IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 04.01.2011
CORAM
THE HONOURABLE MR.JUSTICE K.CHANDRU
W.P.NOs.2471, 3234, 30509 and 16273 of 2007, 10131,
17326 and 24350 to 24352 of 2008, 6287 and 19395 of 2009,
10028, 21034 and 24691 of 2010
and
M.P.NOS.2,2 and 2 OF 2007, 2,2,2,2,3,3 and 3 of 2008,
2,1 and 2 of 2009, 2, 2 and 2 of 2010
Muthu Rathina Arangam
Matriculation school,
Kundanpalayam,
Puducherry-605 009
represented by its Principal
Mr.V.Balakrishnan .. Petitioner in
W.P.No.2471 of 2007
Senthil Education Society
running Senthil Matriculation Hr. Sec. School,
No.36, Thiyagaraja Street,
Puducherry-605 001.
represented by its Correspondent cum Principal
Mr.B.Dhandapany .. Petitioner in
W.P.No.3234 of 2007
Sri Lakshmi Narayana Institute of
Medical Sciences,
(Constituent of Bharat University)
Agaram Village, Villianur Commune,
Kudapakkam Post, Puducherry 605 502
rep. By its Chairperson .. Petitioner in
W.P.No.30509 of 2007
The Association of Private Schools and
their Managements in Pondicherry
represented by its Secretary,
Fr.S.Antonisamy. .. Petitioner in
W.P.No.16273 of 2007
Vasavi College of Education,
No.45-A, Villupuram Main Road,
Madagadipet, Puducherry-605 107,
represented by its Chairman,
Mr.K.P.Thiyagarajan .. Petitioner in
W.P.No.10131 of 2008
Immaculate College of Education,
represented by its Principal,
Pakkamudayanpet,
Puducherry-605 008. .. Petitioner in
W.P.No.17326 of 2008
Acharya Bala Siksha Mandir,
Estd. By Acharya Educational Trust,
rep. By its Managing Trustee
J.Arawindan,
5,Villupuram Main Road,
Villianur,
Puducherry-605 110. .. Petitioner in
W.P.No.24350 of 2008
Acharya College of Education,
Estd. By Acharya Educational Trust,
rep. By its Managing Trustee
J.Arawindan,
5,Villupuram Main Road,
Villianur,
Puducherry-605 110. .. Petitioner in
W.P.No.24351 of 2008
Acharya Siksha Mandir,
Estd. By Acharya Educational Trust,
rep. By its Managing Trustee
J.Arawindan,
5,Villupuram Main Road,
Villianur,
Puducherry-605 110. .. Petitioner in
W.P.No.24352 of 2008
Nirmala Ranee Girls' Higher Secondary School,
rep by its Principal,
33, Nehru Street,
Karaikal-609 602. .. Petitioner in
W.P.No.6287 of 2009
Sri Ramakrishna Vidyalaya
Higher Secondary School,
No.44,Zally, Tollandal Street,
Puducherry-605 001
rep by its Secretary. .. Petitioner in
W.P.No.19395 of 2009
Santhamani English High school,
rep by its Correspondent,
No.2,Indira Nagar,
Thuruvandar Koil,
Puducherry-605 102. .. Petitioner in
W.P.No.10028 of 2010
Wiseman Higher Secondary school,
rep. By its Manager/Principal
Mrs.S.Saroja,
W/o.Babu Ansardeen,
Ericarai Main Road,
Velrampet, Mudaliarpet,
Puducherry-605 004. .. Petitioner in
W.P.No.21034 of 2010
Sri Saimatha English High School
rep by its Correspondent,
Mr.V.Balakrishnan, S/o.Venkatesan,
Draupathi Amman Koil Street,
Dharmapuri,
Puducherry-605 009. .. Petitioner in
W.P.No.24691 of 2010
Vs.
1.The Government of Pondicherry,
represented by Additional Secretary
to Government (Labour),
Labour Department,
General Secretariat, Puducherry.
2.The Employees' State Insurance Corporation,
Regional Office (Puducherry),
represented by its Regional Directorate
Bouvankare Street, Mudaliarpet,
Puducherry-605 004. .. Respondents 1 and 2 in
W.P.Nos.2471, 3234,
30509 and 16273 of 2007,
10131, 17326 of 2008,
6287 and19395 of 2009,
10028, 21034 and
24691 of 2010
The Deputy Director,
The Employees' State Insurance Corporation,
Regional Office (Puducherry),
represented by its Regional Director,
Bouvenkare Street, Mudaliarpet,
Puducherry-605 004. .. Respondent No.3 in
W.P.No.17326 of 2008,
6287 and19395 of 2009,
10028, 21034 and
24691 of 2010
1.Union of India,
Union Territory of Puducherry,
rep. By Chief Secretary,
Govt. of Puducherry,
Puducherry.
2.The Additional Secretary to Government,
Labour Department,
Govt. of Puducherry, Puducherry
3.The Regional Director,
Employees State Insurance Corpn.,
Regional Office,
Bouvankare Street, Mudaliarpet,
Puducherry-605 004. .. Respondents in
W.P.Nos.24350 to
24352 of 2008
The Assistant Director,
Authorised Officer,
ESI Corporation,
No.178,100 Feet Road,
Ansari Duraisamy Nagar,
Puducherry-605 004. .. 4th respondent in
W.P.No.24691 of 2010
W.P.No.2471 of 2007 is preferred under Article 226 of the Constitution of India praying for the issue of a writ of certiorari to call for the records relating to order No.6563/Lab/K/2004, dated 24.06.2005 passed by the first respondent, Order No.55-42257-E1/1118, dated 23.06.2006 and PY/D5/INS/55-42257-E1/522, dated 29.12.2005 passed by the second respondent and to quash the same.
