Calcutta High Court
Everett (India) Private Ltd. vs State Of West Bengal And Ors. on 27 March, 2000
Equivalent citations: (2002)IILLJ477CAL
JUDGMENT Ajoy Nath Ray, J.
1. At the time of hearing of the application for extension of the interim order, which was granted from time to time only for limited periods, the writ application itself appeared to be ready for hearing and was taken up by consent of parties. It appears that ESI Contribution has not been paid by the writ petitioner company for an inordinately long period of 12 years from 1983 to 1995. The ESI Authorities also did not initiate any assessment recovery proceedings for the said large length of time.
2. It is only for the first time in or about the month of March, 1999 that notices were issued by the ESI Authorities pointing out to the writ petitioner company the defaults in the making of contribution and the defaults in the making of return. Although Mr. Sengupta appearing for the Union of Workers once submitted that the aggregate of these notices is around Rupees 62 lakhs, yet the exact computation was not given to Court by the parties.
3. Immediately on receipt of the notices, one T. Banerjee, General Manager of the first writ petitioner wrote to the ESI a one page letter. In that letter it was stated that because of frequent disruption in electricity there was dislocation of work and as such the Assistant Regional Director of the ESI could not be met or given any explanation. It was further stated in the letter that the writ petitioner has made an application before "Your Goodselves" meaning the ESI itself, for exemption from operation of the ESI Act, 1948. This part of the letter is hopelessly misinformed because the exemption granting authority is the State of West Bengal and not ESI.
4. It might as well be stated here once for all that if the State Government refuses to grant exemption to the writ petitioner No. 1, it will be liable for 12 years' ESI contribution and the sum is likely to be very large.
5. The writ petitioner, however, made an application to the State Government for exemption under the hand of the Managing Director R. C. Banerjee by a letter dated August 4, 1999. The application was not made in the standard proforma. There were two annexures apparently to the letter of application: i) an express bipartite agreement between the company and the employees association and ii) statement of financial liability incurred annually for providing benefits to employees.
6. The case before the Writ Court made on behalf of the writ petitioner was that the company extends all insurance benefits to its employees by way of a bipartite agreement; such benefit is accepted by the employer and the employees as more beneficial to the employees than to that an ESI contribution and coverage might produce.
7. The Union appearing through Mr. Sengupta has supported the case of Mr. Pai's client in the writ Court. Since the employer and the employees are satisfied on both sides, the question of making ESI contribution should not prove to be an additional and useless burden to the employer - so ran the submission.
8. In answer to the letter requesting for exemption the State Government wrote back a cryptic six line letter enclosing a proforma "A" in which the application for exemption is to be made. State Government's letter is dated August 27, 1999. The proforma was filled up and submitted to the State Government by the writ petitioner on or about October 4, 1999. The grounds for exemption from the ESI Scheme would be found against item 15 given at pages 29 and 30 of the affidavit-in-reply. The State Government has not yet given a decision in the matter of grant of exemption.
9. Mr. Pai appearing for the writ petitioner submitted that all that his clients want for the present is a direction upon the State Government to dispose of the exemption application and for stay of recovery proceedings until such disposal.
10. Mr. Sengupta has supported Mr. Pai's case throughout, submitting that if ESI contributions are now to be made by the employer, the employer will pass the burden over to the employees by way of reduced bonus and such like and the employees will suffer.
11. The ESI opposed the writ petition. According to them the contributions are statutorily compulsory, that assessments under Section 45-A have been made. One such copy of assessment is annexed to the opposition. It appeared that the assessment, even if it contains two sheets of the same assessment order, even then it does not tally with the assessment order supplied to Mr. Pai's client.
12. The ESI has commenced recovery proceedings. The writ petition was filed to stop the process of recovery. It has been pressed to stay recovery until disposal of the exemption application by the State Government.
13. Under section 1(4) of the ESI Act of 1948 a Government establishment does not come under the purview of the Act if the employees are in receipt of benefits substantially similar or superior to the statutory benefits of the ESI Act. The said sub-section is quoted below:
"(4) It shall apply, in the first instance, to all factories including factories belonging to the Government other than the seasonal factories:
(Provided that nothing contained in this sub-section shall apply to a factory or establishment belonging to or under the control of the Government whose employees are otherwise in receipt of benefits substantially similar or superior to the benefits provided under this Act.)"
The above sub-section does not apply to the private clients of Mr. Pai. They would have to get exemption, if at all, under Section 87 of the Act read with Section 91-A. The sections are quoted below:
"87. Exemption of a factory or establishment: The appropriate Government may, by notification in the Official Gazette and subject to such conditions as may be specified in the notification, exempt any factory or establishment or class of factories or establishments in any specified area from the operation of this Act for a period not exceeding one year and may from time to time by like notification renew any such, exemption for periods not exceeding one year at a time."
"91-A. Exemption to be either prospective or retrospective: Any notification granting exemption under Section 87, Section 88, Section 90 or Section 91 may be issued so as to take effect either prospectively or retrospectively on such date as may be specified therein."
The power of the State Government to grant retrospective exemption was inserted by insertion of Section 91-A sometime in or about the year 1967.
