State Insurance Corporation & Ors Vs. Jardine Henderson Staff Association
& Ors  Insc 448 (25 July 2006)
Ar. Lakshmanan & Lokeshwar Singh Panta
Civil Appeal Nos.3132, 3133, 3134, 3135, 3149, 3136, 3137, 3138, 3139, 3140,
3141, 3142, 3143, 3144, 3145, 3146, 3148, 3147 & 3150 of 2006 (@ SLP (C)
Nos. 17431-17435, 19447-19451, 19453-19457, 19466-19470, 24210, 20831-20834,
20836-20840, 20841- 20847, 20849-20853, 20855-20864, 20866-20873, 20874- 20881,
20882-20891, 20893-20897, 20898-20907, 20933- 20939, 24197-24206, 22783-22790
and 25482 of 2004) Dr. AR. Lakshmanan, J.
granted in the special leave petitions.
Appeal No. 1726 of 2005 and 119 special leave petitions (now civil appeals)
have been filed by the Employees State Insurance Corporation (in short the
"Corporation") against the common final judgment and order dated
16.03.2004 passed by the Division Bench of High Court at Calcutta in APO No.
124 of 2001.
Appeal No. 1726 of 2005 arises out of the writ petition filed by Jardine
Henderson Staff Association and Others wherein they challenged the Notification
dated 23.12.1996. The Notification was issued by the Union of India by which
the Central Government amended Rules 50, 51 and 54 of the Employees State
Insurance (Central) Rules, 1950, pursuant to which the wage limit for coverage
of an employee under Section 2(9)(b) of the Employees State Insurance Act (in
short 'the Act') was enhanced from Rs.3,000/- to Rs.6,500/- instead of the
existing wage ceiling of Rs.3,000/- p.m. Various Employees Associations
challenged the Notification. They prayed for quashing the Notification and
also, in some of the appeals, for declaring the Amended Rules as ultra vires.
Petitions were filed mostly by the Employees Union both in the original side
and the appellate side of the High Court at Calcutta.
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.
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.
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.
C.S. Rajan, learned senior counsel ably assisted by Mr. V.J. Francis, learned
counsel argued the case on behalf of the Corporation.
submitted that the condition imposed by the Division Bench of the High Court is
not proper for the reason that once the Notification is enforced, the
applicability of the same will be from the date of Notification and not from
any future date. This submission, according to him, was upheld by this Kerala
State Handloom Development Corpn. Employees Union (CITU), Kannur, Dist. Kannur,
Kerala and Others, (1994) 1 SCC 268 and that the interim orders passed at
different stages will not have any effect on the applicability and
further argued that the principle of prospective overruling was laid down for
the first time by this Court in the case of I.C. Golak Nath & Ors. vs.
State of Punjab & Anrs.,  2 SCR 762 and applied by this Court in a
series of decisions till now, will not be applicable to the present case coming
under the Act for various reasons. Another Constitution Bench of this Court
reiterating the above principles has also observed in the case of Managing
Director, ECIL, Hyderabad and Others vs. B. Karunakar and Others, (1993) 4 SCC
727 as under:
is now well settled that the courts can make the law laid down by them
prospective in operation to prevent unsettlement of the settled positions, to
prevent administrative chaos and to meet the ends of justice" According to
Mr. Rajan, the law is well settled in this case i.e. the upward revision from
Rs.400/- p.m. in the ceiling of wages has been upheld by various High Courts
and also by this Court inasmuch as that with the upward revision more employees
will be eligible to the benefits under the Act and they will have to make a
little contribution @ 1.75% from their wages every month. The employees share
is to the extent of 4.75% p.m.
Rule 51 of the Employees State Insurance (Central) Rules, 1950. The law is also settled to
the effect that once interim stay is granted with regard to the operation of
the new law, and the writ petition is dismissed subsequently, the operation of
the law will relate back to the original date of enforcement and, therefore,
there is nothing in this case to unsettle the settled law which would have
effect on past transactions and, therefore, it is not necessary to bring in the
principle. Moreover, in this case, the Act is made applicable for giving
medical benefits to all those employees only, whose wages do not exceed the
prescribed limit notified by the Central Government as stated above. In this
case, there was no dispute about the applicability of the Act but the question
was about the ceiling limit. The reason, as pointed out above, is to give
benefits to more number of employees. The employees will not get benefit unless
the proper machinery are set up for the purpose. That cannot be done overnight
but over a period of years.
this context, the observations made by this Court in Corporation and Another,
(1985) 2 SCC 68 was relied on as relevant. Learned senior counsel relies upon
the following observations from that case:
fact, it may often happen that the rendering of a service or the conferment of
a benefit may only follow after the consolidation of a fund from the fee
for instance, cannot be built in a day nor medical facilities provided right
from the day of the commencement of the scheme. It is only after a sufficient
nucleus is available that one may reasonably expect a compensating
return." X X X "Therefore, whether the special contribution is to be
viewed as a tax, fee or neither it has sufficient constitutional
protection." While replying to the arguments advanced by learned counsel
for the respondents that many employees have retired from service or have left
the company or organisation, as according to Mr. Rajan, has no relevance
because the liability under the Act continues till the date of employment of
the employee concerned, or till the closure of the establishment.
is also settled by this Court in the case of Employees' State Insurance
Corporation vs. Hotel Kalpaka International, (1993) 2 SCC 9.
