Development Consultants Pvt. Ltd vs The State Of Tamilnadu on 26 November, 2009

[Cites 12, Cited by 0]

Madras High Court

Development Consultants Pvt. Ltd vs The State Of Tamilnadu on 26 November, 2009

2. The petitioner is a Private Limited Company. They have filed the present writ petition seeking to challenge the order of the first respondent dated 25.05.2009 and after setting aside the same, they sought for a direction to the first respondent to re-consider their application for an exemption under Section 87 of the ESI Act for the period from 01.04.2007 to 31.03.2010 and to pass appropriate orders.

3.It is the claim of the petitioner that they are paying substantial benefits to their workmen in terms of sickness and their scheme is superior to that of the benefits granted by the ESI Corporation (for short ESI(C)). The petitioner filed a writ petition in W.P.No.18551 of 2001 before this Court. This Court by an order dated 08.10.2001 directed the respondents to dispose of their claim for exemption.

4. Pursuant to the direction, the first respondent State issued an order dated 08.02.2002 and refused to grant exemption from May 1995 to March 2002 since the benefits given by them are not superior to the benefits given by the ESI(C). The petitioner once again challenged the said order dated 08.02.2002 in W.P.No.21126 of 2002. This Court held that since no opportunity was given to the petitioner, the order was liable to be set aside and the respondents were directed to reconsider their decision.

5. It was thereafter the Government issued G.O.(D)Nos.5 to 11 Labour and Employment Department granting time bound exemption to the petitioner under Section 91A of the E.S.I Act starting from the period 01.05.1995 to 31.03.2002 and imposed certain conditions. Thereafter, the petitioner once again moved the Government under Section 87 and got an exemption from 01.04.2002 to 31.03.2003. The same exemption was not extended.

6. The petitioner moved this Court in W.P.No.28001 of 2004 seeking 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 2005 challenging the proceedings initiated by ESI(C). Subsequently, on the application for exemption from the purview of the Act from 01.04.2003 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 Corporation gave a detailed reply in No.51/P/11/13/15/I.PN/Exmp/Inspn dated Nil and communicated the same to the first respondent on 09.03.2005 objecting 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, Dependent benefit, Maternity benefit and the Medical care. It was the same case for the Funeral expense. This was communicated to the petitioner and they also sent a reply dated 15.02.2006. After addressing the earlier writ petitions filed by them, a feeble attempt was made by them that they were giving substantial benefits to the workmen.

8. They also filed one more writ petition being W.P.No.30731 of 2006 challenging the order of the ESI(C) made under Section 45A of the ESI Act. The said notice was quashed on the ground that the petitioner had availed exemption from 1995 to 2003 and further exemption application is pending. The State Government thereafter granted exemptions under Section 91-A without any reasons by the following GOs:

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 exemption from 01.04.2007 to 31.03.2008, the Government by an order dated 24.07.2008 informed them that their application for exemption from 01.04.2007 to 31.03.2008 is under active consideration. Therefore, they were directed to re-submit their proposal after the order of the Government on the first proposal is passed. Subsequently, by an order dated 25.05.2009 the petitioner Management was informed that their request for exemption cannot be granted as the benefit given by them are not similar or superior to the benefits provided under the ESI Act. It is this order which is under challenge.

10. The grounds raised by the petitioner was that the finding given by the Government was wrong and that the petitioner was enjoying the benefit for nearly 12 years; no opportunity was given to the petitioner while passing the impugned order and there was no application of mind. Having granted exemption year after year, they cannot refuse an exemption.

11. It must be stated that the exemption granted by the Government was not after consulting the ESI(C) as required under Section 90. Only once remarks were called for from the ESI(C). In that remarks dated Nil, the Corporation has categorically stated that the benefits given by the petitioner company is not similar to the benefits provided by the ESI(C). Somehow, the petitioner maneuvered the grant of successive exemptions even on retrospective basis by invoking the power under Section 91-A of the Act.

12. The Supreme Court in the case of Secretary, Housing Department, Madras vs. K.Sabanayagam reported in JT 1997 (9) SC 316 has held that for the grant of exemption from any labour enactments, the State Government must necessarily hear the workmen. Otherwise such an order of exemption is invalid. In the present case, there is no joint application filed by the petitioner before the Government. On the contrary, each time they were able to secure exemption without notice to the workers. Even in the present writ petition, the workers were not made as parties either individually or in a representative capacity. The question of grant of any hearing to the Management of the petitioner will not arise as the Act do not contemplate any personal hearing.

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.

14. In this context, it is necessary to refer to the judgment of this Court in Madras Race Club represented by its Secretary Mr.Dharmasenan Ebeneser v. The Secretary to Governmen, Labour and Employment Department and others reported in Manu/TN/1319/2008. In paragraphs 10 to 13, it was observed as follows:-

"10. ...submitted that the order of the State Government is bereft of any reason and no opportunity was given to the petitioner Club before passing the orders. In this context, he relied upon a judgment of the 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 purpose to show that the Government must examine the benefits provided by the employer whether they are similar or superior to the benefits provided under the Act and hearing of the employer and union must be afforded.

11.In that case, the State Government on a policy consideration refused to grant exemption, which was found fault with by the Allahabad High Court. But, in the present case, it is not as if on any policy consideration the State Government had refused. But, on the contrary, it was found that the medical and cash benefits provided by the petitioner Club were neither comparable nor superior to the benefits provided under the ESI Act. Further, as stated in the counter affidavit, the petitioner Club is not providing the various benefits given under one umbrella under the ESI Act. It includes, Sickness Benefits, Maternity Benefits, Disablement Benefits, Death Benefit and Funeral Benefit. Such benefits are not provided by the Club. Even in the application sent by the petitioner club dated 06.04.1997 the Annexure appended shows that many of the benefits covered by the ESI Act were not extended.

12.In any event, Courts have repeatedly held that an exemption from the operation of a labour legislation is not automatic and there is no vested right on any employer to seek for an exemption. Only the benefits are superior compared to the ESI Act. The ESI Act is a social welfare legislation and the subscription paid by the employer and employees only covers a fraction of the expenditure involved by the Corporation. In the present case, the first respondent State has categorically held that it was not satisfied that the petitioner Corporation deserves an exemption and it had rejected the same on specific grounds.

13.The Act does not contemplate any personal hearing. Neither in the application nor in the direction given by this Court vide order dated 08.2.1999, any such right of personal hearing was conferred on the petitioner Club. It must also be stated that it was not a joint application made by the employer and employees together. The two employees' unions were subsequently made as party respondents and they have also not come to support the stand of the petitioner management. In any event, the decision relied on by the learned counsel for the petitioner has no application to the facts of this case."

15. In the light of the above, the contentions raised by the petitioner are misconceived. Accordingly, the writ petition stands dismissed. No costs. Consequently, connected miscellaneous petition is closed.

26.11.2009 Index : Yes/No Internet:Yes/No svki To

1.The Secretary The State of Tamilnadu, Labour and Employment Department, Secretariat, Fort St.George, Chennai 600 009.

2.The Regional Director Employees State Insurance Corporation, 143, Sterling Road, Nungambakkam, Chennai 600 034.

K.CHANDRU,J.

Svki Pre-Delivery Order in W.P.No.12187 of 2009 26.11.2009

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