the Corporation could not delegate its powers in favour of an unknown officer. Before delegating powers by exercising one's discretion, it is necessary to know to whom one is delegating the powers and the Corporation has not done so and it has left that work to be done by the Director General. It is for these reasons that we hold that there is no substance in the submission made by the learned counsel for the Corporation that the resolution, dated 28th February 1976, by the Corporation delegates powers in favour of other subordinate authorities also. We have no hesitation to hold that the Corporation by its resolution delegated its powers only in favour of Director General and further authorised him to sub-delegate the powers. As the syntax and structure of the composition of the Resolution stand, there cannot be any other meaning assigned to the Resolution.

28. We may refer to a decision placed before us in this connection, passed by a Division Bench of the Punjab and Haryana High Court in the case, Employees State Insurance Corporation and Dhanda Engineers (P) Ltd., Faridabad8, wherein this very Resolution came up for consideration before a Division Bench of the Punjab and Harayana High Court. The Hon'ble Chief Justice S.S Sandhawalia who spoke for the Bench in that decision, in para-8 of his judgment explaining the resolution has observed thus:

“The language of the aforesaid resolution is significant and calls for some analysis. It is plain that the delegation by the Corporation was no made merely in favour of the Director General. Plainly enough it was a two fold delegation. Firstly, in favour of the Director General and Secondly in favour of any other officer authorised or named by the Director General.”

With respect to the Hon'ble Judge, we are unable to bring ourselves to agree with the view so expressed. The learned Judge appears to think that the words “authorised or named” are used in the resolution. It is not so. The only words used are “authorised by him” (Director General) hat, by no stretch of imagination means that delegation is also made in favour of persons who are still to be authorised by the Director General. On the other hand, it plainly means that the Director General is authorised to sub-delegate the power and nothing more.

29. The learned Judge has, however, explained why he did not delve deep into the matter in para-10 of the judgment thus:

“It calls for notice that Mr. R.S Mittal, learned counsel for the respondent, when faced with the aforesaid sequence of the statutory provisions and the resolution of the Corporation and other procedural steps thereunder, has raised no meaningful argument whatsoever against the validity of the delegation. Without making a formal concession he was candid enough to say that he had no precise challenge to raise against the delegation.”

But the learned counsel for respondents in these appeals strenuously urged before us that word ‘authorised’ in the context would mean not merely to name and that it would not amount to merely performing a ministerial act but would be something more and that it amounts to conferring powers to sub-delegate. We are pursuaded to agree with the said submission.

Having held above, that the resolution of the corporation dated 28th February 1976 clearly authorised the Director General to sub-delegate, we have to consider next, whether such a resolution to the extent that it authorises the Director General to sub-delegate, is in accordance with Section 94A of the Act. Section 94A of the Act does not speak of conferring power to sub-delegate. It only speaks of power to delegate and as stated above, both Indian and English decisions, make it amply clear that when there is no specific provisions, in the authorising sub-delegation, any sub-delegation of delegated power would be void in the eye of law, especially so when it refers to Judicial or quasi-judicial powers.

30. In Bombay Municipal Corporation v. Dhondu Narayan Choudari. His Lordship Hidayatulla, J., as he then was, who spoke for Bench has laid down in para-3 of the judgment thus:

“It goes without saying that Judicial powers cannot ordinarily be delegated unless the law expressly or by clear implication permits it”.

In Broom's Legal Maxims, 10th Edition, it is stated thus at page 571:

“……….and this jurisdiction is, in law, held to be that of the Judge who appoints a deputy, and not of the deputy; and in this case the maxim holds, delegatus non potest delegare: the person to whom any office or duty is delegated for example, an arbitrator-cannot lawfully devolve the duty on another, unless, he be expressly authorised so to do. Nor can an individual, clothed with judicial functions, delegated the discharge of those functions to another, unless, as in the case of a County Court Judge, he be expressly empowered to do so. For the ordinary rule is that, although a ministerial officer may appoint a deputy a judicial officer cannot.”

31. And Section 94A as explained above, authorises the Corporation to delegate its powers and does not empower any sub-delegation and in the case of delegation of judicial or quasi-judicial power as is contained in S. 85-B(1) of the Act, Section 94A has to be, for reasons discussed above, strictly construed. That being so, we are constrained to hold that, that part of the resolution of the Corporation which authorises the Director General to sub-delegate powers, passed by the Corporation on 28th February 1976, is void in the eye of law and it does not authorise legally the Director General to authorise his subordinates to exercise powers contemplated under Section 85-B(1) of the Act. It is, therefore, manifest that the office Order issued by the Director General on 3rd May 1976 is void and inoperative and it cannot confer any power on the subordinates mentioned therein to exercise powers under Section 85-B(1) of the Act. That is our finding on points 1 and 2.

32. The Court in its orders has further held that even assuming that the Director General had power to sub-delegate, he has not followed the procedure contemplated under Rule 16(2) of the Rules of Employees State Insurance Rules 1950, Rule 16(2) reads:

“The Director-General may, with the approval of the Standing Committee, by general or special order, delegate any of his powers or duties under the Rules or the Regulations or under any resolution of the Corporation or the standing Committee, as the case may be, to any person subordinate to him. The exercise or discharge of any of the powers or duties so delegated shall be subjected to such restrictions, limitations and conditions, if any, as the Director General may, with the approval of the Standing Committee, impose.”

The Court has held that there is no approval of the Standing Committee to the Office order under which Director General delegated powers in favour of the Regional Director, Deputy Directors and others and hence it is void in law. We have shown above that the Director General had no authority to sub-delegate and as such it is void in law. That being so, the question of delegation under Rule 16(2) Would not arise on the facts of this case. The learned counsel appearing for the respondents did not rightly in our opinion, seek to rely on that Rule and he did not press into service, that rule to declare the validity of the sub-delegation. Hence, we do not propose to discuss the aspect further.

33. It may, however, be mentioned in passing that Rule 16(2) cannot confer any power on the Director General to sub-delegate contrary to the provisions contained in the Section 94A as rules are framed under Section 95, which clearly states:

“Make rules not inconsistant with this Act”.

“Vide also The State of Kerala v. K.M Charia Abdulla And Co. (AIR 1965 Supreme Court 1585) and (Barium Chemicals Ltd., v. Company Law Board (AIR 1967 Supreme Court page 295 at pages 311 and 312”.

34. In that view, we hold under point No. 3 that Rule 16(2) has no application to the facts of the case. That being so, point No. 4 does not survive for consideration.

35. In the view we have taken under points 1 and 2, points 6 and 7 would not arise for consideration and even if they arose for consideration, it may be pointed out that this Court has ruled on those points in the earlier referred case, The Regional Director, Employees' State Insurance Corporation v. Tungabhadra Steel Products Ltd.

36. The point No. 5 is covered by the decision rendered by this Court in M.F.As Nos. 381 to 384/1980 decided on 31st July 1981, holding that the proceedings under Section 85-B(1) of the Act could be initiated even if on the date of initiation the default was not outstanding.

37. In the earlier decision, this Court has held that in proceedings under Section 85-B, principles of natural justice should be followed and the order should be a speaking order.

In the result, the appeals fail and are rejected. On the peculiar facts of these cases, we make no order as to costs.