Madhya Pradesh High Court
Employees' State Insurance ... vs Swadesh Daily Newspaper on 26 April, 1991
Equivalent citations: (1994)IIILLJ643MP, 1991(0)MPLJ914
ORDER T.N. Singh, J.
1. Two appeals are linked up as the crucial question of law agitated in both appeals is a common question of general importance and indeed, the appellant in both appeals is also common. Counsel made oral submissions and written arguments are also filed. By this common order, both appeals are being disposed of.
2. Facts in two appeals being little disparate those are being stated first clearly to avoid confusion. Respondent in M.A. No. 67 of 1984 is a vernacular Daily, published from Gwalior. The management of the Newspaper, hereinafter, the "Employer' has raised a "Dispute" in case No. 48/79 in Employees' Insurance Court, Gwalior, for short, E.I. Court, alleging that to the factory in which the newspaper was printed, the provisions of Employees' State Insurance Act, 1948, for short, the Act, did not apply inasmuch as power was not used in the manufacturing process and the number of workers employed on wages in the factory did not exceed the prescribed minimum of 20. That was decided against the appellant Corporation, for short, the 'Corporation' on 29.1.1982 by the said Court holding the factory not liable to be covered under the Act and the demand of the Corporation made under the Act against the employer in the sum of Rs. 2,030.50 was quashed. Subsequently, the said employer instituted in the same Court Case No. 47/82, seeking now the relief of refund of Rs. 18,481.05/- which he had deposited pursuant to Corporation's demand during May, 1977 to December, 1981. That "Dispute" being also decided on 24.10.1983 against the Corporation and order for refund being made by the Court below, the instant appeal is preferred. In the other appeal, the story is almost the same except that respondent Vijay Laxmi Steel Ltd. running a factory at Baraghat Industrial Area, Jhansi Road,Gwalior, had contended in Case No. 12/82 in E.I. Court that their factory could not be covered under the Act, being situated beyond the "municipal area". The Demand Notice and recovery proceeding initiated by the Corporation in respect of Rs. 16,280/-were quashed. Subsequently, Case No. 7/83 was filed in the same Court claiming refund of Rs. 34,410.65/-, deposited during the period 16.4.1980 to 23.10.1982. The subsequent "dispute" was decided on 30.5.1984, allowing employer's claim. Hence, Corporation's instant appeal challenging that order in M.A. No. 68 of 1984.
3. Let it be made clear that the question regarding the nature of original liability of the respondents in the two appeals though variously contested by them earlier in the two "dispute" raised by them are not germane to the decision of these two appeals. Corporation's counsel Shri Johri has raised two substantial contentions assailing the orders passed by E.I. Court in the two cases allowing refund claimed by the employers. Firstly, he submits, although the Court below purported to act under Section 75(1)(viii), as contended by respondents, in passing the impugned order, neither the employers had due standing to raise the dispute" nor did Court have jurisdiction thereunder to decide that. Secondly, the provisions enacted in Regulation 40 of the Employees' State Insurance (General) Regulations, 1950, were in the nature of "Special Law" and the Court below was bound as much by it as was the employer and that refund could be ordered only in terms thereof, but the case of neither employer was covered by the said Regulation. On behalf of respondent/employers, Shri Dubey endeavoured to sustain the impugned order, invoking Section 70 Contract Act. He also cited I.T.C. Ltd. v. George Joseph Fernandes : AIR 1989 SC 839. The thrust of the argument of Shri Mittal, who appeared for respondent in M.A. No. 68 of 1984, on the other hand, was on the limitation of this Court's jurisdiction in deciding these appeals and he submitted that no question of fact and even no finding of fact reached by the Court below can be reagitated in appeal in this Court.
4. As earlier alluded, I reiterate that in these appeals, I am not at all concerned to re-examine in any manner if the factories of the respondent had been legally and rightly "covered". The common feature of the cases of the two respondents evidently is that earlier, E.I. Court had rendered a decision in their favour upholding their contentions that the demand made under the Act for payment by them of the employees' contribution and employers' contribution as contemplated under Chapter IV of the Act was illegal. Although counsel has contended that the Corporation did not examine any witness in the subsequent cases decided by the E.I. Court and, therefore, the impugned decision rendered by that Court buttressing the finding which the said Court had earlier Reached in the earlier two cases decided, cannot be challenged in these two appeals. I do not think if at all it is necessary for me to consider that question.