Division Bench has also noticed that the Corporation has to spend approximately
Rs.800/- p.a. for each insured employee who has to be given the benefit.
Naturally, therefore, once the machinery is set up it must keep going and its
functioning cannot be stopped merely because some employees approach the High
Court and has obtained stay against extending the benefits to more employees.
answering the complaint of efficiency of the ESIC Health System as not up to
the mark comparing it with other large hospitals in the country, Mr. Rajan
submitted that large hospitals are not available in every part of the country
and it is at that moment the need of an ESI
Hospital comes into picture. It can never be
said at that time that the ESI machinery will not be useful. It is also well
known that the ESI Hospital which is run in a remote area also makes reference
of a serious case to a big hospital at the cost of the Corporation and for that
purpose a share from the wages of the employees is not deducted and for this
purpose there is no limit with regard to the wages earned by the insured
also made reference to the principles laid down by this Court in the case of
Employees' State Insurance Corpn. vs. All India ITDC Employees' Union and
Others, (2006) 4 SCC 257 wherein this Court had accepted, on principle, the
submission of the Corporation that it is not open to the High Court that the
Notification has to operate prospectively. It is submitted that the law in this
respect has been reiterated by this Court in the said ruling of this Court and the
appellant also relies on the said ruling which is the latest judgment.
to Mr. Rajan the amounts that are collected by the Corporation goes into the
fund maintained under Section 26 of the Act and the same is utilized as
contemplated under Section 28 of the Act. It is laid down in the case of Hotel Kalpaka
International (supra) as under:
Section 26 of the Act all contributions are paid into a common fund. Such a
fund will have to be administered for the purposes of the Act as indicated under
Section 28. Therefore, the employer cannot contend that he did not collect the
employees' contribution and hence, he cannot be called upon to pay".
also submitted that the principle of unjust enrichment as enunciated by this
Court in the case of Mafatlal Industries Ltd. And Others vs. Union of India and
Others, (1997) 5 SCC 536 will not be applicable to this case because this is
not a case where there has been any illegal collection of any levy on the basis
of an enhancement, which was declared unconstitutional and illegal by the
Courts due to which the party who collected the amount had to refund the amount
or otherwise it would have become an unjust enrichment.
also pointed out that this Court has noticed in the case of Bharagath
Engineering vs. R.Ranganayaki and Another, (2003) 2 SCC 138 that even after the
death of the insured employee who survived for a day, and even before the
registration with the Corporation, his dependants are entitled to receive the
benefit under the Act. Therefore, it is submitted that the benefits that are
granted under the Act are unique. Moreover, if any employee or employer makes a
claim that they are giving better benefits, then it is open to that party to
apply to the appropriate Government for exemption under any of the provisions
of Chapter-VIII of the Act, i.e. Sections 87 to 91A. That only means that the
liability of both the employee and the employer under the Act continue till the
law takes its course as provided under the Act.
therefore, submitted that all the 120 appeals filed by the Corporation against
the common judgment of the High Court are fit to be allowed with such
directions as this Court may be inclined to give which will have the effect
under Article 141 of the Constitutional of India.
behalf of the respondents, we heard the arguments of Mr. Gaurab Kumar Banerjee,
learned senior counsel, Mr. P.H.Parekh, Mr. Gaurav Agrawal, Mr. Avijit Bhattacharjee
learned counsel, Mr. Pradip Ghosh, Mr. Kailash Vasdev, learned Senior counsel,
Mr. E.C.Agrawala, Mr. K.V. Viswanathan, Mr. Rauf Rahim, Mr. Suresh Kumar, Dr. Sumeet
Bhardwaj, Mr. Vipin Gogia, Mr. Maninder Singh, Ms. Meera Mathur, Mr. Deepak Sabharwal,
Mr. Chiraranjan Addey, Mr. Rajindra Dhawan, Ms. Anitha Shenoy, Mr. A.
Bhattacharya, Mr. Rana Mukherjee, Mr. Arun Kumar Sinha, Mr. K.V. Mohan, Ms. Kumud
Lata Das, Mr. Sushil Kumar Jain, Mr. Bharat Sangal, Mr. Jatin Zaveri, Mr. Pradeep
Misra, Mr. Vairav Gaggar, Mr. Ghanshyam Joshi, learned counsel and Mr. R. Venkatramani,
learned senior counsel for their respective parties.
Henderson Ltd. submitted a statement of expenditure for medical expenses
incurred by the Company on the staff, during the period from the year
2001-2004. Likewise, other respondents have also filed statement of submissions
in the form of affidavit on behalf of their parties.
