Full Judgment Text
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CASE NO.:
Appeal (civil) 1726 of 2005
PETITIONER:
Employees State Insurance Corporation & Ors
RESPONDENT:
Jardine Henderson Staff Association & Ors
DATE OF JUDGMENT: 25/07/2006
BENCH:
Dr. AR. Lakshmanan & Lokeshwar Singh Panta
JUDGMENT:
J U D G M E N T
WITH
Civil Appeal Nos.3132, 3133, 3134, 3135, 3149, 3136, 3137,
3138, 3139, 3140, 3141, 3142, 3143, 3144, 3145, 3146,
3148, 3147 & 3150 of 2006
(@ SLP (C) Nos. 17431-17435, 19447-19451, 19453-19457,
19466-19470, 24210, 20831-20834, 20836-20840, 20841-
20847, 20849-20853, 20855-20864, 20866-20873, 20874-
20881, 20882-20891, 20893-20897, 20898-20907, 20933-
20939, 24197-24206, 22783-22790 and 25482 of 2004)
Dr. AR. Lakshmanan, J.
Leave granted in the special leave petitions.
Civil Appeal No. 1726 of 2005 and 119 special leave
petitions (now civil appeals) have been filed by the Employees
State Insurance Corporation (in short the "Corporation") against
the common final judgment and order dated 16.03.2004 passed
by the Division Bench of High Court at Calcutta in APO No. 124
of 2001.
Civil Appeal No. 1726 of 2005 arises out of the writ petition
filed by Jardine Henderson Staff Association and Others wherein
they challenged the Notification dated 23.12.1996. The
Notification was issued by the Union of India by which the
Central Government amended Rules 50, 51 and 54 of the
Employees State Insurance (Central) Rules, 1950, pursuant to
which the wage limit for coverage of an employee under Section
2(9)(b) of the Employees State Insurance Act (in short ’the Act’)
was enhanced from Rs.3,000/- to Rs.6,500/- instead of the
existing wage ceiling of Rs.3,000/- p.m. Various Employees
Associations challenged the Notification. They prayed for
quashing the Notification and also, in some of the appeals, for
declaring the Amended Rules as ultra vires. Petitions were filed
mostly by the Employees Union both in the original side and the
appellate side of the High Court at Calcutta.
A learned Single Judge of the High Court disposed off all the
writ petitions by a common judgment and order, by quashing the
amendment of the Rules of 1950 with the result that there was
no enhancement of wage ceiling. About 63 appeals were filed by
the Corporation as well as by the Union of India against that part
of the order by which the amendment was quashed. No appeals
and/or cross appeals were filed by any of the writ petitioners.
Therefore, the Division Bench of the High Court, by the
impugned common judgment, allowed the appeals and set aside
the judgment of the learned Single Judge of the High Court. The
High Court held that the enhancement could not be termed as
ultra vires for the purpose of the Act or being inconsistent
therewith as held by the learned Single Judge. The High Court
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further held that all interim orders passed in this connection,
inter alia, staying the operation of the said enhancement are
vacated. However, the High Court did not stop at that, but,
proceeded to direct that the employers who had stay order in
their favour, will implement the amendment only from the date of
the impugned judgment of the High Court dated 16.03.2004
though the amendment came into operation w.e.f. 01.01.1997.
The Corporation, being aggrieved of this direction of the
High Court giving liberty to the employers to comply with the
Notification on and from 16.03.2004, preferred the above civil
appeals. The High Court also gave liberty to the employers to
apply for exemption and directed the State Government to
dispose off the same within two months.
Mr. C.S. Rajan, learned senior counsel ably assisted by Mr.
V.J. Francis, learned counsel argued the case on behalf of the
Corporation.
Mr. Rajan submitted that the condition imposed by the
Division Bench of the High Court is not proper for the reason
that once the Notification is enforced, the applicability of the
same will be from the date of Notification and not from any future
date. This submission, according to him, was upheld by this
Court in the case of Employees’ State Insurance Corpn. Vs.
Kerala State Handloom Development Corpn. Employees
Union (CITU), Kannur, Dist. Kannur, Kerala and Others,
(1994) 1 SCC 268 and that the interim orders passed at different
stages will not have any effect on the applicability and
enforceability.
Mr. Rajan further argued that the principle of prospective
overruling was laid down for the first time by this Court in the
case of I.C. Golak Nath & Ors. vs. State of Punjab & Anrs.,
[1967] 2 SCR 762 and applied by this Court in a series of
decisions till now, will not be applicable to the present case
coming under the Act for various reasons. Another Constitution
Bench of this Court reiterating the above principles has also
observed in the case of Managing Director, ECIL, Hyderabad
and Others vs. B. Karunakar and Others, (1993) 4 SCC 727 as
under:
"It is now well settled that the courts can make the law
laid down by them prospective in operation to prevent
unsettlement of the settled positions, to prevent
administrative chaos and to meet the ends of justice"
According to Mr. Rajan, the law is well settled in this case
i.e. the upward revision from Rs.400/- p.m. in the ceiling of
wages has been upheld by various High Courts and also by this
Court inasmuch as that with the upward revision more
employees will be eligible to the benefits under the Act and they
will have to make a little contribution @ 1.75% from their wages
every month. The employees share is to the extent of 4.75% p.m.
under Rule 51 of the Employees State Insurance (Central) Rules,
1950. The law is also settled to the effect that once interim stay
is granted with regard to the operation of the new law, and the
writ petition is dismissed subsequently, the operation of the law
will relate back to the original date of enforcement and, therefore,
there is nothing in this case to unsettle the settled law which
would have effect on past transactions and, therefore, it is not
necessary to bring in the principle. Moreover, in this case, the
Act is made applicable for giving medical benefits to all those
employees only, whose wages do not exceed the prescribed limit
notified by the Central Government as stated above. In this case,
there was no dispute about the applicability of the Act but the
question was about the ceiling limit. The reason, as pointed out
above, is to give benefits to more number of employees. The
employees will not get benefit unless the proper machinery are
set up for the purpose. That cannot be done overnight but over a
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period of years.