W.P.No.3234 of 2007 is preferred under Article 226 of the Constitution of India praying for the issue of a writ of certiorari to call for the records relating to order No.6563/Lab/K/2004, dated 24.06.2005 passed by the first respondent, Order No.55-42299-E1/1161, dated 28.6.2006 and order No.PY/Ins/55/42299-E1/1161, dated 17.7.2006 and order No.PDY/RECY/ESICP-16/55-42299-E1, dated 8.1.2007 passed by the second respondent and to quash the same.
W.P.No.30509 of 2007 is preferred under Article 226 of the Constitution of India praying for the issue of a writ of certiorari to call for the records comprises in the proceedings of the first respondent in notification, dated 27.1.2006 in No.4894/Lab/K/2005 and published in the Puducherry Government Gazette, dated 14.2.2006 and to quash the same as illegal, ultra vires and unenforceable as against the petitioner.
W.P.Nos.16273 of 2007 and 17326 of 2008, 6287, 19395 of 2009, 10028 and 21034 of 2010 are preferred under Article 226 of the Constitution of India praying for the issue of a writ of certiorari to call for the records relating to order No.6563/Lab/K/2004, dated 24.06.2005 passed by the first respondent and to quash the same so far as petitioners are concerned.
W.P.No.10131 of 2008 is preferred under Article 226 of the Constitution of India praying for the issue of a writ of certiorari to call for the records relating to order No.6563/Lab/K/2004, dated 24.6.2005 passed by the first respondent, proceedings No.55-42571-E1/C-18)Adhoc/2167 dated 31.3.2008 and proceedings No.55-42571-E1/1059, dated 31.3.2008 passed by the second respondent and to quash the same.
W.P.Nos.24350 to 24352 of 2008 are preferred under Article 226 of the Constitution of India praying for the issue of a writ of declaration declaring the notification bearing No.6563/Lab/K/2004 dated 24.09.2004 issued by the second respondent published in the Gazette of Pondicherry on 12.10.2004 and the consequential notification bearing No.6563/Lab/K/2004, dated 24.06.2005 issued by the second respondent published in the Gazette of Pondicherry on 12.07.2005 as null and void and ultravires the provisions of the Employees State Insurance Act, 1948 (ESI Act) and violative of provisions of the Constitution of India.
W.P.No.24691 of 2010 is preferred under Article 226 of the Constitution of India praying for the issue of a writ of certiorari to call for the records relating to order No.6563/Lab/K/2004, dated 24.6.2005 passed by the first respondent and proceeding No.55-00-042259-000-1302/C-18(Adhoc)/2996, dated 11.8.2010 passed by the fourth respondent and to quash the same.
For Petitioners : Mr.P.V.S.Giridhar Associates
in W.P.Nos.2471, 3234 and 16273 of 2007,
10131, 17326, of 2008, 6287 and 19395 of 2009,
10028, 21034 and 24691 of 2010
Mr.Satish Parasaran
in W.P.No.30509 of 2007
Mr.G.Masilamani, SC
for M/s.G.M.Mani Associates
in W.P.Nos.24350 to 24352 of 2008
For Respondents : Ms.N.Mala, GA(Puducherry) for R-1
in W.P.Nos.2471, 3234, 30509 and
16273 of 2007, 10131 and 17326 of 2008,
6287 and 19395 of 2009,
10028 and 21034 of 2010
for RR1 and 2 in W.P.Nos.24350 to 24352/2008
Ms.A.S.Bharathi, GA(Puducherry) for R-1
in W.P.No.24691 of 2010
Mr.A.Paramasivam for R-2
in W.P.Nos.2471 of 2007
Mrs.Jayakumari for R-2
in W.P.No.30509 of 2007, 10131 of 2008
Mr.S.Vaidyanathan for R-2
in W.P.No.16273 of 2007
for R-3 in W.P.Nos.24350 to 24352 of 2008
for ESI in W.P.Nos.17326 of 2008, 6287/2009
and 3234 of 2007
Mr.G.Bharadwaj for RR2 and 3
in W.P.No.19395 of 2009 and
10028 and 21034 of 2010
for RR2 to 4 in W.P.No.24691 of 2010
- - - -
COMMON ORDER
Except in W.P.No.30509 of 2007 filed by Sri Lakshmi Narayana Institute of Medical Sciences, in all other writ petitions, the challenge is to the order passed by the Lieutenant Governor of Union Territory of Puducherry under Section 1(5) of the Employees' State Insurance Act, 1948 (for short ESI Act) in notifying the educational institutions including public, private, aided or partially aided employees run by individuals, trustees, societies or other organisations, wherein 20 or more persons are employed or were employed for wages on any day of the preceding twelve months to be covered by the provisions of the ESI Act by a notification, dated 24.6.2005.
2.Before issuance of the said notification, they issued a preliminary notification, dated 24.9.2004. The preliminary notification dated 24.9.2004 reads as follows:
GOVERNMENT OF PONDICHERRY
Labour Department
No.6563/Lab./K/2004 Pondicherry, the 24th September, 2004.
NOTIFICATION
In exercise of the powers conferred by sub-section (5) of section 1 of the Employees State Insurance Act, 1948, the Lieutenant-Governor, Pondicherry in consultation with the Employees State Insurance Corporation and with the approval of the Central Government, is hereby pleased to notify his intention to extend the provisions of the said Act to the classes of establishments specified in the schedule annexed hereunder, on expiry of 6 months from the date of publication of this notification in the official gazette of Pondicherry, namely:-
SCHEDULE
--------------------------------------------------------------------------------------------------------
Description of Area in which the
establishments establishments are situated
(1) (2)
———————————————————————————————————
Educational institutions (including The whole or the Union
public, private, aided or partially Territory of Pondicherry.
aided) run by individuals, trustees,
societies or other organisations,
wherein 20 or more persons are
employed or were employed on
any day of the preceding twelve months.
