(Common Prayer: Memoranda of Grounds of Appeals filed under Clause 15 of the Letters Patent against the order of a learned single Judge of this Court dated 05.03.2010 passed in Writ Petition No.4491 of 2010.)
R. Banumathi, J. & T.S. Sivagnanam, J.
1. This appeal by the Writ Petitioner Trade Union formed by the employees of the third respondent Management is directed against the order dated 05.03.2010 in W.P.No.4491 of 2010. The appellant filed the writ petition challenging the Government Order in G.O.(D).No.81, Labour and Employment Department, dated 03.02.2010 and for a consequential direction to the Management to refund the contribution deducted from the staff category of employees from December 1997 and from the operative category of employees from 01.03.1993 onwards to 01.04.2009. By the Government order in G.O.(D).No.81, request made under Section 88 of the Employees State Insurance Act, 1948 (hereinafter referred to as the 'Act') requesting for exemption from the provisions of the Act, came to be rejected.
2. The facts, which are necessary for the disposal of the appeal, are that the appellant which is a Trade Union registered under the provisions of the Trade Union Act, 1926, consists of members, who are employees working in the factory and mines of the third respondent Management. The appellant claims to be the majority and recognised Union. It is stated that there are about 307 employees working in the third respondent factory and 73 employees working in the mines owned by the third respondent and their services are interchangeable. It is further stated that the employees working under the third respondent management are covered by Medical Benefit Scheme evolved by the third respondent Management. Till 01.01.1997, the employees drawing more than Rs.3000/- per month as wages, were not covered by the provisions of the Act. The Central Government by notification dated 23.12.1996, extended the coverage under the Act to employees, who are drawing wages upto Rs.6500/- w.e.f., 01.01.1997. The appellant Union submitted a representation to the third respondent management to get exemption from the coverage of the Act by filing an application under Section 88 of the Act. Accordingly, the third respondent management by an application dated 26.12.1996, requested for grant of exemption from the coverage of the Act and it appears that details of the Medical Benefit Scheme extended by the management, were submitted. Subsequently, another application dated 17.01.1997 was submitted by the third respondent management for grant of exemption from the provisions of the Act. These applications were pending and no orders were passed, consequently, the management took steps to effect deduction of ESI contribution from the salary of the employees. This prompted the appellant Union to file a writ petition before this Court in W.P.No.2792 of 1997, to direct the first respondent to consider the application for exemption submitted by the third respondent management and also sought for an order to restrain the management from deducting ESI contribution from 01.01.1997 onwards. The writ petition was disposed of, by directing the first respondent to consider the application for exemption. A time frame of 8 weeks was fixed to pass orders of the said application and till such application was disposed of, the third respondent management was directed to collect the ESI contribution of the employees and keep the same in a separate account and likewise keep the employers contribution also in a separate account.
3. Thereafter, the appellant Union submitted an application for exemption on 02.03.1999, through the third respondent management, the first respondent by order dated 17.05.1999, declined to grant exemption. This order was challenged by the appellant Union by filing W.P.No.10549 of 1999. The writ petition was dismissed by a Division Bench of this Court by order dated 08.01.2000 on the ground that the issue raised is covered by an earlier decision. The appellant Union filed a review petition in Rev. P.No.67 of 2001, to review the order passed by the Division Bench of this Court dated 08.01.2000. The review petition was allowed, by order dated 28.03.2002, by directing the first respondent to decide the exemption application after hearing the parties, within a period of six months. Subsequently, the appellant Union submitted a representation dated 29.04.2002 to the first respondent seeking exemption. The Vice President of the appellant Union was afforded an opportunity of the personal hearing before the Deputy Secretary to Government, Labour and Employment Department. The first respondent by G.O.(D).No.1107, dated 26.12.2002, rejected the request made by the appellant for grant of exemption and called upon the management to comply with the provisions of the Act. This order was challenged by the appellant Union by filing W.P.No.804 of 2003. By order dated 25.08.2009, G.O.(D).No.1107 was set aside and the first respondent was directed to re-examine the matter. Thereafter, the first respondent by G.O.(D).No.81, dated 03.02.2010, declined to grant exemption. This order was challenged by the appellant Union by filing W.P.No.4491 of 2010, which was dismissed by the learned Single Judge by order dated 05.03.2010. The said order is impugned in this appeal.
4. Mr.Balan Haridas, learned counsel appearing for the appellant submitted that the employees of the third respondent management have not availed any medical facilities from the ESI as the employer themselves are providing medical facilities and therefore, the question of payment of contribution does not arise. By placing reliance on the decision of the Hon'ble Supreme Court in Employees' State Insurance Corpn., & Ors., vs. Jardine Henderson Staff Association & Ors., [(2006) 6 SCC 581] and Employees' State Insurance Corpn., vs. Distilleries & Chemical Mazdoor Union & Ors., [(2006) 6 SCC 604], it is submitted that the writ Court ought to have directed the amount paid by the employees to be returned, as the same has been directed to be kept in a deposit pursuant to an interim direction issued in the earlier writ petition. Further, it is submitted that if the amount is allowed to be retained by the ESI Corporation, the same would amount to unjust enrichment.
