IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 26.11.2008 CORAM: THE HONOURABLE MR.JUSTICE K.CHANDRU W.P.No.17364 of 1999 and WPMP.Nos.2489 and 2490, 21119 and 21120 of 2005 Madras Race Club Guindy, Chennai-32, rep.by its Secretary, Mr.Dharmasenan Ebeneser ... Petitioner Vs 1. The Secretary to Government, Labour and Employment Department, Fort St.George, Chennai – 9. 2. The Employees State Insurance Corporation, rep.by its Regional Director, 143, Sterling Road, Nungambakkam, Chennai – 34. 3. Madras Race Club Staff Union, rep. by its Secretary, 7/170 A Type SIDCO Nagar, Villivakkam, Chennai-49. 4. Tamil Nadu Race Club General Employees' Union, 18, K.V.Koil Street, Alandur, Chennai-16, rep.by its General Secretary ... Respondents (RR3 and 4 are impleaded as per the order of Court dated 3.1.2000 in WMP.No.27232 of 1999) PRAYER:- Petition filed under Article 226 of the Constitution of India praying for the issuance of a Writ of Certiorarified mandamus calling for the records comprised in Lr.No.Ms.78, dated 11.6.1999 of the first respondent and quash the same as illegal and consequently direct the first respondent to grant exemption https://hcservices.ecourts.gov.in/hcservices/ under Sections 87 and 90 of the Employees' State Insurance Act, 1948. For petitioner : Mr. Rahul Balaji for Mr.Sathish Parasaran For Respondents : Mrs.C.K.Vishnu Priya, AGP for R1 Mrs.Jayakumari for R2 ***** O R D E R The petitioner is the Madras Race Club. In the present writ petition, they seek to challenge the order dated 11.6.1999 passed by the first respondent State Government. After quashing the same, they seek for a direction to the first respondent to grant exemption under Sections 87 and 90 of the Employees' State Insurance Act, 1948 (for short 'the ESI Act'). 2. The petitioner Race Club was established and it is registered under Section 25 of the Companies Act, 1956. Subsequently, by the Madras Race Club (Acquisition and Transfer of Undertaking) Act, 1986, the activities of the Club were taken over by the State Government. It was under the control of the custodian of the Department of Racing, Chennai. The said Act was struck down by the Supreme Court vide its judgment in K.R.Lakshmanan (Dr.) -vs- State of Tamil Nadu reported in (1996) 2 SCC 226. It is stated that at that time the petitioner Club employed 361 workmen and it included some employees who were drawing a monthly salary of Rs.6500/- . 3. Even before the judgment of the Supreme Court, the then custodian of the Department of Racing, aggrieved by the order passed by the second respondent Employees' State Insurance Corporation (for short 'the ESIC') dated 10.4.1991, moved this Court and sought for a direction to the State Government to grant exemption from the ESI Act. In the said writ petition (being W.P.No.7222 of 1991), this Court by an order dated 08.2.1999 directed the State Government to dispose of the representation made by the then custodian of the Department of Racing requesting for an exemption pending with the first respondent in accordance with law. It was stated that till such time, the interim stay of the recovery order dated 10.4.1999 will be continued. 4. Pursuant to the said direction, the first respondent State by its order dated 11.6.1999 refused to grant exemption from the https://hcservices.ecourts.gov.in/hcservices/ operation of the ESI Act. Para 2 of the said order reads as follows:- ''2. The Government have examined your request in consultation with the Deputy Director, E.S.I. Corporation, Chennai. The Government, after careful examination, have decided that the medical and cash benefits provided by the Madras Race Club, Guindy, to their employees are neither comparable nor superior to the benefits provided under the ESI Act. Therefore, your request for the grant of exemption from the provisions of the ESI Act, 1948 to Madras Race Club, Guindy, cannot be complied with." (Emphasis Added) It is against that order, the petitioner Club has come forward with the present writ petition. 5. The writ petition was admitted on 03.1.2000. Though an interim stay was sought against the impugned order, only notice was ordered. Subsequently, on 01.9.2003, that application was dismissed. The petitioner Club also impleaded two of the employees' unions functioning in the Club as party respondents. The same was ordered by this Court on 03.1.2000. 6. Thereafter, the petitioner Club took out two applications, viz., WPMP.Nos.2489 and 2490 of 2005, once again seeking for interim injunction restraining the respondents from taking any coercive steps pursuant to the rejection of their application for exemption. This Court by an order dated 18.4.2005 permitted the respondent ESIC to proceed in accordance with law in assessing the subscription due from the petitioner Club from the date of its order. 7. Once again, the petitioner Club filed another two applications seeking a restraint on the inspection to be conducted by the ESIC on 30.5.2005 for scrutinising the Club's records. In these two WPMPs, namely, WPMP.Nos.21119 and 21120 of 2005, no orders have been passed so far. 8. On behalf of the second respondent, a counter affidavit dated 07.2.2005 has also been filed. It is stated in the counter affidavit that the petitioner Club was inspected on 28.3.1985 and it was found that the said club is covered by Section 1(5) of the ESI Act with effect from 01.3.1985 and accordingly a code number was allotted to it. The Club was also informed in form 'C' regarding the application of the Act. A notice dated 30.9.1986 was issued to the petitioner Club for non-payment of subscription for the period from March 1985 to August 1986. It was at this stage a https://hcservices.ecourts.gov.in/hcservices/ writ petition being W.P.No.4149 of 1990 was filed and pursuant to the direction given by this Court, the ESIC passed an order dated 10.4.1991 dealing with the issues raised by the petitioner Club. Even then the petitioner has not complied with those directions issued. 