IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.M.JOSEPH & THE HONOURABLE MR. JUSTICE M.L.JOSEPH FRANCIS SATURDAY, THE 19TH NOVEMBER 2011 / 28TH KARTHIKA 1933 Ins.APP.No. 74 of 2011 -------------------------------------- AGAINST THE ORDER DATED 24/01/2011 IN IA 309/2010 IN IC.1/2009 of EI COURT, PALAKKAD .................... APPELLANT/PETITIONER/OPPOSITE PARTY: --------------------------------------------------------------- THE REGIONAL DIRECTOR, E.S.I. CORPORATION, THRISSUR BY ADV. SRI.T.V.AJAYAKUMAR RESPONDENT/RESPONDENT/APPLICANT: ----------------------------------------------------------- M/S.MRF LTD., VADAVATHOOR, KOTTAYAM - PIN-686010 ADV. SRI.SAJI VARGHESE FOR R1 SMT.MARIAM MATHAI FOR R1 ADVOCATE SHRI K.P. SREEKUMAR, AMICUS CURIAE. THIS INSURANCE APPEAL HAVING COME UP FOR ADMISSION ON 19/11/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: K.M. JOSEPH & M.L. JOSEPH FRANCIS, JJ. ----------------------------------------- INS.APPEAL.NO.74 OF 2011 ------------------------------------------ Dated this the 19th November, 2011 JUDGMENT K.M. Joseph, J. The Appeal is filed by the Regional Director of E.S.I. Corporation challenging an order passed by the Employees' Insurance Court, Palakkad. By the impugned order, the application filed by the appellant seeking transfer of the case to the Employees' Insurance Court, Idukki has been dismissed. The E.I. Court, Palakkad finds that the appellant cannot contend that the court at Palakkad had no jurisdiction, as that point has been decided by the preliminary order dated 23.11.2009. It is stated that the appellant had not challenged that order of the court by filing any appeal and the same has become final. It is further reasoned that the court cannot review the above order on the basis of the subsequent judgments of the High Court and the Supreme Court in some of the Ins. Appeal No.74/2011 2 cases. Apparently, the court has drawn sustenance from the Explanation to Order 47 Rule 1 of the Code of Civil Procedure. It is further found that the Judgment of a learned Single Judge of this Court dated 7.10.2010 has no application or relevance. It is found that the Corporation has no case either in its preliminary objection or in the present I.A. that Section 76 is applicable and in fact, accepting the preliminary order, the Corporation has filed written objection on the merit of the case. 2. We heard Shri T. V. Ajayakumar, learned counsel for the appellant and Shri Saji Varghese, learned counsel appearing for the respondent. We also heard Advocate Shri K. P. Sreekumar as Amicus Curiae, in view of the issues which were projected by the counsel for the appellant. 3. It is necessary to advert to certain provisions contained in the Employees' State Insurance Act, 1948 (hereinafter referred to as the Act). Section 76 of the Act reads as follows: Ins. Appeal No.74/2011 3 “76. Institution of proceedings, etc.- (1) Subject to the provisions of this Act and any rules made by the State Government, all proceedings before the Employees' Insurance Court shall be instituted in the Court appointed for the local area in which the insured person was working at the time the question or dispute arose. (2) If the Court is satisfied that any matter arising out of any proceeding pending before it can be more conveniently dealt with by any other Employees' Insurance Court in the same State, it may, subject to any rules made by the State Government in this behalf, order such matter to be transferred to such other Court for disposal and shall forthwith transmit to such other court the records connected with hat matter. (3) The State Government may transfer any matter pending before any Employees' Insurance Court in the State to any such Court in another State with the consent of the State Government of that State. (4) The court to which any matter is transferred under sub-section (2) or sub-section (3) shall continue the proceedings as if they had been originally instituted in it.” Ins. Appeal No.74/2011 4 Section 78 reads as follows: “78. Powers of Employees' Insurance Court.- (1) The Employees' Insurance Court shall have all the powers of a Civil Court for the purposes of summoning and enforcing the attendance of witnesses, compelling the discovery and production of documents and material objects, administering oath and recording evidence and such court shall be deemed to be a Civil Court within the meaning of Section 195 and Chapter XXVI of the Code of Criminal Procedure, 1973 (2) of 1974). (2) The Employees' Insurance Court shall follow such procedure as may be prescribed by rules made by the State Government. (3) All costs incidental to any proceeding before an Employees' Insurance Court shall, subject to such rules as may be made in this behalf by the State Government, be in the discretion of the court. (4) An order of the Employees' Insurance Court shall be enforceable as if it were a decree passed in a suit by a Civil Court.” Ins. Appeal No.74/2011 5 Rule 16 of the Rules reads as follows: “16. Place of Suing.