Basant Kumar Sarkar & Ors Vs.
Eagle Rolling Mills Ltd. & Ors  INSC 46 (26 February 1964)
26/02/1964 GAJENDRAGADKAR, P.B. (CJ)
GAJENDRAGADKAR, P.B. (CJ) WANCHOO, K.N.
AYYANGAR, N. RAJAGOPALA SIKRI, S.M.
CITATION: 1964 AIR 1260 1964 SCR (6) 913
C 1980 SC 882 (16) RF 1985 SC 790 (4)
Employees State Insurance Act (XXXIV of
1948),s. 1(3) Constitutional validity-Central Government empowered to apply
provisions of Act by notification-If excessive delegation.
The appellants as workmen of respondent No. 1
in all the three respondent concerns were getting free medical benefits of a
very high order in a well furnished hospital maintained by respondent No. 1.
Respondent No. 3. the Union of India issued a notification under s. 1(3) of the
Employees State Insurance Act appointing 28th August, 1960 as the date on which
some provisions of the Act should come into force in certain areas of the State
of Bihar and the area in which the appellants were working came within the
scope of the Act. In pursuance of the said notification, the Chief Executive
Officer of Respondent No. 1 issued notices to the appellants that the medical
benefits upto the extent admissible under the Act will cease to be provided to
insurable persons from the appointed day and the medical benefits would
thereafter be governed by the relevant provisions of the Act. The appellants in
a writ petition to the High Court challenged the validity of s. 1(3) of the Act
and legality of the notifications issued under it, inter alia, on the ground
that it contravened Art. 14 of the Constitution and suffers from the vice of
excessive delegation. The High Court rejected the plea and dismissed the writ
petitions. On appeal by special leave the appellants contended that s. 1(3) of
the Act suffers from excessive delegation and is, therefore, invalid.
Held: (i) S. 1(3) of the Act is not an
illustration of delegated legislation at all, it can be described as
conditional legislation. It purports to authorise the Central Government to
establish a corporation for the administration of the scheme of Employees'
State Insurance by a notification. As to when the notification should be issued
and in respect of what factories it should be issued, has been left to the
discretion of the Central Government and that is precisely what is usually done
by conditional legislation.
Queen v. Burah, 5. I.A. 178, relied on.
(ii) Assuming there is an element of
delegation, the plea is equally unsustainable, because there is enough guidance
given by the relevant provisions of the Act and the very scheme of the Act
itself. In the very nature of things, it would have been impossible for the
legislature to decide in what areas and in respect of which factories the
Employees' State Insurance Corporation should be established. It is obvious
that a scheme of this kind, though very beneficent, could not be introduced 34
-159 S.C.-58 914 in the whole of the country all at once. Such -beneficial
measures which need careful experimentation have sometimes to be adopted by
stages and in different phases, and so, inevitably, the question of extending
the statutory benefits contemplated by the Act has to be left to the discretion
of the appropriate Government. That cannot amount to excessive delegation.
Edward Mills Co. Ltd. Beawar v. The State of
Ajmer,  1 S.C.R. 735, M/s Bhikusa Yamasa Kshatriya v. Sangamner Akola
Taluka Bidi Kamgar Union,  Supp. 1 S.C.R. 524 and Bhikusa Yamasa Kahtriva
v. Union of India,  1 S.C.R. 860 followed:
CIVIL APPELLATE JURISDICTION: Civil Appeals
Nos. 721-723 of 1962.
Appeals by special leave from the judgment
and order dated March 1, 1961, of the Patna High Court in Misc. Judicial Cases
Nos. 1167, 1122 and 1235 of 1960.
N. C. Chatterjee, Rai Behari Singh and Udai Pratap
Singh,for the appellants (in all the appeals).
B. P. Singh, N. P. Singh and I. N. Shroff,
for the respondent No. 1 (in all the appeals).
C. K. Daphtary, Attorney-General, N. S.
Bindra, V. D.Mahajan and B. R. G. K. Achar, for respondents Nos. 2 and 3.
February 26, 1964. The Judgment of the Court
was delivered by GAJENDRAGADKAR. C.J.-The short question which arises in these
appeals by special leave is whether section 1(3) of the Employees' State
Insurance Act, 1948 (No. 34 of 1948) (hereinafter called the Act) is invalid.
By their writ petitions filed before the Patna High Court, the appellants who
are the workmen of the three respondent concerns, the Eagle Rolling Mills Ltd.,
the Kumardhubi Engineering Works Ltd., and Kumardhubi Fire Clay and Silica
Works Ltd., respectively, alleged that the impugned section has contravened
Art. 14 of the Constitution, and suffers from the vice of excessive delegation,
and as such is invalid.
These employers were impleaded as respondent
No. 1 respectively in the three writ petitions. The High Court has rejected the
plea and the writ petitions filed by 915 the appellants have accordingly been
dismissed. It is against this decision of the High Court that the appellants
have come to this Court and have impleaded the three employers respectively.
