& Chemicals Travancore Ltd. Vs. Regional Director ESIC & Ors.  INSC
1463 (20 August 2009)
IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NOS.
917-918 OF 2004 Fertilizers & Chemicals .... Appellant Travancore Ltd.
Regional Director, ESIC & Ors. .... Respondents
O R D E R
Heard learned counsel for the parties.
These appeals have been filed against the common impugned judgment
and order dated 30.10.2002 of the High Court of Kerala at Ernakulam whereby the
appeal filed by the respondent-Employees State Insurance Corporation
(hereinafter for short the 'ESIC') under Section 82(2) of the Employees State
Insurance Act, 1948 (hereinafter for short 'the Act') has been allowed and the appeal
filed by the appellant herein has been dismissed.
It appears that a demand notice was sent against the appellant
company under Section 45A of the Act in respect of the employers contribution
under the Act. The appellant challenged the said demand notice by filing a
petition under 2 Section 75 of the Act before the Employees Insurance Court,
Alleppey. The Employees Insurance Court in its order dated 4.2.1993 made the
following observations:- "12. If reliance is made on the rational laid down
by the High Court in the abovesaid decisions it is very clear that the
identities of the employees should be an essential factor for bringing under
coverage employees and paying contribution in respect of them. Here, in this
case, because of the peculiar nature of the work arrangement, at Depots, it is
impossible to register an employee engaged in the loading and unloading work
under the ESI Scheme. If there is requirement, a group of headload workers will
come and they do the work collectively and payments are received on tonnage
basis. On behalf of this group engaged, one person will collect payment from
the depot and distribute the same among themselves. Such labourers coming on
one day may not be the same in next day. That is because of this peculiar
nature of arrangement among workers on the basis of understanding or agreement
reached between trade unions. After completing work in the depot they will go
elsewhere and do identical nature of work. If such is the nature of work it is
quite improper to compel the applicant to pay contribution on the payments
given in various 3 depots merely because they obtained the services of such
workers. However as a principal employer the applicant cannot absolve
themselves from the responsibility of covering such employees under the scheme
because those employees are rendering service to them. Therefore it would be
appropriate that in close co-operation with the ESI Corporation they should
take effort at least now to ascertain the identities of those headload workers
so as to cover them also under the ESI Scheme. The ESI Corporation will also
make immediate arrangement for bringing all the loading and unloading workers
in the depots under the ESI Scheme. The ESI Corporation shall work out the
modus operandi for bringing these workers under the coverage.
registration of the headload workers under the scheme, the applicant will pay
contribution from the date of passing of the order passed under Sec. 45-A of
the ESI Act viz., 15.6.1989. The ESI corporation shall work out the
contribution from that date in respect of workers who are brought under scheme
and who were found to be working from that day onwards.
above observation and direction, this application is disposed of."
Aggrieved against the said order dated 4.2.1993 of the Employees
Insurance Court, both the appellant herein as 4 well as the Employees State
Insurance Corporation filed appeals before the High Court under Section 82 of
appeal filed by the respondent-ESIC has been allowed and the appeal filed by
the appellant herein has been dismissed.
the appellant is before us by way of the present appeal by special leave.
It may be noted that in its petition before the Employees
Insurance Court, the appellant herein only impleaded the Employees State
Insurance Corporation and the District Collectors of Alleppey, Palaghat and
Cannanore as the respondents but did not implead even a single workman as a
Labour statutes are meant for the benefit of the workmen. Hence,
ordinarily in all cases under labour statutes the workmen, or at least some of
them in a representative capacity, or the trade-union representing the
concerned workmen must be made a party. Hence, in our opinion the appellant
(petitioner before the Employees Insurance Court) should have impleaded atleast
some of the persons concerned, as respondents.
The case of the appellant was that, in fact, none of the concerned
persons was its employee and it was difficult to identify them.
In this connection we may refer to Section 75(1)(a) of the Act
which states that if any question or dispute arises as to whether any person is
an employee of the employer concerned, or whether the employer is liable to pay
the employer's contribution towards the said persons' insurance, that is a
matter that has to be decided by the Employees Insurance Court. Hence, in our
opinion, the concerned person has to be heard before a determination is made
against him that he is not an employee of the employer concerned.
The rules of natural justice require that if any adverse order is
made against any party, he/she must be heard. Thus if a determination is given
by the Employees Insurance Court that the concerned persons are not the
employees of the petitioner, and that determination is given even without
hearing the concerned persons, it will be clearly against the rules of natural
It may be seen that Section 75 of the Act does not mention who
will be the parties before the Insurance Court.
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 6 passing
any order by the authority/court.
In our opinion, wherever any petition is filed by an employer
under Section 75 of the Act, the employer has not only to implead the ESIC but
has also to implead atleast some of the workers concerned (in a representative
capacity if there are a large number of workers) or the trade-union
representing the said workers. If that is not done, and a decision is given in
favour of the employer, the same will be in violation of the rules of natural
justice. After all, the real concerned parties in labour matters are the
employer and the workers. The ESI Corporation will not be in any way affected
if the demand notice sent by it under Section 45A/45B is quashed.
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 ESI Corporation. The ESI 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 who have to lose if a decision is given in favour of the
employer. Hence, the 7 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.
In the present case the workmen concerned were not made parties
before the Employees Insurance Court, nor was notice issued to them by the said
Also, the order of the Employees Insurance Court dated 4.2.1993,
relevant portion of which we have quoted, is not a very happy one as no proper
determination has been made therein as to whether the workmen concerned are the
employees of the appellant and whether they are entitled to the benefit of the
Act. No doubt some observations have been made that some labourers come on one
day but they may not come on the next day. Having said so, a direction has been
given that the ESI Corporation will after making inquiries about the identities
of the said workers will register them and then extend the benefit of the Act.
In our opinion, the Employees Insurance Court should have itself
made a proper investigation of the facts after getting evidence from the
parties, including the workmen concerned, and after impleading them as party in
the petition, it should have determined the question as to 8 whether the
persons concerned were the employees of the appellant or not.
For the reasons stated above, we set aside the impugned judgment
and order of the High Court as well as the order dated 4.2.1993 passed by the
Employees Insurance Court and remand the matter to the Insurance Court for
deciding the same afresh after impleading some of the workmen, if not all of
them, or their trade union in a representative capacity. Needless to say, the
Employees Insurance Court will grant an opportunity to all the parties,
including the alleged workmen, to lead documentary evidence or oral evidence
and thereafter proceed in accordance with law.
We make it clear that nothing stated hereinabove shall be
construed as an expression of opinion on the merits of the controversy
involved. All questions of law and fact are left open for the parties to be
raised before the Insurance Court.
allowed. No order as to the costs.
.....................J. (MARKANDEY KATJU)
.....................J. (ASOK KUMAR GANGULY)