———————————————————————————————————-
(By order of the Lieutenant-Governor)
(Emphasis added)
3.Subsequently, the Lieutenant Governor of Union Territory of Puducherry issued a final notification, dated 24.6.2005, which reads as follows:
GOVERNMENT OF PONDICHERRY
LABOUR DEPARTMENT
No.6563/Lab./K/2004,
Pondicherry, the 24th June 2005.
NOTIFICATION
In exercise of the powers conferred by sub-section (5) of section 1 of the Employees’ State Insurance Act, 1948 (Central Act 34 of 1948), the Lieutenant-Governor, Pondicherry, having already given six months’ notice as required thereunder vide Notification No.6563/Lab./K/2004, dated 24-9-2004 of the Labour Department, Pondicherry and published in the Official Gazette No.41, dated 12.10.2004, hereby appoints the date of publication of this notification in the official gazette as the date on which all the provisions of the said Act shall extent to the establishments specified under column (1) of the Schedule below and within the area specified under column (2) of the said Schedule, namely:-
SCHEDULE
——————————————————————————————————–
Description of Area in which the establishment establishments are situated (1) (2) --------------------------------------------------------------------------------------------------------- Educational institutions (including The whole or the Union public, private, aided or partially Territory of Pondicherry. aided) run by individuals, trustees, societies or other organisations, wherein 20 or more persons are employed or were employed for wages on any day of the preceding twelve months. ---------------------------------------------------------------------------------------------------------- (By order of the Lieutenant-Governor) (Emphasis added)
4.After the issuance of the notification, the respondent ESI sent notices to the petitioners and directed them to cover their employees under the Act. In many cases, after show cause notices, order under Section 45-A came to be issued. In some cases, prosecution notices were issued to the petitioners. In some of the cases, they were threatened with levy of damages under Section 85-B of the ESI Act. Some of them have also paid the amounts either fully or partially. On one case, it was stated that they had approached the ESI Court challenging the amounts demanded. None of the petitioners have moved the machinery provided under the Act to dispute either their liability or coverage in terms of Section 75 of the ESI Act before the appropriate ESI Court. On the other hand, long after the notification, dated 24.6.2005 and after protracted correspondence, they moved this court impugning the notification, dated 24.06.2005 only in the year 2007. The delay in moving the court was not explained in any of the affidavit filed by the petitioners.
5.In W.P.Nos.24350, 24351 and 24352 of 2008, not only the final notification was under challenge, but even the preliminary notification, dated 24.9.2004 is also under challenge.
6.In W.P.No.30509 of 2007, the petitioner is a private medical college. They have challenged the preliminary notification issued in respect of private medical institutions, dated 27.1.2006. The said notification reads as follows:
GOVERNMENT OF PONDICHERRY
Labour Department
No.4894/Lab/K/2005 Pondicherry
27th January 2006
NOTIFICATION
In exercise of the powers conferred by Sub-section (5) of Section 1 of the Employees State Insurance Act, 1948, the Lieutenant Governor, Pondicherry in constitution with the Employees State Insurance Corporation and with the approval of the Central Government, is hereby pleased to notify his intention to extend the provisions of the said Act to the classes of establishments specified in the Schedule below, on expiry of 6 months from the date of publication of this notification in the official gazette of Pondicherry, namely:-
SCHEDULE
————————————————————————————————————-
Description of Establishments Areas in which the establishments are situated ------------------------------------------------------------------------------------------------------------ All private Medical Institutions (including The whole of the Union corporate, joint sector, trust, charitable Territory of Pondicherry and private ownership hospitals, nursing homes, diagnostic centres, pathological labs) wherein 20 or more persons are employed or were employed on any day of the preceding twelve months. ----------------------------------------------------------------------------------------------------------- (By order of the Lieutenant-Governor)
7.It is also not the case of the petitioner medical college in that writ petition that they have sent any objection regarding the coverage under the Act. Notice regarding admission was given on 20.9.2007 and an interim stay was granted. Therefore, the respondents have not published any final notification since last three years due to pendency of the said writ petition.
8.In all writ petitions, the main contentions raised by the petitioners were twofold. One was that the Lieutenant Government of Union Territory of Puducherry lacks legislative sanction for the issuance of the notification under Section 1(5) of the ESI Act. According to the petitioners, it is only the Central Government which can issue such a notification. The second contention was that an educational institution cannot be covered by the provisions of the ESI Act as it is not an “establishment” within the meaning of Section 1(5). The term “otherwise” found in Section 1(5) after the words industrial, commercial and agricultural should have the same meaning as that of the previous words and that the concept of “ejusdem generis” will apply. There was also a minor contention, i.e. before issuing the final notification, the Lieutenant Governor must separately express his mind to cover the Act and only thereafter, a final notification can be issued.
9.In W.P.No.30509 of 2007, the contention was that no other State had covered the private medical colleges and hence it is discriminatory. It is also stated that the hospital run by them is a teaching hospital covered by the provisions of the MCI Act. Hence it cannot be covered by the ESI Act.
10.This court had admitted most of the writ petitions and also granted interim stay of the impugned order either with condition or without conditions. On notices from this court, the respondents have filed counter affidavits, justifying the impugned notification. In addition to justification of the impugned notifications, the respondent ESI also contended that the petitioners having been served with orders under Section 45-A or Section 85-B, their recourse can only be by raising a dispute under Section 75 and not to challenge those proceedings under Article 226 of the Constitution.
11.W.P.Nos.2471, 3234 and 30509 of 2007, 17326 and 24350 to 24352 of 2008, 6287 and 19395 of 2009, 10028 and 21034 of 2010 were heard on 15.12.2010, W.P.Nos.16273 of 2007 and 10131 of 2008 were heard on 16.12.2010 and W.P.No.24691 of 2010 were heard on 20.12.2010.
12.As noted already, the impugned notification issued by the Union Territory of Puducherry is mainly challenged on the following two grounds. They are as follows:
(a)The Union Territory of Puducherry is not the “appropriate Government” for making the notification under Section 1(5) of the ESI Act. The Union Territory of Puducherry cannot be called as a State Government as found under Section 2(1) of the ESI Act. If it is not a State Government within the meaning of the said provision, then the appropriate Government in respect of any institution in the Union Territory of Puducherry is only the Central Government. Therefore, the impugned notification is invalid.
