Madras High Court
M/S.Thanjavur West Sarvodaya Sangh vs State Of Tamilnadu on 24 February, 2010
Author: K.Chandru
Bench: K.Chandru
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 24.02.2010 CORAM THE HONOURABLE MR.JUSTICE K.CHANDRU W.P.NO.3666 of 2010 and M.P.NO.1 OF 2010 M/s.Thanjavur West Sarvodaya Sangh, rep. by its Secretary, A.P.Jothiramalingam, No.28,Giri Road, Srinivasapuram, Thanjavur-613 009. .. Petitioner Vs. 1.State of Tamilnadu, rep. by its Secretary, Labour and Employment Department, Fort St. George, Chennai-600 009. 2.The Regional Director, E.S.I. Corporation, 143, Sterling Road, Chennai-600 034. .. Respondents This writ petition is preferred under Article 226 of the Constitution of India praying for the issue of a writ of certiorarified mandamus to call for the records of the impugned order dated 12.01.2010 in G.O.(D)No.31 passed by the first respondent herein, to quash the same and to direct the first respondent to dispose of the application, dated 21.11.2009 filed by the petitioner for exemption under Section 87 read with 91-A of the Act for the period from 01.04.1991 to 31.03.2009 from the provisions of the E.S.I. Act. For Petitioner : Mr.C.S.Dhanasekaran For Respondents : Mr.N.Senthilkumar, AGP for R1 Mrs.Jayakumari for R2 - - - - ORDER
Heard both sides. The petitioner is the Thanjavur West Sarvodaya Sangh represented by its Secretary. Aggrieved by an order passed by the first respondent State Government in G.O.(D) No.31, dated 12.1.2010, the present writ petition has been filed. The petitioner wanted to set aside the said order and to dispose of their application, dated 21.11.2009 filed under Section 87 read with Section 91-A of the E.S.I. Act and to grant exemption with retrospective effect from 1.4.1991 to 31.3.2009 from the application of the Act.
2.By the impugned order, the State Government considered the case of the petitioner management and held that the benefit provided by the petitioner management is no way comparable with the ESI Scheme, which is more comprehensive and more advantageous to workmen. In that view of the matter, the State Government in the impugned order held as follows:
"The Government considered that the Employees' State Insurance Benefits are Superior.
The Government, have examined the benefits provided to the workers by the Employees' State Insurance Corporation and the Management, and as the benefits provided by the Employees' State Insurance Corporation are superior in nature and more beneficial to the employees than the benefits provided by the management of Thanjavur West Sarvodaya Sangh, Thanjavur the Government have decided not to grant exemption to the above management from the provisions of Employees' State Insurance Act. Accordingly, the Government reject the request of the Secretary, Thanjavur West Sarvodaya Sangh, Thanjavur for grant of exemption for the period from 01.04.1991 to 31.03.2009 from the provisions of Employees' State Insurance Act, 1948."
It is this order the petitioner has challenged in the writ petition.
3.The contentions raised by the petitioner are twofold. One was that employees of petitioner management also joined along with them in making an application. Secondly, no opportunity of personal hearing was given before passing the impugned order.
4.It is the case of the petitioner that some of the Sarvodaya Sanghs have got the benefit of exemption under Section 87 read with Section 91-A of the ESI Act upto 31.3.1991 by G.O.(D1)No.32, Labour and Employment Department, dated 7.7.1990. Thereafter, the petitioner Association filed writ petitions before this court being W.P.Nos.21058 of 1994 and 5893 of 1995, seeking to challenge the demand of ESI contribution for the period from 1.4.1992 to 31.7.1994 and also challenged the rejection of their exemption application. This Court, by a final order, dated 31.10.2001 allowed the writ petitions and held that since before passing the impugned order dated 31.1.1995, the petitioner Sangh was not given personal hearing and therefore, the order was set aside. The State Government was directed to consider their representation after giving due opportunity to the petitioner and to the ESI Corporation and to pass an order.
