IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 14.03.2011 CORAM THE HONOURABLE MR.JUSTICE K.CHANDRU W.P.NOs.2872, 2873, 4570, 4722, 5084, 5257 of 2011 and M.P.NOs.1,1,1,1 and 1 AND 2,2,2,2,2 and 2 OF 2011 Maharaja College of Arts and Science, represented by its Chairman, Neelambur, Arasur, Coimbatore-641 407. .. Petitioner in W.P.No.2872 of 2011 Association of Management of Coimbatore Anna University Affiliated Colleges (Registration No.140/2008), represented by its President, 119,Bhavani Road, Erode-638 004. .. Petitioner in W.P.No.2873 of 2011 Tamil Nadu Nursery, Primary, Matriculation and Higher Secondary Schools Managements Association, rep by its General Secretary, Mr.D.Christdass Old No.64, New No.122, T.P.Koil Street, Triplicane,Chennai-600 005. .. Petitioner in W.P.No.4570 of 2011 Federation of Association of Private Schools in Tamil Nadu, represented by its President Mrs.R.Visalakshi, No.6A, New No.11, P.T.Rajan Road, 20th Avenue, Ashok Nagar, Chennai-600 083. .. Petitioner in W.P.No.4722 of 2011 R.V.S.College of Arts & Science, rep by its Chairman, K.V.Kuppusamy, Door No.242-B,Trichy Road, Sulur, Coimbatore-641 402. .. Petitioner in W.P.No.5084 of 2011 Tamil Nadu Self Financing College of Education Management Association, rep by its Secretary Mr.S.Vijayakumar Old No.7, New No.11, 3rd Cross Street, West C.I.T. Nagar,Chennai-600 035. .. Petitioner in W.P.No.5257 of 2011 https://hcservices.ecourts.gov.in/hcservices/ Vs. 1.The State of Tamil Nadu, rep by its Principal Secretary to Government, Labour and Employment Department, Fort St. George, Chennai-600 009. .. 1st respondent in all writ petitions 2.Employees' State Insurance Corporation, represented by Assistant Director (Inspection), 1897, Trichy Road, Panchdeep Complex, Ramanathapuram, Coimbatore-641 045. .. 2nd respondent in W.P.Nos.2872, 2873, 5084, of 2011 2.Employees' State Insurance Corporation, rep by its Regional Director, "Panchdeep", Sterling Road, Nungambakkam, Chennai-600 034. .. 2nd Respondent in W.P.Nos.4570 and 5257 of 2011 2.Employees' State Insurance Corporation, rep by its Additional Commissioner and Regional Director, 143, Sterling Road, Nungambakkam, Chennai-600 034. .. 2nd respondent in W.P.No.4722 of 2011 W.P.Nos.2872, 2873 and 5084 of 2011 are preferred under Article 226 of the Constitution of India praying for the issue of a writ of certiorari to call for the records relating to the G.O.Ms.No.237, Labour and Employment (K1) Department, dated 26.11.2010 and published at page 879 of Part II Section 2 of the Tamil Nadu Government Gazette No.51, dated 29.12.2010 and the order of the second respondent in No.56/8/II/12/2(SSO)/Inspn/2011 dated 04.01.2011 and to quash the same insofar as they relate to the petitioner and the members of the petitioner herein. W.P.No.4722 of 2011 is preferred under Article 226 of the Constitution of India praying for the issue of a writ of certiorari to call for the records relating to the G.O.Ms.No.237, Labour and Employment (K1) Department, dated 26.11.2010 passed by the first respondent and to quash the same. W.P.Nos.4570 and 5257 of 2011 are preferred under Article 226 of the Constitution of India praying for the issue of a writ of certiorari to call for the records in respect of the impugned notification issued by the first respondent in G.O.Ms.No.237, Labour and Employment (K1) Department, dated 26.11.2010 as https://hcservices.ecourts.gov.in/hcservices/ published in the Tamil Nadu Government Gazette No.51, dated 29.12.2010 in Part II Section II and to quash the same. For Petitioners : Mr.Kanda Vadivel Doraisami in W.P.Nos.2872 and 2873 of 2011 Mr.R.Sureshkumar in W.P.Nos.4570 and 5257 of 2011 Mr.K.Selvaraj in W.P.No.5084 of 2011 Mr.AR.L.Sundaresan, SC for Mr.K.Surendar in W.P.No.4722 of 2011 For Respondents : Mr.S.Sivashanmugam, GA for R1 in W.P.Nos.2872, 2873, 4570, 5084 and 5257 of 2011 Ms.C.Devi, GA for R-1 in W.P.No.4722 of 2011 Mrs.S.Jayakumari for R-2 in all writ petitions COMMON ORDER Heard the arguments of learned counsels in W.P.Nos.2872, 2873, 4570, 5084 and 5257 of 2011 on 10.3.2011 and in W.P.No.4722 of 2011 on 11.3.2011. 2.The short question that arises for consideration in these writ petitions is whether the attempt by the State Government in covering the educational institutions employing 20 or more persons under the provisions of the Employees' State Insurance Act, 1948 (for short ESI Act) is legally valid? If the coverage of such institutions are legally valid whether the exclusion of the educational institutions run by the Government and Government Aided institutions from the purview of the notification is discriminatory? and that the impugned notification covering the petitioners alone are liable to be struck down on ground of Article 14 of the Constitution of India. 