In this context, the observations made by this Court in
Gasket Radiators Pvt. Ltd. Vs. Employees’ State Insurance
Corporation and Another, (1985) 2 SCC 68 was relied on as
relevant. Learned senior counsel relies upon the following
observations from that case:
"In fact, it may often happen that the rendering of a
service or the conferment of a benefit may only follow
after the consolidation of a fund from the fee levied.
Hospitals, for instance, cannot be built in a day nor
medical facilities provided right from the day of the
commencement of the scheme. It is only after a
sufficient nucleus is available that one may reasonably
expect a compensating return."
X X X
"Therefore, whether the special contribution is to
be viewed as a tax, fee or neither it has sufficient
constitutional protection."
While replying to the arguments advanced by learned
counsel for the respondents that many employees have retired
from service or have left the company or organisation, as
according to Mr. Rajan, has no relevance because the liability
under the Act continues till the date of employment of the
employee concerned, or till the closure of the establishment.
This is also settled by this Court in the case of Employees’ State
Insurance Corporation vs. Hotel Kalpaka International,
(1993) 2 SCC 9.
The Division Bench has also noticed that the Corporation
has to spend approximately Rs.800/- p.a. for each insured
employee who has to be given the benefit. Naturally, therefore,
once the machinery is set up it must keep going and its
functioning cannot be stopped merely because some employees
approach the High Court and has obtained stay against
extending the benefits to more employees.
While answering the complaint of efficiency of the ESIC
Health System as not up to the mark comparing it with other
large hospitals in the country, Mr. Rajan submitted that large
hospitals are not available in every part of the country and it is at
that moment the need of an ESI Hospital comes into picture. It
can never be said at that time that the ESI machinery will not be
useful. It is also well known that the ESI Hospital which is run
in a remote area also makes reference of a serious case to a big
hospital at the cost of the Corporation and for that purpose a
share from the wages of the employees is not deducted and for
this purpose there is no limit with regard to the wages earned by
the insured employees.
Mr. Rajan also made reference to the principles laid down
by this Court in the case of Employees’ State Insurance Corpn.
vs. All India ITDC Employees’ Union and Others, (2006) 4
SCC 257 wherein this Court had accepted, on principle, the
submission of the Corporation that it is not open to the High
Court that the Notification has to operate prospectively. It is
submitted that the law in this respect has been reiterated by this
Court in the said ruling of this Court and the appellant also
relies on the said ruling which is the latest judgment.
According to Mr. Rajan the amounts that are collected by
the Corporation goes into the fund maintained under Section 26
of the Act and the same is utilized as contemplated under Section
28 of the Act. It is laid down in the case of Hotel Kalpaka
International (supra) as under:
"Under Section 26 of the Act all contributions are paid
into a common fund. Such a fund will have to be
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administered for the purposes of the Act as indicated
under Section 28. Therefore, the employer cannot
contend that he did not collect the employees’
contribution and hence, he cannot be called upon to
pay".
He also submitted that the principle of unjust enrichment
as enunciated by this Court in the case of Mafatlal Industries
Ltd. And Others vs. Union of India and Others, (1997) 5 SCC
536 will not be applicable to this case because this is not a case
where there has been any illegal collection of any levy on the
basis of an enhancement, which was declared unconstitutional
and illegal by the Courts due to which the party who collected
the amount had to refund the amount or otherwise it would have
become an unjust enrichment.
It is also pointed out that this Court has noticed in the case
of Bharagath Engineering vs. R.Ranganayaki and Another,
(2003) 2 SCC 138 that even after the death of the insured
employee who survived for a day, and even before the registration
with the Corporation, his dependants are entitled to receive the
benefit under the Act. Therefore, it is submitted that the benefits
that are granted under the Act are unique. Moreover, if any
employee or employer makes a claim that they are giving better
benefits, then it is open to that party to apply to the appropriate
Government for exemption under any of the provisions of
Chapter-VIII of the Act, i.e. Sections 87 to 91A. That only means
that the liability of both the employee and the employer under
the Act continue till the law takes its course as provided under
the Act.
Mr. Rajan, therefore, submitted that all the 120 appeals
filed by the Corporation against the common judgment of the
High Court are fit to be allowed with such directions as this
Court may be inclined to give which will have the effect under
Article 141 of the Constitutional of India.
On behalf of the respondents, we heard the arguments of
Mr. Gaurab Kumar Banerjee, learned senior counsel, Mr.
P.H.Parekh, Mr. Gaurav Agrawal, Mr. Avijit Bhattacharjee
learned counsel, Mr. Pradip Ghosh, Mr. Kailash Vasdev, learned
Senior counsel, Mr. E.C.Agrawala, Mr. K.V. Viswanathan, Mr.
Rauf Rahim, Mr. Suresh Kumar, Dr. Sumeet Bhardwaj, Mr. Vipin
Gogia, Mr. Maninder Singh, Ms. Meera Mathur, Mr. Deepak
Sabharwal, Mr. Chiraranjan Addey, Mr. Rajindra Dhawan, Ms.
Anitha Shenoy, Mr. A. Bhattacharya, Mr. Rana Mukherjee, Mr.
Arun Kumar Sinha, Mr. K.V. Mohan, Ms. Kumud Lata Das, Mr.
Sushil Kumar Jain, Mr. Bharat Sangal, Mr. Jatin Zaveri, Mr.
Pradeep Misra, Mr. Vairav Gaggar, Mr. Ghanshyam Joshi,
learned counsel and Mr. R. Venkatramani, learned senior
counsel for their respective parties.