The three appeals proceed on similar facts and raise an identical question of
law and have, therefore, been heard together.
It appears that respondents No. 1 in all the
three appeals are under the management of M/s. Bird.& Co. Ltd., through a
General Manager, and the appellants are their workmen. As such workmen, the
appellants were getting satisfactory medical benefits of a very high order free
of any charge.
Respondent No. 1 in each appeal maintained a
well furnished hospital with provision for 60 permanent beds for the workmen,
their families and their dependents. The main grievance made by the appellants
is that as a result of s.
1(3) of the Act, the appellants have now to
be content with medical benefits of a less satisfactory nature. That is why
they challenged the validity of the impugned section and contest the propriety
and legality of the notification issued under it. To these writ petitions as
well as to the appeals, the Employees' State Insurance Corporation and the
Union of India have been impleaded as respondents 2 and 3 respectively.
On the 22nd August, 1960, respondent No. 3
issued a notification under section 1, sub-section (3) appointing the 28th
August, 1960 as the date on which some provisions of the Act should come into
force in certain areas of the State of Bihar. By this notification, the area in
which the appellants are working came within the scope of the Act. In pursuance
of the said notification, the Chief Executive Officer of respondent No. 1
informed the appellants on the 25th August, 1960 that the medical benefits
including indoor and outdoor treatment up to the extent admissible under the
Act will cease to be provided to insurable person-, from the appointed day. A
notice in that behalf was duly issued and published by the said Officer.
Similar notices were issued indicating to the appellants that medical benefits
would thereafter be governed by the relevant provisions of the Act and not by
the arrangements which had been made 916 earlier by respondent No. 1 in that
behalf. That, in brief, is the genesis of the present writ petitions and the
nature of the dispute between the parties.
The first point which Mr. Chatterjee has
raised before us is that s. 1(3) of the Act suffers from excessive, delegation
and is, therefore, invalid. In order to consider the validity _of this
argument, it is necessary to read section 1, sub-section (3):"The Act
shall come into force on such date or dates as the Central Government may, by
notification in the Official Gazette, appoint, and different dates may be
appointed for different provisions of this Act and for different States or for
different parts thereof'.
The argument is that the power given to the
Central Government to apply the provisions of the Act by notification, confers
on the Central Government absolute discretion, the exercise of which is not
guided by any legislative provision and is, therefore, invalid. The Act does
not prescribe any considerations in the light of which the Central Government
can proceed to act under s. 1(3) and such uncanalised power conferred on, the
Central Government must be treated as invalid. We are not impressed by this
argument. Section 1(3) is really not an illustration of delegated legislation
at all; it is what can be properly described as conditional legislation. The
Act has prescribed a self-contained code in regard to the insurance of the,
employees covered by it; several remedial measures which the Legislature
thought it necessary to enforce in regard to such workmen have been
specifically dealt with and appropriate provisions have been made to carry out
the policy of the Act as laid down in its relevant sections.
Section 3(1) of the Act purports to authorise
the Central Government to establish a Corporation for the administration of the
scheme of Employees' State Insurance by a notification. In other words, when
the notification should be issued and in respect of what factories 'it should
be issued, has been left to the discretion of the Central Government and that
is precisely what is usually done, by conditional legislation.
917 What Lord Selborne said about the powers
conferred on the Lieutenant-Governor by virtue of the relevant provisions of
Act 22 of 1869 in Queen v. Burah(1), can be said with equal justification about
the powers conferred on the Central Government by s. 1(3). Said Lord Selborne
in that case:
"Their Lordships think that it is a
fallacy to speak of the powers thus conferred upon the Lieutenant-Governor
(large as they undoubtedly are) as" if, when they were exercised, the
efficacy of the acts done under them would be due to arty other legislative
authority than that of the Governor-General in Council.
Their whole operation is directly and
immediately under and by virtue of this Act (XXII of 1869) itself. The proper
Legislature has exercised its judgment as, to place, person, laws, powers; and
the result of that judgment has been to legislate conditionally as to all these
things. The Conditions having been fulfilled, the legislation, is now
That is the first answer to the plea raised
by Mr. Chatterjee.
Assuming that there is an element of
delegation, the plea is equally unsustainable, because there is enough guidance
given by the relevant provisions of the Act and the very scheme of the Act
itself. The preamble to the Act shows that it was passed because the
legislature thought it expedient 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. So, the policy of the Act is
unambiguous and clear. The material' definitions of "benefit period",
"employee", "factory","injured person ",
"sickness", "wages" and other terms contained in s. 2 give
a clear 'idea as to the nature of the factories to which the Act is intended to
be applied, the class of persons for whose benefit it has' been passed and the
nature of the benefit which is intended to be conferred on them. Chapter II of
the Act deals with the (1) 5 I.A. 178 at p. 195.