3.The State Government by the exercise of its power under Section 1(5) of the ESI Act had issued a preliminary notification by G.O.No.58, Labour and Employment Department, dated 15.4.2005 notifying the educational institutions, excluding the Government and Government Aided institutions, run by various types of bodies and individuals employing more than 20 to be brought within the purview of Section 1(3) of the ESI Act. By the said notification, the Government had expressed its intention to extend the provisions of the ESI Act to these institutions any day on or after six months after publication of the notification in the Tamil Nadu Government Gazette. The said notification was published in Part II Section 2 of the Tamil Nadu Government Gazette, dated 11.5.2005. The said notification reads as follows: https://hcservices.ecourts.gov.in/hcservices/ Extension of Employees' State Insurance Scheme to certain New Sectors of Establishments in all the Implemented area under Employees' State Insurance Act. [G.O.No.58, Labour and Employment (K1), 15th April, 2005.] No.II(2)/LE/366/2005.-In exercise of the powers conferred by sub-section (5) of Section 1 of the Employees' State Insurance Act, 1948 (Central Act XXXIV of 1948), the Governor of Tamil Nadu in consultation with the Employees State Insurance Corporation and with the approval of the Central Government hereby gives notice of its intention to extend the provisions of the said Act to the class of establishments specified in column (1) of the Schedule below situated in the areas specified in the corresponding entries in column (2) thereof, on or after six months from the date of publication of this Notification in the Tamil Nadu Government Gazette. THE SCHEDULE ------------------------------------------------------------------- Description of class of Areas in which the establishments establishments are situated. ------------------------------------------------------------------- (1) (2) ------------------------------------------------------------------- Educational Institutions (excluding Areas where the Scheme Government and Government Aided has already been brought Institutions), run by individuals, into force under sub- trustees, societies or other section (3) of Section 1 organisations, wherein and sub-section (5) of 20 or more persons are employed or Section 1 of the Act. were employed on any day of the preceding twelve months. ------------------------------------------------------------------- 4.The petitioners herein were not able to pinpoint any objection raised by any one of the petitioners with reference to the preliminary notification. Though vague allegations were made that some of them have sent their representations, neither copies of such representations were enclosed in the typed set nor any attempt to produce those copies during the hearing was made by the counsel for the petitioners. On the other hand, some of the counsel for petitioners have fairly admitted that no representations were sent by them as there was no wide publicity on the said notification. They had also taken this as a ground for impugning the final notification. In any event, the State Government subsequent to the expression of its intention to notify the educational institutions had published a final notification vide G.O.Ms.No.237, Labour and Employment Department, dated 26.11.2010 and the same was also published in the Tamil Nadu Government Gazette as required under Section 1(5) of the ESI Act. The said notification reads as follows: https://hcservices.ecourts.gov.in/hcservices/ LABOUR AND EMPLOYMENT DEPARTMENT Extension of Employees' State Insurance Scheme to Private Educational Institutions in all the implemented area under Employees' State Insurance Act. [G.O.Ms.No.237, Labour and Employment (K1), 26th November 2010, Karthigai 10, Thiruvalluvar Aandu-2041.] No.II(2)/LE/767/2010.-In exercise of the powers conferred by sub-section (5) of Section 1 of the Employees' State Insurance Act, 1948 (Central Act XXXIV of 1948), the Governor of Tamil Nadu, in consultation with the Employees' State Insurance Corporation and with the approval of the Central Government, after complying with the statutory requirement of giving six months notice of the intention of the Tamil Nadu Government vide Labour and Employment Department Notification No.II (2)LE/265/2008, published at page 206 of Part-II Section 2 of the Tamil Nadu Government Gazette, dated the 4th June 2008, hereby extends the provisions of the said Act, to the educational Institutions (excluding Government and Government aided institutions) run by individuals, trustees, societies or other organizations, wherein twenty or more persons are employed or were employed on any day of preceding twelve months, with effect from the date of publication of this Notification. T.PRABHAKARA RAO, Principal Secretary to Government. 5.The object of the Employees' State Insurance Act, 1948 (Central Act 34 of 1948) reads as follows: "An Act to provide for certain benefits to employees in case of sickness, maternity and employment injury and to make provision for certain other matters in relation thereto." 6.The Statement of Objects and Reasons attached to the Bill sets out the purpose for which the Act is enacted, which reads as follows: "Statement of Objects and Reasons.- The introduction of a scheme of Health Insurance for industrial workers has been under the consideration of the Government of India for a long time. The necessity for such a scheme has become more urgent in view of the conditions brought about by war. The scheme envisaged is one of compulsory State Insurance providing for certain benefits in the event of sickness, maternity and employment injury to workmen employed in or in connection with the work in factories other than seasonal factories. (2)A scheme of this nature has to be planned on an all-India basis and administered uniformly throughout the country. With this object, the https://hcservices.ecourts.gov.in/hcservices/ administration of the Scheme is proposed to be entrusted to a Corporation constituted by central legislation." 