M/s Jardine Henderson Ltd. submitted a statement of
expenditure for medical expenses incurred by the Company on
the staff, during the period from the year 2001-2004. Likewise,
other respondents have also filed statement of submissions in
the form of affidavit on behalf of their parties.
Lagan Jute Machinery Company Limited \026 respondent
No.14 in SLP (Civil) No. 19454 of 2004 in APO No. 80 of 2001
submitted its submissions. It was submitted by learned counsel
for the said Company that the Company was prevented by orders
of Court from making deductions for ESI contribution from wages
and salaries of the employees. These orders were passed in writ
petitions filed by the Employees Unions and in view of the
injunction order dated 22.05.1997 passed by the Calcutta High
Court, the Company was prevented from deducting ESI
contribution and thus was prevented from making any payment
to ESI. In order to provide medical facilities and benefits to the
employees, the Company entered into a Settlement Agreement
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with the Employees Union under which the company has
incurred a total expense of Rs.97,06,000/- for the period 1997-
2004 till the time of passing of the impugned order. It is
submitted that in the event the respondent-Company was liable
to pay ESI contribution, the total payment would have been
approximate at Rs. 33 lacs. Therefore, as against a total
expenditure of Rs.33 lacs under the ESI, the respondent has
incurred an expense of Rs. 97 lacs for providing medical
facilities. After the impugned judgment in the year 2004, the
respondent-Company is making payment of ESI contribution. In
these circumstances, it is submitted by learned counsel that the
respondent should not be made liable to make payment from the
period 1997-2004 to the Corporation and that the order passed
by the Calcutta High Court is just and fair in the facts and
circumstances of the case.
M/s Philips India Limited - respondent Nos. 8 & 9 (arising
out of APO No. 82 of 2001) also filed their statement. Mr. Jay
Savla, learned counsel submitted that in the year 1999, a
Memorandum of Settlement was arrived at between this
Company and the Workmen Union and by virtue of the said
Memorandum, benefits extended to the employees were far
superior in comparison to the medical benefits extended under
the said Act. The Memorandum of Settlement has also been
annexed as Annexure-R2 with the counter affidavit filed by them.
The said settlement was amended in the year 2000 and
thereafter in 2002 (Annexure-R3). He made the following legal
submissions:
a) the Division Bench while upholding the Notification has
held that the same would apply from the date of the judgment.
The said observation, according to the learned counsel, is
justified in view of the following legal submissions:
(i) Principles of Actus Curiae Neminem Gravabit - No
party shall be prejudiced for the act of Court.
It is submitted that interim stay order was granted on 25.03.97
which continued till the passing of the Division Bench judgment
dated 16.3.2004. By the interim order, the respondents were
restrained from deducting the contribution required to be
deposited with the Corporation. Further, the respondents were
directed to continue to provide existing medical benefits. Under
Section 39 of the ESI Act employees’ contribution is to be
deducted from their salary. The contribution by the employer is
to be made as per Rule 51 of The Employees’ State Insurance
(Central) Rules, 1950 which is given below. Rule 51 of the
Employees’ State Insurance (Central) Rules, 1950 is as follows:
"Rates of contribution- The amount of contribution for
a wage period shall be in respect of-
(a) employer’s contribution, a sum (rounded to the next
higher multiple of five paise) equal to [four and
three-fourth per cent] of the wages payable to an
employee; and
(b) employee’s contribution, a sum (rounded to the next
higher multiple of five paise) equal to [one and three-
fourth per cent] of the wages payable to an
employee"
In view of interim stay order which continued for almost seven
years, the employers were restrained from making any
deduction. Whereas, the employers continued to provide
satisfactory medical benefits to its employees. The said interim
order was not appealed or challenged by the Corporation nor
was it stayed during the pendency of the appeal before the
Division Bench.
It is further submitted that with the passage of time several
employees would have left the organization and to deduct the
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employees contribution from their salary is not workable.
In the matter of Rajesh D. Darbar & Ors vs. Narasingrao
Krishnaji Kulkari & Ors., (2003) 7 SCC 219, this Court held
that where the nature of relief, as originally sought, has become
obsolete or unserviceable on account of developments
subsequent to the suit or even during appellate stage, it is unfair
that the relief is moulded, varied or reshaped in the light of the
updated facts.
In the matter of Mohammed Gazi vs. State of M.P.,
(2000) 4 SCC 342, the facts were that on account of litigation
initiated by one of the respondents, the appellant was prevented
from taking benefit of the acceptance of his tender notice. For no
fault of his, the appellant was prevented from collecting the
tendu leaves. The High Court directed that a sum of Rs.
30,000/- be deducted from the earnest money of the appellant.
Such a direction was not sustained by this Court.
The maxim of equity which is founded upon justice and
good sense was applied as well as other maxim "lex non cogit
ad impossibilia" \026 the law does not compel a man to do what he
cannot possibly perform. The applicability of the aforesaid
maxim has been approved by this Court in Raj Kumar Dey vs.
Tarapada Dey (supra) and Gursharan Singh vs. New Delhi
Municipal Committee (supra).
(ii) Prospective applicability/ overruling of the Judgment:
It is well settled that declaration of law can be made prospective
i.e. operative from the date of the judgment. This Court in
several decisions has laid down the law and declared it to be
operative only prospectively. The Constitution Bench of this
Court in the matter of Somaiya Organics (India) Ltd. & Anr.
vs. State of U.P. & Anr. reported in (2001) 5 SCC 519 has
discussed at length the principles of Prospective over-ruling
which are enunciated in the following paras:-
"27. In the ultimate analysis, prospective overruling,
despite the terminology, is only a recognition of the
principle that the court moulds the reliefs claimed to meet
the justice of the case- justice not in its logical but in its
equitable sense. As far as this country is concerned, the
power has been expressly conferred by Article 142 of the
Constitution which allows this Court to "pass such decree
or make such order as is necessary for doing complete
justice in any cause or matter pending before it." In
exercise of this power, this Court has often denied the
relief claimed despite holding in the claimants’ favour in
order to do "complete justice."