(b)The petitioners are running educational institutions and it cannot be called as an establishment within the meaning of proviso to Section 1(5) of the ESI Act.
13.Before proceeding to deal with these issues, it is necessary to refer to Section 2(1) of the ESI Act which reads as follows:
“2.Definitions.-In this Act, unless there is anything repugnant in the subject or context,-
(1)”appropriate Government” means, in respect of establishments under the control of the Central Government or [a railway administration] or a major port or a mine or oil-field, the Central Government, and in all other cases, the [State] Government;”
14.In order to establish that the Union Territory of Puducherry is not the State Government, the counsel for the petitioners placed heavy reliance upon a judgment of the Supreme Court in Goa Sampling Employees’ Assn. v. General Superintendence Co., reported in (1985) 1 SCC 206. In that case, the Supreme Court while dealing with the term “appropriate Government” found under Section 2(a) of the Industrial Disputes Act, 1947 held that the Administrator of the Union Territory cannot be called as the State Government. In respect of the industrial dispute, a reference can be made under Section 10(1) only by the Central Government as the Central Government alone is an appropriate Government in respect of the industries located in an Union Territory. Therefore, it was argued that the said ratio rendered under the Industrial Disputes act will automatically apply to application of ESI Act in the Union Territory. The said judgment has been quoted out of context to support their arguments by the counsel for the petitioners.
15.In that case, before the Supreme Court, the question came up for consideration was whether the reference given by the Central Government in respect of an industrial dispute relating to an employee engaged by the Iron Ore Sampling companies was valid or not? On behalf of the employers, preliminary objections were raised before the industrial tribunal. The matter finally reached the Supreme Court. The Supreme Court after construing the Constitutional provision enshrined under Article 239(1) of the Constitution of India held that an Union Territory cannot be called as a State Government and constitutionally speaking, it is some thing other than a State. To understand the ratio of the Supreme Court, it is necessary to extract the following passages found in paragraphs 16, 17 and 18, which are as follows:
“16.It was then pointed out that the definition of the expression appropriate Government in Section 2(a)(i) of the Act unless it is shown in relation to any industrial dispute concerning any industry carried on by or under the authority of the Central Government or the enumerated industries or a banking or an insurance company, a mine, an oilfield, a Cantonment Board, or a major port, the appropriate Government will be the Central Government and in any other case a State Government. It was therefore, submitted that unless it is shown that in relation to the industrial dispute raised by the Association, the appropriate Government would be the Central Government, the case would fall under the residuary provision, namely, that in relation to any other industrial dispute, the appropriate Government would be the State Government. The submission does not commend to us because before one can say that the appropriate Government is the State Government in relation to an industrial dispute, there has to be some State Government in which power must be located for making the reference. If there is no State Government but there is some other Government called the Administration of Union Territory, the question would arise whether in such a situation the Administration of Union Territory should be described as State Government for the purpose of Section 2(a)(i) read with Section 10(1)?
17.The High Court clearly fell into an error when it observed that the inclusive definition of the expression State Government does not necessarily enlarge the scope of the expression, but may occasionally point to the contrary. Let us assume it to be so without deciding it. But where the High Court fell into the error was when it held that the President representing the Central Government and the Administrator, and appointee of the President and subject to all orders of the President constitute two different Governments for a Union Territory. The position, the power, the duties and functions of the Administrator in relation to the President have been overlooked. On a conspectus of the relevant provisions of the Constitution and the 1963 Act, it clearly transpires that the concept of State Government is foreign to the administration of Union Territory and Article 239 provides that every Union Territory is to be administered by the President. The President may act through an Administrator appointed by him. Administrator is thus the delegate of the President. His position is wholly different from that of a Governor of a State. Administrator can differ with his Minister and he must then obtain the orders of the President meaning thereby of the Central Government. Therefore, at any rate the Administrator of Union Territory does not qualify for the description of a State Government. Therefore, the Central Government is the appropriate Government.
18.If the Central Government as the appropriate Government has made the reference, the High Court was clearly in error in quashing the reference.”
16.It is only in this context, the reference made by the Central Government was upheld by the Supreme Court. It is not clear as to how this judgment is of any assistance to the petitioners. On the contrary, if Article 239(1) is correctly understood, then it could only mean that the Union Territory is to be administered by the President acting to such an extent as he things fit through the Administrator to be appointed by him with such designation as he may specify.
17.It is also necessary to refer to the definition of the terms “Central Government”, “State Government” and “Union Territory” as found under the General Clauses Act, 1897 (omitting the words not relevant for the present purpose), which reads as follows:
(8) Central Government shall
(a) * * *
(b) in relation to anything done or to be done after the commencement of the Constitution, mean the President; and shall include,
(i)-(ii) * * *
(iii) in relation to the administration of a Union Territory, the Administrator thereof acting within the scope of the authority given to him under Article 239 of the Constitution.
The expression State Government is defined in Section 3(60) (omitting the words not necessary for the present purpose) as under:
(60) State Government,
(a)-(b) * * *
(c) as respects anything done or to be done after the commencement of the Constitution (Seventh Amendment) Act, 1956, shall mean, in a State, the Governor, and in a Union Territory, the Central Government;
The expression Union Territory is defined in Section 3(62-A) to mean Union Territory specified in the First Schedule to the Constitution and shall include any other territory comprised within the territory of India but not specified in that Schedule.”
