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2022 DIGILAW 924 (KER)

Arya Vaidya Sala v. State Of Kerala

2022-11-01

P.V.KUNHIKRISHNAN

body2022
JUDGMENT : The short point to be decided in these writ petitions is the validity of an order passed by the 1st respondent -State of Kerala by invoking the powers under Sec. 87 of the Employees' State Insurance Act, 1948 (for short “ESI Act”). Whether the appropriate Government while passing orders under Sec.87 of the ESI Act should pass a speaking order and whether the exemption orders can be passed based on the date of the application for exemption in the light of Sec. 91-A of the ESI Act are some of the ancillary points to be decided. Since in all these cases, common questions are raised, the narration of the facts in one of the case will be sufficient for resolving the issue. Therefore, W.P.(C) No. 32536/2017 can be treated as the leading case and the exhibits marked in this case is referred in this judgment unless it is specifically mentioned otherwise. 2. The petitioner in all these writ petitions is Arya Vaidya Sala Kottakkal, which is a charitable trust constituted as per the will executed by late Vaidyaratnam P.S.Warrier in the year 1939. The petitioner is engaged in the manufacture and sale of Ayurvedic medicines. Besides this the petitioner is imparting ayurvedic treatment by establishing hospitals and is also conducting research in Ayurveda. The head office of the petitioner is situated at Kottakkal and the petitioner also has branches at different parts of the country. The petitioner is employing about 2500 employees including temporary, casuals and Doctors attached to its hospitals and branches. The service conditions of the workmen of the petitioner are governed by the certified standing orders and long-term settlements entered into between the management and the trade unions regularly. As per the referendum of trade unions conducted in terms of the settlement the petitioner has recognized respondents 3 to 6 namely Kottakkal Arya Vaidya Sala Workers Federation (CITU), Arya Vaidya Sala Employees Union, Arya Vaidya Sala Mazdoor Sangh (BMS) and Arya Vaidya Sala Workers Union (AITUC) as bargaining agents of the employees of the petitioner. 3. The petitioner is exempted from the provisions of the ESI Act by the 1st respondent by invoking the powers under Sec.87 of the ESI Act on year-to-year basis from 1978 onwards during which period the area wherein the petitioner's establishment is located has been brought under the umbrella of the ESI Act. 3. The petitioner is exempted from the provisions of the ESI Act by the 1st respondent by invoking the powers under Sec.87 of the ESI Act on year-to-year basis from 1978 onwards during which period the area wherein the petitioner's establishment is located has been brought under the umbrella of the ESI Act. The trade unions of the employees of the petitioner have also represented to the petitioner, the 1st respondent and the 2nd respondent -The Employee State Insurance Corporation, that the employees are satisfied with the benefits provided by the petitioner which according to them is superior to the benefits provided under the ESI Act. They also submitted that they do not want to be covered under the provisions of the ESI Act. The 1st respondent on being satisfied that the employees of the petitioner are in receipt of benefits superior than the benefits provided under the ESI Act, was exempting the petitioner from the provisions of the ESI Act on year-to-year basis, i.e., from 1978 to 2009. Exts.P1 to P29 are the different Government Orders granting exemption to the petitioner from the provisions of the ESI Act. 4. Subsequently, as per the Employees’ State Insurance (Amendment) Act, 2010 (for short “Amendment Act”), certain provisions of ESI Act including Secs. 87 and 91-A were amended. The amendment to Secs. 87 and 91-A of the ESI Act came into force with effect from 01.06.2010. 5. In the meanwhile, for the period starting from 01.10.2009 to 30.09.2010, the petitioner submitted an 1st application dated 15.09.2009 to the respondent for exemption under Sec. 87 of the ESI Act. Subsequently the 1st respondent referred the matter for enquiry to the District Labour Officer, Malappuram and the District Labour Officer conducted the enquiry by issuing notice dated 03.03.2010 to the petitioner. Respondents 3 to 6 send their submission to the District Labour Officer, Malappuram admitting that the employees of the petitioner are getting benefits superior to the benefits provided under the ESI Act and they have given their consent for exemption of the petitioner from the provisions of the ESI Act under Section 87 of the ESI Act. The District Labour Officer, Malappuram after conducting enquiry submitted his report to respondents 1 and 2 stating that the petitioner may be exempted from the ESI Scheme for the period 01.10.2009 to 30.09.2010. The District Labour Officer, Malappuram after conducting enquiry submitted his report to respondents 1 and 2 stating that the petitioner may be exempted from the ESI Scheme for the period 01.10.2009 to 30.09.2010. But, the 1st respondent as per Ext.P30 order rejected the application which resulted in the filing of W.P.(C) No.18456/2012 before this Court. This Court admitted the above writ petition and granted interim order on 07.08.2012 staying the enforcement of the provisions of the ESI Act and Scheme. Ext.P31 is the stay order passed in W.P.(C)No.18456/2012. 6. For the period, 01.10.2010 to 30.09.2011, the petitioner had submitted the application dated 26.06.2010 on 28.06.2010 to the 1st respondent for exemption under Section 87 of the ESI Act. Similar enquiry was conducted by the District Labour Officer, Malappuram for this period also. But that exemption application was also rejected as per Ext.P32 by the Government. Against Ext.P32 order, the petitioner filed W.P.