State Insurance Corporation Vs. Distilleries & Chemical Mazdoor Union &
Ors  Insc 415 (17
Ar. Lakshmanan & Lokeshwar Singh Panta
Appeal No. 3002/2006 (@ SLP(C) No. 18215 of 2004) and Civil Appeal No.
3003/2006 (@ SLP(C) No. 4202 of 2005) Dr. AR. Lakshmanan, J.
APPEAL NO. 1727 OF 2005 This appeal was filed by the Employees State Insurance
Corporation (in short the "ESIC") against the final judgment and
order dated 11.05.2004 passed by the High Court of Judicature at Allahabad in
C.M.W.P No. 6920 of 1986. The High Court disposed off the writ petition with
certain directions which are in challenge in this appeal by the ESIC.
C.A. No. /2006 @ SLP (C) NO. 18215 OF
2004 Leave granted.
appeal was filed by the ESIC against the final judgment and order dated
11.05.2004 passed by the said Court in C.M.W.P No. 27607 of 1998 which was
disposed off by the High Court with certain directions which are in challenge
in this appeal.
C.A. No. /2006 @ SLP (C) NO. 4202 OF 2005
appeal was filed by the ESIC against the final judgment and order dated
16.09.2004 passed by the said Court in C.M.W.P No. 32843 of 1997 which was
disposed off by the High Court with certain directions as covered by the
earlier decision in C.M.W.P. No. 6920 of 1986.
parties to the above three appeals and the question of law to be decided are
the same, by consent of parties, all the three matters were taken up together
for final disposal.
employer, the Trade Union and the State of U.P.
have been impleaded as party respondents in these appeals.
shall now take up the facts mentioned in civil appeal No. 1727 of 2005 for
reference. Since the facts are identical in other matters we are not stating
them in the other cases.
petition No. 6920 of 1986 was filed by the Distilleries and Chemical Mazdoor
Union, Meerut against the State of U.P., the ESIC and the Company, namely, Central
Distilleries and Breweries Limited (CSBL) merged with Shaw Wallace Distilleries
Limited (SWDL) for seeking direction in the nature of mandamus not to realise
any contribution from the workmen of respondent No.2-herein.
writ petition was admitted and an interim order was passed stating that,
meanwhile no deduction shall be made towards the contribution of ESIC from the
members of the petitioners-Union under the ESI Act.
application was filed on behalf of respondent No.2 herein for vacation/suitable
modification of the order, in order to safeguard the interest of the Company
keeping in view all the provisions of the Act. On 17.07.1987, the Court, after
hearing all the parties on the application of the company, confirmed the
previous order dated 19.05.1986 with the modification that "no deduction
shall be made from the employer or the employees towards the contribution under
the ESI Act provided the respondent-employers shall pay the medical allowance
to its workmen." An application for modification of the order dated
17.07.1987 was filed by respondent No.2 herein to substitute the words
"provide" and "facility" instead of "pay" and
Court modified the above order dated 17.07.1987 as sought for.
writ petition remained pending and no contribution was either deducted or
deposited. Management continued to provide the medical facility to its workmen
as directed by the Court, which fact has not been disputed either by the ESIC
or by the workmen. The ESIC did not file any counter affidavit/opposition to
the writ petition. The writ petition was finally heard and disposed off along
with another writ petition No. 27607 of 1998 which had been filed by another
Union - Distilleries and Breweries Shramik Sangh, Meerut filed writ petition
No. 27607 of 1998 against the State Government of U.P., ESIC and CDBL on the
ground that no medical facility has been provided by the ESIC Authority in the
area and the exemption application filed before the Secretary of Labour
Department has not been decided and sought direction from the Court not to realise
any contribution from the workers of the Union under the ESI Act and also
sought exemption from applicability of the Act for the employees of CDBL.
interim order was passed in the writ petition to the extent.
recovery should be made under the ESI Scheme from the salary of the workmen.