7.The ESI Act was enacted after India had achieved its independence and was made on 19.4.1948. Even before India's independence, the British Indian Government was a member of the International Labour Organization (ILO). But no welfare legislation concerning labours were ever brought into force for reasons best known. The colonial Government was indifferent to such issues. The plight of the labours in India was recognised by the freedom fighters of our Country. They had resolved that no sooner India became independent, the conventions of the International Labour Organization to which our Country was a party will be translated to ground realities through appropriate legislations. The ILO Convention No.24 related to sickness and insurance to workers in industry, commercial and domestic service. It was adopted on 15.7.1928. Likewise recommendation No.69 adopted by the ILO on 20.4.1944 related to medical care for workers. Detailed guidelines were made with reference to medical care, coverage, etc. However, those conventions and recommendations became a ground reality only on 19.4.1948 the day when the ESI Act was enacted as the Central Act 34/1948. But, even then different sections of the labour force were made to wait for coverage through subsequent notifications made under the said Act. 8.Initially the ESI Act was made applicable only to the factories including the factories belonging to the Government. But subsequently, by an amendment made by the Central Act 29/1989, a proviso was inserted to Section 1(4) thereby the Act was made inapplicable in respect of factories or establishments belonging to or under the control of the Government, whose employees are otherwise in receipt of benefits substantially similar or superior to the benefit provided under the ESI Act. Section 1(4) reads as follows: "1(4)It shall apply, in the first instance, to all factories (including factories belonging to the Government) other than seasonal factories: [Provided that nothing contained in this sub-section shall apply to a factory or establishment belonging to or under the control of the Government whose employees are otherwise in receipt of benefits substantially similar or superior to the benefits provided under this Act.]" 9.Under Section 1(5), the Act also empowered the appropriate Government to notify the other establishments such as industrial, commercial, agricultural or otherwise by giving six months' notice of its intention of doing so and publishing the same in the official Gazette. Section 1(5) reads as follows: "1(5)The appropriate Government may, in consultation with the Corporation and [where the appropriate Government is a State Government, with the approval https://hcservices.ecourts.gov.in/hcservices/ of the Central Government], after giving six months' notice of its intention of so doing by notification in the Official Gazette, extend the provisions of this Act or any of them, to any other establishment or class of establishments, industrial, commercial, agricultural or otherwise:" (Emphasis added) 10.Subsequent to the enactment of the ESI Act, the Constitution of India was adopted and was brought into force with effect from 26.1.1950. Part IV of the Constitution made specific directive principles of State Policy. Though they were not enforceable by any Court, the principles set out therein were made fundamental to the governance of the Country. The State was given its duty to apply those principles in making laws. 11.Articles 39(e), 41, 42 and 43 of the Constitution of India reads as follows: "39.Certain principles of policy to be followed by the State.-The State shall, in particular, direct its policy towards securing- (a) to (d) omitted (e)that the health and strength of workers, men and women, and the tender age of children are not abused and that citizens are not forced by economic necessity to enter avocations unsuited to their age or strength; 41.Right to work, to education and to public assistance in certain cases.-The State shall, within the limits of its economic capacity and development, make effective provision for securing the right to work, to education and to public assistance in cases of unemployment, old age, sickness and disablement, and in other cases of undeserved want. 42.Provision for just and humane conditions of work and maternity relief.-The State shall make provision for securing just and humane conditions of work and for maternity relief. 43.Living wage, etc., for workers.