(C)No.37647/2010 and this Court passed Exts.P33 and P34stay orders. Similarly for the period from 01.10.2011 to 30.09.2012, 01.10.2012 to 30.09.2013 and 01.10.2013 to 30.09.2014, applications under Section 87 of the ESI Act were submitted and those applications were rejected and consequently writ petitions were filed as W.P. (C)Nos.29454/2011, 6644/2013 and 24786/2014 before this Court and this Court passed interim orders in all those writ petitions. 7. Subsequently, for the period from 01.10.2015 to 30.09.2016, the petitioner submitted application dated 16.06.2015 to the 1st respondent for exemption under Section 87 of the ESI Act. Exts.P42 and P42(a) are the applications. Exts.P43 to P46 are the statements submitted by respondents 3 to 6 admitting that the employees of the petitioner are getting benefits superior to the benefits provided under the ESI Act. Thereafter, Ext.P47 order was passed rejecting the application. Aggrieved by Ext.P47, W.P.(C)No.32536/2017 was filed. 8. Heard Advocate V. Krishna Menon for the petitioner and the learned Government Pleader for the first respondent. I also heard the Standing counsel appearing for the ESI Corporation. Advocate P. Ramakrishnan appeared for the trade unions. 9. The counsel appearing for the petitioner submitted that the impugned orders in these writ petitions are unsustainable for the simple reason that it is not a speaking order and it is an order passed without giving an opportunity of being heard to the petitioner. Advocate P. Ramakrishnan appeared for the trade unions. 9. The counsel appearing for the petitioner submitted that the impugned orders in these writ petitions are unsustainable for the simple reason that it is not a speaking order and it is an order passed without giving an opportunity of being heard to the petitioner. It is also submitted that the finding in these impugned orders in these writ petitions that there cannot be any exemption order retrospectively in the light of Section 91-A of the ESI Act will not stand. The counsel submitted that the applications for exemption are to be allowed based on the date of those applications and if the orders are passed belatedly, it cannot be treated as an order passed retrospectively in violation of Section 91-A of the ESI Act. The counsel also relied on the judgment of this Court in Kancor Ingredients Limited rep. by its Personnel Manager, Angamally south v. Regional Director (Ker) E.S.I Corporation and Others [2012-III-LLJ-316 (Kerala)] to contend that a speaking order is necessary while considering an application for exemption under Section 87 of the ESI Act. The counsel for the petitioner also relied on the judgment of this court in Kerala Educational Society v. State of Kerala [ 2011 (4) KLT 318 ] to contend that there is no violation of Section 91-A of ESI Act. 10. The counsel appearing for the ESI Corporation strongly opposed the prayers in these writ petitions. The counsel submitted that the Government is considering these applications by invoking the powers of conditional legislation. When the Government is invoking the powers of conditional legislation, the question of natural justice or the question of speaking order will not arise. The counsel also submitted that there is no proper pleadings in these writ petitions to show that the benefits given to the employees of the petitioner are similar or superior to the benefits as per the ESI Act. The counsel also submitted that the order granting exemption under Section 87 can be passed only prospectively and there is no need to interfere with the impugned orders passed by the Government. The Government pleader supported the impugned orders. The counsel appearing for respondent Nos.3 to 6 supported the arguments of the petitioner. 11. This Court considered the contentions of the petitioner and the respondents. The Government pleader supported the impugned orders. The counsel appearing for respondent Nos.3 to 6 supported the arguments of the petitioner. 11. This Court considered the contentions of the petitioner and the respondents. The power of exemption given to the appropriate Government is mentioned in Chapter VIII of the ESI Act. Section 87 states the exemption of a factory or establishment or class of factories or establishments. It will be better to extract Section 87 of the ESI Act with its two provisos: 87. Exemption of a factory or establishment or class of factories or establishments. - The appropriate Government may, by notification in the Official Gazette and subject to such conditions as may be specified in the notification, exempt any factory or establishment or class of factories or establishments in any specified area from the operation of this Act for a period not exceeding one year and may from time to time by like notification renew any such exemption for periods not exceeding one year at a time: Provided that such exemptions may be granted only if the employees in such factories or establishments are otherwise in receipt of benefits substantially similar or superior to the benefits provided under this Act: Provided further that an application for renewal shall be made three months before the date of expiry of the exemption period and a decision on the same shall be taken by the appropriate Government within two months of receipt of such application. 