Jute Machinery Company Limited respondent No.14 in SLP (Civil) No. 19454 of
2004 in APO No. 80 of 2001 submitted its submissions. It was submitted by
learned counsel for the said Company that the Company was prevented by orders
of Court from making deductions for ESI contribution from wages and salaries of
the employees. These orders were passed in writ petitions filed by the
Employees Unions and in view of the injunction order dated 22.05.1997 passed by
the Calcutta High Court, the Company was prevented from deducting ESI
contribution and thus was prevented from making any payment to ESI. In order to
provide medical facilities and benefits to the employees, the Company entered
into a Settlement Agreement with the Employees Union under which the company
has incurred a total expense of Rs.97,06,000/- for the period 1997- 2004 till
the time of passing of the impugned order. It is submitted that in the event
the respondent-Company was liable to pay ESI contribution, the total payment
would have been approximate at Rs. 33 lacs. Therefore, as against a total
expenditure of Rs.33 lacs under the ESI, the respondent has incurred an expense
of Rs. 97 lacs for providing medical facilities. After the impugned judgment in
the year 2004, the respondent-Company is making payment of ESI contribution. In
these circumstances, it is submitted by learned counsel that the respondent
should not be made liable to make payment from the period 1997-2004 to the Corporation
and that the order passed by the Calcutta High Court is just and fair in the
facts and circumstances of the case.
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.
said settlement was amended in the year 2000 and thereafter in 2002
(Annexure-R3). He made the following legal submissions:
Bench while upholding the Notification has held that the same would apply from
the date of the judgment.
said observation, according to the learned counsel, is justified in view of the
following legal submissions:
of Actus Curiae Neminem Gravabit –
party shall be prejudiced for the act of Court. 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:
of contribution- The amount of contribution for a wage period shall be in
employer's contribution, a sum
(rounded to the next higher multiple of five paise) equal to [four and
three-fourth per cent] of the wages payable to an employee; and
employee's contribution, a sum
(rounded to the next higher multiple of five paise) equal to [one and three-
fourth per cent] of the wages payable to an employee" In view of interim
stay order which continued for almost seven years, the employers were
restrained from making any deduction. Whereas, the employers continued to
provide satisfactory medical benefits to its employees. The said interim order
was not appealed or challenged by the Corporation nor was it stayed during the pendency
of the appeal before the Division Bench.
further submitted that with the passage of time several employees would have
left the organization and to deduct the employees contribution from their
salary is not workable.
matter of Rajesh D. Darbar & Ors vs. Narasingrao Krishnaji Kulkari &
Ors., (2003) 7 SCC 219, this Court held that where the nature of relief, as
originally sought, has become obsolete or unserviceable on account of
developments subsequent to the suit or even during appellate stage, it is unfair
that the relief is moulded, varied or reshaped in the light of the updated
matter of Mohammed Gazi vs. State of M.P., (2000) 4 SCC 342, the facts were
that on account of litigation initiated by one of the respondents, the
appellant was prevented from taking benefit of the acceptance of his tender
notice. For no fault of his, the appellant was prevented from collecting the tendu
leaves. The High Court directed that a sum of Rs. 30,000/- be deducted from the
earnest money of the appellant.
direction was not sustained by this Court.
maxim of equity which is founded upon justice and good sense was applied as
well as other maxim "lex non cogit ad impossibilia" the law does not
compel a man to do what he cannot possibly perform. The applicability of the
aforesaid maxim has been approved by this Court in Raj Kumar Dey vs. Tarapada Dey
(supra) and Gursharan Singh vs. New Delhi Municipal Committee (supra).
applicability/ overruling of the Judgment:
well settled that declaration of law can be made prospective i.e. operative
from the date of the judgment. This Court in several decisions has laid down
the law and declared it to be operative only prospectively. The Constitution
Bench of this Court in the matter of Somaiya Organics (India) Ltd. & Anr. vs. State of U.P.
& Anr. reported in (2001) 5 SCC 519 has discussed at length the principles
of Prospective over-ruling which are enunciated in the following paras:-
"27. In the ultimate analysis, prospective overruling, despite the
terminology, is only a recognition of the principle that the court moulds the reliefs
claimed to meet the justice of the case- justice not in its logical but in its
equitable sense. As far as this country is concerned, the power has been
expressly conferred by Article 142 of the Constitution which allows this Court
to "pass such decree or make such order as is necessary for doing complete
justice in any cause or matter pending before it." In exercise of this
power, this Court has often denied the relief claimed despite holding in the
claimants' favour in order to do "complete justice."
constitutional discretion, it was perhaps unnecessary to resort to any
principle of prospective overruling, a view which was expressed in Narayanibai
with the "doctrine of prospective overruling", this Court said that
it was a method evolved by the courts to adjust competing rights of parties so
as to save transactions "whether statutory or otherwise, that were
effected by the earlier law". According to this Court, it was a rule.