Mr. Burman submits on instruction that all the members of the Union are agreed and have given undertaking through him
that in case the petition fails in the event amount recoverable for the period
during the interim order remain operative shall be recovered from their salary
in a suitable monthly instalment." No counter was filed by the State and
the ESIC and the interim order was confirmed in the said writ petition. An
application for amendment of the writ petition was filed by the Union in the said writ petition for extending the coverage
to the daily/contractor workers since they are also the members of their Union. The aforesaid amendment application was allowed.
The CDBL filed an application for stay. Final arguments were heard by the High
Court and a detailed judgment was passed in the writ petition No. 6920 of 1986
and by the same order writ petition No. 27607 of 1998 was also disposed off.
The Court has ordered:
these circumstances, we direct that no contribution shall be realized from the
employer or employees till today towards E.S.I contribution, but from today
onwards they will start paying E.S.I contribution and employee may avail
benefit of the E.S.I Scheme" Civil Appeal No. /2006 @ SLP NO. 4202 OF 2005
This appeal filed against the final judgment and order dated 16.09.2004 in
C.M.W.P. No. 32843 of 1997 was disposed off by a learned Single Judge of the
High Court. The said writ petition was disposed off on the ground that the
controversy in this writ petition is covered by the decision of the said Court
rendered in writ petition No. 6920 of 1986. Considering the aforesaid
submission, learned Single Judge disposed off the writ petition with a
direction that no contribution shall be realised from the employer or employees
till today i.e. 16.09.2004, but from 16.09.2004 onwards they will start paying
ESI contribution and the employee may avail benefit of the ESI scheme. With the
aforesaid observations, the writ petition was disposed off finally.
heard Mr. C.S. Rajan, learned senior counsel ably assisted by Mr. V.J. Francis
for the appellant-Corporation and Mr. Anil Divan, learned senior counsel for
the employers and also heard learned counsel appearing for the respective
employees Union. Mr. C.S. Rajan, learned senior
counsel made the following submissions:
impugned order of stay granted earlier, and later became part of the final
order, does not amount to postponing the enforcement of notification and,
therefore, is in clear violation of the principles laid down by this Court in
impugned direction is not in contravention of the principles laid down by this
Court in Kanoria Chemicals and Industries Ltd. And Others vs. U.P. State
Electricity Board and Others reported in (1997) 5 SCC 772.
directions given by the High Court not to deduct contributions are not contrary
to the law laid Employees' State Insurance Corporation and Another reported in
(1985) 2 SCC 68.
that the High
Court has failed to appreciate that after the dismissal of the main
proceedings, the stay and other interim orders granted therein comes to an end
and it is the duty of the Court to put parties in the same position they would
have been but for the interim orders of this Court.
that when once
the main case has been disposed off the parties are relegated to the original
position and the management is liable to pay the contributions of the employer
and the employees. Further, the ESI Act is a beneficial piece of social
security legislation, provisions of the Act will have to be construed with that
end in view to promote the scheme and avoid any mischief.
impugned order of stay granted earlier and later became part of the final
order, amounted to postponing the enforcement of the notification and,
therefore, it is in clear violation of the principles laid down by this Court
in Employees' State Insurance Corpn. Employees Union (CITU), Kannur, Dist. Kannur, Kerala and Others, (1994) 1
SCC 268. The learned senior counsel has also relied on certain other judgments
of this Court.
impugned direction of the High Court will have far-reaching implications on the
enforcement of the provisions of the Act and will also give benefit to those
employers by themselves or through employees to obtain stay orders from the
High Court under Article 226 of the Constitution of India and thereby assisting
them indirectly and, therefore, this is a fit case for interference by this
Court under Article 136 of the Constitution of India.
affidavit has been filed by respondent No.1 Mazdoor Union and the respondent
Anil Divan, learned senior counsel invited our attention to the various orders
passed by the High Court in the writ petition on 19.05.1986, 17.07.1987,
09.03.1988 and the final order passed by the High Court in the impugned
judgment. Our attention was also drawn to the petition to vacate the ex-parte
order dated 19.05.1986 passed by the High Court with a prayer to suitably
modify to safeguard the interest of the management with regard to the anomalies
mentioned in the counter affidavit.