12. As per Section 87, the appropriate Government may, by notification in the official Gazette and subject to such conditions as may be specified in the notification, exempt any factory or establishment or class of factories or establishments in any specified area from the operation of the ESI Act for a period not exceeding one year. The two conditions mentioned in Section 87 is that a notification in the official Gazette is necessary and the appropriate Government can impose such conditions as may be specified in the notification. Therefore, each application has to be dealt with separately and the maximum period that can be exempted is one year at a time. The first proviso to Section 87 states that the exemptions may be granted only if the employees in such factories or establishments are otherwise in receipt of benefits substantially similar or superior to the benefits provided under the ESI Act. The first proviso to Section 87 states that the exemptions may be granted only if the employees in such factories or establishments are otherwise in receipt of benefits substantially similar or superior to the benefits provided under the ESI Act. The second proviso to Section 87 states that, an application for renewal shall be made within three months before the date of expiry of the exemption period and a decision on the same shall be taken by the appropriate Government within two months of receipt of such application. Section 88 of the ESI Act deals with the exemption of persons or class of persons. Section 89 states that, no exemption shall be granted or renewed under Section 87 or Section 88, unless a reasonable opportunity has been given to the Corporation to make any representation it may wish to make in regard to the proposal and such representation has been considered by the appropriate Government. Section 90 states about the exemption of factories or establishments belonging to Government or any local authority. Section 91 states about the exemption from one or more provisions of the Act. Section 91-A of the ESI Act states about the exemptions to be prospective. Section 91-A of the ESI Act is extracted hereunder: “91-A. Exemptions to be prospective. -Any notification granting exemption under section 87, section 88, section 90 or section 91 may be issued so as to take effect prospectively on such date as may be specified therein.” 13. A reading of the impugned orders in these writ petitions will show that, one of the reasons mentioned by the 1st respondent State to reject the applications for exemption under Section 87 is that, in the light of the amended Act, there cannot be retrospective exemption. Ext.P37 in W.P. (C)No.37647/2010 reads like this: “I am to invite your attention to the reference cited and to inform you that your application for exemption from ESI coverage for the period from 1.10.2010 to 30.9.2011 cannot be considered in view of the ESI (Amendment) Act 2010 dated 25.5.2010 whereby retrospective exemption cannot be granted and also since the benefits provided by your establishment are not similar or superior to those provided under the ESI Scheme.” 14. Admittedly, in all these cases, there is no dispute that the applications were submitted by the petitioner in time and also in accordance with the second proviso to Section 87 of the ESI Act. If the applications are submitted within the statutory period, simply because the Government considered the matter after a long time it cannot be said that, the same is a retrospective exemption order in violation of section 91-A of the ESI Act. If such an interpretation is given to section 91-A of the ESI Act, it will be an injustice for the applicants under section 87 of the ESI Act. 15. The above point is considered by this Court in Kerala Educational Society’s case (supra). It will be better to extract the relevant portion of the judgment: “3. The operative portion of the impugned order reads as follows:- "4. In the Ext.P3 application submitted by the petitioner for exemption from the purview of ESI Act under Ss. 87 and 88, the period for which exemption is required, has not been specifically indicated. The petitioner has sought exemption "with retrospective effect" without specifying the period of exemption. 5. As per section 91A of the ESI Act, 1948, as amended by the Act 18 of 2010, which came into force w.e.f. 1.6.2010, exemption can be granted only with prospective effect. Since there is no provision in this Act to exempt with retrospective effect the request of the petitioner cannot be considered and the Ext.P3 application for exemption is therefore rejected. The directions of the Hon'ble High Court in the judgment read above is thus complied with." From a reading of the impugned order it is evident that the Government was mainly influenced by the entry made against column No.9 of the application which reads as follows:- "9.(a) Section of the E.S.I Act under which exemption is sought Section 87 & 88 of the E.S.I Act, 1948. (b) The period for which the exemption is required With retrospective effect." Against column 9(b) the petitioner had stated that the period for which exemption was required is "with retrospective effect". The impugned order also proceeds to state that in view of section 91A of the Act as amended by Act 18 of 2010 with effect from 1.6.2010, exemption can be granted only prospectively. The impugned order also proceeds to state that in view of section 91A of the Act as amended by Act 18 of 2010 with effect from 1.6.2010, exemption can be granted only prospectively. The application submitted by the petitioner for exemption has been rejected on two grounds, namely, the period for which exemption was sought has not been specified and retrospective exemption cannot be granted. 3. Section 91A of the Act as it stood prior to 1.6.2010 reads as follows:- "91A. Exemptions to be either prospective or retrospective.