918 Corporation, Standing Committee and
Medical Benefit Council and their constitution; Chapter III deals with the
problem of finance and audit; Chapter IV makes provisions for contribution both
by the employees and the employer, and Chapter V prescribes the benefits which
have to be conferred on the workmen; it also gives general provisions in
respect of those benefits. Chapter V-A deals with transitory provisions;
Chapter VI deals with the adjudication of disputes and claims; and Chapter VII
Chapter VIII which is the last Chapter, deals
with miscellaneous matters. In the very nature of things, it would have been
impossible for the legislature to decide in what areas and in respect of which
factories the Employees' State Insurance Corporation should be established. It
is obvious that a scheme of this kind, though very beneficient, could not be
introduced in the whole of the country all at once.
Such beneficial measures which need careful
experimentation have sometimes to be adopted by stages and in different phases,
and so, inevitably, the question of extending the statutory benefits
contemplated by the Act has to be left to the discretion of the appropriate
Government. "Appropriate Government" under s. 2(1) means in respect
of establishments under the control of the Central Government or a railway
administration or a major port or a mine or oilfield, the Central Government,
and in all other cases, the State Government. Thus, it is clear that when
extending the Act to different establishments, the relevant Government is given
the power to constitute a Corporation for the administration of the scheme of
Employees' State Insurance.
The course adopted by modern legislatures in
dealing with welfare schemes has uniformly conformed to the same pattern.
The legislature evolves a scheme of
socioeconomic welfare, makes elaborate provisions in respect of it and leaves
it to the Government concerned to decide when, how and in what manner the
scheme should be introduced. That, in our opinion, cannot amount to excessive
The question of excessive delegation has been
frequently considered by this Court and the approach to be adopted in dealing
with it is no longer in doubt. In the Edward Mills Co. Ltd., Beawar and Others
v. The State of Ajmer 919 and Another(1), this Court repelled the challenge to
the validity of s. 27 of the Minimum Wages Act, 1948 (No. XI of 1948), whereby
power had been given to the appropriate Government to add to either part of the
schedule any employment in respect of which it was of opinion that minimum
wages shall be fixed by giving notification in a particular manner, and it was
provided that on the issue of the notification, the scheme shall, in its
application to the State, be deemed to be amended accordingly. In dealing with
this problem, this Court observed that there was an element of delegation
implied in the provisions of s. 27, for the legislature, in a sense, authorised
another body specified by it to do something which it might do itself;
but it was held that such delegation was not
unwarranted and unconstitutional and it did not exceed the limits of
permissible delegation. To the same effect are the recent decisions of this
Court in M/s. Bhikusa Yamasa Kshatriya and Another v. Sangamner Akola Taluka
Bidi Kamgar Union and Others(2), and Bhikusa Yamasa Kshatriya (P) Ltd. v. Union
of India and Another(3). Therefore, we must hold that the impugned section 1
(3) of the Act is not shown to be constitutionally invalid.
Before we part with these appeals, there is
one more point to which reference must be made. We have already mentioned that
after the notification was issued under s. 1(3) by respondent No. 3 appointing
August 28, 1960 as the date on which some of the provisions of the Act should
come into force in certain areas of the State of Bihar, the Chief Executive
Officer of respondent No. 1 issued notices giving effect to the State
Government's notification and intimating to the appellants that by reason of
the said notification, the medical benefits which were being given to them in
the past would be received by then under the relevant provisions of the Act. It
was urged by the appellants before the High Court that these notices were
invalid and should be struck down. The argument which was urged in support of
this contention was that respondent (1) 1 S.C.R. 735.
(2)  Supp. 1 S.C.R. 524.
(3)  1 S.C.R. 860.
920 No. 1 in all the three appeals were not
entitled to curtail the benefits provided to the appellants by them and that
the said benefits were not similar either qualitatively or quantitatively to
the benefits under the Scheme which had been brought into force under the Act.
The High Court has held that the question as to whether the notices and
circulars issued by respondent No. 1 were invalid, could not be considered
under Art. 226 of the Constitution; that is a matter which can be appropriately
raised in the form of a dispute by the appellants under s. 10 of the Industrial
Disputes Act. It is true that the powers conferred on the High Courtís under
Art. 226 are very wide, but it is not suggested by Mr. Chatterjee that even
these powers can take in within their sweep industrial disputes of the kind
which this contention seeks to raise. Therefore, without expressing any opinion
on the merits of the contention, we would confirm the finding of the High Court
that the proper remedy which is available to the appellants to ventilate their
grievances in respect of the said notices and circulars is to take recourse to
s. 10 of the Industrial Disputes Act, or seek relief, if possible, under
sections 74 and 75 of the Act.
The result is, the appeals fail and are
dismissed. There would be no order as to costs.