28. Given this constitutional discretion, it was perhaps
unnecessary to resort to any principle of prospective
overruling, a view which was expressed in Narayanibai
Vs State of Maharastra at p.470 and in Ashok Kumar
Gupta Vs. State of U.P. In the latter case, while dealing
with the "doctrine of prospective overruling", this Court
said that it was a method evolved by the courts to adjust
competing rights of parties so as to save transactions
"whether statutory or otherwise, that were effected by
the earlier law". According to this Court, it was a rule.
"of judicial craftsmanship with pragmatism and judicial
statesmanship as a useful outline to bring about smooth
transition of the operation of law without unduly affecting
the rights of the people who acted upon the law operated
prior to the date of the judgment overruling the previous
law."
Ultimately, it is a question of this Court’s discretion and
is, for this reason, relatable directly to the words of the
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Court granting the relief."
In the matter of Harsh Dhingra vs. State of Haryana & Ors.,
(2001) 9 SCC 550, this Court held as follows:
"7. Prospective declaration of law is a device innovated
by this Court to avoid reopening of settled issues and to
prevent multiplicity of proceedings. It is also a device
adopted to avoid uncertainty and avoidable litigation. By
the very object of prospective declaration of law it is
deemed that all actions taken contrary to the declaration
of law, prior to the date of the declaration are validated.
This is done in larger public interest."
This proposition of prospective overruling has been followed in
several other decisions as well.
(iii) Undue Hardship:
It is submitted that if the order of the Division Bench is not
held to be operative prospectively, the same would cause grave
and undue hardship to the employers including M/s Philips
India Ltd. Philips India Ltd. have not only extended medical
benefits by spending huge amount but have further not deducted
any amount statutorily required from the salary of the employees
in view of interim prohibition order. To direct the deposit of
monies, for this period would amount to undue and grave
hardship and would be inequitable to the employer.
Mr. Chiraranjan Addey, who is the counsel for respondent
No.3 in civil appeal (arising out SLP (C) Nos. 19447-451/2004
made the following submissions:
According to the learned counsel, the Company had spent
by way of medical benefits for such employees who came outside
the purview of the Act pursuant to stay order granted by the
Court is estimated for the three establishments a sum of Rs. 30
lacs upto 16.03.2004 and that the employees who have retired
from the respondent-Organisation during this period of 7 years
when the stay order of the Court was in operation had also
availed of the benefit and, therefore, if the liability of the
respondent-Company towards payment of ESI contribution is
made retrospective, the employer will not be able to recover the
contributions from the concerned employees and the employer
will have to make both the employer’s and the employees’
contribution retrospectively, notwithstanding the fact that the
company has incurred huge expenditure for granting liberal
medical benefits as coverage of such employees was stayed.
It is also pointed out that the employers were not the
petitioners in the writ court and the order was imposed upon
them and the management was compelled to abide by the same
and so far as the Corporation is concerned, they are in the most
enviable position. The Corporation took full advantage of the
interim order and did not provide any benefit to the employees at
all nor did they move to get the order vacated and yet now they
are claiming the contributions for the past period which was
covered by the said interim order of the learned Single Judge.
That will be an unjust enrichment by the Corporation at the cost
of the employers. Learned counsel also cited the following
decisions for invoking the doctrine of prospective overruling:
Raymond Ltd. vs. M.P. Electricity Board, (2001) 1 SCC 534
Managing Director,ECIL vs. B. Karunakar,(1993) 4 SCC 727 (supra)
Ashok Kr. Gupta vs. State of U.P., (1997) 5 SCC 201
Somaiya Organics Ltd. vs. State of U.P., (2001) 5 SCC 519 (supra)
Sarwar Kumar vs. M. Agarwal, (2002) 4 SCC 147
In the light of the principles laid down in the aforesaid
decisions with regard to the innovative concept of prospective
overruling which are applicable also in matters arising out of
statutory interpretation for the purpose of substantial justice in
the exigencies of peculiar fact situations, the counsel requested
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this Court to uphold the decision of the Division Bench of the
Calcutta High Court and that this Court in any event under
Article 142 of the Constitution may make such order as may be
warranted in the peculiar facts and circumstances of this case
for doing complete justice.
M/s. Gaurav Agrawal, E.C. Aggarwala, Jay Salve, C.R.
Addy, A.N. Bardiayar and M/s P.H.Parekh and Co. counsel for
the appellants respectively made their submissions in SLP (Civil)
Nos. 20855-64, 19453-57 etc. they reiterated the submissions
made in their special leave petitions and submitted that, asking
the respondent to pay the contribution now will cause undue
hardship by citing the decisions in Shree Cement vs. State of
Rajasthan, (2000) 1 SCC 765 and British Physical Lab India
Ltd. Vs. State of Karnataka, (1999) 1 SCC 170.