18.It is necessary to refer to certain decisions of the Supreme Court interpreting the scope of Article 239 of the Constitution and also the powers of an Administrator of an Union Territory. In State of Bombay v. Salat Pragji Karamsi reported in 1957 SCR 745 = AIR 1957 SC 517, the Supreme Court held that the Chief Commissioner of the Union Territory acting under the orders of the President can issue statutory notifications under the powers vested in any statute. In paragraphs 14 and 15 of the judgment, the Supreme Court observed as follows:
“14.Article 239 of the Constitution relates to administration of Part C States and provides:
Subject to the other provisions of this Part, a State specified in Part C of the First Schedule shall be administered by the President acting, to such extent as he thinks fit, through a Chief Commissioner or a Lieutenant-Governor to be appointed by him….
15. This Article has been relied upon for urging that in a Part C State, the administration had to be carried on by the President acting through a Chief Commissioner. But this does not take away the powers of the Chief Commissioner given to him under any other Statute or Order. The Chief Commissioner of Kutch under Section 1 of the Bombay Act, had the power to issue notifications making that Act operative in Kutch or any part of Kutch and those powers were not affected by Article 239 of the Constitution particularly because of clause 15 of the Adaptation of Laws Order, 1950, which preserved these powers of the Chief Commissioner. Therefore, the notification issued by the Chief Commissioner on November 28, 1950 was valid and issued under legal authority; and the Act came into force in the parts to which the notification made it so applicable. We have therefore, come to the conclusion that the learned Judge was in error in holding that the notification was not a valid one and insofar as that was the basis of the acquittal of the accused, the judgment under appeal must be set aside.”
19.While dealing with the notification issued by the Lieutenant Governor of the Union Territory of Delhi, the Supreme Court in its judgment in Om Prakash v. Union of India reported in (1988) 1 SCC 356 held that the Lieutenant Governor exercises his power validly only subject to the control and further orders of the President. In paragraph 12, the Supreme Court observed as follows:
“12….Granting that the 1957 Act desired to empower the Central Government to acquire lands in Delhi for the purposes of the said Act and even granting that such power has to be exercised through the Lt. Governor because of the notification under Article 239(1), such power can also stand side by side with the wider power of the Lt. Governor to acquire lands for a public purpose. There is nothing in the 1957 Act which prohibits the Lt. Governor taking such steps as he desires, under the powers available to him, to carry out the planned development of Delhi in consonance with the plans approved or finalised under the 1957 Act. Viewed in this light, the powers of the Lt. Governor under Section 4 of the Land Acquisition Act can be read as additional to the powers of the Central Government under the Delhi Development Act. The 1957 Act does not destroy but only supplements the 1894 Act. This is the view taken by the High Court and we agree with it.”
20.The Supreme Court had an occasion to consider the legislative power of the Puducherry Legislature and its competence to enact laws vide its judgment in Mahe Beach Trading Co. v. Union Territory of Pondicherry reported in (1996) 3 SCC 741. In paragraphs 16 to 19, the Supreme Court held as follows:
“16.Before dealing with the second contention raised by the learned counsel for the appellant, it would be more appropriate to deal with the third contention. It was submitted that the Pondicherry Legislature had no plenary powers as the same vested only in Parliament. The submission was that the Pondicherry Legislature could not make retrospective laws, or laws contrary to the laws made by Parliament, under Articles 239 and 239-A of the Constitution. Elaborating further it was submitted that the Pondicherry Legislature did not have the power to pass the Validation Act which had the effect of re-enacting and imposing restrictions on diesel and petrol with retrospective effect.
17.Article 239-A of the Constitution provides for Parliament creating, by law, for the Union Territory of Pondicherry, a body to function as a legislature with such constitution, powers and functions as may be specified in the law. It was in pursuance of this that [The] Government of Union Territories Act, 1963 was passed by Parliament and the said Act was made applicable to the Union Territory of Pondicherry from 1-7-1963. This Act provided for the setting up of Legislative Assemblies and Council of Ministers for the Union Territories and it was under this Act that the Legislative Assembly for the Pondicherry Union Territory was constituted. Section 18 of [The] Government of Union Territories Act, 1963 deals with the extent of the legislatures power and it reads as follows:
Extent of legislative powers.(1) Subject to the provisions of this Act, the Legislative Assembly of a Union Territory may make laws for the whole or any part of the Union Territory with respect to any of the matters enumerated in the State List or the Concurrent List in the Seventh Schedule to the Constitution insofar as any such matter is applicable in relation to Union Territories.
(2) Nothing in sub-section (1) shall derogate from the powers conferred on Parliament by the Constitution to make laws with respect to any matter for a Union Territory or any part thereof.
18.Reading Article 239-A and Section 18 of [The] Government of Union Territories Act, 1963 together, it is clear that the Pondicherry Assembly had the power to make laws for the whole or part of Pondicherry with respect to any of the matters enumerated in the State List or the Concurrent List. Levy of sales tax would undoubtedly be within its legislative competence by virtue of Entry 54 of List II of the Seventh Schedule. The effect of Validation Act being promulgated was that the levy on diesel and petrol would no longer be regarded as one being made under municipal decree of 1880 by the Municipal Council but, in law, will have to be regarded as being a levy made by a competent legislature exercising its powers by virtue of Section 18 of [The] Government of Union Territories Act, 1963 read with Article 239-A of the Constitution.
19.By virtue of [The] Government of Union Territories Act, 1963, the Pondicherry Legislature was given the powers which any other State Legislature had to enact laws with respect to the matters enumerated in the State List or the Concurrent List. Of course, sub-section (2) of Section 18 provides that the powers conferred under sub-section (1) shall not derogate from the powers conferred on Parliament by the Constitution to make laws with respect to any matter for the Union Territory. But, there is no such law relating to the imposition of sales tax on diesel and petrol which has been enacted by Parliament, while the Validation Act has imposed such a tax. It is not in dispute, and now it is well settled, that the State Legislature as well as Parliament has the power to legislate with retrospective effect and also to pass a Validation Act. This being so, and the powers of the legislature of Pondicherry being coextensive with the powers of a State Assembly, by virtue of Section 18 of [The] Government of Union Territories Act, 1963, there is no reason for this Court to hold that the Pondicherry Legislature could not enact a law with retrospective effect. In other words, by virtue of Section 18 of [The] Government of Union Territories Act, 1963, Parliament vested with the Pondicherry Legislature the plenary powers to legislate with respect to the matters in List II and List III of the Seventh Schedule and the said power has been validly exercised with the enactment of the Validation Act.”