5. Decisions galore on the scope of this Court's appellate jurisdiction under Section 82 of the Act Shri Mittal cited. In E.S.I. Corporation v. J.C. Mills, 1980 II MPWN 232 , the Court held "no substantial question of law" was raised and that on facts, the finding reached by E.I. Court on Corporation's claim made under Section 66 of the Act for reimbursement could not be reagi-tated. To the same effect is this Court's D.B. decision in M. P. E.B v. E. S. I. Corporation, 1981 MPLJ 490, wherein the E.I. Court had allowed Corporation's claim made under Section 66, holding that employer had failed to observe the statutory Safety Rules due to which the accident had taken place and, therefore, compensation paid by Corporation to the employees should be recovered by it from the employer. On a "dispute" raised by employee in regard to ''employment injury" finding in that regard of the E.I. Court was held immune to challenge in E.S.I. Corporation v. Baboolal, 1983 MPLJ 277 and Corporation's appeal was dismissed. To almost same effect is the decision in E.S.I. Corporation v. Shantilal, 1984 MPLJ 611, when this Court chided the Corporation for litigating against a just and honest claim of an employee. Though Shri Mittal also placed reliance on E. S. I. Corporation v. A.K Plastics Industries 1987 II MPWN 83 and in that case too, appreciation of evidence was held not to constitute substantial, question of law, but in that case it was further observed that the term "dispute" employed in Section 75, implied a lis of a different type and parties are not to be seen as plaintiff and defendant and the question of onus of proof does not arise. Reliance, therefore, of Shri Mittal on Jainendra Kumar 1985 JLJ 533, which was a case on Hindu Law, in an appeal arising out of a suit for specific performance of contract, I deem misconceived. True, by referring to Section 114(e), Evidence Act, the Court stated therein the settled law that party suppressing any crucial evidence is liable to suffer penalty of adverse inference being drawn against him.
6. To deal now with the moot question, let first reference be made to the long title of the Act wherein its object and purpose are stated "to provide for certain benefits to employees in case of sickness, maternity and employment injury and to make provisions for certain other matters in relation thereto". Legislative intent is expressed clearly that the measure is enacted in terms of the Constitutional imperative underlying under Articles 39(o) and 42 by which the state is required to make adequate provision for health-care and medi-care of workers with special reference to maternity relief. Section 1(5) contemplates exemption of any establishment or class of establishments, industrial, commercial, agricultural or otherwise when Gazette Notification in that regard is issued by Central/State Government, while making the Act generally applicable "to all factories (including factories belonging to Government) other than seasonal factories". Establishment of Corporation, "for administration of scheme of Employees' State Insurance in accordance with the provisions of the Act" is contemplated under Section 3 and as per Section 26(1), it is contemplated that "all contributions paid under this Act and all other moneys received on behalf of the Corporation shall be paid into a fund called the Employees State Insurance Fund which shall be held and administered by the Corporation for the purposes of this Act." The Corporation is authorised vide Section 26(2), to accept grants, donations and gifts from the Central or any State Government, local authority, or any individual or body whether incorporated or not, for all or any of the purposes of this Act. According to Section 28, the Fund may be expended only for the purposes specified, among others, for "payment of benefits and provision of medical treatment and attendance to insured persons" as also for "establishment and maintenance of hospitals and dispensaries and other institutions" etc. Accounts are to be maintained by the Corporation and are to be regularly audited too in such manner as may be prescribed by the Central Government. As per Section 35, the Corporation submits to Central Government an annual report which, along with the audited accounts of the Corporation, are to be placed before the Parliament and published in the Official Gazette as per Section 36.