Mr. K.V. Viswanathan, learned counsel on behalf of
respondent No.1/CESC Ltd. in SLP (Civil) No. 19466-19470
made lengthy submissions both on facts and on law. A written
submission was also made with details of the amounts paid and
spent by the management on various items. According to him,
around 14,000 employees of the Company availed the benefits
each year during the period from 1996-2003 and an amount of
Rs.55.30 crores was incurred by CESC Ltd. in providing such
benefits vis-‘-vis the cost incurred for providing such benefits
was also furnished. It is submitted that, as a matter of fact, that
on 03.08.2004 the appropriate authority had exempted CESC
under Section 87 of the Act pursuant to the application filed in
February, 1997 and in the proforma prescribed as on
18.11.1997. It is stated that the delay in disposal of the
application was solely due to the inaction on the part of the
Appropriate Authority. In fact as can be seen from the exemption
order the Assistant Director, CESC had himself reported that
CESC Ltd. has been providing free medical treatment domiciliary,
round the clock emergency treatment, ambulatory facility,
hospitalisation facilities irrespective of the cost involved to all the
permanent employees including employees termed as
apprentices/trainees. It was also noted that M/s CESC Ltd. has
tie up arrangements with 40 different reputed hospitals/nursing
homes in Kolkata and Howrah and that the organization runs as
many as 24 dispensaries with 28 appointed doctors at the factory
locations and has tie-up arrangements with 36 investigation
centres and 42 chemist shops. The Assistant Director, in his
report, has indicated that 98 specialists in and around Kolkata
are empanelled for medical care of CESC employees. The cost of
spectacles, cervical collars, hearing aid etc. are also reimbursed
to the employees. After noticing this report that the prayer for
granting of exemption under Section 87 of the Act for the
permanent employee was granted and that this order has also
been accepted by the Corporation.
The factual situation that emerges according to Mr.
K.V.Viswanathan, therefore, are as under:
1) Today CESC Ltd. pursuant to the application dated
03.02.1997 stands exempted by order dated
03.08.2004 under Section 87 of the Act;
2) During the period from 1997-2003 because of
operation of the injunction order, it was not able to
deduct contribution and pay its contribution.
Moreover, it extended medical facilities as directed
by the interim order;
3) In the exemption application (page 86 of the paper-
book at page 88) the medical benefits given by the
company are set out.
Mr. K.V. Viswanathan submitted that once a party is
injuncted, then violating the order would result in party being
hauled up for contempt. CESC Ltd., the respondent No.1 herein
obeyed the orders and granted its own medical facilities. Order
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of injunction was passed since workers Union had obtained
reliefs in similar writ petitions. CESC Ltd. did not get any
interim order from which it benefited. In fact it was an order of
injunction against CESC Ltd. and not an order of Stay in its
favour. The Corporation did not take any steps to vacate such
injunction order which was passed on 17.04.1997. In fact, the
CESC Ltd. was incurring huge expenditure on medical benefits
and the employees were happy with such arrangement and as of
today also the employees are not aggrieved. Permitting the
Corporation to recover contribution for the year 1996 to 2003,
under such circumstances, would apart from resulting in undue
hardship to CESC Ltd. would also result in unjustly enriching
the Corporation. As rightly held by the Division Bench of the
High Court in impugned judgment, undue hardship will be
caused to the CESC Limited if the arrears are asked to be paid as
the employees would have to pay arrear contribution although
they did not enjoy any benefits during the said period. This is a
fortiori in a case like the present, wherein now the CESC Ltd. has
been exempted under Section 87 of the Act on the ground that its
medical benefits are far superior to the medical benefits as
provided by the Corporation.
Mr. K.V. Viswanathan cited the following two decisions on
the principles of justice, equity and good conscience. By citing
the same, he submitted that this Court has the power to relieve a
party from undue hardship.
1. West Bengal Hosiery Association vs. State of Bihar &
Ors, (1998) 4 SCC 134 and 2. Sree Cement Ltd. and Anr.
Vs. State of Rajasthan & Ors., 2001 (1) SCC 765
He next submitted that the act of Court can prejudice no
party. He said the maxim "actus curiae neminum gravebit" fully
applies to the present case as pointed out in Mohammed Gazi
vs. State of Madhya Pradesh and Ors., 2000 (4) SCC 342.
According to the learned counsel, the judgment cited by the
counsel for the Corporation in All India ITDC Employees Union
case (supra) has no application to the facts of the present case.
This is for the reason that the nature of relief sought by the
Petitioner in the said case was different and also the interim
order as passed in the said case was different from the present
case. In the said case relied by the Corporation, the prayer in
the Writ Petition was for exemption on the ground that the
employer was the Government of India undertaking and
employee stood covered under Section 1(4) of the Act.
Furthermore in the said case there was no positive direction
injuncting the employer from making contributions and
deductions and the only order in that case was an order of stay.
This can be distinguished from the present case as despite being
an order of stay, the employer could have made contributions
and deductions in the said case, however in the present case
since there was a specific order injuncting the CESC Ltd. from
making contributions and deductions such contributions and
deductions could not have been made by the Respondent No.1.
Moreover none of the circumstances which have been set out
herein above were present in the said case as cited by the
Corporation.
Concluding his submission, learned counsel submitted that
no case has been made out by the Corporation which warrants
interference by this Court.
Mr. Gaurab Kumar Banerjee, learned senior counsel
appearing on behalf of respondent Nos. 6 & 7 in civil appeals
(arising out of SLP (Civil) Nos. 20841-47 of 2004) Hindustan
Lever Ltd submitted that, during the 7 years period under
dispute and as a result of the High Court’s order, the Company
has spent far greater amount on the medical facilities to the 39
covered employees who would otherwise have been covered by
the Corporation and the Corporation would have had to provide
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the medical benefits. Learned senior counsel submitted that this
Court will not interfere with an order simply because it is lawful
to do so even if it has legal errors, if the impugned order results
in substantial justice. He relied on Council of Scientific and
Industrial Research vs. K.G.S. Bhatt, (1989) 4 SCC 635 (para
12) and para 23 of ONGC vs. Sendhabhai Vastram Patel,
(2005) 6 SCC 454. He submitted that under Article 142 of the
Constitution, this Court is empowered to pass such orders as
would do complete justice between the parties. It was also
submitted that it is permissible in law to prospectively overrule a
judgment as has been done recently in the case of SBP & Co. vs.
Patel Engineering Ltd., (2005) 8 SCC 618. According to the
learned senior counsel, the decision of this Court in All India
ITDC Employees Union (supra) is clearly distinguishable as
unlike in the present case. In that case, the High Court did not
give any positive directions and the decision of the High Court
was not reversed by this Court. Concluding his argument, the
counsel submitted that if the respondent now starts recovering
from the erstwhile employees, it would severely affect industrial
relations.