- In cases not falling under sub-section (1) of Section76, a proceeding against any person shall be instituted in the Court within the local limits of whose jurisdiction:- (a) the opposite party or each of the opposite parties where there are more than one, at the time of commencement of the proceedings, actually and voluntarily resides, or carries on business, or personally works for gain, or (b) any of the opposite parties, where there are more than one, at the time of the commencement of the proceeding, actually and voluntarily resides, or carries on business, or personally works for gain, provided that in such case either the leave of the Court is given, or the opposite parties who do not reside, or carry on business or personally work for gain, as aforesaid, acquiesce in such institution; or ( c) the cause of action, wholly or in part, arose.” 4. A learned Single Judge of this Court in the decision in E.S.I. Corporation v. Panickaveettil Sir Sebastian Public School Ins. Appeal No.74/2011 6 (2010 (4) KLT 976) has upheld the objection of the Corporation in another case that the court at Palakkad has no jurisdiction. Apparently, the reasoning employed was on the basis of the Judgment of the Apex Court in Fertilisers & Chemicals Travancore Ltd. v. E.S.I. Corporation (2009 (3) KLT 946). The Apex Court took the view that some workers have to be impleaded. Therefore, this Court took the view that it is Section 76 which will come into play, in that, it is the court within whose jurisdiction the worker works which alone can decide the matter. This Judgment has in fact been affirmed by the Division Bench also. The Judgment of the learned Single Judge is dated 7.10.2010. It is prior to 7.10.2010 that in this case, however, the Insurance Court on being invited by the appellant to rule on its jurisdiction, passed an order dated 23.11.2009 that the Insurance Court at Palakkad had jurisdiction. The case of the appellant would appear to be that in the light of the subsequent Judgment of the learned Single Judge, holding that the Court at Palakkad had no jurisdiction, the Ins. Appeal No.74/2011 7 Insurance Court at Palakkad should have accepted the request of the appellant to transfer the case to the Court at Idukki. It is pointed out that the workers involved in this case reside at Kottayam and the Court which has jurisdiction in respect of those workers, is the Court at Idukki. Hence, request was made by the appellant that in view of the subsequent Judgment of this Court, the Court does not have jurisdiction to proceed further in the matter and hence prayed that the matter may be transferred to the Court at Idukki. It is this request, as already noted, which has been dismissed. 5. Shri T. V. Ajayakumar, learned counsel for the appellant would contend that what Section 76 prescribes, does not relate to territorial jurisdiction, but on the other hand, it goes to the inherent lack of jurisdiction. In other words, it is his argument that Section 76 of the Act provides for jurisdiction in respect of the subject matter and, therefore, the earlier order passed by the Insurance Court should have been ignored in the light of the exposition of the Ins. Appeal No.74/2011 8 law by this Court that it has no jurisdiction. In this connection, counsel drew our attention to the following decisions: 1) Harshad Chiman Lal Modi v. DLF Universal Ltd. And Another ((2005) 7 SCC 791). 2) Ramnik Vallabhdas Madhavan v. Taraben Pravinlal Madhavan ((2004) 1 SCC 497). 3) Ashok Leyland Ltd. v. State of T.N. and Another (2004) 3 SCC 1). 4) Modi Entertainment Network and Another v. W.S.G.Cricket Pte. Ltd. (AIR 2003 SC 1177). 6. Per contra, learned counsel appearing on behalf of the respondent Company would contend that having courted an order by the Court specifically on the issue of jurisdiction and not having challenged the said order, it is not open to the appellant to unsettle the order by filing a fresh application seeking transfer and challenging the order thereon. According to the counsel, the Ins. Appeal No.74/2011 9 matter is clearly barred by res judicata. He drew our attention to the following decisions: 1) Vallapally Plantations Pvt. Ltd. v. State of Kerala (1994 (4) SCC 434). 2) Hasham Abbas Sayyad v. Usman Abbas Sayyad & Ors. (AIR 2007 SC 1077). 3) J. Kodanda Rami Reddy v. State of Andhra pradesh And Others ((2011) 1 SCC 197). He also points out that even on facts, the decision of this Court may not apply as the case related to the workers of the contractors of the appellant and, therefore, the Court at Palakkad has jurisdiction. 