5.It is pursuant to the direction, the State Government, by an order, dated 29.4.2002 refused to grant exemption. Before doing so, the petitioner Sangh was heard represented through its counsel. The various benefits given under the ESI Scheme vis-a-vis the benefits given by the petitioner Sangh were also scrutinized. Aggrieved by the said order, the petitioner once again filed W.P.No.41909 of 2002 before this court challenging the said order. The said writ petition came to be heard along with the other writ petitions and disposed of by a common order, dated 7.10.2009. Once again, this court held that the views of employees should also be taken into account and in refusing the exemption, a speaking order should be made. In this context, reliance was placed upon the judgment of the Supreme Court in S.N.Mukherjee Vs. Union of India reported in 1990 (4) SCC 594. A direction was given to the respondents to adhere to Section 87 of the Act.
6.Pursuant to the said direction, the State Government gave an opportunity to the petitioner and asked the petitioner to file consent letters of employees in Proforma-A and also the comparative statement showing the benefits provided by the establishment. Accordingly, the petitioner enclosed the consent letters of some of its employees and gave a list of the benefits given by it. It is on receipt of the said representation, the State Government passed the impugned order negativing the request of the petitioner. The State Government examined in detail the claims made by the petitioner and also the objections raised by the Assistant Director for ESI Corporation vide his letter, dated 3.12.2009. Each of the benefit given by the petitioner was compared with the benefits available under the ESI Scheme and it was finally rejected. It is this order which is once again challenged.
7.The petitioner's claim that their benefits are superior than the benefit given by ESI, does not take its case any further. A perusal of the claim made by the petitioner vis-a-vis the statutory schemes provided by the ESI clearly shows that the petitioner Sangh is no way nearer to the benefits under the ESI Scheme. Further, it must be noted that it is not a matter of right that the petitioner can seek any exemption under the provisions of the Act.
8.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 12, 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.
9.It must be noted that the petitioner has been filing writ petition after writ petition before this court on one ground or other. In the first writ petition, this court only directed the State Government to consider their case, which was duly considered by the State Government on 29.4.2002. Once again with an untenable plea, the petitioner challenged the second order by stating that it should be a speaking order. That prayer was also granted by this court and it directed the State to consider their representation.
10.The Supreme Court in ESI Corpn. v. All India ITDC Employees' Union reported in (2006) 4 SCC 257 decided the scope as to what was meant by a direction to consider. The following passages found in paragraphs 12 and 13 may be usefully extracted below:
"12. But it is really unnecessary to go into the said question because the order of the High Court really did not give a positive direction. Relevant portion of the learned Single Judges order which has been extracted above, clearly goes to show that the learned Single Judge left the matter to be decided by the Corporation. The direction was to consider and in that sense there was no positive direction.
13. 14. We may, in this context, examine the significance and meaning of a direction given by the court to consider a case. When a court directs an authority to consider, it requires the authority to apply its mind to the facts and circumstances of the case and then take a decision thereon in accordance with law. There is a reason for a large number of writ petitions filed in the High Courts being disposed of with a direction to consider the claim/case/representation of the petitioner(s) in the writ petitions.
15. Where an order or action of the State or an authority is found to be illegal, or in contravention of the prescribed procedure, or in breach of the rules of natural justice, or arbitrary/unreasonable/irrational, or prompted by mala fides or extraneous consideration, or the result of abuse of power, such action is open to judicial review. When the High Court finds that the order or action requires interference and exercises the power of judicial review, thereby resulting in the action/order of the State or authority being quashed, the High Court will not proceed to substitute its own decision in the matter, as that will amount to exercising appellate power, but require the authority to consider and decide the matter again. The power of judicial review under Article 226 concentrates and lays emphasis on the decision-making process, rather than the decision itself.
16. The High Courts also direct the authorities to consider, in a different category of cases. Where an authority vested with the power to decide a matter, fails to do so in spite of a request, the person aggrieved approaches the High Court, which in exercise of the power of judicial review, directs the authority to consider and decide the matter. In such cases, while exercising the power of judicial review, the High Court directs consideration without examining the facts or the legal question(s) involved and without recording any findings on the issues. The High Court may also direct the authority to consider afresh, where the authority had decided a matter without considering the relevant facts and circumstances, or by taking extraneous or irrelevant matters into consideration. In such cases also, the High Court may not examine the validity or tenability of the claim on merits, but require the authority to do so.
17. Where the High Court finds the decision-making process erroneous and records its findings as to the manner in which the decision should be made, and then directs the authority to consider the matter, the authority will have to consider and decide the matter in the light of the findings or observations of the Court. But where the High Court without recording any findings, or without expressing any view, merely directs the authority to consider the matter, the authority will have to consider the matter in accordance with law, with reference to the facts and circumstances of the case, its power not being circumscribed by any observations or findings of the Court.