The Supreme Court by the above observations recognised the right of the Puducherry Legislature to enact law on par with a State assembly by virtue of delegation of powers granted by the Parliament under the Union Territories Act, 1963.
21.A similar question regarding the power of the President vis-a-viz Union Territory and the position of an Administrator of an Union Territory came to be considered by the Supreme Court in Government of NCT Delhi v. All India Central Civil Accounts, JAO’s Assn., reported in (2002) 1 SCC 344. In paragraphs 2 and 8, the Supreme Court observed as follows:
“2….The administration of the Union Territories is carried on by the Union, through an Administrator. As stated by this Court in New Delhi Municipal Council v. State of Punjab1 the President, who is the executive head of a Union Territory does not function as the head of the Central Government, but as the head of the Union Territory under powers specially vested in him under Article 239 of the Constitution thereby occupying a position analogous to that of a Governor in a State. Though the Union Territories are centrally administered under the provisions of Article 239 they do not become merged with the Central Government as has been stated by this Court in Satya Dev Bushahri v. Padam Dev2. However, the Administrator is competent to exercise all powers vested in him by the Government of National Capital Territory of Delhi Act, 1991 (1 of 1992) (hereinafter referred to as the Act). The Administrator functions as a delegate of the President and will have to act under the orders of the President, that is, the Central Government.
…..
8…..The position in law is clear that though the Union Territories are centrally administered under the provisions of Article 239 of the Constitution, they do not become merged with the Central Government and they form part of no State and yet are the territories of the Union, as has been held by this Court in Satya Dev Bushahri v. Padam Dev2 and NDMC v. State of Punjab1. Thus, it must be held that the Union Territory does not entirely lose its existence as an entity though large control is exercised by the Union of India…..”
22.Once again, similar view was reiterated by the Supreme court in Chandigarh Administration. v. Surinder Kumar reported in (2004) 1 SCC 530. In paragraph 1, it was observed as follows:
“….Under Article 239 of the Constitution of India the Union Territories are administered by the President of India acting through an administrator to be appointed by him. But this does not mean that the Union Territories become merged with the Central Government. They are centrally administered but they retain their independent entity….”
23.The power of the Lieutenant Governor of the Union Territory in sanctioning prosecution under Section 50 of the Prevention of Terrorism Act, 2002 came to be considered by the Supreme Court vide its judgment in State (NCT of Delhi) v. Navjot Sandhu reported in (2005) 11 SCC 600. The court dealt with the ratio of the Goa Sampling Employees’ Association case (cited supra) and upheld the power of the Lieutenant Governor in granting sanction for prosecution by holding that he possesses a specific statutory delegation. It is necessary to refer to the following passage found in paragraph 10, which reads as follows:
“10…The reliance sought to be placed on Goa Sampling Employees Assn. v. General Superintendence Co. of India (P) Ltd.2 is rather misconceived. That case turned on the interpretation of the expression appropriate Government occurring in Section 10 of the Industrial Disputes Act, 1947. The industrial dispute pertained to the workmen employed at Mormogao Port which is located in the then Union Territory of Goa, Daman and Diu. It was contended by the employer that the Central Government was not competent to refer the dispute to the Tribunal for adjudication. This contention found favour with the High Court of Bombay which held that the Administrator appointed under Article 239 of the Constitution is the State Government for the Union Territory of Goa and is the appropriate Government within the meaning of Section 2(a) of the Industrial Disputes Act. The judgment of the High Court was reversed by this Court after referring to Articles 239 and 239-A and the provisions of the Government of Union Territories Act, 1963 and the definitions of the General Clauses Act and observed thus: (SCC p.217, para 17)
On a conspectus of the relevant provisions of the Constitution and the 1963 Act, it clearly transpires that the concept of State Government is foreign to the administration of Union Territory and Article 239 provides that every Union Territory is to be administered by the President. The President may act through an administrator appointed by him. Administrator is thus the delegate of the President. His position is wholly different from that of a Governor of a State. Administrator can differ with his Minister and he must then obtain the orders of the President meaning thereby of the Central Government. Therefore, at any rate the administrator of Union Territory does not qualify for the description of a State Government. Therefore, the Central Government is the appropriate Government.
That decision, in our view, has no relevance. This Court was not called upon to consider a specific provision like Section 50 or Section 2(1)(h) of POTA. We are, therefore, of the view that by virtue of specific statutory delegation in favour of the Administrator who is constitutionally designated as the Lieutenant Governor as well, the sanction accorded by the said authority is a valid sanction under Section 50 of POTA….”
24.The Supreme Court in its judgment in Sushil Flour Dal & Oil Mills v. Chief Commissioner reported in (2000) 10 SCC 593 held that the Administrator of the Union Territory is a delegate of the President and the notification issued by him is valid in law. In paragraphs 2 to 4, the Supreme Court observed as follows:
“2.The appellants filed a writ petition in the High Court of Punjab and Haryana challenging notifications fixing the rate under Section 5(1) of the Punjab General Sales Tax Act in relation to the Union Territory of Chandigarh. The notifications were issued by the Administrator (Chief Commissioner) of the territory. The challenge was upheld by the learned Single Judge but it failed in appeal. It is the judgment under appeal which is questioned before us.
3.The argument which found favour with the learned Single Judge was this: the impugned notifications, having been issued by a delegate of the Central Government, were bad because the Central Government could not further delegate its power to the Administrator. The learned Single Judge took the view that the Central Government having itself been delegated legislative power under the said Act, it could not further delegate it to the Administrator.
