Full Judgment Text
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 7
CASE NO.:
Appeal (civil) 1727 of 2005
PETITIONER:
Employees State Insurance Corporation
RESPONDENT:
Distilleries & Chemical Mazdoor Union & Ors.
DATE OF JUDGMENT: 17/07/2006
BENCH:
Dr. AR. Lakshmanan & Lokeshwar Singh Panta
JUDGMENT:
J U D G M E N T
WITH
Civil 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.
CIVIL 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.
This 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
Leave granted.
This 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.
Since 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.
Respective employer, the Trade Union and the State of U.P. have
been impleaded as party respondents in these appeals.
We 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.
A writ 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
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 7
No.2-herein.
The 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.
An 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 "allowance".
The Court modified the above order dated 17.07.1987 as sought
for.
The 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 employees Union.
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.
An interim order was passed in the writ petition to the
extent\005.
"No 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:
"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 employee may avail benefit of the E.S.I
Scheme"
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 7
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.
We 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:
a) that the 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 various decisions.
b) that the 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.
c) that the directions given by the High Court not to
deduct contributions are not contrary to the law laid
down by this Court in Gasket Radiators Pvt. Ltd. Vs.
Employees’ State Insurance Corporation and
Another reported in (1985) 2 SCC 68.
d) 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.
e) 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.
f) that the 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. Vs. Kerala State Handloom Development
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.
g) that the 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
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 7
assisting them indirectly and, therefore, this is a fit
case for interference by this Court under Article 136 of
the Constitution of India.
Counter affidavit has been filed by respondent No.1
Mazdoor Union and the respondent No.2-employer.
Mr. 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.
It is 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, many anomalies.
a) 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.
b) 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
Corporation.
c) That 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.
With 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
"facility".
That 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:
"The 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
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 7
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.
The 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.
ESIC 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.
We see much force, substance and merit in the above
submission of the learned senior counsel.
It is 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 employer.
The High Court observed as follows:-
"However, since there was an interim order of this
court dated 19.05.1986 as modified on 17.07.1987,
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 7
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.
This 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.
A separate counter affidavit was filed by the Mazdoor Union
in support of the employer.
As 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.
This 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
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 7
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.
The 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.
In the 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.
The question of law is left open to be decided in an
appropriate case.