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Report No. 126

4.8. Coming to the statistical side of the performance of the Corporation, it appears that 1,122 claimants out of 6,558 claims repudiated between 1979-80 to 1986-87 filed suits/writ petitions in the court. The information tabulated in Annexure II would reveal at a glance that for most of the years, except for 1980-81 and 1983-84, most of the cases were decided against the LIC compared to those decided in its favour. Even in the aforementioned years, the ratio of cases decided in favour of the Corporation and against it were 50:50.

It, however, appears that once the case was decided against the Corporation by the court of first instance, ordinarily temptation to prefer appeal was resisted, implying that the decision of the court of first instance was accepted as correct. The Corporation also pointed out that of the 1,122 claims filed against it between 1979 and 1987, it conceded the claims of 441 suitors.

It would immediately appear that at least these 441 suitors should not have been forced to go to the court. The dispute appears to have been raised where the claim on an average is of Rs. 40,000, meaning thereby that the claim is put forward by persons belonging to the middle class. The question, however, has to be posed in a different manner.

Should a monopoly by its litigation policy force the people belonging to lower middle class, economically lower class and persons belonging to that group who take life insurance policy with utmost difficulty because they have little cushion and saving is a luxury, to go in for litigation as the last resort at a time when the benefit is needed the most? Because of this manifest treatment on the part of the Corporation, the courts have been constrained to observe that such monopolistic concern should not stand on technicalities and the obligation on the part of the State or its instrumentalities to act fairly can never be over-emphasised.

4.9. The next monopolistic concern is the State Insurance Corporation set up under the Employees State Insurance Act, 1948. As the long title of the Act shows that it was an Act to provide for certain benefit to employees in case of sickness, maternity and employment injury and to make provision for certain other matters in relation thereto, such as industrial sickness, industrial injury, et al. The Act appears to have been enacted in pursuance of the directive principles set out in Articles 38, 41, 42, 43 and 46.

The scheme of the Act briefly stated is that a Corporation would be set up, known as Employees State Insurance Corporation, for the administration of the scheme of Employees State Insurance in accordance with the provisions of the Act. The funding programme was a contribution by the employees covered by the Act and their employers.

Section 28 sets out the purposes for which the fund may be expended. In short, if the employees covered by the Act contribute in return for certain benefits, it would be a travesty of the Act if the contribution of the workmen are used to defeat the claims of the workmen themselves. The Act provides for setting up a court, called the Employees State Insurance Court, for adjudication of disputes arising under the Act.

The Corporation has set up hospitals and medical dispensaries in numerous towns for the benefit of the workmen. Any employee entitled to the benefit under the Act can approach the authority and the benefit has to be granted to him if he is otherwise qualified for the same. In the event of a refusal, he can resort to the court. Against the decision of the court, an appeal can lie to the High Court on a substantial question of law.

4.10. A query similar to the one addressed to the Life Insurance Corporation was also addressed to the ESI Corporation. The Corporation informed the Commission that the litigation cost was 57.72 lakhs during the period of seven years. It came to light that the Corporation pursued an employer for reimbursement of Rs. 531 paid to the employee which, according to the Corporation, was reimbursable for the default of the employer.

The approach of the Corporation appeared to be bordering on ludicrous. No point of law was involved and when the court pointed out the obligations of the Corporation, later on it came to know that there were numerous such appeals which were subsequently withdrawn. Occasionally, the litigation is pursued on a specious plea that a point of law is involved which, if not correctly decided, would expose Corporation to unjust claims.

This is more a facade and camouflage. If any such issue arises, Corporation being a public sector undertaking can certainly obtain the opinion of the Attorney-General or litigate the matter before the first court and if the interpretation of law is against it, be done away with further litigation. ESI Court dockets are equally clogged and the energies of the employees are fruitlessly wasted in litigation forced upon them by the Corporation.

4.11. The next public sector undertaking which deserves the notice for discussion is the one set up under the Employees Provident Funds and Miscellaneous Provisions Act, 1952. As the preamble of the Act shows, it was enacted to provide for the institution of provident funds, family pension fund and deposit linked insurance fund for employees in factories and other establishments. Obviously, it was for providing social security in old age and in case of undeserved want.

The Central Government was to set up a Board of Trustees to administer the fund, called Provident Fund, to be set up urger a scheme to be called the Employees Provident Funds Scheme. The funding programme was to consist of contribution of the employees and the employer. Why does one contribute to provident fund, especially the one who hardly is in a position to make his both ends meet? The answer obviously is to provide for a rainy day and if this compulsory saving is not available when the need has arisen, the scheme itself comes into disrepute.

A case can be cited to convince the same.1 It need not be recapitulated here. It is a truism that the payment under the provident fund scheme which has become due and payable is hardly received in time. The litigation on this account is galore. The information supplied by the organisation has been set up in a tabulated form (See Annexure III).

1. P.K. Kartiyani v. Regional Provident Fund Commissioner, (1983) 2 GLR 927.

4.12. It may be true, as pointed out by the Commissioners of the Scheme, that most of the litigation is attributable to the deliberate failure on the part of the employers to remit their contributions and a two-pronged litigation has to be started: (1) for recovery; and (2) by way of a prosecution. It is, therefore, said by the organisation that litigation becomes inevitable on account of the recalcitrant conduct of the employers. Whatever that may be, way has to be, found by the organisation for avoiding litigation, if need be by a radical amendment in the Act. Otherwise the courts' dockets get murkier and murkier.

4.13. Assuming that litigation as a whole is unavoidable, an alternative method for resolution of dispute has to be found. An alternative method could be of a standing committee representing the employers, employees and the organisation to which every case can be taken wherever the dispute arises and the result of it must be binding. Today most of the countries are in search of non-court forums for resolution of disputes.

It is, therefore, necessary for such an organisation, which is devoting itself to expanding social justice benefits to the employees working in industries, to organise such a forum for resolution of disputes and which must as well as satisfy the employers. The organisation is triangular in character and all the affected interests must have confidence in a forum for resolution of disputes arising amongst them. The Law Commission would certainly devise such a forum for their consideration.

Government and Public Sector Undertaking - Litigation Policy and Strategies Back

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