4.The Division Bench was, in our view, right in pointing out that there was no delegation of power. Under Part VIII of the Constitution the power to administer the Union Territories vested in the President and the President could exercise that power directly or through an Administrator appointed by him. An Administrator so appointed was the medium through which the President exercised the function of administering the Union Territories. Reliance was also placed by the Division Bench, and rightly, upon Section 3(8) of the General Clauses Act which provides that in relation to the administration of the Union Territories, the Central Government means the Administrator thereof acting within the scope of the authority given to him under Article 239 of the Constitution. No amplification of this position seems to be necessary.”
25.While validating a reference made under Section 10(1) of the I.D. Act by the respondent Union Territory of Puducherry, a learned Judge of this court in W.P.M.P.No.30534 of 2004 and W.V.M.P.No.1642 of 2004 in W.P.No.25097 of 2004, dated 04.11.2004 in Sri Bharathi Mills, A unit of National Textiles Corporation (TN &P) Ltd. Vs.The Commissioner of Labour, Government of Pondicherry, Pondicherry and others after referring to Goa Sampling Employees’ Association case (cited supra), in paragraph 8 observed as follows:
“8.Section 2-A of the Industrial Disputes Act, refers to the appropriate Government meaning one as Central Government and another as State Government. If the Government of Pondicherry cannot be considered to be a State Government as it has been held by the Apex Court, Section 2(a)(ii) relating to any other dispute as to the competent authority viz., State Government is not applicable to this case and thereby, the only appropriate authority, who is competent is the Central Government. Under Section 2(a)(i) of the Act, as the Government of Pondicherry/Union Territory is administered by the President of India under Article 239 of the Constitution of India and the exclusion of such union territory from the definition of State Government, it must be held that the Government of Pondicherry is competent to exercise the power by virtue of definition under Section 2(a)(i) of the I.D. Act.”
26.Therefore, inasmuch as the Administrator had acted on behalf of the President of India in terms of Article 239 in having issued the notification, no fault can be found. The impugned notifications do not suffer from want of legislative sanction by the ESI Act. Hence the first objection stands overruled.
27.In respect of the second objection that the educational institutions cannot be covered by the provisions of the ESI Act and that the impugned notification covers the educational institutions within the purview of the ESI Act, it was contended by the counsel for the petitioners that the educational institutions cannot be covered by the ESI Act as they were not commercial or industrial enterprises. Reliance was placed upon the judgment of the Supreme Court in Haryana Unrecognised Schools’ Association v. State of Haryana reported in (1996) 4 SCC 225. In that case, the Supreme Court held that a teacher in an educational institution is not employed to do any skilled or unskilled manual or clerical work and therefore, once he is not an employee within the meaning of Section 2(i) of the Minimum Wages Act, the State Government by adding employments in educational institutions into the schedule to the Minimum Wages Act by virtue of the power conferred under Section 27 was not valid and it was beyond its competence. Therefore, insofar as the teacher of the educational institutions being covered by the provisions of the Minimum Wages Act was invalid. But in that case, the only question that was considered was whether teachers in educational institutions can be brought within the purview of the Minimum Wages Act. It was found that the definition of the term “employee” defined under Section 2(i) of the Minimum Wages Act was not covering the teachers. In fact, the said definition more or less borrows the definition of term “workman” found under Section 2(s) of the Industrial Disputes Act. Therefore, the observation of the Supreme Court in A.Sundarambal Vs. Government of Goa, Daman and Diu reported in 1988 (4) SCC 42 was quoted with approval. In paragraphs 10 and 11, it was observed as follows:
“10….Since the teachers of an educational institution are not employed to do any skilled or unskilled or manual or clerical work and therefore could not be held to be an employee under Section 2(i) of the Act, it is beyond the competence of the State Government to bring them under the purview of the Act by adding the employment in educational institution in the Schedule in exercise of power under Section 27 of the Act. This Court while examining the question whether the teachers employed in a school are workmen under the Industrial Disputes Act had observed in A. Sundarambal v. Govt. of Goa, Daman & Diu3: (SCC p.48, para 10)
We are of the view that the teachers employed by educational institutions whether the said institutions are imparting primary, secondary, graduate or postgraduate education cannot be called as workmen within the meaning of Section 2(s) of the Act. Imparting of education which is the main function of teachers cannot be considered as skilled or unskilled manual work or supervisory work or technical work or clerical work. Imparting of education is in the nature of a mission or a noble vocation. A teacher educates children, he moulds their character, builds up their personality and makes them fit to become responsible citizens. Children grow under the care of teachers. The clerical work, if any they may do, is only incidental to their principal work of teaching.
11.Applying the aforesaid dictum to the definition of employee under Section 2(i) of the Act it may be held that a teacher would not come within the said definition. In the aforesaid premises we are of the considered opinion that the teachers of an educational institution cannot be brought within the purview of the Act and the State Government in exercise of powers under the Act is not entitled to fix the minimum wage of such teachers. The impugned notifications so far as the teachers of the educational institution are concerned are accordingly quashed. This appeal is allowed. Writ petition filed succeeds to the extent mentioned above. There will be no order as to costs.”
28.Thereafter, reliance was also placed upon a judgment of the Supreme Court in Ruth Soren v. Managing Committee, East I.S.S.D.A., reported in (2001) 2 SCC 115 wherein the Supreme Court considered whether an educational institution is an establishment within the meaning of Bihar Shops and Establishments Act, 1953. It was held that though it may be an industry within the meaning of Section 2(j) of the I.D.Act, it cannot be an establishment within the meaning of Bihar Shops and Establishments Act. In that context, the Supreme Court in paragraphs 4 and 5 observed as follows:
“4.An establishment for the purposes of the Act means an establishment which carries on any business, trade or profession or any work in connection with, or incidental or ancillary thereto. Concept of industry, as defined under the Industrial Disputes Act, would include any business, trade, undertaking, manufacture or calling of employers and includes any calling service, employment, handicraft, or industrial occupation or avocation of workmen. There is an organised activity between employers and employees to impart education. Such an activity, though may be industry will not be a profession, trade or business for the purposes of Article 19(1)(g) of the Constitution, would not be one falling within the scope of establishment under the Act. Therefore, the view taken by the Division Bench of the High Court is unexceptionable. The High Court did appreciate that Unni Krishnan case1 itself made a distinction between what was stated in Bangalore Water Supply & Sewerage Board v. A. Rajappa2.
