MODERN FOOD INDUSTRIES (INDIA) LTD. v. REGIONAL DIRECTOR, E. S. I. CORPORATION
2003-09-22
S.ABDUL NAZEER
body2003
DigiLaw.ai
S. ABDUL NAZEER, J. ( 1 ) MODERN Food Industries (India) Limited has filed this appeal challenging the order passed by the Additional Industrial Tribunal, bangalore, and El Court (for short the 'esi court') in El Application No. 8/2000 dated 21/04/2001. For the sake of convenience, the parties will be referred to by their ranks before the El Court. ( 2 ) THE applicant in its application filed under Section 75 of the ESI Act has challenged the claim of contribution by the Corporation for the period from 1/01/199 7/03/1997. It is their case that by a notification issued by the Central Government the wage ceiling for esi coverage was enhanced from Rs. 3000/- to rs. 6,500 per month from 1/01/1997. The applicant has challenged the said notification by filing a writ petition before this Court and this court stayed the said notification. It is contended that, later on, the said writ petition was dismissed. Therefore, the Corporation has claimed contribution of Rs. 94,185/- for the said period. It is further contended that when the order of stay was in operation, no ESI benefits were available to such employees who come within the wage ceiling of Rs. 3,000/- to rs. 6,500/- per month from 1/01/1997. They have incurred a sum of Rs. 2,25,9467- towards medical expenses during the said period and that they are entitled for reimbursement of Rs. 1,31,7617- from the corporation. ( 3 ) RESPONDENT/corporation has filed its objections. It is contended that during the routine inspection conducted in September 1999, it was found that the applicant has disbursed salary of Rs. 14,48,977. 70 and that contribution on the said amount in a sum of Rs. 94,185/- was not paid. The applicant has already deducted employees share of contribution and has not deposited the same with the Corporation. Since, the High Court has upheld the Notification issued by the government enhancing the wage ceiling, the applicant is liable to pay the contribution as claimed. It is further contended that there is no provision under the ESI Act either for adjustment or reimbursement of any amount, in the manner the applicant demands. They have justified issuance of the notice demanding the contribution. ( 4 ) ON the basis of the pleadings, the ESI court has framed the following issues: (I) Whether the applicant is entitled for refund of Rs. 1,31,761/-? (ii) Whether the recovery proceedings are bad in law?
They have justified issuance of the notice demanding the contribution. ( 4 ) ON the basis of the pleadings, the ESI court has framed the following issues: (I) Whether the applicant is entitled for refund of Rs. 1,31,761/-? (ii) Whether the recovery proceedings are bad in law? (Hi) Whether the applicant is entitled for the relief claimed? ( 5 ) THE El Court has held that there is no provision under the ESI Act for reimbursement of the amount claimed by the applicant and there is no material on record to show that the esi Corporation has refused to give medical benefits to employees of the applicant who are drawing wages between Rs. 3,000/- to Rs. 6,500/- during the relevant period. It was further held that the applicant having collected the contribution from its employees ought to have deposited the same with the Corporation and nothing prevented them to deposit the same at least after the dismissal of the writ petition. Consequently, the Court has dismissed the application. ( 6 ) I have heard the learned counsel for the parties and perused the order impugned as also the records. ( 7 ) THERE is no dispute that the applicant had filed the writ petition challenging the notification, wherein the wage ceiling for ESI coverage was enhanced from Rs. 3,000/- to rs. 6,500/- per month from 1/01/1997 and in the said writ petition, the Court has granted stay of the operation of the said notification. Subsequently, the said writ petition was dismissed upholding the said notification. Consequent upon the dismissal of the writ petition, the Corporation has claimed contribution in a sum of Rs. 94,185/- for the said period namely from 1/01/1997 to 31/03/1997. The applicant contends that when the order of stay was in operation they have spent a sum of Rs. 2,25,946/- towards medical expenses of the said employees. After deducting the contribution payable, the applicant is entitled for reimbursement of a sum of Rs. 1,31,761/- from the Corporation. ( 8 ) THEREFORE, the points for consideration in this appeal are as follows: (I) Whether the Corporation is justified in claiming the contribution for a period from 1/01/199 7/03/1997? (ii) Whether the applicant is entitled for reimbursement as claimed? ( 9 ) RE. Point No. (i):-It is well established that the Employees' State Insurance Act is a beneficial piece of social security legislation in the interest of labour.