judicial craftsmanship with pragmatism and judicial statesmanship as a useful
outline to bring about smooth transition of the operation of law without unduly
affecting the rights of the people who acted upon the law operated prior to the
date of the judgment overruling the previous law." Ultimately, it is a
question of this Court's discretion and is, for this reason, relatable directly
to the words of the Court granting the relief." In the matter of Harsh Dhingra
vs. State of Haryana & Ors., (2001) 9 SCC 550, this Court held as follows:
declaration of law is a device innovated by this Court to avoid reopening of
settled issues and to prevent multiplicity of proceedings. It is also a device
adopted to avoid uncertainty and avoidable litigation. By the very object of
prospective declaration of law it is deemed that all actions taken contrary to
the declaration of law, prior to the date of the declaration are validated.
is done in larger public interest." This proposition of prospective
overruling has been followed in several other decisions as well.
submitted that if the order of the Division Bench is not held to be operative
prospectively, the same would cause grave and undue hardship to the employers
including M/s Philips India Ltd. Philips India Ltd. have not only extended
medical benefits by spending huge amount but have further not deducted any
amount statutorily required from the salary of the employees in view of interim
prohibition order. To direct the deposit of monies, for this period would
amount to undue and grave hardship and would be inequitable to the employer.
Addey, who is the counsel for respondent No.3 in civil appeal (arising out SLP
(C) Nos. 19447-451/2004 made the following submissions:
to the learned counsel, the Company had spent by way of medical benefits for
such employees who came outside the purview of the Act pursuant to stay order
granted by the Court is estimated for the three establishments a sum of Rs. 30 lacs
upto 16.03.2004 and that the employees who have retired from the respondent-Organisation
during this period of 7 years when the stay order of the Court was in operation
had also availed of the benefit and, therefore, if the liability of the
respondent-Company towards payment of ESI contribution 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 the employer's and the
employees' contribution retrospectively, notwithstanding the fact that the
company has incurred huge expenditure for granting liberal medical benefits as
coverage of such employees was stayed.
also pointed out that the employers were not the petitioners in the writ court
and the order was imposed upon them and the management was compelled to abide
by the same and so far as the Corporation is concerned, they are in the most
enviable position. The Corporation took full advantage of the interim order and
did not provide any benefit to the employees at all nor did they move to get
the order vacated and yet now they are claiming the contributions for the past
period which was covered by the said interim order of the learned Single Judge.
will be an unjust enrichment by the Corporation at the cost of the employers.
Learned counsel also cited the following decisions for invoking the doctrine of
Ltd. vs. M.P. Electricity Board, (2001) 1 SCC 534 Managing Director,ECIL vs. B.
Karunakar,(1993) 4 SCC 727 (supra) Ashok Kr. Gupta vs. State of U.P., (1997) 5
SCC 201 Somaiya Organics Ltd. vs. State of U.P., (2001) 5 SCC 519 (supra) Sarwar
Kumar vs. M. Agarwal, (2002) 4 SCC 147 In the light of the principles laid down
in the aforesaid decisions with regard to the innovative concept of prospective
overruling which are applicable also in matters arising out of statutory
interpretation for the purpose of substantial justice in the exigencies of
peculiar fact situations, the counsel requested this Court to uphold the
decision of the Division Bench of the Calcutta High Court and that this Court
in any event under Article 142 of the Constitution may make such order as may
be warranted in the peculiar facts and circumstances of this case for doing
Agrawal, E.C. Aggarwala, Jay Salve, C.R. Addy, A.N. Bardiayar and M/s P.H.Parekh
and Co. counsel for the appellants respectively made their submissions in SLP
(Civil) Nos. 20855-64, 19453-57 etc. they reiterated the submissions made in
their special leave petitions and submitted that, asking the respondent to pay
the contribution now will cause undue hardship by citing the decisions in Shree
Cement vs. State of Rajasthan, (2000) 1 SCC 765 and British Physical Lab India
Mr. K.V. Viswanathan, learned counsel on behalf of respondent No.1/CESC Ltd. in
SLP (Civil) No. 19466-19470 made lengthy submissions both on facts and on law.
A written submission was also made with details of the amounts paid and spent
by the management on various items. According to him, around 14,000 employees
of the Company availed the benefits each year during the period from 1996-2003
and an amount of Rs.55.30 crores was incurred by CESC Ltd. in providing such
benefits vis-`-vis the cost incurred for providing such benefits was also
furnished. It is submitted that, as a matter of fact, that on 03.08.2004 the
appropriate authority had exempted CESC under Section 87 of the Act pursuant to
the application filed in February, 1997 and in the proforma prescribed as on
18.11.1997. It is stated that the delay in disposal of the application was
solely due to the inaction on the part of the Appropriate Authority. In fact as
can be seen from the exemption order the Assistant Director, CESC had himself
reported that CESC Ltd. has been providing free medical treatment domiciliary,
round the clock emergency treatment, ambulatory facility, hospitalisation
facilities irrespective of the cost involved to all the permanent employees
including employees termed as apprentices/trainees. It was also noted that M/s
CESC Ltd. has tie up arrangements with 40 different reputed hospitals/nursing
homes in Kolkata and Howrah and that the organization runs as many as 24
dispensaries with 28 appointed doctors at the factory locations and has tie-up
arrangements with 36 investigation centres and 42 chemist shops. The Assistant
Director, in his report, has indicated that 98 specialists in and around Kolkata
are empanelled for medical care of CESC employees. The cost of spectacles,
cervical collars, hearing aid etc. are also reimbursed to the employees. After
noticing this report that the prayer for granting of exemption under Section 87
of the Act for the permanent employee was granted and that this order has also
been accepted by the Corporation.