-The State shall endeavour to secure, by suitable legislation or economic organisation or in any other way, to all workers, agricultural, industrial or otherwise, work, a living wage, conditions of work ensuring a decent standard of life and full enjoyment of leisure and social and cultural opportunities and , in particular, the State shall endeavour to promote cottage industries on an individual or co-operative basis in rural areas." (Emphasis added) https://hcservices.ecourts.gov.in/hcservices/ 12.The substance of these Articles only reinforce the principles of the State policy to enact laws with a view to taking care of health and safety of workers and provide benefits for old age, sickness, disablement, maternity relief and conditions of work ensuring decent standard of life. Therefore, the ESI Act and the subsequent amendment and the notification were in effect to fulfill the State's obligation in safeguarding the rights provided under Part IV of the Constitution. 13.It must also be noted that until New Educational Policy (NEP) was made by the Central Government in the year 1986, education was dealt with by the State Governments and the Central Government with some exceptions. Some Private Managements who were allowed to run institutions were assured of State's assistance. There was no concept of any self financing educational institutions at the relevant time. The employees of the State Governments and the Central Government as well as local body employees were given decent pay which were revised from time to time by successive Pay Commissions. Health care of those Government servants and their family members were taken care of by suitable rules framed by the Government either under Article 309 of the Constitution, by various executive orders and by other statutory rules. Subsequently, even the employees (both teachers and non teaching staff) employed by the private educational institutions (governed by the grant-in-aid code of the State Government) were slowly extended to the benefits applicable to Government servants. Today, in the State of Tamil Nadu, it can be said without fear of contradiction that employees (whether teachers or non teaching staff) employed by Aided schools or Colleges have been brought almost on par with Government servants in the matter of pay scales, conditions of service and retirement benefits including health care. 14.Even after getting aid from the State, the educational institutions who are entitled to protection under Article 30(1) of the Constitution were resisting the application of several labour legislations on the specious plea that those legislations were in conflict with the minority right given to them under Article 30(1) of the Constitution. Therefore, such of those legislations which interfered with their "right to establish and administer" educational institutions of their choice were per se unconstitutional. But their attempt in this regard was rejected by the Supreme Court vide its judgment in Christian Medical College Hospital Employees' Union v. C.M.C. Vellore Assn., reported in (1987) 4 SCC 691. 15.The Supreme Court in the said judgment had categorically held that in the matter of application of laws relating to public health, taxation, municipal laws and labour legislation, the minority managements cannot claim any privilege and those laws must be uniformly applied to the workmen employed by those institutions irrespective of character of those institutions. The Supreme Court had forewarned that if not done in that fashion, it may result in maladministration of those institutions. It is necessary to extract https://hcservices.ecourts.gov.in/hcservices/ the following passages found in paragraph 18 of the said judgment which reads as follows: "18.... It has to be borne in mind that these provisions have been conceived and enacted in accordance with the principles accepted by the International Labour Organisation and the United Nations Economic, Social and Cultural Organisation. The International Covenant on Economic, Social and Cultural Rights, 1966 which is a basic document declaring certain specific human rights in addition to proclaiming the right to work as a human right treats equitable conditions of work, prohibition of forced labour, provision for adequate remuneration, the right to a limitation of work hours, to rest and leisure, the right to form and join trade unions of one’s choice, the right to strike etc. also as human right. The Preamble to our Constitution says that our country is a socialist republic. Article 41 of the Constitution provides that the State shall make effective provision for securing right to work. Article 42 of the Constitution provides that the State shall make provision for securing just and humane conditions of work and for maternity relief. Article 43 of the Constitution states that the State shall endeavour to secure by suitable legislation or economic organisation or in any other way to all workers agricultural, industrial or otherwise work, a living wage, conditions of work ensuring a decent standard of life and full enjoyment of leisure and social and cultural opportunities. These rights which are enforced through the several pieces of labour legislation in India have got to be applied to every workman irrespective of the character of the management. Even the management of a minority educational institution has got to respect these rights and implement them. Implementation of these rights involves the obedience to several labour laws including the Act which is under consideration in this case which are brought into force in the country. Due obedience to those laws would assist