(ii) Whether the applicant is entitled for reimbursement as claimed? ( 9 ) RE. Point No. (i):-It is well established that the Employees' State Insurance Act is a beneficial piece of social security legislation in the interest of labour. Therefore, the provisions of the Act will have to be construed to promote the scheme and avoid the mischief. Its object is to provide benefit to the employees in case of sickness or injuries, etc. . That is why the legislature has given wider meaning to cover more establishments to come under the purview of the Act with the object of providing relief to the workmen. The Court should adapt a liberal construction to achieve the legislative purpose without, of course, doing violence to the language used in the Act. In the case of B. M. Lakshmanamurthy v. ESI Corporation AIR 1974 SC 759 : 1974 (4) SCC 365 : 1974-I-LLJ-304 the Hon'ble Supreme Court has held as follows at p. 308 of LLJ:"22. The Act is thus a beneficial piece of social security legislation in the interest of labour in factories at the first instance and with power to extend to other establishments. Provision of the Act will have to be construed with that end in view to promote the scheme and avoid mischief. . . . . . . . . . "the aforesaid principles have to be kept in mind while answering the points that have fallen for consideration. ( 10 ) THE Act is applicable to all factories, from the date on which it has come into force, as provided in sub-section (4) of Section (1) of the Act. Likewise, as per sub-section (5) of section (1), the Act is applicable to the establishments from the date on which the appropriate Government has issued a notification in the Official Gazette, extending the provisions to the establishments or class of establishments that may be enumerated in the said notifications. The Act defines an 'employee' as also an 'insured person'. An 'insured person' means a person who is or was an employee in respect of whom contributions are or were payable under the Act and who is by reason thereof entitled to the benefits provided by the Act. Section 28 provides the purposes for which the insurance fund may be expended.
An 'insured person' means a person who is or was an employee in respect of whom contributions are or were payable under the Act and who is by reason thereof entitled to the benefits provided by the Act. Section 28 provides the purposes for which the insurance fund may be expended. Sub-section (1) of Section 28 provides for payment of benefits and provision for medical treatment and attendance to 'insured persons' and where the medical benefit is extended to their families, the provisions of such medical benefit to their families, in accordance with the provisions of the Act and defraying charges and costs in connection therewith. The various provisions of the Act make it clear that the benefits have to be provided to the 'insured persons' and dependants in the manner provided by the Act. ( 11 ) IN this case, a notification was issued with effect from 1/01/1997 increasing the coverage from Rs. 3,000/- to Rs. 6,500/- per month. There is no dispute that the applicant has collected employee's share of contribution at 1. 75% and has failed to deposit with the corporation. At the same time, it has challenged the said Notification in this Court and obtained an order of stay. It is also not in dispute that the said writ petition was dismissed later. Even after the dismissal of the writ petition, the applicant did not deposit the contribution. It was only when a routine inspection. was conducted by the Corporation through its Inspector, it came to light that the applicant has not paid contribution in accordance with the provisions of the Act for a period of three months from January 1997 to march 1997. The plea of the applicant was that they are not liable to pay the contribution because this Court has granted an order of stay of operation of the said notification. The corporation contends that once the writ petition is dismissed, the interim order granted by the court merges with the final order and that the applicant is liable to pay the contribution from 1/01/1997. As stated above, the Act being a beneficial piece of social security legislation, the provisions of the Act will have to be considered to promote the scheme and avoid mischief and even when two views are possible on its applicability, the view which furthers the legislative intention should be preferred to the one which frustrates it.
As stated above, the Act being a beneficial piece of social security legislation, the provisions of the Act will have to be considered to promote the scheme and avoid mischief and even when two views are possible on its applicability, the view which furthers the legislative intention should be preferred to the one which frustrates it. When the aforesaid notification was issued, the Act becomes applicable to such of those employees whose wage ceiling limit is between Rs. 3,000/- to Rs. 6,500/- from 1/01/1997. The operation of the said Notification was temporarily suspended due to the interim order granted by this Court. Once the writ petition is dismissed, the employer has to pay the contribution from the date of enforcement of the Notification i. e. from 1/01/1997. A Division Bench of this court in the case of Workmen of Bharat electronics Limited v. Employees' State insurance Corporation 1996-II-LLJ-341 (Kant) has held that the stay order issued: pending disposal of the writ petition has no effect on the application of the principal employer to pay the contribution as required under Act. "the stay orders issued pending disposal of the writ petition had no effect on the obligation of the principal employer to pay contributions as required by Section 40. If any hardship is caused to the employers by - their understanding of the implications of the stay orders, it is open to them to make representations to the appropriate government and seek exemptions under the provisions contained in Chapter VIII of the - act. " ( 12 ) IN the case of Shree Chamundi mopeds Limited v. Church of South India Trust association AIR 1992 SC 1439 : 1992 (3) SCC 1 the Hon'ble Supreme Court has considered the effect of the interim order of stay. It has held as follows:"while considering the effect of an interim order staying the operation of the order under challenge, a distinction has to be made between quashing of an order and stay of operation of an order. Quashing of an order results in the restoration of the position as it stood on the date of the passing of the order which has been quashed. The stay of operation of an order does not, however, lead to such a result.