situation that emerges according to Mr. K.V.Viswanathan, therefore, are as
Today CESC Ltd.
pursuant to the application dated 03.02.1997 stands exempted by order dated
03.08.2004 under Section 87 of the Act;
period from 1997-2003 because of operation of the injunction order, it was not
able to deduct contribution and pay its contribution.
it extended medical facilities as directed by the interim order;
In the exemption
application (page 86 of the paper- book at page 88) the medical benefits given
by the company are set out.
K.V. Viswanathan submitted that once a party is injuncted, then violating the
order would result in party being hauled up for contempt. CESC Ltd., the
respondent No.1 herein obeyed the orders and granted its own medical
facilities. Order of injunction was passed since workers Union had obtained reliefs in similar writ petitions. CESC
Ltd. did not get any interim order from which it benefited. In fact it was an
order of injunction against CESC Ltd. and not an order of Stay in its favour.
The Corporation did not take any steps to vacate such injunction order which
was passed on 17.04.1997. In fact, the CESC Ltd. was incurring huge expenditure
on medical benefits and the employees were happy with such arrangement and as
of today also the employees are not aggrieved. Permitting the Corporation to
recover contribution for the year 1996 to 2003, under such circumstances, would
apart from resulting in undue hardship to CESC Ltd. would also result in unjustly
enriching the Corporation. As rightly held by the Division Bench of the High
Court in impugned judgment, undue hardship will be caused to the CESC Limited
if the arrears are asked to be paid as the employees would have to pay arrear
contribution although they did not enjoy any benefits during the said period.
This is a fortiori in a case like the present, wherein now the CESC Ltd. has
been exempted under Section 87 of the Act on the ground that its medical
benefits are far superior to the medical benefits as provided by the
K.V. Viswanathan cited the following two decisions on the principles of
justice, equity and good conscience. By citing the same, he submitted that this
Court has the power to relieve a party from undue hardship.
West Bengal Hosiery Association vs. State of
Bihar & Ors, (1998) 4 SCC 134 and
Sree Cement Ltd.
next submitted that the act of Court can prejudice no party. He said the maxim
"actus curiae neminum gravebit" fully applies to the present case as
pointed out in Mohammed Gazi vs. State of Madhya Pradesh and Ors., 2000 (4) SCC
to the learned counsel, the judgment cited by the counsel for the Corporation
in All India ITDC Employees Union case (supra) has no application to the facts
of the present case.
is for the reason that the nature of relief sought by the Petitioner in the
said case was different and also the interim order as passed in the said case
was different from the present case. In the said case relied by the
Corporation, the prayer in the Writ Petition was for exemption on the ground
that the employer was the Government of India undertaking and employee stood
covered under Section 1(4) of the Act.
in the said case there was no positive direction injuncting the employer from
making contributions and deductions and the only order in that case was an
order of stay.
can be distinguished from the present case as despite being an order of stay,
the employer could have made contributions and deductions in the said case,
however in the present case since there was a specific order injuncting the
CESC Ltd. from making contributions and deductions such contributions and
deductions could not have been made by the Respondent No.1.
none of the circumstances which have been set out herein above were present in
the said case as cited by the Corporation.
his submission, learned counsel submitted that no case has been made out by the
Corporation which warrants interference by this Court.
Kumar Banerjee, learned senior counsel appearing on behalf of respondent Nos. 6
& 7 in civil appeals (arising out of SLP (Civil) Nos. 20841-47 of 2004)
Hindustan Lever Ltd submitted that, during the 7 years period under dispute and
as a result of the High Court's order, the Company has spent far greater amount
on the medical facilities to the 39 covered employees who would otherwise have
been covered by the Corporation and the Corporation would have had to provide
the medical benefits. Learned senior counsel submitted that this Court will not
interfere with an order simply because it is lawful to do so even if it has
legal errors, if the impugned order results in substantial justice. He relied
on Council of Scientific and Industrial Research vs. K.G.S. Bhatt, (1989) 4 SCC
635 (para 12) and para 23 of ONGC vs. Sendhabhai Vastram Patel, (2005) 6 SCC
454. He submitted that under Article 142 of the Constitution, this Court is
empowered to pass such orders as would do complete justice between the parties.