14. On the construction of these Sections, it was submitted by Mr. Pai that a one time annual exemption only can be granted where the grant is prospective. If, however, a retrospective grant is being made, then and in that event such retrospective grant is necessarily limited to a period of one year.
15. On behalf of the ESI it was submitted that the limitation of the grant being limited to one year is absolutely unconditional in Section 87, further that Section 91-A permits issue of a notification only as per Section 87 and the only extension made in Section 91-A is as to the retrospective nature of the Notification and not the period of exemption which must be one year.
16. Looking at the facts of this case it is a matter of no two opinions that there has been a gross and inordinate delay on the part of the writ petitioner and a complete disregard of the existence of the provisions of the ESI Act. Although the only bipartite agreement shown to Court is dated 1996 and although it can have absolutely no manner' of linkage by itself to the disputed period of 83/1995, even then, assuming even without full justification, that there was such bipartite agreements for the entirety of the disputed period of 83/1995, even then, the writ petitioner, since it had no exemption from the State Government, was proceeding on the basis as if the ESI Act was meant for other employers and not for the writ petitioner. The utter disregard to the ESI Provisions shown for 12 years can only be regarded as acts of recklessness on the part of the writ petitioner.
17. No doubt the ESI Authorities also woke up only in the year 1999 but if the enforcing authority sleeps, that is no reason for completely exempting the persons in breach from all their liabilities for such breach. The simple legal principle is that where the default is equal, it is the claimant before the Court who has to suffer. In other words if the writ petitioner slept and disobeyed the ESI Act for 12 years, and the ESI Authorities slept equally soundly and peacefully for 12 years, when the writ Court is approached, it extends no helping hand to the writ petitioners because they are the defaulting claimants. The Court of equity does not aid a recklessly careless person irrespective of the fact an adversary is equally careless and reckless.
18. So far as the law is concerned, it should be borne in mind that an exemption under Section 87 is not in the nature of an ordinary hearing resulting in a statutory decision, but it is in the nature of a decision of issuance of a Notification. This issuance of a Notification, apart from combining elements of hearing also has in it an element of delegated legislation. The State Government in making the Notification uses the notifying power given to it by Section 87 of the ESI Act and this Notification has to be issued on an administrative pragmatism which is to be determined by the State Government as the body primarily in control of industrial matters, and the practical factors affecting such industrial matters.
19. The writ Court cannot, excepting in the most extreme of circumstances, interfere in a peculiar administrative sphere like this. It would be almost as difficult for a Writ Court to compel the raising of an industrial dispute upon the State Government as it would be for the writ Court to enforce the State Government the grant of a notification exemption.
20. The writ Court should not ordinarily play the role of a mere requester. Prayer (b) in the writ petition is framed in this way that the Court direct the State Government to decide the matter of exemption within a certain time frame. In my opinion, this is no more and no less than the writ Court playing the role of a requester to the State Government although such request can be backed up in appropriate cases by a threat of contempt.
21. If the State Government allows an inordinate length of time to lapse and shows itself to be in dereliction of its duty to consider even the matter of issuance or non-issuance of the Notification, then, if the Court reaches that conclusion, it can even compel the State Government to issue a Notification; but where parties have allowed more than a decade to slip by, I cannot, in fairness opine that the State Government, by not deciding on the matter of issuance of a Notification within a span of about 6 months has rendered itself liable to chastising by the writ Court.
22. Indeed, if the State Government does not decide upon the matter of exemption for some months now, or even such, the writ petitioner will be very likely compelled to pay because of the continuing recovering process of the ESI authorities. No doubt if payments are made and then and thereafter the State Government decides to grant the writ petitioner exemption, there will be a large multiplicity of proceedings because the writ petitioner will, in that event, have to take recourse to proceedings for refund of moneys paid to the ESI for the periods exempted.
23. But in considering this, one should not miss out in noting and considering that the State Government might also refuse to grant such exemption. The prayer for exemption is a very large scale prayer. It asks for retrospective operation at one go for periods which are now 17 years back in time. It is not at all inconceivable that the prayer for exemption will be turned down on a consideration of the papers and the facts by the State Government.
24. The matter of successive bipartite settlements, payments made to workers by way of insurance cover, the support given by the employees, the importance to be put upon the utter disregard shown to the existence of the ESI Act all these will have to be taken into consideration by the State Government. If thereafter it does not issue the exemption notification, then and in that event any order passed in the writ, any sort of encouragement shown to the writ petitioner by entertaining the writ, would work greatly to the injustice of the statutory authorities. The balance of convenience in my opinion, therefore, does not at all show that the writ petition should be entertained, touched or passed any favourable orders upon.
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 of 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.
27. The writ application is, therefore, rejected.
28. Rule, if any, issued will stand discharged with immediate effect.
29. Interim orders, if any, passed will have a similar fate i.e. they will perish here and now immediately.
30. There will be no order as to costs.
31. Stay of operation of this order for seven days is prayed but the prayer is turned down.
32. All parties and all others concerned to act on a signed copy of this order on the usual undertakings.