-- Any notification granting exemption under section 87, section 88, section 90 or section 91 may be issued so as to take effect either prospectively or retrospectively on such date as may be specified therein." Section 91A of the Act as amended with effect from 1.6.2010 reads as follows:- "91A. Exemption to be prospectively.— Any notification, granting exemption u/s.87, Section 88, Section 90 or Section 91 may be issued so as to take effect prospectively on such date as may be specified therein." As per the provisions in force prior to 1.6.2010 the State Government could have granted exemption either prospectively or retrospectively with effect from such date as may be specified in the order of exemption. On and with effect from 1.6.2010 the exemption granted can only have prospective effect from such date as may be specified therein. In my opinion the word 'prospectively' occurring in section 91A of the Act as amended with effect from 1.6.2010 cannot be interpreted to mean that an order of exemption can take effect only from the date on which it is granted. In a given case, the Government may have to spend some time on the application before granting an exemption. In another case, the Government may be in a position to pass expeditious orders. In other words, if the Government were to grant exemption with effect from the date of the application it cannot be said that such an order of exemption is illegal. The words "may be issued so as to take effect prospectively on such date as may be specified therein" cannot be interpreted to mean that that date can only be a future date. If that were the intention the Parliament would have stated that the notification granting exemption will take effect only from the date of the order. The words "may be issued so as to take effect prospectively on such date as may be specified therein" cannot be interpreted to mean that that date can only be a future date. If that were the intention the Parliament would have stated that the notification granting exemption will take effect only from the date of the order. All that section 91A as amended prohibits is the grant of retrospective exemption from an earlier date, anterior in point of time, to the application for exemption itself. In other words in view of the stipulations in S. 91A as amended, an order of exemption cannot take effect from a date earlier than the date of the applications. In the instant case the Government appears to have taken the stand that exemption can be granted only from the date of the order. That apart, the Government have also declined to grant exemption on the ground that the date with effect from which the petitioner seeks exemption has not been specified. In my opinion, if the Government were of the opinion that the application was defective for want of details, it should have returned the application to the petitioner and directed the petitioner to rectify the defect and to resubmit the application. It is evident from a reading of the impugned order that it was because of the omission in the application that the Government rejected the application. Such being the situation, I am of the opinion that the Government should reconsider Ext.P3 application after giving the petitioner an opportunity to rectify the defect in it, namely the entry in column 9(b). I accordingly allow the Writ Petition, quash Ext.P14 and direct the Government to reconsider Ext.P3 application after giving the petitioner an opportunity to correct the entry against column 9(b) of the application. The petitioner shall move the Government for such correction within two weeks from the date of receipt of a certified copy of this judgment. On the petitioner moving an application for correction, the Government shall consider Ext.P3 application afresh and pass appropriate orders thereon after notice to and affording the petitioner an opportunity of being heard. Needless to say the Government shall ascertain the views of the Corporation and shall, if necessary, afford an opportunity of being heard to the Corporation also. On the petitioner moving an application for correction, the Government shall consider Ext.P3 application afresh and pass appropriate orders thereon after notice to and affording the petitioner an opportunity of being heard. Needless to say the Government shall ascertain the views of the Corporation and shall, if necessary, afford an opportunity of being heard to the Corporation also. The Government shall pass revised orders on Ext.P3 application within three months from the date of receipt of the application for correction and shall after orders are passed communicate copies thereof to all the parties simultaneously. Until such time, the status quo as on today shall be maintained as regards the proceedings, if any, initiated by the Corporation against the petitioner/petitioner's establishment.” 