stated in the counter affidavit that the workmen got the facilities
contemplated under the ESI Act and that the workmen did not get the medical
allowance but the management pays more in the form of its ESI contribution than
what it would pay in the form of medical allowance to the workmen. It is also
stated that the distance of the dispensary from the factory is nearly 8 kms. which
is highly inconvenient for the workmen to really avail of the facility intended
to be provided to them. In view of the ex-parte order, the ESI deductions of
the members of the Union have been stopped and in compliance
with the Court's Order the management was not deducting the ESI contributions
of its workmen. However, the aforesaid order, according to the learned senior
counsel for the management, though has been complied with is creating, inter alia,
The Court has
not made it clear as to what shall be the effect of the stoppage of the
deductions on the statutory liability of the answering respondent contemplated
under sections 40 and 41 of the ESI Act.
It has also not
been made clear as to what shall be the consequences if a workman dies or
sustains injury during the substance of the interim order as it is very likely
that the Corporation in such an event may take a stand of not compensating the
workmen for the injury sustained as their contribution is not being paid to the
answering respondent is nevertheless depositing 5 per cent contribution without
any benefit to its workmen and it is just and proper that so long as the
deductions are not being made the answering respondent should also not be
obliged to pay its E.S.I contribution with regard to its workmen.
the above averments, the management employer filed the petition to vacate the
ex-parte order granted by the High Court on 19.05.1986 or to suitably modify
the same to safeguard the interest of the management in regard to the anomalies
mentioned in the paragraphs (supra). However, the High Court, by its order
dated 17.07.1987 instead of vacating the interim stay confirmed the same with
certain modifications that no deduction shall be made either from the employer
or from the employees towards the contribution under the ESI Act. The said
order was again modified on 09.03.1988 to the effect that the words
"payments" and "allowances" occurring in order dated
17.07.1987 shall be substituted by the words "provide" and
the appellant has not referred to or mentioned about the two important orders
that has been passed by the High Court. The said order would show that:
employer company have initially opposed the writ petition filed by the
Employees Union and had also prayed for vacation of the ex-parte interim order
dated 19.05.1986 passed by the High Court and/or prayed for suitable
modification of the order to safeguard the interest of the respondent company
(employer), in view of the provisions of the Act. However, the High Court after
hearing the parties, confirmed the interim order dated 19.05.1986 and directed
that no deduction shall be made either from the employer or the employees
towards the contribution under ESI Act provided the respondent employer shall
pay medical allowance to its workmen. Respondent No.2 again applied for
modification instead of medical allowance, Respondent No.2 was providing/willing
to provide medical facilities.
High Court thereafter by order dated 09.03.1988 substituted the words
"payment" and "allowances" with "provide" and
"facilities". Therefore with the modification of the initial ex parte
order dated 19.05.1986 by subsequent orders dated 17.07.1987 and 09.03.1988,
the respondent No.2 was restrained from making contribution to ESIC and was
directed to provide medical facilities to the employees.
was not providing medical facilities to the employees in asmuch as the
employees themselves contented in the writ petition that the hospital of ESIC was more than 12 kms away from the factory and even
ordinary medical facilities are not available to them and it was therefore,
impossible for them to avail of the facilities." It is submitted by
learned senior counsel that under compulsion of the above order, the employer
company did, in fact, provided medical facilities to the employees as per
directions of the High Court and that the employees were also fully satisfied
with the medical facilities provided by the employer and have never raised any
grievance till date. It is also submitted that the respondent-company has spent
large amount of money in view of the order of the High Court for providing
medical facilities and subsequently also paid medical allowances to the
employees. It is stated that if the High Court had not passed the order of
injunction, the respondent-company would have contributed to the ESIC instead
of spending monies on the medical facilities and allowances. In these
circumstances, Mr. Anil Divan submitted 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 medical facilities as per the
directions of the High Court and it would cause extreme and grave hardship to
the employer if it is required to pay contribution for the past for no fault of
its own. It is also submitted that no party should suffer because of the orders
of the Court if duly complied with.