7. Chapter IV of the Act is captioned "Contributions" of which Section 38 requires that "all the employees in factories or establishments to which this Act applies shall be insured in the manner provided by this Act." The "contribution" payable to the Corporation under the Act, as per Section 39, in respect of an employee shall comprise contribution specified separately in the schedule in respect of the employer and the employee to be known respectively as "employer's contribution" and "employees' contribution", but as per Section 42, the last-mentioned contribution is not payable in respect of an employee whose average daily wage during the wage period is below six rupees. The duty to make such payment to the Corporation is laid primarily, under Section 40, on the employer, who is authorised to make deduction of employee's contribution from the wages paid to the employee and according to Sub-section (3), the sum so deducted "shall be deemed to have been entrusted to him by the employee for the purposes of paying the contribution" in respect of which it was deducted". Chapter V deals with "Benefits", enumerated in Section 46, made available to the insured persons and their dependants. According to Section 53, the insured person and his dependents are debarred from claiming and recovering from the employer or from any other person any compensation or damages under the Workmen's Compensation Act or under any law for the time being in force in respect of an employment injury sustained by him as an employee under this Act. Section 60 prohibits transfer and assignment of the "benefits" and the person entitled is debarred, as per Section 61, to claim similar benefits under any other enactment. Section 72 prohibits the employer from reducing wages of any employee directly or indirectly on account of his liability for payment to the Corporation of "contributions". Section 97 empowers the Corporation to make Regulations "for the administration of the affairs of the Corporation and for carrying into effect the provisions of the Act," albeit with the prior approval of the Central Government and subject to the condition of previous application. Regulation 40(1) is as follows:
"Any contribution paid by a person under the erroneous belief that the contribution, was payable by that person under that Act may be refunded without interest by the Corporation to that person, if application to that effect is made in writing before the commencement of the benefit period corresponding to the contribution period in which such contribution was paid,"
8. What appears clear to me is that rightly or wrongly, as soon as any employee is "insured ' in terms of Section 38 of the Act on payment made of "contributions" in accordance with Sections 39 and 40, he becomes entitled to claim statutory "benefits" contemplated under the Act and it would be a matter of no consequence and of no consideration that any "employee" who is "insured" has not actually availed any benefit to which he was entitled in the right of an "insured" person. The question, therefore, whether actually the employees" of the two respondents did not enjoy any benefit, in my view, is wholly irrelevant. I do not think if the Corporation is to be faulted for not proving that the "employees" of the two respondent/employers did enjoy or were duly advanced the statutory benefits. Indeed, whether the factory was rightly or wrongly "covered" is not the question. The position which is statutorily established and is undeniable is that of Corporation's liability in respect of the risk covered in relation to each and every employee and consequently absolving the employer concerned of that liability. Although no separate "Policy of insurance" is issued in respect of each employee as per Regulation 10-b(d), 15 and 17, framed under the Act, a "Code No. ," is allotted to each employer and his employees are issued "identity Cards" by allotting separately to them each "Insurance Number" in token of the risk covered.
9. What distinguishes the Corporation from the insurer to whom provisions of Insurance Act, 1938 apply is that the moment "contributions" are paid by the employer (comprising the employer's contribution and the employee's contribution) the amount so paid becomes part of the Employees' State Insurance Fund contemplated under Section 26. That Fund can be used by the Corporation for the authorised and specified purposes for the common welfare of all employees of all employers in the country who are "insured" even if from that Fund no amount is spent in advancing any benefit to any particular insured employees of any particular employer. From the Common Fund, constituted under Section 26, expenses are met by the Corporation not only for providing "benefits" to the insured persons, out also for maintaining hospitals and other institutions generally for all workers throughout the country who, as defined in Section 2(a), are "employed for wages in or in connection with the work of any factory or establishment". Corporation is required to perform statutory functions and duties contemplated under the Act and by virtue of payment merely of "contribution" contemplated under Chapter IV of the Act, neither the employer nor the employee can contend that a separate and independent contract of insurance between the Corporation on one side and on the other side employer and/or employee was created and that was either void or breached in any manner by the Corporation by not providing any "benefit" to any particular employee. Liability to pay contribution contemplated under Sections 30 and 40, evidently, is statutory and on discharging that the employer and/or the employee becomes entitled to enforce statutory rights in respect of "benefits" contemplated under the Act. Evidently, the Corporation is not a contractual insurer; but is a statutory insurer. Accordingly, the person who is entitled to enforce any specified statutory right, is only entitled as per Section 75, to move E.I. Court to raise any "dispute" pertaining to that right, to be decided' by that Court.
10. Section 75(1)(viii) speaks of-
"any other matter which is in dispute between a principal employer and the Corporation, or between a principal employer and an immediate employer, or between a person and the Corporation or between an employee and a principal or immediate employer, in respect of any contribution or benefit or other dues payable or recoverable under this Act, or any other matter required to be or which may be decided by the Employees Insurance Court under this Act".
For the E.I. Court, to assume jurisdiction in regard to "any other matter , there has to be a "dispute between Corporation on one side and on the other side such person who is entitled in law to raise a question "in respect of any contribution or benefit or other dues payable or recoverable under the Act or any other matter required to be or which may be decided" by the Court under the Act. Only when the proper person moves the Court or when the court is vested under the Act with authority to decide the "matter", that jurisdiction under Section 75 can be exercised. Although Clause (viii) is a residuary clause, that does not vest E.I. Court with an inherent power or jurisdiction to deal or decide any matter" at its whim or caprice at the instance of any party. The use of the expression "which may be decided" is not to be misunderstood as vesting such inherent power or jurisdiction in the E.I. Court as to defeat any express or implied statutory prohibition, such as contemplated under Regulation 40(1), afore-extracted. See in this connection, Cotton Corporation AIR 1983 SC 1272; Manoharlal AIR 1962 SC 527; Mahesh ChandraGupta 1991 MPLJ 520.