It was also submitted that it is permissible in law to prospectively overrule a
judgment as has been done recently in the case of SBP & Co. vs. Patel
Engineering Ltd., (2005) 8 SCC 618. According to the learned senior counsel,
the decision of this Court in All India ITDC Employees Union (supra) is clearly
distinguishable as unlike in the present case. In that case, the High Court did
not give any positive directions and the decision of the High Court was not
reversed by this Court. Concluding his argument, the counsel submitted that if
the respondent now starts recovering from the erstwhile employees, it would
severely affect industrial relations.
& Co. advocates argued for respondent No.2 BOC India Limited. Learned
counsel also submitted that the principle of 'actus curiae neminem gravabit'
i.e. the act of Court shall prejudice no man is fully applicable and,
therefore, the Division Bench qua the respondent directed the said Notification
to operate prospectively. Referring to the decision in Union of India & Anr.
vs. Murugan Talkies, (1996) 1 SCC 504, learned counsel submitted that this
Court has also applied the above principle in several decisions including 1988
(2) SCC 602 and in 1996 (1) SCC 504 and observed as follows:
contended for the respondents that the High Court has granted the relief taking
into consideration that some workmen had retired and it would be inequitable to
deduct from the meagre wages of existing employees with retrospective period.
Therefore, the High Court directed deduction of their share from the date of
the judgment. It is needless to mention that since some of the workmen have
already retired and from some existing workmen deduction from date of
enforcement of the notification would cause great hardship to them, so it
cannot be made to bear the burden of their contribution with retrospective
effect from the date of the notification towards their share of contribution.
To that extent,
the order of the High Court is upheld.
Learned counsel further submitted that because of the interim/final order
passed by the High Court, the Corporation has not rendered any service like
medical benefits to the employees whose wages were above Rs.3,000/- but less
than Rs.6,500/- p.m. Therefore, in absence of any quid pro quo for the said
period of 7 years, no contribution can be claimed by the ESI either from the
respondent-Company or from the employees especially, when no service/benefit
was rendered to the concerned employees.
Banerji, learned senior counsel also made submissions on behalf of respondent
No.4 Modern Food Industries Ltd. in SLP (Civil) No. 20861of 2004. He made
similar submissions and cited the same authorities as others did.
Mukherjee, learned counsel appearing on behalf of respondent No.5, Engel India
Machines & Tools (1987) Limited made the following submissions.
submitted that various labour Unions of different industries including that of
respondent No.5 challenged the said Notification by filing separate writ
petitions in the Calcutta High Court and the High Court by different orders
from time to time granted injunction with regard to the said Notification. The
said injunction was extended from time to time which, in effect, injuncted the
Management from either collecting or making any contributions towards the
Corporation. Such injunctions were extended and continued from time to time. On
30.06.1997, by judgment and order, the learned Single Judge of the High Court
declared the said amendments as ultra vires. Being aggrieved by the said order,
the appellant-Corporation filed 120 appeals before the Division Bench of the
High Court which stood disposed off by the impugned judgment and order on
16.03.2004. It is submitted that respondent No.5 by way of abundant caution had
also in the meantime applied for exemption for the said period of 1997-2004
i.e. the date of the impugned judgment and order under Section 87 of the Act of
1948 which is still pending before the appropriate Government. Learned counsel
has also annexed certificates, details of expenditure and extracts from the
annual report. It is submitted that the respondent should not be proceeded
against by the Corporation under Section 68 of 1948 inasmuch as the
contributions towards ESI fund had not been made during the period since the
Company was prevented by an order of injunction of the Calcutta High Court and
that the said directions, therefore, require no interference by this Court and
this Court may exercise its powers under Article 142 of the Constitution of
India to do complete justice to the respondent No.5-herein.
Ray Bhardwaj, learned counsel for the respondent in Civil appeal arising out of
SLP 20882-20891 of 2004 etc. submitted repeatedly the same arguments on behalf
of respondent No.5 Westinghouse Saxby Farmer Limited. An application in the
prescribed Proforma-A for exemption from the provisions of the Act as per and
after the Calcutta High Court's direction passed in this order dated 07.06.2004
in writ petition No. 8791 of 2004. On 03.08.2004, the Company further submitted
another set of application in Proforma-A as asked for by the West Bengal Labour
Department's letter dated 22.07.2004. Thereafter, pursuant to the Government of
West Bengal Labour Department's notice dated 30.08.2004, 29.10.2004, 16.11.2004
and 26.11.2004, the Company's representative duly attended the hearing in
connection with the Company's exemption application. It is stated that the
Company has submitted the Comparative Table of Benefits given by the Company to
its employees and benefits under the ESI scheme etc. However, no order has yet
been passed or communicated by the Labour Department in regard to the
respondent-Company's application for exemption. Learned counsel has also
furnished the amount of medical expenses paid by the respondent- Company to its
employees since 1996-97.
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.
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.