in the smooth working of the educational institutions and would facilitate proper administration of such educational institutions. If such laws are made inapplicable to minority educational institutions, there is very likelihood of such institutions being subjected to maladministration. Merely because an impartial tribunal is entrusted with the duty of resolving disputes relating to employment, unemployment, security of work and other conditions of workmen it cannot be said that the right guaranteed under Article 30(1) of the Constitution of India is violated. If a creditor of a minority educational institution or a contractor who has built https://hcservices.ecourts.gov.in/hcservices/ the building of such institution is permitted to file a suit for recovery of the money or damages as the case may be due to him against such institution and to bring the properties of such institution to sale to realise the decretal amount due under the decree passed in such suit is Article 30(1) violated? Certainly not. Similarly the right guaranteed under Article 30(1) of the Constitution is not violated, if a minority school is ordered to be closed when an epidemic breaks out in the neighbourhood, if a minority school building is ordered to be pulled down when it is constructed contrary to town planning law or if a decree for possession is passed in favour of the true owner of the land when a school is built on a land which is not owned by the management of a minority school. In the same way if a dispute is raised by an employee against the management of a minority educational institution such dispute will have necessarily to be resolved by providing appropriate machinery for that purpose. Laws are now passed by all the civilised countries providing for such a machinery....." 16.From the above, it can be safely concluded that whether an educational institution run by minority or by non minority, with reference to application of welfare legislation there is no distinction and they should be treated on par. In this batch of writ petitions, there was no challenge on the touchstone of Article 30(1) of the Constitution. Even otherwise, the observations made by the Supreme Court will clearly show that these legislations were made on an obligation arising out of conventions of International Labour Organization and they should be implemented uniformly to all employees. 17.It is only after the New Educational Policy conceived, there were mushroom growth of educational institutions in the private sector. It gave rise to multiple problems relating to service conditions of employees working in those institutions. Therefore, the State belatedly woke up to the conditions of employees both teaching and non teaching staff working in these so- called self financing educational institutions so as to bring reasonable conditions of work. It is with this view as well as to safeguard the Health of the employees, the preliminary notification came to be published. Subsequently, in accordance with Section 1 (5), a final notification was also issued. Once a notification under Section 1(5) is issued covering the establishment, then under Section 2-A, it is the obligation of the establishments to register themselves within such time and in such manner as specified in the regulation with the authorities under the ESI Act. Regulation 10-B of the ESI General Regulations, 1950 provides the manner by which an establishment can be registered. The Act obliges both employer and employees to contribute towards ESI. The contributions were levied in terms of Rule 51 of the ESI Central Rules 1950 obliges an employer to pay 4.75% of wages payable to an employee as their https://hcservices.ecourts.gov.in/hcservices/ contribution and it is 1.75% in respect of employee's contribution for coverage under the Act. Both employer and employee will contribute 6.50% of wages payable to an employee towards the ESI Fund. An employee of an institution covered by the ESI Act if he draws Rs.15000/-, which is the maximum wage limit, his contribution will only come to Rs.113/- per month. The total contribution by both will be Rs.875/-. This is the contribution for an highest paid employee. Based upon this contribution, which will be kept by the ESI Corporation in a special fund, the employees were paid various benefits including for sickness, maternity, disablement, dependent benefits, funeral payments, medical care and treatment. But for the benefit derived from the Act for such a limited payment, the contribution is enormous as it takes care of an umbrella services as noted above. 18.The term "employee" is defined under Section 2(9) of the ESI Act and it does not exclude any person and couched in a general term. In fact, the ESI Act covers even the contract labours who are engaged through an agency. As per the notification issued on 20.4.2010 by G.S.R. 349E, the Central Government has now fixed the wage limit at Rs.15000/- per month for coverage in terms of Section 95(2)(a) of the ESI Act. 19.Since the petitioners are running educational institutions both schools and colleges and if the Government/UGC scales as well as pay commission recommendations are paid to them as required under law, there will be hardly any teacher employed by these