11. The first question, therefore, is if the E.I Court is vested with express authority or even impliedly if it is authorised, to decide any claim for refund of contribution already paid to the Corporation which has become part of the Fund of the Corporation under Section 26. The only express authority in that regard is vested rather in the Corporation under Regulation 40; impliedly, therefore, other modes of refund are statutorily barred. This follows from the maxim expressio unius est exclusis alterius. See also, in this connection, Patna Improvement Trust AIR 1963 SC 1077; Narabada Prasad AIR 1969 SC 395. When application is made by person entitled to refund from the Corporation of contribution paid by him or on his account and when that application is rejected, a "dispute" can be then raised by him under Section 75(1) and it shall then be within the jurisdiction of the Court to decide the question raised and also the ''dispute". Evidently, a "dispute" arises for adjudication when a claim is made and that is refused. In Black's Law Dictionary, 5th Edition, at p.424, the word "dispute" is said to mean inter alia, "assertion of a right, claim, or demand on one side, met by contrary claims or allegations on the other". However, scope of adjudication of the "dispute" raised in terms of Regulation 40(1) would be evidently limited to the determination of the question if the application to the Corporation for refund was made "before the commencement of the benefit period corresponding to the contribution period in which such contribution was paid," and if the application was properly presented by the proper person and was yet wrongly rejected by the Corporation on extraneous consideration and untenable ground.
12. Unless this view is taken, there is likelihood obviously of the benevolent object of the Act being defeated inasmuch as E.I. Court may be flooded with incompetent applications from undeserving and unauthorised persons for refunds on non-statutory grounds. Corporation's statutory discretion contemplated under Regulation 40(1) to make refund in appropriate cases must be respected to subserve public interest to prevent the Common Fund of the Corporation being illegitimately drained and the object of the Act as also the underlying Constitutional imperative of providing healthcare and Medicare to the working class of the people being defeated. The intention of the Legislature of excluding specifically in the enumerations covered by Clauses (i) to (vii) of the question of refund must also be given due weight to restrict the scope in that regard to the residuary Clause (viii). Because also of the fact, indeed, that "any claim" which can be entertained and decided by the Court is also specified and different types of claims are enumerated in Sub-section (2) of Section 75. Court's duty to interpret statutory provision to subserve the object and purpose thereof matching the underlying public policy or public interest has been underlined in Aundal Ammal AIR 1987 SC 203 and that mandate binds me completely. What is clear is that Section 74 creates E.I Court as a special forum and reading Section 78, no doubt remains that it is not a "Civil Court". It is for specified purposes "deemed to be a Civil Court" and it has been vested with only specified powers of the Civil Court for specified purposes only. It required to follow such procedure, as per Section 78(2), as may be prescribed by Rules framed by the State Government. As held in Mahesh Chandra Gupta (supra), the Act creating in E.I. Court a new forum and providing machinery for enforcement of the right contemplated thereunder and right and the remedy being created uno flatu, the E.I. Court cannot arrogate to itself by implication any inherent power of a Civil Court not expressly contemplated under the Act for the forum.
13. Second question is, if the employer has any locus standi to raise the "question" of refund of the contribution already paid which is made up of both, employee's and employer's contribution. That neither he, nor any other person, can directly raise that "dispute" in E.I. Court, I have already held. However, it is also to be noticed that according to Section 38, "employee" is the "insured" and even when any deduction is made by the employer from the wages paid to the employee until that amount is paid by him to the Corporation, the employer holds that amount in ' trust" for the purpose of payment of that amount to the Corporation. The moment the trust is discharged by payment, he ceases to have any authority to act in any manner in respect of that amount though he had deducted that amount from the wages paid to the employee. When the "Insured" or the "employee" does not raise any "dispute" in accordance with Regulation 40(1), the employer is impliedly debarred from raising the "question" regarding refund in respect of which a "dispute" could have been, but has not been, raised as per provisions of Regulation 40(1) by the employee claiming refund in regard to deduction made from his wages under an "erroneous belief in respect to any particular "benefit period". The employer cannot unilaterally claim that he had paid any contribution, whether that was done under "erroneous belief" or not, because contribution is jointly payable by him for the employee of latter's shares along with his own contribution. Regulation 40 does not kill employee's option to avail the "benefit" subsequent and pursuant to any "contribution" paid, rightly or wrongly. Right to refund contemplated under Regulation 40 is primarily his; and employer's is only contingent or consequential right.