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 exercise of the
power conferred by section 88 read with section 91-A of the Employees' State
Insurance Act, 1948 (34 of 1948) the Central Government hereby exempts the
regular employees in respect of two units of M/s Central Inland Water Transport
Corporation Limited i.e. M/s. Marine Workshop and M/s Rajabagan Dock yard both
in Kolkata, West Bengal from the operation of the said Act
for the period from 01.01.1997 to 30.09.2006" A copy of the said
Notification has also been annexed and marked as R-4.
submitted that in view of the above, CIWIC has been exempted from the
provisions and operations of the ESI Act, 1948 for the relevant period from
01.01.1997 to 15.03.2004 for which the special leave petition has been filed by
the Corporation. It is also further submitted that the Corporation has also
been granted exemption from the operation of the ESI Act for further period upto
September, 2006. In view of the above, learned counsel submitted that the
special leave petition Nos. 20938 and 39 of 2004 be dismissed against
respondent No. 21.
Gaur, learned counsel for respondent No.4 in S.L.P. No. 20840 of 2004 (Siemens
Workers Union & Others) submitted that this Court will be reluctant to
interfere with the discretion exercised by the High Court. In this connection,
he cited Municipal Corporation of Faridabad vs. Siri Niwas, (2004) 8 SCC 195. He also submitted that it is not the
case of the Corporation that the said exercise of jurisdiction is irrational.
Union of India vs. Murugan Talkies (supra) similar relief granted by the High
Court was not interfered with by this Court. Therefore, he submitted that the
discretion exercised by the High Court is justified in view of various facts
and circumstances and thus prayed that the appeal filed by the Corporation be
have given our thoughtful consideration to the questions and issues involved in
this matter. We have also perused the pleadings, the order passed by the
learned Single Judge and the orders passed by the Division Bench and the
written submissions made by the respective parties along with the annexures
have already noticed that the respondent-Companies have spent large amount of
money on the employees and provided medical facilities in view of the order of
the High Court granting stay/injunction etc. If the High Court had not passed
the order of injunction, the respondent-companies would have contributed the
ESI contribution instead of spending monies on the medical facilities and
allowances. In these circumstances, the submissions made by learned senior
counsel appearing for the respondents that it would be unfair and unjust to
make the employer to pay contribution towards ESIC since in lieu of the
contribution to ESIC, the employer provided better medical facilities, in our
view holds water and it would cause extreme and grave hardship to the employer
if they are required to pay contribution for the past several years for no
fault of their own.
view, no party much less the respondents should suffer because of the orders of
the Court if duly complied with.
much force, substance and merit in the submissions made by the learned senior
counsel appearing for the respective respondents and as duly adopted by the
other learned counsel appearing for other civil appeals.
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.
view, passing of the final order by the High Court directing the payment of the
ESI contribution from the date of the said judgment does not amount to
postponing the enforcement of notification and the same is also not in
violation of the principles laid down by this Court in various judgments
referred to above. There has been no postponing of the enforcement of the
Notification in view of the peculiar circumstances of the case, namely, the
non-availability of the facilities, non-deduction of contribution from the
members of the union for several years and provision of medical relief by the
Management. The High Court's direction for deduction of contribution w.e.f. the
date of the judgment in our view, is perfectly justified. This apart, the
members of the union included casual, temporary contractual and it will be
practically impossible to find each and every member of the union to recover
their contribution for the past several years and in fact some of the workmen
who would have been the employees during all these years would have left,
expired etc. and on account thereof also their contribution cannot be
recovered. The order passed by the High Court, in our opinion, is perfectly
justified in view of the peculiar facts and circumstances of the case.
High Court, in our opinion, while disposing of the matter has taken a just,
pragmatic, fair and judicious view after considering all the equities and facts
and circumstances of the case. Extreme hardship might have been caused to both
the employer as well as the employee since no medical facilities admittedly
have been availed by the workmen from ESIC and the employer had provided
medical facilities to the workmen as per the Court orders and in view of the
interim order also had paid medical allowances.
similar view was taken by us in the case of Employees State Insurance
Corporation vs. Distilleries & Chemical Mazdoor Union & Ors. in Civil
Appeal Nos. 1727 of 2005, 3002 and 3003 of 2006 by the very same Bench
comprising of Dr. AR. Lakshmanan and Lokeshwar Singh Panta, JJ. We have also
considered the submissions both factual and legal made by Mr. C.S.Rajan,
learned senior counsel appearing on behalf of the ESI Corporation. In our
opinion, his argument has no merits in the facts and circumstances of this case
and the interim orders passed by the High Court which prevented employer and
employee from making any contribution towards ESI.
present case, the law as well as the facts are in favour of the respondents.