5. Mr.Ravindran, learned counsel appearing for the respondent Management produced before this Court statistics regarding the yearwise medical expenses incurred by the management for the employees and the medical facilities provided by the management are of high standard and therefore, the Government ought to have granted exemption from the provisions of the Act and without considering any of the contentions raised, the Government mechanically rejected the claim for exemption. Further, it is submitted that both the employees and employers contribution are retained in a separate account and details of the amounts retained were also placed before the Court.
6. Mrs.S.Jayakumari, learned counsel appearing for the ESI Corporation submitted that the appellants have prevented the corporation from implementing the provisions of the Act by filing writ petitions from 1997 and because of the hurdles caused for enforcing the provisions of the Act for the past 13 years, the respondent organisation being a welfare organisation is unable to give effect to the provisions of the Act. Further, it is submitted that the State Government have considered all the issues and rendered a finding that the scheme given by the ESI Corporation is more beneficial to the workmen and therefore, the question of granting exemption does not arise and the writ Court rightly declined to interfere in such an order.
7. We have heard the submissions on either side and carefully perused the materials placed on record.
8. Though elaborate submissions were made by the learned counsels on the factual aspect regarding comparative merits and demerits in the welfare scheme as given by the management vis-a-vis which is provided in the scheme formulated by the Employees State Insurance Corporation, those aspects need not be gone into at this stage for the reason that on account of the increase in the income range, all the employees of the third respondent management have gone outside the scope of coverage under the ESI Act w.e.f., 01.04.2009 and there is no further personal liability either on the employee or on the employer. In such circumstances, the question of considering as to whether the impugned government order was validly made, whether the reasons assigned are justifiable or whether all the contentions raised by the respondent management were properly considered, need not be examined as the question has virtually become academic, if not literally. Even before the writ Court alternate submission was made contending that since all the employees have gone outside the scope of coverage under the ESI Act, the validity of the impugned order need not be considered and it would suffice if the prayer for refund of the amount, which is lying in deposit alone be considered.
9. The learned Single Judge after referring to the decision of the Hon'ble Supreme Court in the case of Jardine Henderson Staff Association & Ors., (referred supra) and Distilleries & Chemical Mazdoor Union & Ors., (referred supra), which have been relied by the learned counsel for the appellant observed that the Hon'ble Supreme Court granted relief only in very old cases, where workers were no longer in service and it would be impossible for the employers to recover those amounts from those workmen. It was further observed that the amount has also been recovered and kept in a separate deposit, the monies will have to be deposited with the ESI. The appellants were held to be at fault for having stalled the application of the scheme and now having got out of the scheme enmasse due to the enhancement of the salary, cannot ask the money in deposit to be refunded. For such reason, the learned Judge observed that there were no equities in favour of the appellant.
10. In Jardine Henderson Staff Association & Ors., (referred supra), the staff association challenged the notification issued by the Central Government pursuant to which wage limit for coverage of an employee under the Act was enhanced from Rs.3000/- to Rs.6500/- instead of the wage ceiling of Rs.3000/- per month. The learned Single Judge of the High Court at Calcutta quashed the amendment with the result, there was no enhancement of wage ceiling. The Division Bench of the High Court allowed the appeals filed by the ESI Corporation and set aside the judgment of the Single Judge holding with the enhancement of the wage limit for coverage could not be termed as ultra vires. The Division Bench vacated the interim orders, which were granted by the learned Single Judge and directed the employers to implement the amended notification from the date of the judgment of the High Court, though the amendment came into operation from an anterior date. The ESI Corporation preferred appeals before the Hon'ble Supreme Court. As in the instant case before the Hon'ble Supreme Court, the management therein submitted a statement of expenditure for medical expenses incurred by the company on the staff and the other respondents also filed statements. One of the questions, which fell for consideration is as to whether any undue hardship has been caused, if the amendment is to be applied retrospectively, whether grave prejudice would be caused to the employers, who have spent huge amount and extended medical benefits without making any deduction from the salary of the employees and to direct such management to deposit the employers contribution would be in equitable. The Hon'ble Supreme Court took note of the fact that the ESI Corporation took full advantage of the interim order and did not provide any benefit to the employees at all nor did the ESI Corporation move to get the interim order vacated, yet they were claiming contribution for the past period, which was covered by the interim order granted by the learned Single Judge and that it will be unjust enrichment by the ESI Corporation at the cost of the employers. In the background of the above facts, the Hon'ble Supreme Court held that it would be unfair and unjust to make the employer pay the contribution for the past several years, more so, when they have spent large amount of money on the employees and provided medical facilities. The relevant portion of the judgment is quoted herein below:-
'55. We have already noticed that the respondent companies 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 the learned Senior Counsel appearing for the respondents that it would be unfair and unjust to make the employer 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 employers 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.
66......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 unions have complained about medical services provided by the employers since the object is otherwise fulfilled.....'
