High Court · 2009

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 26.11.2009CORAM:THE HON’BLE MR.JUSTICE K.CHANDRUW.P.No.12187 of 2009 andM.P.No.1 of 2009Development Consultants Pvt. Ltd.,Rep. herein by its ChiefExecutive Officer, ChennaiMr.P.R.Basu....Petitioner Vs1.The State of Tamilnadu, Rep. By its Secretary Labour and Employment Department, Secretariat, Fort St.George, Chennai – 600 009.2.Employees State Insurance Corporation, Rep. By its Regional Director 143, Sterling Road, Nungambakkam, Chennai – 600 034. .. RespondentsPrayer :Petition under Article 226 of the Constitution of Indiapraying for a Writ of certiorarified mandamus, calling for therecords of the first respondent in Letter No.1086/L1/2008-1 dated25.5.2009, quash the same and consequently direct the firstrespondent to reconsider the petitioner's application for exemptionunder Section 87 of ESI Act for the period from 01.04.2007 to31.03.2010. For Petitioner : Mr.T.S.Vijayaraghavan For Respondent 1 : Mr.R.Neelakandan,G.A. For Respondent 2 : *Mr.G.BharadwajO R D E RHeard both sides.2. The petitioner is a Private Limited Company. They have filedthe present writ petition seeking to challenge the order of thefirst respondent dated 25.05.2009 and after setting aside the same,they sought for a direction to the first respondent to re-considertheir application for an exemption under Section 87 of the ESI Actfor the period from 01.04.2007 to 31.03.2010 and to pass appropriateorders.3.It is the claim of the petitioner that they are payingsubstantial benefits to their workmen in terms of sickness and their https://hcservices.ecourts.gov.in/hcservices/ scheme is superior to that of the benefits granted by the ESICorporation (for short ESI(C)). The petitioner filed a writ petitionin W.P.No.18551 of 2001 before this Court. This Court by an orderdated 08.10.2001 directed the respondents to dispose of their claimfor exemption. 4. Pursuant to the direction, the first respondent State issuedan order dated 08.02.2002 and refused to grant exemption from May1995 to March 2002 since the benefits given by them are not superiorto the benefits given by the ESI(C). The petitioner once againchallenged the said order dated 08.02.2002 in W.P.No.21126 of 2002.This Court held that since no opportunity was given to thepetitioner, the order was liable to be set aside and the respondentswere directed to reconsider their decision. 5. It was thereafter the Government issued G.O.(D)Nos.5 to 11Labour and Employment Department granting time bound exemption tothe petitioner under Section 91A of the E.S.I Act starting from theperiod 01.05.1995 to 31.03.2002 and imposed certain conditions.Thereafter, the petitioner once again moved the Government underSection 87 and got an exemption from 01.04.2002 to 31.03.2003. Thesame exemption was not extended. 6. The petitioner moved this Court in W.P.No.28001 of 2004seeking to challenge the notice issued by ESI(C) dated 14.09.2004.They had also filed a further writ petition in W.P.No.7270 of 2005challenging the proceedings initiated by ESI(C). Subsequently, onthe application for exemption from the purview of the Act from01.04.2003 to 31.03.2005, the State Government requested the ESI(C)to offer their remarks as contemplated under law. 7. Pursuant to the request, the second respondent Corporationgave a detailed reply in No.51/P/11/13/15/I.PN/Exmp/Inspn dated Niland communicated the same to the first respondent on 09.03.2005objecting to the grant of exemption. In respect of Sickness benefit,it was stated by them that the benefit under ESI is superior.Similar was the case in the case of Disabled benefit, Dependentbenefit, Maternity benefit and the Medical care. It was the samecase for the Funeral expense. This was communicated to thepetitioner and they also sent a reply dated 15.02.2006. Afteraddressing the earlier writ petitions filed by them, a feebleattempt was made by them that they were giving substantial benefitsto the workmen. 8. They also filed one more writ petition being W.P.No.30731 of2006 challenging the order of the ESI(C) made under Section 45A ofthe ESI Act. The said notice was quashed on the ground that thepetitioner had availed exemption from 1995 to 2003 and furtherexemption application is pending. The State Government thereaftergranted exemptions under Section 91-A without any reasons by thefollowing GOs: https://hcservices.ecourts.gov.in/hcservices/ i)G.O.Ms.No.272 Labour and Employment Department dated 05.04.2007 (01.04.2003 to 31.03.2004) ii)G.O.Ms.No.273 Labour and Employment Department dated 05.04.2007 (01.04.2004 to 31.03.2005) iii)G.O.Ms.No.274 Labour and Employment Department dated 05.04.2007 (01.04.2005 to 31.03.2006) iv)G.O.Ms.No.275 Labour and Employment Department dated 05.04.2007 (01.04.2006 to 31.03.2007)9. Thereafter, when the petitioner sought for further exemptionfrom 01.04.2007 to 31.03.2008, the Government by an order dated24.07.2008 informed them that their application for exemption from01.04.2007 to 31.03.2008 is under active consideration. Therefore,they were directed to re-submit their proposal after the order ofthe Government on the first proposal is passed. Subsequently, by anorder dated 25.05.2009 the petitioner Management was informed thattheir request for exemption cannot be granted as the benefit givenby them are not similar or superior to the benefits provided underthe ESI Act. It is this order which is under challenge.10. The grounds raised by the petitioner was that the findinggiven by the Government was wrong and that the petitioner wasenjoying the benefit for nearly 12 years; no opportunity was givento the petitioner while passing the impugned order and there was noapplication of mind. Having granted exemption year after year, theycannot refuse an exemption. 