M/s K.L.Mehta & Co. advocates argued for respondent No.2
BOC India Limited. Learned counsel also submitted that the
principle of ’actus curiae neminem gravabit’ i.e. the act of Court
shall prejudice no man is fully applicable and, therefore, the
Division Bench qua the respondent directed the said Notification
to operate prospectively. Referring to the decision in Union of
India & Anr. vs. Murugan Talkies, (1996) 1 SCC 504, learned
counsel submitted that this Court has also applied the above
principle in several decisions including 1988 (2) SCC 602 and in
1996 (1) SCC 504 and observed as follows:
"3. It is contended for the respondents that the High
Court has granted the relief taking into consideration
that some workmen had retired and it would be
inequitable to deduct from the meagre wages of existing
employees with retrospective period. Therefore, the
High Court directed deduction of their share from the
date of the judgment. It is needless to mention that
since some of the workmen have already retired and
from some existing workmen deduction from date of
enforcement of the notification would cause great
hardship to them, so it cannot be made to bear the
burden of their contribution with retrospective effect
from the date of the notification towards their share of
contribution.
4. To that extent, the order of the High Court is upheld.
\005 "
Learned counsel further submitted that because of the
interim/final order passed by the High Court, the Corporation
has not rendered any service like medical benefits to the
employees whose wages were above Rs.3,000/- but less than
Rs.6,500/- p.m. Therefore, in absence of any quid pro quo for the
said period of 7 years, no contribution can be claimed by the ESI
either from the respondent-Company or from the employees
especially, when no service/benefit was rendered to the
concerned employees.
Mr. Gaurab Banerji, learned senior counsel also made
submissions on behalf of respondent No.4 Modern Food
Industries Ltd. in SLP (Civil) No. 20861of 2004. He made similar
submissions and cited the same authorities as others did.
Mr. Rana Mukherjee, learned counsel appearing on behalf
of respondent No.5, Engel India Machines & Tools (1987) Limited
made the following submissions.
He submitted that various labour Unions of different
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industries including that of respondent No.5 challenged the said
Notification by filing separate writ petitions in the Calcutta High
Court and the High Court by different orders from time to time
granted injunction with regard to the said Notification. The said
injunction was extended from time to time which, in effect,
injuncted the Management from either collecting or making any
contributions towards the Corporation. Such injunctions were
extended and continued from time to time. On 30.06.1997, by
judgment and order, the learned Single Judge of the High Court
declared the said amendments as ultra vires. Being aggrieved by
the said order, the appellant-Corporation filed 120 appeals before
the Division Bench of the High Court which stood disposed off by
the impugned judgment and order on 16.03.2004. It is
submitted that respondent No.5 by way of abundant caution had
also in the meantime applied for exemption for the said period of
1997-2004 i.e. the date of the impugned judgment and order
under Section 87 of the Act of 1948 which is still pending before
the appropriate Government. Learned counsel has also annexed
certificates, details of expenditure and extracts from the annual
report. It is submitted that the respondent should not be
proceeded against by the Corporation under Section 68 of 1948
inasmuch as the contributions towards ESI fund had not been
made during the period since the Company was prevented by an
order of injunction of the Calcutta High Court and that the said
directions, therefore, require no interference by this Court and
this Court may exercise its powers under Article 142 of the
Constitution of India to do complete justice to the respondent
No.5-herein.
Ms. Mridula Ray Bhardwaj, learned counsel for the
respondent in Civil appeal arising out of SLP 20882-20891 of
2004 etc. submitted repeatedly the same arguments on behalf of
respondent No.5 Westinghouse Saxby Farmer Limited. An
application in the prescribed Proforma-A for exemption from the
provisions of the Act as per and after the Calcutta High Court’s
direction passed in this order dated 07.06.2004 in writ petition
No. 8791 of 2004. On 03.08.2004, the Company further
submitted another set of application in Proforma-A as asked for
by the West Bengal Labour Department’s letter dated
22.07.2004. Thereafter, pursuant to the Government of West
Bengal Labour Department’s notice dated 30.08.2004,
29.10.2004, 16.11.2004 and 26.11.2004, the Company’s
representative duly attended the hearing in connection with the
Company’s exemption application. It is stated that the Company
has submitted the Comparative Table of Benefits given by the
Company to its employees and benefits under the ESI scheme
etc. However, no order has yet been passed or communicated by
the Labour Department in regard to the respondent-Company’s
application for exemption. Learned counsel has also furnished
the amount of medical expenses paid by the respondent-
Company to its employees since 1996-97.
Mr. C.K. Ganguli, learned counsel for the respondent in civil
appeal (arising out of SLP (Civil) Nos. 20933-20939 of 2004 made
submissions on behalf of Hahnemann Publishing Company Ltd.
The learned counsel furnished the details about the medical
allowances given to the employees and submitted that if the
liability is made retrospective, the employer will not be able to
recover the contributions from the concerned employees and the
employer will have to make both employers and employees
contribution. Notwithstanding the fact that the company has
incurred huge expenditure for granting liberal medical benefits
as coverage of such employees since the notification was stayed.