16. From the above decision it is clear that the word ‘prospectively’ in Section 91-A of the ESI Act, as amended with effect from 01.06.2010 cannot be interpreted to mean that an order of exemption can take effect only from the date on which it is granted. As stated in the Kerala Educational Society’s case (supra), the Government may have to spend some time on the application before granting an exemption. In almost all these cases, an enquiry was conducted through the District Labour Officer by the Government before passing the orders. The counsel for the ESI Corporation submitted that the Government is bound to pass orders on the exemption application within two months of receipt of such application in the light of the second proviso to Section 87. Suppose the Government took more than 2 months to finish the enquiry, it cannot be said that such an order is illegal. A reading of the second proviso to Section 87 only states that the time fixed to dispose the exemption application is only directory. In a given case for adequate reasons, the Government can consider the 2nd application even beyond the period. The counsel for the respondent submitted that in Kerala Educational Society’s case,(supra), the proviso to Section 87 is not considered. As I mentioned earlier, the time limit fixed in the statute for disposing the application can only be directory in the light of the fact that several factors have to be considered by the Government. The Government has to consider whether the benefits granted by the employer is similar or superior to the benefits under the ESI Act. As I mentioned earlier, the time limit fixed in the statute for disposing the application can only be directory in the light of the fact that several factors have to be considered by the Government. The Government has to consider whether the benefits granted by the employer is similar or superior to the benefits under the ESI Act. The Government has to hear the ESI Corporation and also the Government has to conduct an enquiry before passing orders of exemption. Therefore, strict compliance of the outer limit fixed in the second proviso to Section 87 is not necessary while considering an application for exemption. The only condition is that the applications for renewal shall be made three months before the date of expiry of the exemption period. Admittedly, in all these cases, the applications for exemption were submitted three months before the date of expiry of exemption. Therefore, the reason shown in the impugned orders that the exemption cannot be granted retrospectively is not applicable to the facts and circumstances of these cases, because the exemption is to be granted based on the date of application. The counsel for the ESI Corporation relied on the judgment of Bombay High Court in WP(C) 768 of 2014 and the judgment of the Madras High Court in WP(C) No.17948 of 2012 to support his contention. In the light of the decision of this Court in Kerala Educational Society’s case (supra), the decision of the Bombay High Court and the decision of the Madras High Court need not be looked into and I respectfully disagree with the interpretations in those judgments as far as section 91-A of the ESI Act is concerned. 17. The next point to be decided is when the Government rejects an application for exemption whether a speaking order is necessary or not. This Court in Kancor Ingredients Limited’s case (supra) considered this point in detail. It will be better to extract the relevant portions of the above judgment here: “6. A reading of Exhibit P-20 order denying exemption in the instant case would reveal that no reasons have been assigned to justify the conclusion arrived at. It would not be sufficient to merely state mechanically that the benefits under the E.S.I. Scheme are far more superior and beneficial. The various benefits extended by the petitioner and the Employees' State Insurance Corporation have to be analysed item wise. It would not be sufficient to merely state mechanically that the benefits under the E.S.I. Scheme are far more superior and beneficial. The various benefits extended by the petitioner and the Employees' State Insurance Corporation have to be analysed item wise. A detailed order is warranted while granting or disallowing exemption under Section 87 of the Act. This is especially so since the interest of a large section of workers are involved whose representative also deserves to be heard in the exercise. The principal beneficiary of the Act is the employees who have a right to be heard as held in Fertilizer & Chemicals Travancore Ltd. v. ESI Corporation (2009) 9 SCC 485 : LNIND 2009 SC 1705. It needs no mention that exemption under Section 87 of the Act could be granted either prospectively or retrospectively under Section 91-A of the Act.” 18. From the above decision it is clear that mere statement by the Government that the benefits under the ESI scheme are far more superior and beneficiary is not sufficient. The various benefits extended by the petitioner and the Employees of the State Insurance Corporation have to be analysed item wise. A detailed order is warranted while granting or disallowing exemption under Section 87 of the ESI Act. Moreover, there are recognized trade unions in the petitioners’ establishment. A perusal of their statement filed in these writ petitions would show that they are satisfied with the benefits granted to their members by the petitioner’s establishment. They filed affidavit before this Court to that effect. These aspects were not at all considered by the 1st respondent while passing the orders. Therefore, on the ground that the impugned orders are not speaking orders and also for the reason that the finding in the impugned orders states that there cannot be any retrospective exemption which is not correct, the impugned orders in these cases are to be quashed. The application for exemption is to be considered based on the date of those applications. If the applications are considered based on the date of those applications, it cannot be said that the same is a retrospective exemption in violation of Section 91-A of the ESI Act. 19. The application for exemption is to be considered based on the date of those applications. If the applications are considered based on the date of those applications, it cannot be said that the same is a retrospective exemption in violation of Section 91-A of the ESI Act. 19. The counsel appearing for the ESI Corporation submitted that