Quashing of an order results in the restoration of the position as it stood on the date of the passing of the order which has been quashed. The stay of operation of an order does not, however, lead to such a result. It only means that the order which has been stayed would not be operative from the date of the passing of the stay order and it does not mean that the said order has been wiped out from existence. " ( 13 ) FOLLOWING the said decision, the hon'ble Supreme Court in the case of Kanoria chemicals and Industries Limited and others v. U. P. State Electricity Board and others 1997 (5) SCC 772 has held that 'stay of operation of order or notification only means the order or notification which has been stayed would not be operative from the date of passing of the stay order. It is further held that the order of stay granted pending disposal of the writ petition comes to an end with the dismissal of the substantive proceeding and in that event it is the duty of the Court in such a case to put the parties in the same position they would have been but for the interim order of the Court'. The relevant portion is as follows:"stay of operation of order or notification only means the order or notification which has been stayed would not be operative from the date of passing of the stay order and it does not mean that the order or notification has been wiped out from existence. An order of stay granted pending disposal of a writ petition/suit or other proceeding, comes to an end with the dismissal of the substantive proceeding and it is the duty of the Court in such a case to put the parties in the same position they would have been but for the interim orders of the Court. " ( 14 ) IN the case of Employees' State insurance Corporation v. Kerala State handloom Development Corporation, employees Union (C. I. T. U.), Kannur District, kannur, Kerala and others 1994 (1) SCC 268 : 1995-II-LLJ-17 it has been held as follows at p. 17ofllj:"3. . . . . . . . NOTIFICATION, amending the Rules, was a Legislative act.
" ( 14 ) IN the case of Employees' State insurance Corporation v. Kerala State handloom Development Corporation, employees Union (C. I. T. U.), Kannur District, kannur, Kerala and others 1994 (1) SCC 268 : 1995-II-LLJ-17 it has been held as follows at p. 17ofllj:"3. . . . . . . . NOTIFICATION, amending the Rules, was a Legislative act. The amendment of the rules being a delegated legislation, the High court could not have interfered with the date of operation of the notification. "in the said order, the wage ceiling for coverage was enhanced from Rs. 1,6007- to Rs. 3,000/- per month. The said amendment was challenged before the High Court. The High Court while upholding the validity of the amendment has directed that the notification should be enforced with effect from 1/01/1997 instead of 1/04/1992. In that context, the supreme Court has held that the High Court has fallen into a patent error in postponing the date of operation of the notification, because the notification amending the Rules was a Legislative act. ( 15 ) IN the case of Ennore Foundries limited v. Government of India and others 2000-III-LLJ (Suppl)-185 the Madras High court in a similar situation has held that the interim order of the Court at the instance of the employees/union comes to an end on the dismissal of the writ petition and it is the duty of the Court to put the parties in the same position. The relevant portion is as follows:"it is clear from the above decisions that an order or act of the Court shall prejudice no man. No doubt, as stated earlier, at the instance of the employees/union, this Court in certain cases has granted injunction till the consideration of their application for exemption before the State Government. In some cases this Court has stayed the notification of the Government of India enhancing the salary limit from Rs. 3,000/- to Rs. 6,500/ -. However, the fact remains that all the writ petitions have been dismissed by this Court on 21/11/1997. Admittedly, no direction pr observation for payment of E. S. I, contributions have been made from the date of the dismissal of the writ petitions. In other words, all the writ petitions filed by the employees/union were dismissed as devoid of merits.