The Central Inland Water Transport Corporation,
respondent No. 21 through Mr. S.D. Gupta who is the Head of
the Central Inland Water Transport Corporation Ltd. filed an
affidavit. It is stated that some employees/workers
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Union/Associations in CIWIC filed a writ petition in the High
Court praying for their exemption from the provisions of the ESI
Act, 1948. That pursuant to an order dated 07.09.2004 passed
by the High Court, the Government of India, Ministry of Labour
and Employment issued a notice dated 16.02.2005 informing
that in connection with exemption from provisions of the Act it
has been decided that hearing would be held on 04.03.2005 in
the said Ministry and all the concerned parties were requested to
attend the hearing and make their submissions. The
representative of CIWIC Ltd. attended the aforesaid hearing on
04.03.2005 and made his submissions. As decided in the said
meeting, CIWIC under cover of its letter dated 23.03.2005
submitted two separate applications both dated 22.03.2005 for
exemption from the provisions of the ESI Act as amended upto
date in respect of its factory establishments which were covered
under the provisions of the said Act. That due consideration of
the aforesaid appeal and the two applications dated 22.03.2005,
the Ministry of labour and Employment issued a notification S-
38014/6/2005-SSS-I dated 05.01.2006 thereby granting
exemption to CIWIC Ltd. From the operation of the ESI Act,
1948 for the period from 01.01.1997 to 30.09. The order reads
as follows:-
"In exercise of the power conferred by section 88
read with section 91-A of the Employees’ State
Insurance Act, 1948 (34 of 1948) the Central
Government hereby exempts the regular
employees in respect of two units of M/s Central
Inland Water Transport Corporation Limited i.e.
M/s. Marine Workshop and M/s Rajabagan Dock
yard both in Kolkata, West Bengal from the
operation of the said Act for the period from
01.01.1997 to 30.09.2006"
A copy of the said Notification has also been annexed and
marked as R-4.
It is submitted that in view of the above, CIWIC has been
exempted from the provisions and operations of the ESI Act,
1948 for the relevant period from 01.01.1997 to 15.03.2004 for
which the special leave petition has been filed by the
Corporation. It is also further submitted that the Corporation
has also been granted exemption from the operation of the ESI
Act for further period upto September, 2006. In view of the
above, learned counsel submitted that the special leave petition
Nos. 20938 and 39 of 2004 be dismissed against respondent No.
21.
Mr. P. Gaur, learned counsel for respondent No.4 in S.L.P.
No. 20840 of 2004 (Siemens Workers Union & Others) submitted
that this Court will be reluctant to interfere with the discretion
exercised by the High Court. In this connection, he cited
Municipal Corporation of Faridabad vs. Siri Niwas, (2004) 8
SCC 195. He also submitted that it is not the case of the
Corporation that the said exercise of jurisdiction is irrational.
In Union of India vs. Murugan Talkies (supra) similar
relief granted by the High Court was not interfered with by this
Court. Therefore, he submitted that the discretion exercised by
the High Court is justified in view of various facts and
circumstances and thus prayed that the appeal filed by the
Corporation be dismissed.
We have given our thoughtful consideration to the questions
and issues involved in this matter. We have also perused the
pleadings, the order passed by the learned Single Judge and the
orders passed by the Division Bench and the written
submissions made by the respective parties along with the
annexures filed therein.
We have already noticed that the respondent-Companies
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have spent large amount of money on the employees and
provided medical facilities in view of the order of the High Court
granting stay/injunction etc. If the High Court had not passed
the order of injunction, the respondent-companies would have
contributed the ESI contribution instead of spending monies on
the medical facilities and allowances. In these circumstances,
the submissions made by learned senior counsel appearing for
the respondents 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 better medical
facilities, in our view holds water and it would cause extreme and
grave hardship to the employer if they are required to pay
contribution for the past several years for no fault of their own.
In our view, no party much less the respondents should suffer
because of the orders of the Court if duly complied with.
We see much force, substance and merit in the submissions
made by the learned senior counsel appearing for the respective
respondents and as duly adopted by the other learned counsel
appearing for other civil appeals.
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 and should not bear with the liability for the past
inasmuch as the employees of the respondents have not availed
any medical facilities from ESIC and at the same time the
employer was providing the medical facilities due to interim
orders of the High Court. 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.
In our view, passing of the final order by the High Court
directing the payment of the 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 various judgments
referred to above. There has been no postponing 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 several years and provision of medical relief by the
Management. The High Court’s direction for deduction of
contribution w.e.f. the date of the judgment in our view, is
perfectly justified. This apart, the members of the union
included casual, temporary contractual and it will be practically
impossible to find each and every member of the union to recover
their contribution for the past several 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 order passed by
the High Court, in our opinion, is perfectly justified in view of the
peculiar facts and circumstances of the case.
The High Court, in our opinion, while disposing of the
matter 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
admittedly have been availed by the workmen from ESIC and the
employer had provided medical facilities to the workmen as per
the Court orders and in view of the interim order also had paid
medical allowances.
A similar view was taken by us in the case of Employees
State Insurance Corporation vs. Distilleries & Chemical
Mazdoor Union & Ors. in Civil Appeal Nos. 1727 of 2005, 3002
and 3003 of 2006 by the very same Bench comprising of Dr. AR.
Lakshmanan and Lokeshwar Singh Panta, JJ. We have also
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considered the submissions both factual and legal made by Mr.
C.S.Rajan, learned senior counsel appearing on behalf of the ESI
Corporation. In our opinion, his argument has no merits in the
facts and circumstances of this case and the interim orders
passed by the High Court which prevented employer and
employee from making any contribution towards ESI.
In the present case, the law as well as the facts are in
favour of the respondents. The High Court has correctly
appreciated the tremendous hardship that will be caused if
arrears are sought to be paid and nobody stands to gain, neither
the employer nor the employee under the circumstances. Even
assuming that the law is in favour of the ESI, keeping in view the
special facts and circumstances of the present case, relief can be
denied under Article 136 of the Constitution of India. In view of
the judgment reported in Chandra Singh and Others vs. State
of Rajasthan and Another, (2003) 6 SCC 545 (Three Judges
Bench), Dr. AR. Lakshmanan, J speaking for the Bench held as
follows:-
"42. In any event, even assuming that there is
some force in the contention of the appellants,
this Court will be justified in following
Taherakhatoon v. Salambin Mohammad, (1999)
2 SCC 635 wherein this Court declared that even
if the appellants contention is right in law having
regard to the overall circumstances of the case,
this Court would be justified in declining to grant
relief under Article 136 while declaring the law in
favour of the appellants.