7. Shri K. P. Sreekumar, learned Amicus Curiae would make the following submissions: He would submit that Section 76 of the Act deals with territorial jurisdiction. There is an order passed by the Insurance Court finding that it has jurisdiction. The said order has not been challenged. He would also point out that it appears that on the Ins. Appeal No.74/2011 10 basis of the order passed by the Insurance Court finding that it has jurisdiction, further proceedings were in fact taken. Having not impugned the order finding it has jurisdiction, it is not open to the appellant, he contends, to challenge the impugned order in this case. He relied on the following case law: 1) Hasham Abbas Sayyad v. Usman Abbas Sayyad & Ors. (AIR 2007 SC 1077). 2) Ajaib Singh v. Baldev Singh (AIR 1987 Punjab & Haryana 104). 3) Herbert Broom's Legal Maximis. 4) Mantoo Sarkar v. Oriental Insurance Co. Ltd. & Anr. (AIR 2009 SC 1022). 5) Hira Lal Patni v. Sri Kali Nath (AIR 1962 SC 199). 6) Satyadhyan Ghosal and Others v. Smt. Deorajin Debi and Another (AIR 1960 SC 941). 8. In Harshad Chiman Lal Modi v. DLF Universal Ltd. And Another ((2005) 7 SCC 791) relied on by the learned counsel for the appellant, it is necessary to notice the facts. A Suit for specific performance of an agreement was filed on the original side of the Ins. Appeal No.74/2011 11 High Court of Delhi. A common written statement was filed on behalf of the defendants wherein it was clearly admitted that “jurisdiction of the Court is admitted”. Thereafter, the matter was transferred to the District Court, Delhi. Thereafter, an application to amend the written statement was filed by raising an objection in regard to the jurisdiction of the Delhi Court to entertain the Suit. Relying on Section 16 of the Code of Civil Procedure, it was sought to be contended that the jurisdiction was only with the local limits of the Court within which the property was situated, and that the property was at Gurgaon and that the Court at Delhi had no jurisdiction. The Court found that it had no jurisdiction and returned the Suit for presentation in the proper Court. It was this order that was challenged ultimately before the Apex Court. The Apex Court adverted to the scheme of Sections 16 to 20 of the Code and thereafter, the Court referred to Section 16 and held as follows: Ins. Appeal No.74/2011 12 “16. Section 16 thus recognises a well- established principle that actions against res or property should be brought in the forum where such res is situate. A court within whose territorial jurisdiction the property is not situate has no power to deal with and decide the rights or interests in such property. In other words, a court has no jurisdiction over a dispute in which it cannot give an effective judgment. The proviso to Section 16, no doubt, states that though the court cannot, in case of immovable property situate beyond jurisdiction, grant a relief in rem still it can entertain a suit where relief sought can be obtained through the personal obedience of the defendant. The proviso is based on a well-known maxim “equity acts in personam” recognised by the Chancery Courts in England. The Equity Courts had jurisdiction to entertain certain suits respecting immovable properties situated abroad through personal obedience of the defendant. The principle on which the maxim was based was that the courts could grant relief in suits respecting immovable property situate abroad by enforcing their judgments by process in personam i.e. by arrest of the defendant or by attachment of his Ins. Appeal No.74/2011 13 property.” It is found that the proviso to Section 16 has no application. It was further held as follows: “21. A plain reading of Section 20 of the Code leaves no room for doubt that it is a residuary provision and covers those cases not falling within the limitations of Sections 15 to 19. The opening words of the section, “subject to the limitations aforesaid” are significant and make it abundantly clear that the section takes within its sweep all personal actions. A suit falling under Section 20 thus may be instituted in a court within whose jurisdiction the defendant resides, or carries on business, or personally works for gain or cause of action wholly or partly arises.” The Court also, inter alia, held as follows: “24. Upholding the contention and considering the provisions of the code as also of the Contract Act, this Court stated: (SCC p.288, para 4): “By clause 13 of the agreement it was expressly stipulated between the parties that the contract shall be deemed to have been entered into by the parties