18. We may also note that sometimes the High Courts dispose of the matter merely with a direction to the authority to consider the matter without examining the issue raised even though the facts necessary to decide the correctness of the order are available. Neither pressure of work nor the complexity of the issue can be a reason for the Court to avoid deciding the issue which requires to be decided, and disposing of the matter with a direction to consider the matter afresh.
19. There are also several instances where unscrupulous petitioners with the connivance of pliable authorities have misused the direction to consider issued by Court. We may illustrate by an example. A claim, which is stale, time-barred or untenable, is put forth in the form of a representation. On the ground that the authority has not disposed of the representation within a reasonable time, the person making the representation approaches the High Court with an innocuous prayer to direct the authority to consider and dispose of the representation. When the court disposes of the petition with a direction to consider, the authority grants the relief, taking shelter under the order of the Court directing him to consider the grant of relief. Instances are also not wanting where authorities, unfamiliar with the process and practice relating to writ proceedings and the nuances of judicial review, have interpreted or understood the order to consider as directing grant of relief sought in the representation and consequently granting reliefs which otherwise could not have been granted. Thus, action of the authorities granting undeserving relief, in pursuance of orders to consider, may be on account of ignorance, or on account of bona fide belief that they should grant relief in view of the Courts direction to consider the claim, or on account of collusion/connivance between the person making the representation and the authority deciding it.
20. Therefore, while disposing of the writ petitions with a direction to consider, there is a need for the High Court to make the direction clear and specific. The order should clearly indicate whether the High Court is recording any finding about the entitlement of the petitioner to the relief or whether the petition is being disposed of without examining the claim on merits. (Emphasis added)
11.In the present case, after giving an opportunity to the petitioner and considering the claim made by them and on an over all consideration, their request for exemption was rejected by a speaking order. The petitioner cannot for the third time attack the order of the Government. It must also be noted that when the petitioner came to this court for the first time in the year 1994, the Act was also made applicable from the year 1991 and their liability is still pending from 1.4.1991. Without complying with the provisions of the Act, they cannot seek for a retrospective exemption, nullifying the benefit of the Act, which is otherwise applicable to them for the last 19 years. The attempt made by the petitioner to keep on filing writ petition after writ petition is nothing but a raid on this court.
12.One cannot escape from the conclusion that the applicability of the principles of natural justice is not a rule of thumb or strait-jacket formula or an abstract proposition of lay. It depends upon the facts of the case, nature of the enquiry and the effect of the enquiry and the effect of the order/decision on the rights of the person and attendant circumstances. It is noticeable feature that the Courts have not hesitated in moulding the concept of natural justice to suit the exigencies and situations.
13.An administrative decision must contain reasons even though the requirement to do so may not flow from the Rules. In S.N.Mukherjee's case (1990 (4) SCC 594), the Constitution Bench of the Apex Court after surveying the entire case laws on the point has held that except in cases where the requirement has been dispensed with, expressly or by necessary implication, an administrative authority exercising judicial or quasi-judicial function, is required to record reasons for its decision. In para 36 of the report, at pages 612 and 613, it was further held that the recording of reasons.... excludes chances of arbitrariness and ensures a degree of fairness in the process of decision making. The said principle would apply equally to all decisions and its implications cannot be confined to the decisions which are subject to appeal, revision or judicial review.
14.The same view was reiterated in the case of Maharashtra State Board of Secondary and Higher Secondary Education (1991 (2) SCC 716). The Apex Court observed in para 21 of the report as follows:
"21.Thus it is settled law that the reasons are harbinger between the mind of the maker of the order to the controversy in question and the decision or conclusion arrived at. It also excludes the chances to reach arbitrary, whimsical or capricious decision or conclusion. The reasons assure an inbuilt support to the conclusion/decision reached. The order when it affects the right of a citizen or a person, irrespective of the fact, whether it is quasi-judicial or administrative fair play requires recording of germane and relevant precise reasons. The recording of reasons is also an assurance that the authority concerned consciously applied its mind to the facts on record...."