43. Issuance of a writ of Certiorari is a
discretionary remedy. [See Champalal Binani v.
CIT, West Bengal, [AIR 1970 SC 645]. The High
Court and consequently this Court while
exercising their extraordinary jurisdiction under
Article 226 or 32 of the Constitution of India may
not strike down an illegal order although it would
be lawful to do so. In a given case, the High
Court or this Court may refuse to extend the
benefit of a discretionary relief to the applicant.
Furthermore, this Court exercised its
discretionary jurisdiction under Article 136 of the
Constitution of India which need not be exercised
in a case where the impugned judgment is found
to be erroneous if by reason thereof substantial
justice is being done. [See S.D.S. Shipping Pvt.
Ltd. v. Jay Container Services Co. Pvt. Ltd. &
Ors. [2003(4) Supreme 44]. Such a relief can be
denied, inter alia, when it would be opposed to
public policy or in a case where quashing of an
illegal order would revive another illegal one. This
Court also in exercise of its jurisdiction under
Article 142 of the Constitution of India is entitled
to pass such order which will do complete justice
to the parties.
44\005\005\005\005\005\005\005\005\005\005\005\005\005\005\005\005\005\005\005\005\005..
45. This Court said that this principle applies to
all kinds of appeals admitted by special leave
under Article 136, irrespective of the nature of the
subject-matter. So even after the appeal is
admitted and special leave is granted, the
appellant must show that exceptional and special
circumstances exist, and that, if there is no
interference, substantial and grave injustice will
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result and that the case has features of sufficient
gravity to warrant a review of the decision
appealed against on merits. So this Court may
declare the law or point out the lower courts’
error, still it may not interfere if special
circumstances are not shown to exist and the
justice of the case on facts does not require
interference or if it feels the relief could be
moulded in a different fashion.
46. The observations made in paras 15-20 of
the Taherakhatoon (supra) can be usefully
applied to the facts and circumstances of the case
on hand.
47. In the instant case, we are dealing with the
higher judicial officers. We have already noticed
the observations made by the committee of three
Judges. The nature of judicial service is such that
it cannot afford to suffer continuance in service of
persons of doubtful integrity or who have lost
their utility.
48\005\005\005\005\005\005\005\005\005\005\005\005\005\005\005\005\005\005\005\005\005.
49. We, therefore, would although dismiss the
appeals, but we would direct the High Court and
the State government to pay all retiral benefits to
the appellants herein as expeditiously as possible
preferably within a period of three months from
the date of communication of this order. No
Costs."
This Court under Article 142 of the Constitution of India is
empowered to pass such orders as would do complete justice
between the parties. This Court is also empowered to mould the
relief in such a manner so that it is not only just but also
equitable even while declaring the law as observed in para 25 of
ONGC Ltd. vs. Sendhabhai Vastram Patel and Others, (2005)
6 SCC 454 and Raj Kumar and Others vs. Union of India and
Another, (2006) 1 SCC 737. It is also permissible in law to
prospectively overrule the judgment as has been done recently in
the case of SBP Co. vs. Patel Engineering Ltd., (2005) 8 SCC
618. If the respondent is now allowed to recover from the
erstwhile covered employees, it would severely affect industrial
relations. Reversal of the impugned order would lead to
prosecution, penalty and also interest against the respondent
without any fault of the respondent. The decision of this Court
in ITDC Employees Union (supra) is clearly distinguishable as
unlike in the present case. In that case, the High Court did not
give any positive direction. The decision of the High Court was
not reversed by this Court.
The High Court under Article 226 and this Court under
Article 136 read with Article 142 of the Constitution of India have
the power to mould the relief in the facts of the case.
Likewise, the judgment cited by learned counsel for the
appellant-Corporation are in a different context altogether and
the ratio of the said cases are not applicable to the present case.
This apart the maxim of equity which is founded upon
justice and good sense was applied as well as other maxim: lex
non cogit ad impossibilia (i.e. the law does not compel a man
to do what he cannot possibly perform) The applicability of the
aforesaid maxim has been approved by this Court in Raj Kumar
Dey and Others vs. Tarapada Dey and Others, (1987) 4 SCC
398 and Gursharan Singh and Others vs. New Delhi
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Municipal Committee and Others, (1996) 2 SCC 459
The ESI Act has enacted to provide for certain benefits to
employees in case of sickness, maternity and employment injury.
Under the scheme of the Act, function of the ESI Corporation is
to derive insurance fund from the contribution from employees
and workmen. The employer is entitled to recover workmen’s
share from the wages of the workmen concerned. It was argued
by the respondent that the employer is providing better medical
facilities to the workmen and, therefore, the object and purpose
of the Act has been fully satisfied. It is pertinent to notice that
none of the employees of the Union have complained about
medical services provided by the employer since the object is
otherwise fulfilled. No further direction, in our opinion, is
required to be passed.
The act of Court can prejudice no party either the ESI or the
respondent-companies. We, therefore, relieve the respondents
from making any contributions for the period in question and
direct them to make the contribution as directed by the Division
Bench of the High Court. It is stated that some of the
respondents have already filed exemption applications and that
the appellant-Corporation has also granted them necessary relief.
We also permit the other respondents who have not filed any
exemption application may now file the same and if such
application for exemption is filed, it is for the authorities to
consider the same on merits and in accordance with law.
For the foregoing reasons, we dismiss all the appeals filed
by the appellant-Corporation in the peculiar facts and
circumstances of the cases. The High Court while upholding the
Notification has held that the same would apply from the date of
the judgment. The said observation is justified in view of the
facts and circumstances and the legal submissions made and
considered in paragraphs supra. No costs.
27897