concerned in Ins. Appeal No.74/2011 14 the city of Bombay. In any event, the respondents have their principal office in Bombay and they were liable in respect of a cause of action arising under the terms of the tender to be sued in the courts at Bombay. It is not open to the parties by agreement to confer by their agreement jurisdiction on a court which it does not possess under the Code. But, where two courts or more have under the Code of Civil Procedure jurisdiction to try a suit or proceeding an agreement between the parties that the dispute between them shall be tried in one of such courts is not contrary to public policy. Such an agreement does not contravene Section 28 of the Contract Act.” In paragraph 31, the Court quotes from Halsbury's Laws of England as follows: “31. In Halsbury's Laws of England, (4th Edn.), Reissue, Vol.10, para 317, it is stated: 317. Consent and waiver.- Where, by reason of any limitation imposed by a statute, charter or commission, a court is without jurisdiction to entertain any particular claim or matter, neither the acquiescence nor the express consent of the parties can confer jurisdiction upon the court, nor can consent give a court jurisdiction if a condition which goes to the root of the jurisdiction has not been performed or fulfilled. Where the court Ins. Appeal No.74/2011 15 has jurisdiction over the particular subject- matter of the claim or the particular parties and the only objection is whether, in the circumstances of the case, the court ought to exercise jurisdiction, the parties may agree to give jurisdiction in their particular case; or a defendant by entering an appearance without protest, or by taking steps in the proceedings, may waive his right to object to the court taking cognizance of the proceedings. No appearance or answer, however, can give jurisdiction tom a limited court, nor can a private individual impose on a judge the jurisdiction or duty to adjudicate on a matter. A statute limiting the jurisdiction of a court may contain provisions enabling the parties to extend the jurisdiction by consent.” It is also necessary to advert to paragraphs 34 and 35 which read as follows: “34. The case on hand relates to specific performance of a contract and possession of immovable property. Section 16 deals with such cases and jurisdiction of the competent court where such suits can be instituted. Under the said provision, a suit can be instituted where the property is situate. No court other than the court where the property is situate can entertain such suit. Hence, even if there is an Ins. Appeal No.74/2011 16 agreement between the parties to the contract, it has no effect and cannot be enforced. 35. In Setrucherlu Ramabhadraraju v. Maharaja of Jeypore a suit was instituted in the subordinate court for possession of mortgage property partly situated in Vishakhapatnam and partly in a scheduled district to which the provisions of the Code did not apply. No objection as to jurisdiction of the court was taken by the defendant and the decree was passed. In appeal, however, such objection was taken by the defendant. Relying on Section 21 of the Code, the High Court overruled the objection. The defendant approached the Privy Council. Upholding the contention and partly reversing the decree, the Judicial Committee of the Privy Council stated: (IA p.156) “The learned Judges of the High Court thought that the matter was met by Section 21 of the Code, which provides that no objection as to the place of suing shall be allowed by any appellate court unless the objection was taken in the court of first instance, which in this case had admittedly not been done. Their Lordships cannot agree with that view. This is not an objection as to the place of suing; it is an objection going to the nullity of the order on the ground of want of jurisdiction.” Ins. Appeal No.74/2011 17 In Ramnik Vallabhdas Madhvani And Others v. Taraben Pravinlal Madhvani ((2004) 1 SCC 497), which arose from a Suit for partition and accounts, the court passed a preliminary decree. The Court, inter alia, held as follows: “55. So far as the question of rate of interest is concerned, it may be noticed that the High Court itself found that the rate of interest should have been determined at 6%. The principles of res judicata which according to the High Court would operate in the case, in our opinion, is not applicable. Principles of res judicata is a procedural provision. The same has no application where there is inherent lack of jurisdiction.” It is, however, important to notice that the matter related to the clear illegality committed by the High Court in awarding interest on the decree for mesne profits at a rate much higher than what was