the powers given to the Government as per Section 87 is a conditional legislation and the question of speaking order or giving opportunity of hearing is not applicable when the powers are invoked based on the conditional legislation. The counsel relied on the judgment of the Apex Court in I.T.C Bhadrachalam Paperboards and Ors. v. Mandal Revenue Officer, A.P. and Ors. [ (1996) 6 SCC 634 ]. It will be better to extract the relevant portions of the above judgment here: “22. In Hamdard Dawakhana v. Union of India 1960 (2) SCR.671, this court dealt with the distinction between conditional legislation and delegated legislation. The following observations are apposite: "The distinction between conditional legislation and delegated legislation is this that in the former the delegate's power is that of determining when a legislative declared rule of conduct shall become effective; Hampton & Co. v. United States,(1927) 276 U.S.394, and the latter involves delegation of rule making power which constitutionally may be exercised by the administrative agent. This means that the legislature having laid down the broad principles of its policy in the legislation can then leave the details to be supplied by the administrative authority. In other words by delegated legislation the delegate completes the legislation by supplying details within the limits prescribed by the statute and in the case of conditional legislation the power of legislation is exercised by the legislature conditionally leaving to the discretion of an external authority the time and the manner of carrying its legislation into effect as also the determination of the area to which it is to extend; {The Queen v. Burah, (1878) 3 A.C.889; Russell v. The Queen, (1882) 7 A.C.829; King-Emporer v. Benoarilal Sarma, (1944) L.R. 72 Ind Ap.57; Sardar Inder Singh v. State of Rajasthan,(1957) S.C.R.604.]. Thus when the delegate is given the power of making rules and regulations in order to fill in the details to carry out and subserve the purposes of the legislation the manner in which the requirements of the statute are to be met and the rights therein created to be enjoyed it is an exercise or delegated legislation. But when the legislation is complete in itself and the legislature has itself made the law and the only function left to the delegate is to apply the law to an area or to determine the time and manner of carrying it into effect, it is conditional legislation. To put it in the language of another American case: To assert that a law is less than a law because it is made to depend upon a future event or act is to rob the legislature of the power to act wisely for the public welfare whenever a law is passed relating to a state of affairs not yet developed, or to things future and impossible to fully know The proper distinction there pointed out was this: The legislature cannot delegate its power to make a law, but it can make a law to delegate a power to determine some fact or state of things upon which the law makes or intends to make its own action depend. There are many things upon which wise and useful legislation must depend which cannot be known to the law making power, and must therefore be subject of enquiry and determination outside the hall of legislature. (In Locks Appeal 72 Pa.491; Field v. Clark [1892] 143 U.S. 649." 23. Hamdard Dawakhana was, of course, a case where clause (d) of Section 3 of the Drugs and Magical Remedies (Objectionable Advertisement) Act, 1954 conferred upon the government the power to specify by Rules made under the Act the diagnosis, cure etc. respecting which the advertisement of a drug was prohibited. The question before the Court was whether it is a case of delegated legislation or conditional legislation. The Court ultimately held that it belongs to the former category and is void being violative of Article 14 of the Constitution. 24. We may in this connection refer to the decision of the Supreme Court of United States in Field v. Clarke (1892) 143 U.S. 649 : 36 \ Ed.294. The Court ultimately held that it belongs to the former category and is void being violative of Article 14 of the Constitution. 24. We may in this connection refer to the decision of the Supreme Court of United States in Field v. Clarke (1892) 143 U.S. 649 : 36 \ Ed.294. The Tariff Act of 1890 empowered the President to suspend the operation of the Act, permitting free import of certain products within United States, on being satisfied that the duties imposed upon such products were reciprocally unequal and unreasonable. It was submitted that the said power transfers the legislative and treaty-making power to the President and, hence unlawful. The attack was repelled holding that the President was a mere agent of the Congress to ascertain and declare the contingency upon which the will of the Congress was to take effect. The Court quoted with approval the following passage from an earlier case: The Legislature cannot delegate its power to make a law; but it can make a law to delegate a power to determine some fact or state of things upon which the law makes, or intends to make, its own action depend. To deny this would be to stop the wheels of government. There are many things upon which wise and useful legislation must depend which cannot be known to the law making power and, must, therefore, be a subject of enquiry and determination outside the halls of the Legislation." 