State Insurance Corporation Vs. M/S. Bhakra Beas Mgmt. Board & ANR.  INSC
1597 (17 September 2009)
IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.
8335 OF 2004 Employees State Insurance .... Appellant Corporation Versus Bhakra
Beas Management Board & .... Respondents Anr. WITH CIVIL APPEAL NO. 8336 OF
O R D E R
APPEAL NO. 8335 OF 2004 Heard learned counsel for the parties.
appeal has been filed against the judgment and order dated 14.11.2002 of the
High Court of Delhi at New Delhi whereby the appeal filed by the respondent No.
1 herein has been allowed and it has been declared that the respondent No. 1
Board is not liable to make any contribution towards the Employees State Insurance
in respect of the impugned demand.
The facts in detail have been given in the impugned judgment and
hence we need not repeat the same herein.
2 It appears that the appellant had issued a notice under Section
45-A of the Employees State Insurance Act, 1948 (hereinafter for short 'the
Act') for making employer's contribution towards the employees state insurance.
The respondent No.1 Board challenged that notice before the Employees State
Insurance Court, Delhi. It appears that neither the workers concerned of the
respondent No. 1 Board nor any one of them in representative capacity were made
parties in the petition under Section 75 of the Act before the Employees State
Insurance Court or before the High Court.
The Employees State Insurance Court decided in favour of the
appellant and against the respondent No. 1 Board and directed the respondent
No. 1 to pay its contribution towards the employees insurance. Against the said
order of the Employees State Insurance Court, the respondent No. 1-Board filed
an appeal under Section 82 of the Act before the High Court and the High Court
has allowed the said appeal holding that the sub-stations of the respondent No.
1 Board are not factories within the meaning of the Act. Hence this appeal by
This Court has recently held in the case of 3 Director, ESIC &
Ors. 2009 (11)SCALE 766 as under :
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 4 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. Since the 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 passing any order by the
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 5 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 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
the workers of the respondent No. 1 nor any one of them in representative
capacity were impleaded either 6 before the Employees State Insurance Court or
before the High Court. In our opinion, this is in violation of the principles
of natural justice. Hence, we allow this appeal, set aside the impugned
judgment and order of the High Court as well as that of the Employees State
Insurance Court and remand the matter to the Employees State Insurance Court
for deciding the same after impleading the workers of the respondent No. 1
Board or their union in a representative capacity. Since, the case pertains to
the year 1987, we request the Employees State Insurance Court to decide the
allowed. No order as to the costs.
Appeal No. 8336/2004 For the reasons stated in order passed in Civil Appeal No.
8335/2004, this appeal is also allowed and the impugned judgment of the High
Court as also of the Employees Insurance Court are set aside and the matter
remanded to the Employees State Insurance Court for deciding a fresh after
impleading the workers of the Respondent No. 1 or their union in a
representative capacity. Since, the case pertains to the year 1987, we request
the Employees State Insurance Court to decide the same expeditiously.
allowed. No order as to the costs.
.....................J. (MARKANDEY KATJU)
.....................J.(ASOK KUMAR GANGULY)