claimed as admissible in the case and the Court took the view that to that extent it is a nullity and cannot be allowed to be enforced. In Ashok Leyland And Ltd. v. State of T.N. And Ins. Appeal No.74/2011 18 Another ((2004) 3 SCC 1), the matter arose under the Tamil Nadu General Sales Tax Act, 1959. Therein, no doubt, the counsel for the appellant seeks support from paragraph 118. Therein, the Court held as follows: “118. The principle of res judicata is a procedural provision. A jurisdiction question, if wrongly decided, would not attract the principle of res judicata. When an order is passed without jurisdiction, the same becomes a nullity. When an order is a nullity, it cannot be supported by invoking the procedural principles like estoppel, waiver or res judicata. This question has since been considered in Ramnik Vallabhdas Madhvani v. Taraben Provinlal Madhavani where this Court observed in the following terms: (SCC pp.518-19, paras 55-57) “55. So far as the question of rate of interest is concerned, it may be noticed that the High Court itself found that the rate of interest should have been determined at 6%. The principles of res judicata which according to the High Court would operate in the case, in our opinion, is not applicable. Principles of res judicata is a procedural provision. The same has no application where there is Ins. Appeal No.74/2011 19 inherent lack of jurisdiction. 56. In Chief Justice of A.P. v. L.V.A. Dixitulu the law is stated in the following terms: (SCC p.42, para 24) “23(24). As against the above, Shri Vepa Sarathi appearing for the respective first respondent in CA No.2826 of 1977, and in CA No.278 of 1978 submitted that when his client filed a writ petition (No.58908 of 1976) under Article 226 of the Constitution in the High Court for impugning the order of his compulsory retirement passed by the Chief Justice, he had served, in accordance with Rule 5 of the Andhra Pradesh High Court (Original Side) Rules, notice on the Chief Justice and the Government Pleader, and, in consequence, at the preliminary hearing of the writ petition before the Division Bench, the Government Pleader appeared on behalf of all the respondents including the Chief Justice, and raised a preliminary objection that the writ petition was not maintainable in view of clause 6 of the Andhra Pradesh Administrative Tribunal Order made by the President under Article 371-D which had taken away that jurisdiction of the High Court and vested t4he same in Administrative Tribunal. This Objection was accepted by the High Court, and as a result, the writ petition was dismissed in limine. In these circumstances - proceeds the argument - the appellant is now precluded on principles of res judicata and estoppel from Ins. Appeal No.74/2011 20 taking up the position, that the Tribunal's order is without jurisdiction. But, when Shri Sarathi's attention was invited to the fact that no notice was actually served on the Chief Justice and that the Government Pleader who had raised this objection had not been instructed by the Chief Justice or the High Court to put in appearance on their behalf, the counsel did not pursue this contention further. Moreover, this is a pure question of law depending upon the interpretation of Article 371-D. If the argument holds good, it will make the decision of the Tribunal as having been given by an authority suffering from inherent lack of jurisdiction. Such a decision cannot be sustained merely by the doctrine of res judicata or estoppel as urged in the case. 57. In Dwarka Prasad Agarwal v. B. D. Agarwal, it is stated: (SCC p.245, para 37) `37. It is now well settled that an order passed by a court without jurisdiction is a nullity. Any order passed or action taken pursuant thereto or in furtherance thereof would also be nullities. In the instant case, as the High Court did not have any jurisdiction to record the compromise for the reasons stated hereinbefore and in particular as no writ was required to be issued having regard to the fact that public law remedy could not have been resorted to, the impugned orders must be held to be illegal and without jurisdiction and are Ins. Appeal No.74/2011 21 liable to be set aside. All orders and actions taken pursuant to or in furtherance thereof must also be declared wholly illegal and without jurisdiction and consequently are liable to be set aside. They are declared as such`”. We do not think that on the facts, it has any similarity to the facts of the present case as such. In Modi Entertainment Network and Another v. W.S.G. Cricket Pte. Ltd. (AIR 2003 SC 1177) relied on by the appellant, the Apex Court, inter alia, had occasion to hold as follows: “10. In regard to jurisdiction of Courts under the