15.The extent and nature of the reasons would depend on particular facts and circumstances. What is necessary is that the reasons are clear and explicit so as to indicate that the authority has given the consideration to the points in controversy. In M.J.Sivani and others (AIR 1995 SC 1770 = 1995 (6) SCC 289), it has been observed in para 32 of the report, as under:
"32. It is also settled law that the order need not contain detailed reasons like a court order. Administrative order itself may contain reasons or the file may disclose reasons to arrive at the decision showing application of mind to the facts in issue. It would be discernible from the reasons stated in the order or the contemporaneous record. Reasons are the link between the order and the mind of its maker. When rules direct to record reasons, it is a sine qua non and condition precedent for valid order. Appropriate brief reasons, though not like a judgment, are a necessary concomitant for a valid order in support of the action or decision taken by the authority or its instrumentality or the State..."
16.No hard and fast rule can be laid down for testing the question as to whether the principles of natural justice have been complied with or not as no strait-jacket formula has been provided for the observance of principles of natural justice. It depends on the nature of the proceedings and the procedure adopted by the Court, Tribunal or authority. In Managing Director E.C.I.L, Hyderabad V. B.Karunakar (1994-I-LLJ-162)(SC), the Hon'ble Supreme Court held as follows:
"...The theory of reasonable opportunity and the principles of natural justice has been evolved to uphold the rule of law and to assist the individual to vindicate his just rights. They are not incantations to be invoked nor rites to be performed on all the sundry occasions. Whether in fact, prejudice has been caused to the employee or not on account of the denial to him of the report, has to be considered on the facts and circumstances of each case..."
17.In the oft quoted celebrated decision of the Apex Court in Union of India V. Mohan Lal Kapoor (1973-II-LLJ-504), it was held in paragraph 28 of the report, that the reasons are the links between materials on which certain conclusions are based to the actual conclusions. They disclose how mind is applied to the subject-matter for a decision whether it is purely administrative or quasi-judicial. They would reveal nexus between the facts considered and the conclusions reached. This view was reiterated in Gurdial Singh Fijji V. State of Punjab (1979 (2) SCC 368).
18.There is another thinking which necessitates the recording of reasons to support the conclusions. It is well-settled law that every action of the State or instrumentality of the State must be informed by reason. Actions uninformed by reason may tantamount to arbitrariness. The State action must be just, fair and reasonable. Fair play and natural justice are part of public administration; non-arbitrariness and absence of discrimination are said to be hallmarks for good governance under the rule of law. One cannot, therefore, escape from the conclusion that it is imperative on the State Government to inform its order by recording reasons to reach a particular conclusion. With this caution in mind, and in the perspective of the law, as mentioned above, the question is whether the impugned order withstands the test of scrutiny at the altar of the principles of natural justice or not and if it is found that the reasons are conspicuously missing to arrive at the conclusion, a further question would be whether omission to record reasons vitiates the impugned order or is in violation of the principles of natural justice.
19.Therefore, the petitioner's request was considered in consultation with the ESIC and after a threadbare analysis, the request was rejected. Even in the affidavit there is no strong attack on the reasons given by the State. The petitioner seems to be rest contended with the so-called denial of personal hearing.
20.Further it must be noted that the Calcutta High Court in Everett (India) Private Ltd. Vs. State of West Bengal reported in 2002-II-LLJ-477 (Calcutta) held that a conjoint reading of Section 87 read with Section 91-A, the power to grant exemption can be available only for one year whether prospectively or retrospectively. In paragraphs 25 and 26, it was observed as follows:
"25.Regarding the interpretation on the joint reading of Sections 87 and 91-A, in my opinion, the submission of the ESI authorities has to be accepted. In my opinion, such notification can issue for a period of one year at a time only be it prospective or be it retrospective. When one considers the effect of such notification, which is the total effective abrogation or a Central Statute from its application to an establishment altogether. The salutary rule of keeping such abrogation limited to instalments of one year at a time is easy to understand and support.
26.In my opinion, therefore, on facts the writ petitioner deserves no relief having shown reckless disregard of the ESI Act for 12 years altogether. On law also the prayer to the State Government of granting a one time retrospective exemption for 12 years is not permissible."
21.In the present case, a retrospective exemption is sought for more than eight years. In view of the above, there are no merits in the writ petition and hence it will stand dismissed. No costs. Consequently, connected miscellaneous petition stands closed.
vvk To
1.The Secretary, State of Tamilnadu, Labour and Employment Department, Fort St. George, Chennai-600 009.
2.The Regional Director, E.S.I. Corporation, 143, Sterling Road, Chennai 600 034