IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE M.N.KRISHNAN TUESDAY, THE 7TH DECEMBER 2010 / 16TH AGRAHAYANA 1932 Ins.APP.No. 37 of 2007() ------------------------ IC.32/2002 of EMPLOYEES INSURANCE COURT, ALAPPUZHA .................... APPELLANT (S): OPPOSITE PARTY --------------------------------------------------- THE REGIONAL DIRECTOR,E.S.I. CORPORATION,PANCHADEEP BHAVAN, THRISSUR-20. BY ADV. SRI.T.V.AJAYAKUMAR RESPONDENT(S): APPLICANT ------------------------------------------ BHARAT HOTEL,D.H.ROAD, KOCHI-16,REP.BY ITS MANAGING PARTNER. R1 BY SRI.U.K.RAMAKRISHNAN, SENIOR ADVOCATE R1 BY ADVS. SRI.V.KRISHNA MENON, SMT.P.VIJAYAMMA, SMT.UMA GOPINATH, SRI.DEVIDAS.U.K. THIS INSURANCE APPEALS HAVING BEEN FINALLY HEARD ON 07/12/2010 , ALONG WITH INAP NO. 55 OF 2007 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: tss M.N. KRISHNAN, J. ........................................... Ins.A.Nos.37 & 55 OF 2007 ............................................. Dated this the 7th day of December, 2010. J U D G M E N T These two appeals are preferred by the Regional Director of the E.S.I.Corporation against the order in I.C.Nos.32 & 57/2002 of the E.I.Court, Alappuzha. Both the cases were disposed of by a common judgment. 2. The point involved in I.C.No.32/2002 is that the applicant/establishment therein is a partnership firm running a vegetarian hotel in Ernakulam city. It is also conducting a training course relating to hotel services. It is contended that in the training school, trainees are taught by qualified persons and at the end of the training period, they are given certificates and if any vacancy arises in the hotel, they are absorbed and paid stipend. Similarly, performance allowance is also given to the other employees. It is contended that the trainees' stipend cannot be tacked on for the purpose of contribution under the Employees' State Insurance Act. So also performance allowance shall not be tacked on with the wages for the said purpose. : 2 : Ins.A.Nos.37 & 55 OF 2007 3. In I.C.No.57/2002 also the similar question had arisen. On a consideration of the entire materials it is stated that except on the deputation allowance paid by the applicant in I.C.No.57/2002, none of the demands made by the opposite party are not sustainable. It is against that decision, the E.S.I. Corporation has come up in appeal. 4. Over and above the points stated above, the question of limitation also had been raised. First I will deal with the question of limitation before going into the other aspects. The Hon'ble Supreme Court of India in Employees State Insurance Corporation v. Santhakumar (2007 (1) KLT 133) had held that there is no limitation for the Employees' State Insurance Corporation to claim contribution, but the question of limitation will arise only if there is necessity for the Employees' State Insurance Corporation to go to the court. At the same time, there is also a stipulation regarding the reasonable period and the empirical formula to be applied in such case. Now it is submitted that there are provisions introduced introducing the plea of limitation. So these are all matters which require reconsideration. : 3 : Ins.A.Nos.37 & 55 OF 2007 5. The other two points are one with regard to inclusion of stipendiary allowance and the other with regard to the performance allowance. Unfortunately this is a case where the persons to be benefited or affected is not before the court. 6. The Supreme Court of India in the decision reported in Fertilizers & Chemicals Travancore Ltd. v. E.S.I. Corportion (2009 (3) KLT 946 (SC) had held that in all cases under labour statutes, the workmen or at least some of them in a representative capacity or trade union representing concerned workmen must be made a party. It is stated in para 10 that: “It may be seen that Section 75 of the Act does not mention who will be the parties before the Insurance Court. Since the determination by the Insurance Court is a quasi judicial determination, natural justice requires that any party which may be adversely affected or may suffer civil consequences by such determination, must be heard before passing any order by the authority/court”. 7. In para 12 again the Hon'ble Supreme Court has made it clear that : : 4 : Ins.A.Nos.37 & 55 OF 2007 It must be remembered that the Act has been enacted for the benefit of the workers to give them medical benefits, which have been mentioned in Section 46 of the Act. Hence the principal beneficiary of the Act is the workmen and not the E.S.I Corporation. The E.S.I. Corporation is only the agency to implement and carry out the object of the Act and it has nothing to lose if the decision of the Employees Insurance Court is given in favour of the employer. It is only the workmen to have to lose if decision is given in favour of the employer. Hence, the workmen (or at least some of them in a representative capacity, or their trade union) have to be necessarily made a party/parties because the Act is a labour legislation made for the benefit of the workmen”. 8. In Employees State Insurance Corporation v. Bhakra Beas Management Board (2009 (10) SCC 671), the Supreme Court reiterated that: “Thus, if a determination is given by the Employees Insurance Court that the persons concerned are not employees of the petitioner and that determination is given even without hearing the persons concerned, it will be clearly against the rules of natural justice”. 9. Now the points that arise for determination are very crucial so far as it relates to the interest of the workmen are concerned. Therefore it has become absolutely necessary : 5 : Ins.A.Nos.37 & 55 OF 2007 in the light of the authoritative pronouncement of the Supreme Court that the workers should also be heard before a final decision is taken in the matter. 10. Therefore the common order under challenge is set aside and the mater is remitted back to the E.I. Court with a direction to the parties concerned to implead the workmen or representative of the workmen and proceed further in the matter. I make it very clear that I leave open the entire matter and let all questions raised by the parties be decided afresh after hearing all concerned and for the said purpose, let all the parties be permitted to produce documentary as well as oral evidence in support of their respective contentions and then the matter be disposed of in accordance with law. The E.I. Court is directed to issue notice to the parties fixing the date of appearance. Registry is directed to transmit the records immediately. M.N. KRISHNAN, JUDGE. cl : 6 : Ins.A.Nos.37 & 55 OF 2007 : 7 : Ins.A.Nos.37 & 55 OF 2007 M.N. KRISHNAN, J. ........................................... A.S.NO.389 OF 2001 ............................................. 11th day of November, 2010. J U D G M E N T