25. Reference may also be made to the decision of this Court in Tulsipur Sugar Co. Ltd. v. Notified Area Committee, Tulsipur [1982] 2 S.C.C. 295 where the power conferred upon the government by Section 3 of the Uttar Pradesh Town Areas Act, 1914 to extend the limits of town area was also to be a power in the nature of conditional legislation. It was held that the power was legislative in character and, therefore, the incidents applicable to an administrative order do not apply to it. 26. What is, however, relevant is that the power to bring an Act into force as well as the power to grant exemption are both treated, without a doubt, as belonging to the category of conditional legislation. Very often the legislature makes a law but leaves it to the executive to prescribe a date with effect from which date the Act shall come into force. Very often the legislature makes a law but leaves it to the executive to prescribe a date with effect from which date the Act shall come into force. As a matter of fact, such a course has been adopted even in the case of a constitutional amendment, to wit, the Constitution (Forty-fourth Amendment) Act, 1978, insofar as it pertains to amendment of Article 22 of the Constitution. The power given to the executive to bring an Act into force as also the power conferred upon the government to exempt persons or properties from the operation of the enactment are both instances from the operation of the enactment are both instances of conditional legislation and cannot be described as delegated legislation." 20. According to the counsel, the power given to the executive to bring an act into force as also the power conferred upon the Government to exempt persons or properties from the operation of the enactment are both instances of conditional legislation and cannot be described as delegated legislation. The counsel submitted that when the legislation is complete in itself and the legislature has itself made the law and the only function left to the delegate is to apply the law to an area or to determine the time and manner of carrying it into effect, is known as conditional legislation. It is very difficult to accept the contention of the Corporation that the Government invoking the powers of exemption under Section 87 of the ESI Act is based on the conditional legislation. A reading of section 87 would show that an enquiry is contemplated before granting exemption. The Government can impose certain conditions before granting exemption. The Government has to hear the affected parties including the ESI Corporation before granting exemption. The Government has to consider whether the benefit given by the establishment is substantially similar or superior to the benefits provided under the ESI Act, before deciding an application for exemption under Section 87 of the ESI Act. Each case has to be decided based on the materials available. Under such circumstances, in my opinion a full-fledged enquiry is necessary on the part of the Government before passing an order in an exemption application filed under Section 87 of the ESI Act. Each case has to be decided based on the materials available. Under such circumstances, in my opinion a full-fledged enquiry is necessary on the part of the Government before passing an order in an exemption application filed under Section 87 of the ESI Act. Therefore, in my opinion, under such circumstances, a speaking order is necessary, especially when the recognised trade unions working in the establishments clearly stated that their members prefer the benefits of the establishment and the benefits given by the establishment is more beneficial than the benefits under the ESI Act. These aspects were not at all considered by the Government while deciding the matter. 21. The counsel for the Corporation also relied on a Division Bench Judgment of this Court in Pantheerankavu Service Co-operative Bank Ltd. And others v. State of Kerala and others [I.L.R 2016 (2) Kerala 1073]. The counsel relied on paragraph 26 of the judgment, which is extracted hereunder: “26. The power of granting exemption under Section 101 given to the State is a delegated legislation. The delegation of power to the State under Section 60 of Madras Co-operative Societies Act, 1932 has been upheld by the Apex Court in The Registrar of Cooperative Societies and another v. Kunjambu and others (supra) which provision was pari materia to Section 101. The notification issued by the State in exercise of delegated legislation under Section 101, which is a species of delegated legislation, and not an executive order. It is true that the delegated subordinate legislation can be questioned on any of the ground on which any plenary legislation can be questioned. But it is well-settled that subordinate legislation cannot be questioned on the principles of natural justice. The Apex Court in Indian Express Newspapers (Bombay) Private Ltd and others v. Union of India and others [ (1985) 1 SCC 641 ] has laid down the following in paragraph 78 : "78. That subordinate legislation cannot be questioned on the ground of violation of principles of natural justice on which administrative action may be questioned has been held by this Court in The Tulsipur Sugar Co.Ltd. v. Notified Area Committee, Tulsipur, Rameshchandra Kachardas Porwal v. State of Maharashtra and in Bates V.Lord Hailsham of St.Marylebone. That subordinate legislation cannot be questioned on the ground of violation of principles of natural justice on which administrative action may be questioned has been held by this Court in The Tulsipur Sugar Co.Ltd. v. Notified Area Committee, Tulsipur, Rameshchandra Kachardas Porwal v. State of Maharashtra and in Bates V.Lord Hailsham of St.Marylebone. A distinction must be made between delegation of a legislative function in the case of which the question of reasonableness cannot be enquired into and the investment by statute to exercise particular discretionary