9. But, on the contrary, they moved the State Government for exemption from the Act, which was refused by the State Government. Paragraphs 6 and 8 of the counter affidavit filed by the ESIC may be extracted below: ''6. I submit that the petitioner's establishment from 1985 onwards filing one after another writ petition just to evade and avoid to pay the Employees State Insurance Contributions. The Employees State Insurance Act is a statutory Social Security Legislature enacted by the Central Government with the sole intention of providing certain benefits to employees in case of sickness, maternity and employment injury and to make provisions of certain other matters. All contributions paid under the Act and all other monies received on behalf of the Corporation shall be paid to the employees State Insurance Fund which will be hold and administered by the Corporation for the purpose of this Act." 8. I further submit that the Corporation providing 91 days sickness benefit a year for the employees covered under this Act but the petitioner's establishment is provided lesser day, of sickness benefit to its employees. Further the petitioner's establishment is not provided its employees, maternity benefits, temporary disablement benefits, permanent disablement benefits. Funeral expenses, provisions of artificial limbs etc. which are available under the Employees State Insurance Act. In the petitioner's establishment many persons are casual or part time employees such of those employees has to be brought under the scheme of Employees State Insurance Act. Hence, benefits provided under the Employees State Insurance Act is superior to the Medical benefits/sickness benefit provided by the petitioner. The applicability of the Employees State Insurance Act to the employees based on welfare scheme and not on the whims and fancies of any individuals. The petitioner's establishment nearly for the past 20 years successfully evading to pay contribution to the Employees State Insurance Scheme. This is not proper and they are doing injustice to the employees." (Emphasis Added) https://hcservices.ecourts.gov.in/hcservices/ 10. Mr.Rahul Balaji, learned counsel representing Mr.Sathish Parasaran, submitted that the order of the State Government is bereft of any reason and no opportunity was given to the petitioner Club before passing the orders. In this context, he relied upon a judgment of the Allahabad High Court in Lohiya Machines (L.M.L.) Karmachari Sangh, Kanpur -vs- State of U.P and others reported in 1999-II-LLJ 1023. This is for the purpose to show that the Government must examine the benefits provided by the employer whether they are similar or superior to the benefits provided under the Act and hearing of the employer and union must be afforded. 11. In that case, the State Government on a policy consideration refused to grant exemption, which was found fault with by the Allahabad High Court. But, in the present case, it is not as if on any policy consideration the State Government had refused. But, on the contrary, it was found that the medical and cash benefits provided by the petitioner Club were neither comparable nor superior to the benefits provided under the ESI Act. Further, as stated in the counter affidavit, the petitioner Club is not providing the various benefits given under one umbrella under the ESI Act. It includes, Sickness Benefits, Maternity Benefits, Disablement Benefits, Death Benefit and Funeral Benefit. Such benefits are not provided by the Club. Even in the application sent by the petitioner club dated 06.4.1997 the Annexure appended shows that many of the benefits covered by the ESI Act were not extended. 12. In any event, Courts have repeatedly held that an exemption from the operation of a labour legislation is not automatic and there is no vested right on any employer to seek for an exemption. Only the benefits are superior compared to the ESI Act. The ESI Act is a social welfare legislation and the subscription paid by the employer and employees only covers a fraction of the expenditure involved by the Corporation. In the present case, the first respondent State has categorically held that it was not satisfied that the petitioner Corporation deserves an exemption and it had rejected the same on specific grounds. 13. The Act does not contemplate any personal hearing. Neither in the application nor in the direction given by this Court vide order dated 08.2.1999, any such right of personal hearing was conferred on the petitioner Club. It must also be stated that it was not a joint application made by the employer and employees together. The two employees' unions were subsequently made as party respondents and they have also not come https://hcservices.ecourts.gov.in/hcservices/ to support the stand of the petitioner management. In any event, the decision relied on by the learned counsel for the petitioner has no application to the facts of this case. 14. The writ petition is devoid of merits, misconceived and accordingly will stand dismissed. No costs. Consequently, the connected miscellaneous petitions are also dismissed. Sd/ Asst.Registrar /true copy/ Sub Asst.Registrar js To 1. The Secretary to Government, Labour and Employment Department, Fort St.George, Chennai – 9. 2. The Regional Director, Employees State Insurance Corporation, 143, Sterling Road, Nungambakkam, Chennai – 34. 3. The Secretary, Madras Race Club Staff Union, 7/170 A Type SIDCO Nagar, Villivakkam, Chennai-49. 4. The General Secretary, Tamil Nadu Race Club General Employees' Union, 18, K.V.Koil Street, Alandur, Chennai-16. +1cc to Mrs. S.Jayakumari, Advocate Sr 66071 KU (CO) km/8.12. W.P.No.17364 of 1999 https://hcservices.ecourts.gov.in/hcservices/