Low Deterrent Effect, Diminished Fear Of Law Fuel Violations In India; Penal Provisions Need Firm Enforcement: Bombay High Court

The Bombay High Court recently invoked Benjamin Franklin and explained how laws in India continue to be violated only because of low deterrent effect and how important it is in a civilised society, to obey law out of principle rather than just fear of punishment. 

Single-judge Justice Jitendra Jain explained that penal provisions have a dual effect - one to penalise an offender or defaulter and the second one is to act as a deterrent.

"Penal provisions have dual effect namely to penalise the offender/defaulter and also to act as deterrent to not only the offender/defaulter but also to others who would think twice before violating the law. The reasons for more violations of law in our country is low deterrent effect or fear of law which is against the principles of arranging affairs and staying in society within the boundaries of law. Therefore, penal provisions in a given case should be enforced with more fervour," the judge observed in the order passed on February 17. 

The judge while invoking the American Writer, added, "Benjamin Franklin said that 'laws too gentle are seldom obeyed; too severe, seldom executed.' Thus, when a low penalty is prescribed it creates a perception that one can get away with anything and everything. Fear of law can be deterrent for immoral behaviour but true virtue involves obeying in law out of principle rather than just fear of punishment of law. A law is valuable not just because it is law, but because there is right in it."

These observations were made by Justice Jain while upholding the order of the Employees' State Insurance Corporation (ESIC), Pune which imposed a penalty of Rs 27,849 on a factory unit for delayed contribution of Rs 96,705 which was unearthed after the ESIC officials visited the factory unit and found its records to the extent of attendance of workers and the wages paid to them were incorrect.

The judge noted that the factory unit in question, firstly delayed the payment of Rs 96,705 and paid it in instalments, claiming that they were orally permitted by the ESIC to pay the amount in instalments. Owing to the delay in paying the contributions, the ESIC under section 85-B of the Employees State Insurance (ESI) Act imposed a penalty of Rs 27,849.

"In the instant case, had it not been for field visit by the Appellants the manipulation between actual entries and those recorded in the records could never have been surfaced and old records were destroyed. The Appellants carried out an investigation and found that the wage register for the year 1997 was prepared in the year 2001 by printing on forms which borne a 7 digit phone number which was introduced only in the year 1999," the judge noted. 

Therefore, while justifying the imposition of penalty by the ESIC, Justice Jain said that the authority took a liberal view by taking due date of contribution from the date of issue of visit notice and not from due date for payment.

"As against arrears of Rs.96,705, the damages levied is only Rs.27,849 whereas the provision prescribes for maximum upto the arrears. Therefore, looking at the amount levied as damages as against arrears, it cannot be said that discretion has not been exercised judiciously by the appellants," the judge held. 

Justice Jain, therefore, quashed and set aside the order by the ESI Court which had quashed the ESIC's decision to impose penalty on the factory unit. The judge has now restored the initial order of the ESIC, Pune which had imposed the penalty on the unit. The judge therefore, allowed the ESIC's First Appeal.

Appearance:

Mayuresh Nagle appeared for the Appellant.

Rutwij Bapat represented the Respondent.

Case Title: The Deputy Regional Director, Employees' State Insurance Corporation vs M/s. Aashu Engineering Works (First Appeal 756 of 2011)

Citation: 2026 LiveLaw (Bom) 91

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