However, the fact remains that all the writ petitions have been dismissed by this Court on 21/11/1997. Admittedly, no direction pr observation for payment of E. S. I, contributions have been made from the date of the dismissal of the writ petitions. In other words, all the writ petitions filed by the employees/union were dismissed as devoid of merits. Accordingly, though the management was prevented from making contributions to the E. S. I. , the fact remains that all those writ petitions were dismissed. It is also brought to my notice that even on earlier occasion when the ceiling limit was increased by way of notification by the government of India, writ petitions challenging the same were dismissed and the management as well as the employees were aware of the same. In view of the fact that after the dismissal of the writ petition, no one has challenged the notification increasing the salary limit from Rs. 3,000/- to Rs. 6,500/ -. I am of the view that the management have to implement the notification from the date on which it came into force and not from the date of dismissal of the writ petitions. In the light of what is stated above, though the management were prevented by an interim order of Court at the instance of the employees/union; after the dismissal of the main proceedings, the stay and other interim order granted therein comes to an end and it is the duty of the Court to put the parties in the same position they would have been but for the interim orders of this Court. It is settled law that when once the main case has been disposed of, 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 the mischief. Further, because of the orders of the Court at the instance of the employees/union if any hardship was caused to the management, it is always open to them to make a representation to the appropriate Government for their redressal.
Further, because of the orders of the Court at the instance of the employees/union if any hardship was caused to the management, it is always open to them to make a representation to the appropriate Government for their redressal. " ( 16 ) IN the light of the aforesaid decisions, it is clear that the Courts cannot postpone the date of operation of the notification. Once the main petition is dismissed the parties are relegated to the original position. Consequently, the employer is liable to pay contribution from the date on which the notification came into force and not from the date of dismissal of the writ petition. Therefore, I hold the first point in favour of the corporation. ( 17 ) RE. Point No. (ii):- Chapter V of the esi Act provides for the benefits that are available to the insured persons, their dependents and other persons who are included in the said provision. Section 51 of the said Act provides a bar against the insured person or his dependents from receiving recovery of compensation or damages under any other law. It states that 'an insured person or his dependants shall not be entitled to receive or recover, whether from the employer of his insured person or from any other person, any compensation or damages under the workmen's Compensation Act, 1923 , or any other law for the time being in force or otherwise, in respect of an employment injury sustained by the insured person as an employee under this Act. Sub-section (2) of Section 57 provides that 'nothing in this Act shall entitle an insured person and (where such medical benefit is extended to his family) his family to claim reimbursement from the Corporation of any expenses incurred in respect to any medical treatment, except as may be provided by the regulations'. It is evident from the above provisions that the insured persons and their dependents or the persons mentioned in chapter-V are alone entitled to claim the benefits as per Section 46 of the Act. Chapter-III of the Employees' State Insurance (General) Regulations, 1950, provides for making a claim for benefits. The benefits 7available are disablement benefit (Regulation 65), dependent's benefits (Regulation 77) maternity benefit (Regulation 87), medical benefits to families (Regulations 95-A) and funeral expenses (Regulation 95-B ).
Chapter-III of the Employees' State Insurance (General) Regulations, 1950, provides for making a claim for benefits. The benefits 7available are disablement benefit (Regulation 65), dependent's benefits (Regulation 77) maternity benefit (Regulation 87), medical benefits to families (Regulations 95-A) and funeral expenses (Regulation 95-B ). ( 18 ) IT is clear from the different provisions of the ESI Act and the Regulation made thereunder that the Act is applicable to an establishment from the date on which the appropriate Government has issued a notification under sub-section (5) of Section 1 of the Act. The insured persons, their dependents and the persons mentioned in chapter-V of the Act are entitled to claim the benefits in accordance with the regulations. ( 19 ) LEARNED counsel for the establishment contends that Regulation 96-A of the ESI (General) Regulations enables an employer to claim reimbursement. The learned counsel for the establishment was not able to point out any other provisions permitting the employer to claim reimbursement. It is his contention that due to the stay order granted by this Court, the benefit was not extended to such of those employees whose wages was between Rs. 3,000 to Rs. 6,500/- and that they were forced to spend towards medical expenses of those employees. It is his further submission that a total sum of Rs. 2,25,946/- has been spent under that head and by deducting the contribution payable in a sum of Rs. 94,185/- they are entitled for reimbursement of Rs. 1,31,761/ -. In my opinion, neither Regulation 96-A nor any other provision provides for making such a claim. The employees alone are entitled for benefits in accordance with the relevant regulations. There is no statutory provision enabling an employer to claim reimbursement. I answer the second point against the establishment. ( 20 ) IN the light of the aforesaid discussion, i pass the following order. The appeal is dismissed. No costs. --- *** --- .