11. It must be stated that the exemption granted by theGovernment was not after consulting the ESI(C) as required underSection 90. Only once remarks were called for from the ESI(C). Inthat remarks dated Nil, the Corporation has categorically statedthat the benefits given by the petitioner company is not similar tothe benefits provided by the ESI(C). Somehow, the petitionermaneuvered the grant of successive exemptions even on retrospectivebasis by invoking the power under Section 91-A of the Act. 12. The Supreme Court in the case of Secretary, HousingDepartment, Madras vs. K.Sabanayagam reported in JT 1997 (9) SC 316has held that for the grant of exemption from any labour enactments,the State Government must necessarily hear the workmen. Otherwisesuch an order of exemption is invalid. In the present case, thereis no joint application filed by the petitioner before theGovernment. On the contrary, each time they were able to secureexemption without notice to the workers. Even in the present writpetition, the workers were not made as parties either individuallyor in a representative capacity. The question of grant of anyhearing to the Management of the petitioner will not arise as theAct do not contemplate any personal hearing. 13. On the contrary, a combined reading of the provisions fromSections 87, 88 and 90 will show that it is a delegated legislation.In terms of Sections 89 and 91, no exemption can be granted withoutconsulting the E.S.I.Corporation. In the previous orders of https://hcservices.ecourts.gov.in/hcservices/ exemption, there was nothing to show that the Corporation wasconsulted. When remarks were called for from the Corporation, theCorporation had given elaborate objection by its letterNo.51/P/11/13/15/I.PN/Exmp/Inspn dated Nil objecting to the grant ofexemption. Therefore, the petitioner cannot treat the grant ofexemption as some private affair and secure orders from theGovernment without even notice to their workman and without hearingthe corporation. 14. In this context, it is necessary to refer to the judgmentof this Court in Madras Race Club represented by its SecretaryMr.Dharmasenan Ebeneser v. The Secretary to Governmen, Labour andEmployment Department and others reported in Manu/TN/1319/2008. Inparagraphs 10 to 13, it was observed as follows:-"10. ...submitted that the order of the StateGovernment is bereft of any reason and no opportunitywas given to the petitioner Club before passing theorders. In this context, he relied upon a judgment ofthe Allahabad High Court in Lohiya Machines (L.M.L.)Karmachari Sangh, Kanpur v. State of U.P and Ors.reported in 1999-II-LLJ 1023. This is for the purposeto show that the Government must examine the benefitsprovided by the employer whether they are similar orsuperior to the benefits provided under the Act andhearing of the employer and union must be afforded.11.In that case, the State Government on a policyconsideration refused to grant exemption, which wasfound fault with by the Allahabad High Court. But, inthe present case, it is not as if on any policyconsideration the State Government had refused. But,on the contrary, it was found that the medical andcash benefits provided by the petitioner Club wereneither comparable nor superior to the benefitsprovided under the ESI Act. Further, as stated in thecounter affidavit, the petitioner Club is notproviding the various benefits given under oneumbrella under the ESI Act. It includes, SicknessBenefits, Maternity Benefits, Disablement Benefits,Death Benefit and Funeral Benefit. Such benefits arenot provided by the Club. Even in the application sentby the petitioner club dated 06.04.1997 the Annexureappended shows that many of the benefits covered bythe ESI Act were not extended.12.In any event, Courts have repeatedly held that anexemption from the operation of a labour legislationis not automatic and there is no vested right on anyemployer to seek for an exemption. Only the benefitsare superior compared to the ESI Act. The ESI Act isa social welfare legislation and the subscription paidby the employer and employees only covers a fractionof the expenditure involved by the Corporation. In thepresent case, the first respondent State hascategorically held that it was not satisfied that thepetitioner Corporation deserves an exemption and it https://hcservices.ecourts.gov.in/hcservices/ had rejected the same on specific grounds.13.The Act does not contemplate any personal hearing.Neither in the application nor in the direction givenby this Court vide order dated 08.2.1999, any suchright of personal hearing was conferred on thepetitioner Club. It must also be stated that it wasnot a joint application made by the employer andemployees together. The two employees' unions weresubsequently made as party respondents and they havealso not come to support the stand of the petitionermanagement. In any event, the decision relied on bythe learned counsel for the petitioner has noapplication to the facts of this case."15. In the light of the above, the contentions raised by thepetitioner are misconceived. Accordingly, the writ petition standsdismissed. No costs. Consequently, connected miscellaneous petitionis closed.svkiSd/-Asst. Registrar4.12.2009*Corrected as per the order of this Court dated 25.1.2010 and made herein.Sd/-Asst Registrar29.1.2010//True Copy//Sub Asst. RegistrarTo1.The Secretary, State of Tamilnadu, Labour and Employment Department, Secretariat, Fort St.George, To be substituted Chennai – 600 009. to the order already despatched on 2.The Regional Director9.12.2009 Employees State Insurance Corporation, 143, Sterling Road, Nungambakkam, Chennai – 600 034. + 1 cc to Government Pleader, SR No.64318BV(CO)SR/4.12.2009SR/1.2.2010 Order inW.P.No.12187 of 2009