11. In Employees' State Insurance Corpn., vs. Distilleries & Chemical Mazdoor Union & Ors., referred supra, the appeal by the Corporation was directed against the judgment of the High Court of Judicature at Allahabad made in a writ petition filed for issuance of a writ of Mandamus not to realise any contribution from the workmen. During the pendency of the writ petition before the High Court, no contribution was either deducted or deposited and the management therein continued to provide the medical facilities to its workmen, which was not disputed by the ESI Corporation. The High Court taking note of the facts directed that no contribution shall be realised from the employer or employees for the past period, but prospectively contributions could be realised and the employees may avail benefit of the ESI scheme. This direction was approved by the Hon'ble Supreme Court holding that the High Court was fully justified in passing a judicious order after considering the equities by directing the employer and the employees to make contribution for the future i.e., from the date of disposal of the writ petition and should not bear the liability for the past inasmuch as the employees have not availed any medical facilities from ESI Corporation and at the same time, the employer was providing the medical facilities. The view taken by the High Court of Allahabad in the said was held to be just, pragmatic, fair and judicious view after considering all the equities and facts and circumstances of the case.
12. The findings and observations made by the Hon'ble Supreme Court in the aforementioned decisions, could be fully applied to the facts of the present case. The appellant Union filed W.P.No.2792 of 1997, praying for a direction to the first respondent to dispose of the exemption application filed under Section 88 of the Act. The said writ petition was disposed of by order dated 19.02.2009, by directing the exemption application to be considered within a time frame. Till the exemption application is disposed of, the employer was directed to collect employees contribution and keep the same in a separate account. Likewise, the employers' contribution was also directed to be kept in a separate account and this was to commence from March 1999. The exemption application was rejected by order dated 17.05.1999, this was challenged by the appellant by filing W.P.No.10549 of 1999. This writ petition came to be dismissed by Division Bench by order dated 08.01.2001, following an earlier decision in W.A.No.252 of 1998 and other connected writ petitions, which were filed challenging the enhancement of ceiling limit for ESI coverage. The appellant filed a review petition in Rev.P.No.67 of 2001, to review the order as the prayer sought for in the writ petition was challenging an order refusing to grant exemption from the provisions of the Act. The Division Bench of this Court by order dated 28.03.2007, allowed the review petition, by directing the Government to decide the exemption application and in the mean time, the interim arrangement, which was made in the earlier writ petition was directed to be continued. Thereafter, the Government by G.O.(D).No.1107, rejected the exemption application. The appellant challenging this order by filing W.P.No.804 of 2003. The writ petition was allowed by this Court by order dated 25.08.2009 and the matter was remanded to consider the comparative benefits and pass an order till such orders were to be passed, the earlier interim arrangement was directed to be continued. It appears that the ESI Corporation did not prefer any appeal against any of these orders nor appear to have raised any objection insofar as the interim arrangement. The net result being what was deducted as employee contribution remained with the management and their contribution also remained with them and it was retained in two separate accounts as directed.
13. We are informed by the learned counsel for the management that those amounts have been invested in fixed deposit and lying with the management. After the matter was remanded for consideration pursuant to the order in W.P.No.804 of 2003, dated 25.08.2009, the Government rejected the request for grant of exemption by G.O(D).No.81. The appellant Union challenged the said order by filing W.P.No.4491 of 2010. The writ petition was dismissed at the admission stage by order dated 05.03.2010, which is impugned in this appeal.
14. Even prior to the order of rejection in G.O.(D).No.81, dated 03.02.2010, all the employees of the third respondent management had gone out side the scope of the coverage under the ESI Act w.e.f., 01.04.2009, on account of increase in salary. The appellant challenged the order in the writ petition by filings
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this appeal, which was admitted on 25.03.2010. Thus, it is seen that though the ESI Corporation was the respondent in all the earlier proceedings at no point of time, they have taken any independent action either to modify or to vacate the interim arrangement, which was ordered in W.P.No.2792 of 1997, dated 19.02.1999. Consequently, no contributions were remitted to the ESI Corporation nor any medical benefits were provided by them and the employees continued to avail the medical benefits extended by the management. Both the employees as well as the third respondent management are speaking with of the same voice, which goes to establish that the employees have no complaints about the facilities given by the management and they appear to be fully satisfied. 15. In such circumstances to direct the amount held in deposit by the management, pursuant to orders of Courts, to be remitted to the ESI Corporation would be a very inequitable proposition and as held by the Hon'ble Supreme Court, it would amount to unjust enrichment by the Corporation. Therefore, the members of the appellant Union are fully justified in seeking for refund of the money held in deposit, which amount was deducted from their salary. 16. Admittedly, no facility offered by the ESI Corporation has been enjoyed by the members of the appellant Union and therefore, to direct remittance of the amount recovered from the salary to the ESI would be against equities and if done would be unjust and unfair. 17. In the result, the writ appeal is allowed, by directing the third respondent management to refund to the employees, the amount recovered from their salary, which is stated to be retained in a separate account together with accrued interest to be calculated pro-rate, within a period of three weeks from the date of receipt of a copy of this order. The third respondent management shall be entitled to withdraw the employers' contribution, which is also retained in a separate account. No costs. Consequently, connected miscellaneous petition is closed.