The High Court has correctly appreciated the tremendous hardship that will be
caused if arrears are sought to be paid and nobody stands to gain, neither the
employer nor the employee under the circumstances. Even assuming that the law
is in favour of the ESI, keeping in view the special facts and circumstances of
the present case, relief can be denied under Article 136 of the Constitution of
India. In view of the judgment reported in Chandra Singh and Others vs. State
of Rajasthan and Another, (2003) 6 SCC 545 (Three Judges Bench), Dr. AR. Lakshmanan,
J speaking for the Bench held as follows:-
event, even assuming that there is some force in the contention of the
appellants, this Court will be justified in following Taherakhatoon v. Salambin
Mohammad, (1999) 2 SCC 635 wherein this Court declared that even if the
appellants contention is right in law having regard to the overall
circumstances of the case, this Court would be justified in declining to grant
relief under Article 136 while declaring the law in favour of the appellants.
Issuance of a
writ of Certiorari is a discretionary remedy. [See Champalal Binani v. CIT, West Bengal, [AIR 1970 SC 645]. The High Court
and consequently this Court while exercising their extraordinary jurisdiction
under Article 226 or 32 of the Constitution of India may not strike down an
illegal order although it would be lawful to do so. In a given case, the High
Court or this Court may refuse to extend the benefit of a discretionary relief
to the applicant.
this Court exercised its discretionary jurisdiction under Article 136 of the
Constitution of India which need not be exercised in a case where the impugned
judgment is found to be erroneous if by reason thereof substantial justice is
being done. [See S.D.S. Shipping Pvt. Ltd. v. Jay Container Services Co. Pvt.
Ltd. & Ors. [2003(4) Supreme 44]. Such a relief can be denied, inter alia,
when it would be opposed to public policy or in a case where quashing of an
illegal order would revive another illegal one. This Court also in exercise of
its jurisdiction under Article 142 of the Constitution of India is entitled to
pass such order which will do complete justice to the parties.
This Court said
that this principle applies to all kinds of appeals admitted by special leave
under Article 136, irrespective of the nature of the subject-matter. So even
after the appeal is admitted and special leave is granted, the appellant must
show that exceptional and special circumstances exist, and that, if there is no
interference, substantial and grave injustice will result and that the case has
features of sufficient gravity to warrant a review of the decision appealed
against on merits. So this Court may declare the law or point out the lower
courts' error, still it may not interfere if special circumstances are not
shown to exist and the justice of the case on facts does not require
interference or if it feels the relief could be moulded in a different fashion.
made in paras 15-20 of the Taherakhatoon (supra) can be usefully applied to the
facts and circumstances of the case on hand.
In the instant
case, we are dealing with the higher judicial officers. We have already noticed
the observations made by the committee of three Judges. The nature of judicial
service is such that it cannot afford to suffer continuance in service of
persons of doubtful integrity or who have lost their utility.
would although dismiss the appeals, but we would direct the High Court and the
State government to pay all retiral benefits to the appellants herein as
expeditiously as possible preferably within a period of three months from the
date of communication of this order. No Costs." This Court under Article
142 of the Constitution of India is empowered to pass such orders as would do
complete justice between the parties. This Court is also empowered to mould the
relief in such a manner so that it is not only just but also equitable even
while declaring the law as observed in para 25 of ONGC Ltd. vs. Sendhabhai Vastram
Patel and Others, (2005) 6 SCC 454 and Raj Kumar and Others vs. Union of India
and Another, (2006) 1 SCC 737. It is also permissible in law to prospectively
overrule the judgment as has been done recently in the case of SBP Co. vs.
Patel Engineering Ltd., (2005) 8 SCC 618. If the respondent is now allowed to
recover from the erstwhile covered employees, it would severely affect
industrial relations. Reversal of the impugned order would lead to prosecution,
penalty and also interest against the respondent without any fault of the
respondent. The decision of this Court in ITDC Employees Union (supra) is
clearly distinguishable as unlike in the present case. In that case, the High
Court did not give any positive direction. The decision of the High Court was
not reversed by this Court.
High Court under Article 226 and this Court under Article 136 read with Article
142 of the Constitution of India have the power to mould the relief in the
facts of the case.
the judgment cited by learned counsel for the appellant-Corporation are in a
different context altogether and the ratio of the said cases are not applicable
to the present case.
apart the maxim of equity which is founded upon justice and good sense was
applied as well as other maxim: lex non cogit ad impossibilia (i.e. the law
does not compel a man to do what he cannot possibly perform) The applicability
of the aforesaid maxim has been approved by this Court in Raj Kumar Dey and
Others vs. Tarapada Dey and Others, (1987) 4 SCC 398 and Gursharan Singh and
Others vs. New Delhi Municipal Committee and Others, (1996) 2 SCC 459 The ESI
Act has enacted to provide for certain benefits to employees in case of
sickness, maternity and employment injury.
the scheme of the Act, function of the ESI Corporation is to derive insurance
fund from the contribution from employees and workmen. The employer is entitled
to recover workmen's share from the wages of the workmen concerned. It was
argued by the respondent that the employer is providing better medical
facilities to the workmen and, therefore, the object and purpose of the Act has
been fully satisfied. It is pertinent to notice that none of the employees of
the Union have complained about medical
services provided by the employer since the object is otherwise fulfilled. No
further direction, in our opinion, is required to be passed.
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.
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.
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.