powers. In the latter case the question may be considered on all grounds on which administrative action may be questioned, such as, non- application of mind, taking irrelevant matters into consideration, failure to take relevant matters into consideration, etc., etc. On the facts and circumstances of a case, a subordinate legislation may be struck down as arbitrary or contrary to statute if it fails to take into account very vital facts which either expressly or by necessary implication are required to be taken into consideration by the statute or, say, the Constitution. This can only be done on the ground that it does not conform to the statutory or constitutional requirements or that it offends Article 14 or Article 19(1)(a) of the Constitution. It cannot, no doubt, be done merely on the ground that it is not reasonable or that it has not taken into account relevant circumstances which the Court considers relevant." 22. That was a case in which this Court was considering the power of granting exemption under Section 101 of the Cooperative Societies Act, 1969 given to State. It is also stated that subordinate legislation cannot be questioned on the principles of natural justice. Here the case is whether before passing orders on an application under Section 87 of the ESI Act, an opportunity of hearing is to be given to the applicants and the ESI Corporation. A reading of Section 87 coupled with its proviso, makes it clear that an enquiry is to be done by the Government after hearing all the affected parties before passing orders in the exemption application. Under such circumstances, a speaking order is necessary while deciding an exemption application filed under Section 87 of the ESI Act. Moreover, the powers of the Government under Section 87 of the ESI Act cannot be treated as conditional legislation. Under such circumstances, a speaking order is necessary while deciding an exemption application filed under Section 87 of the ESI Act. Moreover, the powers of the Government under Section 87 of the ESI Act cannot be treated as conditional legislation. The Madras High Court has considered this point in the Order dated 26.11.2009 in WP. No.12187 of 2009. The relevant portions is extracted hereunder:- 13. On the contrary, a combined reading of the provisions from Sections 87, 88 and 90 will show that it is a delegated legislation. In terms of Sections 89 and 91, no exemption can be granted without consulting the E.S.I. Corporation. In the previous orders of exemption, there was nothing to show that the Corporation was consulted. When remarks were called for from the Corporation, the Corporation had given elaborate objection by its letter No.51/P/11/13/15/I.PN/Exmp/Inspn dated Nil objecting to the grant of exemption. Therefore, the petitioner cannot treat the grant of exemption as some private affair and secure orders from the Government without even notice to their workman and without hearing the corporation. Similarly, the Calcutta High Court also considered the powers of the Government under Section 87 of the E.S.I. Act in Everett (India) Private Ltd. V. State of West Bengal And Ors (2002) 11 LLJ 477 Cal. The relevant portions of the above judgment is extracted hereunder: 18. So far as the law is concerned, it should be borne in mind that an exemption under Section 87 is not in the nature of an ordinary hearing resulting in a statutory decision, but it is in the nature of a decision of issuance of a Notification. This issuance of a Notification, apart from combining elements of hearing also has in it an element of delegated legislation. The State Government in making the Notification uses the notifying power given to it by Section 87 of the ESI Act and this Notification has to be issued on an administrative pragmatism which is to be determined by the State Government as the body primarily in control of industrial matters, and the practical factors affecting such industrial matters. I respectfully agree with the above principle laid down by the Madras and Calcutta High Courts. 23. I respectfully agree with the above principle laid down by the Madras and Calcutta High Courts. 23. The counsel for the E.S.I.Corporation submitted that there is no pleadings in the writ petitions to the effect that the benefits given by the petitioner is similar or superior to that of the benefits provided under the ESI Act. That itself is the crux of the case of the petitioner. The petitioner impleaded the recognised trade unions in these writ petitions. They filed an affidavit before this Court to the effect that they are getting superior benefits when compared to the benefits under the ESI Act. Under such circumstances, it cannot be said that there is no pleadings in these cases. 24. From the above discussions, it is clear that the impugned orders in these writ petitions are unsustainable and are to be set aside. The matter is to be reconsidered by the State Government, in the light of the observations in this judgment, after giving an opportunity of hearing to the petitioner and the respondents. 25. Therefore, these writ petitions are allowed in the following manner: 1. The impugned orders, i.e. -Ext.P37 in WP(C) No.37647 of 2010, Ext.P40 in WP(C) No.29454 of 2011, Ext.P44 in WP(C) No.18456 of 2012, Ext.P43 in WP(C) No.6644 of 2013, Ext.P45 in WP(C) No.24786 of 2014 and Ext.P47 in WP(C) No.32536 of 2017 are set aside. 2. The 1st respondent is directed to reconsider the applications for exemptions in all these cases, after giving an opportunity of hearing to the petitioners and the respondents, as expeditiously as possible, at any rate, within a period of three months from the date of receipt of a copy of this judgment.