Employees State Insurance Corporation ... vs Jardine Henderson Staff Association & ...

A learned Single Judge of the High Court disposed off all the writ petitions by a common judgment and order, by quashing the amendment of the Rules of 1950 with the result that there was no enhancement of wage ceiling. About 63 appeals were filed by the Corporation as well as by the Union of India against that part of the order by which the amendment was quashed. No appeals and/or cross appeals were filed by any of the writ petitioners. Therefore, the Division Bench of the High Court, by the impugned common judgment, allowed the appeals and set aside the judgment of the learned Single Judge of the High Court. The High Court held that the enhancement could not be termed as ultra vires for the purpose of the Act or being inconsistent therewith as held by the learned Single Judge. The High Court further held that all interim orders passed in this connection, inter alia, staying the operation of the said enhancement are vacated. However, the High Court did not stop at that, but, proceeded to direct that the employers who had stay order in their favour, will implement the amendment only from the date of the impugned judgment of the High Court dated 16.03.2004 though the amendment came into operation w.e.f. 01.01.1997. The Corporation, being aggrieved of this direction of the High Court giving liberty to the employers to comply with the Notification on and from 16.03.2004, preferred the above civil appeals. The High Court also gave liberty to the employers to apply for exemption and directed the State Government to dispose off the same within two months.

M/s Philips India Limited - respondent Nos. 8 & 9 (arising out of APO No. 82 of 2001) also filed their statement. Mr. Jay Savla, learned counsel submitted that in the year 1999, a Memorandum of Settlement was arrived at between this Company and the Workmen Union and by virtue of the said Memorandum, benefits extended to the employees were far superior in comparison to the medical benefits extended under the said Act. The Memorandum of Settlement has also been annexed as Annexure-R2 with the counter affidavit filed by them. The said settlement was amended in the year 2000 and thereafter in 2002 (Annexure-R3). He made the following legal submissions:

It is submitted that interim stay order was granted on 25.03.97 which continued till the passing of the Division Bench judgment dated 16.3.2004. By the interim order, the respondents were restrained from deducting the contribution required to be deposited with the Corporation. Further, the respondents were directed to continue to provide existing medical benefits. Under Section 39 of the ESI Act employees' contribution is to be deducted from their salary. The contribution by the employer is to be made as per Rule 51 of The Employees' State Insurance (Central) Rules, 1950 which is given below. Rule 51 of the Employees' State Insurance (Central) Rules, 1950 is as follows:

Mr. C.K. Ganguli, learned counsel for the respondent in civil appeal (arising out of SLP (Civil) Nos. 20933-20939 of 2004 made submissions on behalf of Hahnemann Publishing Company Ltd. The learned counsel furnished the details about the medical allowances given to the employees and submitted that if the liability is made retrospective, the employer will not be able to recover the contributions from the concerned employees and the employer will have to make both employers and employees contribution. Notwithstanding the fact that the company has incurred huge expenditure for granting liberal medical benefits as coverage of such employees since the notification was stayed. The Central Inland Water Transport Corporation, respondent No. 21 through Mr. S.D. Gupta who is the Head of the Central Inland Water Transport Corporation Ltd. filed an affidavit. It is stated that some employees/workers Union/Associations in CIWIC filed a writ petition in the High Court praying for their exemption from the provisions of the ESI Act, 1948. That pursuant to an order dated 07.09.2004 passed by the High Court, the Government of India, Ministry of Labour and Employment issued a notice dated 16.02.2005 informing that in connection with exemption from provisions of the Act it has been decided that hearing would be held on 04.03.2005 in the said Ministry and all the concerned parties were requested to attend the hearing and make their submissions. The representative of CIWIC Ltd. attended the aforesaid hearing on 04.03.2005 and made his submissions. As decided in the said meeting, CIWIC under cover of its letter dated 23.03.2005 submitted two separate applications both dated 22.03.2005 for exemption from the provisions of the ESI Act as amended upto date in respect of its factory establishments which were covered under the provisions of the said Act. That due consideration of the aforesaid appeal and the two applications dated 22.03.2005, the Ministry of labour and Employment issued a notification S- 38014/6/2005-SSS-I dated 05.01.2006 thereby granting exemption to CIWIC Ltd. From the operation of the ESI Act, 1948 for the period from 01.01.1997 to 30.09. The order reads as follows:-

In our opinion, the High Court was fully justified in passing the judicious order after considering the equities by directing the employer and the employees to make ESIC contribution for the future and should not bear with the liability for the past inasmuch as the employees of the respondents have not availed any medical facilities from ESIC and at the same time the employer was providing the medical facilities due to interim orders of the High Court. The order passed by the High Court, in our considered opinion, meets the ends of justice and does not require interference by this Court under Article 136 of the Constitution of India.

The act of Court can prejudice no party either the ESI or the respondent-companies. We, therefore, relieve the respondents from making any contributions for the period in question and direct them to make the contribution as directed by the Division Bench of the High Court. It is stated that some of the respondents have already filed exemption applications and that the appellant-Corporation has also granted them necessary relief. We also permit the other respondents who have not filed any exemption application may now file the same and if such application for exemption is filed, it is for the authorities to consider the same on merits and in accordance with law. For the foregoing reasons, we dismiss all the appeals filed by the appellant-Corporation in the peculiar facts and circumstances of the cases. The High Court while upholding the Notification has held that the same would apply from the date of the judgment. The said observation is justified in view of the facts and circumstances and the legal submissions made and considered in paragraphs supra. No costs.