much force, substance and merit in the above submission of the learned senior
further pertinent to see that the first interim order was passed by the High
Court on 19.05.1986 and it was modified on the application of the respondent
No.2 on 17.07.1987 and 09.03.1988. The interim orders were not challenged at
all by the ESIC and were thus accepted. Despite the pendency of the matter for
17 years, the ESIC did not file any reply or counter affidavit in the writ
petition nor filed any application for variation/vacation of the stay as stated
in the special leave petition and in fact accepted the interim order. It was,
thus, not disputed by the ESIC that the employees were not getting any medical
facilities from ESIC and they were in fact getting medical facilities from the
High Court observed as follows:-
since there was an interim order of this court dated 19.05.1986 as modified on
17.07.1987, which directed that no deduction shall be made from the employer or
employees towards contribution for E.S.I, and in fact E.S.I facility was not
availed by the employees of respondent No. 3 hence in our opinion it would be unfair
if the respondent No.3 and its employees are directed to pay contribution for
the period when they never got this facility. Learned Counsel for respondent
No.3 has stated that the respondent No.3 was giving medical relief to its
employees on its own and no medical benefit was given by the E.S.I Corporation.
Under these circumstances, we direct that no contribution shall be realized
from the employer or employees till today towards E.S.I contribution, but from
today onwards they will start paying E.S.I Contribution and employees may avail
benefit of the E.S.I Scheme. With the above observation, this petition is
disposed off finally." 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 i.e. from
the date of disposal of the writ petition and should not bear with the
liability for the past inasmuch as the employees of the respondent No.2 has not
availed any medical facilities from ESIC and at the same time the employer was
providing the medical facilities due to interim order of the High Court. In
these circumstances, 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.
apart it is important to note that in the past 17 years when the interim orders
passed by the High Court was enforced, several employees have left/retired and
were paid the entire salary without any deduction and, therefore, it will be
impossible for the employer to recover the part of the employees contribution
in respect of the ESIC from the employees.
separate counter affidavit was filed by the Mazdoor Union in support of the
regards the question of law raised by learned counsel for the ESIC regarding
the view taken by the High Court, we are of the opinion that the view taken by
the High Court was on account of the peculiar facts and circumstances of the
case. As already noticed, the deduction of contribution of the members of the Union had been specifically stayed by the High Court and
the same continued for a period of 18 years till the disposal of the petition
and that none of the members of the Union
had availed facilities of the ESI. In our view, passing of the final order by
the High Court directing the payment of 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
the various judgments referred to above. There has been no postponement 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 18 long years, provision of medical relief by the Management. The High
Court had directed deduction of contribution with effect from the date of the
judgment, which, in our opinion, is perfectly justified.
apart, the members of the Union included casual, temporary, contractual, badli
workmen and it will be practically impossible to find each and every member of
the Union to recover their contribution for the last 18 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 judgments relied on by counsel for the appellant are distinguishable
on facts and on law. The order passed by the High Court, in our opinion, is
perfectly justified in view of the facts and circumstances of the case and it
has been repeatedly held by this Court that such a relief can be granted in the
peculiar facts and circumstances of the case and that there can be an exception
as in the present case and, therefore, it cannot be said that the directions
issued by the High Court are not correct or that they are contrary to the power
under Article 226 of the Constitution of India.
High Court, in our opinion, while disposing off the writ petition filed by the Union 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 have been availed by the workmen from ESIC
and the employer had provided medical facilities to the workmen as per the
Court orders and also had paid medical allowances.
result, all the three appeals are dismissed and the judgments passed by the
High Court are affirmed. However, there will be no order as to costs.
question of law is left open to be decided in an appropriate case.