14. Although in these two appeals, counsel for respondents have contended that "employees" did not enjoy any benefit though contributions were paid, that fact, even if that is accepted as true and correct, would not enable the employers/respondents to raise unilaterally the "question" of refund under Section 75(1). The right of the employee who is denied any benefit due to him under the Act, he can definitely enforce himself against the Corporation under Section 75; but the employer is not authorised in any manner under any provision of the Act to enforce by proxy on employee's behalf that right. Sr. Counsel Shri Dubey has also contended that when refund is ordered and payment is made pursuant thereto by Corporation to the employer, that amount comes back to the employer as trustee and the latter is bound to distribute among the employees their contribution which he has deducted from their wages. The statutory trust which Section 40(4) of the Act created in respect to the amount duly deducted having been discharged on that amount being duly paid to the Corporation, there is no scope for any right being conceded to the employer to act as an ex-trustee to claim refund when Regulation 40(4) has made it clear that only on refund being duly allowed under Regulation 40(1), his status as "trustee" thereunder would relate now to sum refunded.
15. Although Shri Dubey has relied on Section 70, Contract Act, his submission, in my view, is repelled effectively by Shri Johri's contention that special law contemplated under Regulation 40, must prevail. In any case, Section 70, Contract Act, also speaks of "benefit' enjoyed by any person who is required to make compensation to the person for whom he had clone any act without intending to do so gratuitously. The provision is evidently based on the doctrine of "unjust enrichment" and it operates when there is no valid or subsisting contract between parties. (See, in this connection, Union of India v. J.K. Gas Plants, AIR 1980 SC 1330, State of West Bengal v. B.K.Mondal AIR 1962 SC 779; O. and N.G. Commission, Nazira v. S.S. Agarwalla, AIR 1984 Gauhati 11. As held in B.K. Mondal, Section 70 operates when the field is not covered by any other statutory provision. In any case, for the simple reason that the Corporation did not enjoy any "benefit" out of the payment made of statutorily contemplated "contributions" by the employer, to discharge its statutory liability, Section 70 could have no scope to operate. Even if the payment was not made gratuitously, that was done to comply with the statutory provisions and not to confer any "benefit" on the Corporation and out of that payment, no "benefit" was derived by the Corporation to enrich itself as that became part of the Common Fund of the Corporation to be spent for specified purposes in connection with the welfare of the toiling and teeming millions of the country. As regards Shri Dubey's reliance on George 'Joseph Fernandes case (supra), that is on Section 20, Contract Act about "mistake" of parties in respect of an agreement between them. Although to paras 22 and 23 of the Report, Shrf Dubey has drawn my attention, I do not think if, that decision avails the respondents in any manner. Once again, I reiterate the admitted position that no kind of agreement was at any time made, whether of insurance or indemnity, whether the Insurance Act or Contract Act, between the Corporation and the employees/respondents.
16. It is true that Section 72, Contract Act recognises the principle that any person to whom money has been paid or anything delivered by mistake or under coercion, must repay or return it. It is equally true that in S.T.O. Pilibhit v. Budh Pradhan Jha AIR 1954 SC 459 and again recently in Sales Tax Commissioner v. Oraiya Chamber of Commerce AIR 1986 SC 1556 it has been held that tax paid by dealer under mistake of law and realised also by Revenue authorities under mistake is refundable. In the instant case however, neither of Section 72 nor of those decisions, the respondents can claim any benefit for two short reasons. It is nobody's case that under any mistake the parties acted in this case though it is true that E.I. Court decided, prior to institution of subsequent claims pertaining to these appeals, that Corporation could not legally demand payment of contribution by the two employers, albeit for different reasons. Evidently, what is not disputed is that the Corporation did not act under any mistake and insisted all along on its right to demand, recover and also retain the contributions paid. Importantly, however, special provision for refund being made under Special Law contemplated under Regulation 40, Section 72 would not operate against that. It was open to the person entitled to claim refund in the manner and mode prescribed thereunder; but that has not been done. Relying even on Section 72, Contract Act, it is not possible to sustain the impugned order passed without jurisdiction.
17. In the premises aforesaid, I do not think if it is necessary at all to decide the additional plea which Shri Johri agitated that under Section 77 of the Act, the dispute or the "question" which the employers/respondents had raised was time-barred in each case. Counsel submitted that as per Section 77(1)(a), the employers/respondents were required to make application for deciding the dispute or question not within three years from the date of decision rendered by E.I. Court in the earlier cases, but from the dates when the contributions had been paid, of which refund was claimed.
18. For the reasons given above, I am constrained to hold that the orders impugned in both appeals passed by E.I. Court, are not sustainable in law because those orders are passed without jurisdiction. Accordingly, both appeals are allowed and impugned orders are set aside. Parties are left to bear their own costs in this Court.