5.In Corpn. of City of Nagpur v. Employees4, LLJ at p.(540) this Court held the Education Department of the Corporation to be an industry. The reason given is that imparting education amounts to service and can be done by a private person also. In University of Delhi v. Ram Nath5 this Court held that imparting education is not an industry as the work of the University cannot be assimilated to the position of trade, calling, business or service and hence cannot be an industry. The majority view in Bangalore Water Supply & Sewerage Board v. A. Rajappa2 a decision of seven-Judge Bench, is that in the case of an educational institution, the nature of activity is exhypothesi and imparting education being service to community is an industry. Various other activities of the institution such as printing press, transport department, clerical, etc. can be severed from teaching activities and these operations either cumulatively or separately form an industry. Even so, the question for consideration is whether educational institution falls within the definition of establishment carrying business, trade or profession or incidental activities thereto. Establishment, as defined under the Act, is not as wide as industry as defined under the Industrial Disputes Act. Hence reliance on Bangalore Water Supply & Sewerage Board v. A. Rajappa2 for the appellant is not of any help.”
29.Therefore, it was contended that the educational institution also is not an establishment within the meaning of Section 1(5) of the ESI Act. But, however unlike the Bihar Shops Act, which was considered by the Supreme Court, the term “establishment” was not defined in the ESI Act. On the other hand, Section 1(5) of the ESI Act is couched in a language which can include establishments which necessarily need not have the characteristics as industrial, commercial or agricultural establishments. They can even include the other types of establishments. Section 1(5) of the ESI Act reads as follows:
“1(5)The appropriate Government may, in consultation with the Corporation and [where the appropriate Government is a State Government, with the approval of the Central Government], after giving six months’ notice of its intention of so doing by notification in the Official Gazette, extend the provisions of this Act or any of them, to any other establishment, or class of establishments, industrial, commercial, agricultural or otherwise.”
30.The term “otherwise” found in Section 1(5) came to be considered by the Allahabad High Court in Maharishi Shiksha Sansthan and another Vs. State of Uttar Pradesh and another reported in 2009 (1) LLN 381. In paragraphs 9 and 10, it was observed as follows:
“9.Learned counsel for the petitioner has argued that the word “establishment” must have some relation with factory and educational institution is not even remotely connected with the activity, which is carried out in factories. This argument is not tenable for the reason that under S.1(5), there is no such restriction. Thereafter, learned counsel for the petitioner has argued that the aforesaid sub-section suffers from the vice of excessive delegation as the power to bring any establishment under the Act has been conferred upon the Government without providing any guidelines.
10.This argument is also not acceptable. The purpose of the Act is to confer certain benefits upon the employees and employees of any establishment may deserve such benefits. This question has also been considered in the Supreme Court authority in Hindu Jea Band, Jaipur V. Regional Director, Employees’ State Insurance Corporation, and others [1987 (1) L.L.N. 778],…”
31.The very same question also came to be considered by a division bench of the Kerala High Court in CBSE School Management’s Association Vs. State of Kerala reported in 2010 (II) LLJ 240 (Ker). In paragraphs 17 and 18, the Kerala High Court observed as follows:
“17.We hold that the notification under Section 1(5) of the ESI Act can cover an educational institution for two reasons:- Our first reason is that, the educational institutions like schools are industrial establishments, in view of the decision of the Apex Court in Bangalore Water Supply and Sewerage Board’s case, (supra). Though a few Benches of lesser strength have expressed the necessity for reconsidering the dictum in Bangalore Water Supply and Sewerage Board’s case, (supra), until such a reconsideration is done by a larger Bench, we are absolutely bound by the decision of the Apex Court in Bangalore Water Supply and Sewerage Board’s case, (supra). If that be so, the only possible view that could be taken in the face of the words contained in Section 1(5) of the ESI Act is that educational institutions are also covered by the expression ‘industrial establishment’. The main thrust of the argument of the writ petitioners was that educational institution is not an industry. In view of the binding precedent mentioned above, we cannot accept that contention. Further, the interpretation of the definition of “industry” in Section 2(j) of the Industrial Disputes Act is applicable to the interpretation of the word “industrial” in Section 1(5) of the E.S.I. Act, in view of Section 2(24) of the latter Act which reads as follows:
“2. Definitions:-
xxx xxx xxx
(24)all other words and expressions used but not defined in this Act and defined in the Industrial Disputes Act, 1947 (14 of 1947), shall have the meanings respectively assigned to them in that Act.”.
18.Our second reason is that, the words employed ‘or otherwise’ should be given the widest possible meaning and therefore, they will cover the educational institutions also. The petitioners contend that the words ‘or otherwise’ should be given a restricted meaning, following the principle of ejusdem generis. Whether the words should be given a restricted meaning will depend upon the context in which they are used. There cannot be any principle of universal application concerning this. The learned author, Sri.G.P.Singh, in his book, Principles of Statutory Interpretation, 10th Edition, 2006, points out that the words “or otherwise” are not usually considered ejusdem generis. The learned author has stated as follows:
“It also appears that the words ‘or otherwise’ have not been usually considered ejusdem generis. They are words of wide import, but context may limit their scope…”.
The learned author has stated the above principle, referring to various decisions of the Apex Court. The decisions cited by the learned counsel for the petitioners to persuade this Court to give a restricted meaning, applying ejusdem generis cannot be upheld, having regard to the context in which the words “or otherwise” are used. We are not referring to each and every decision cited by the petitioners, but we would point out that those are decisions which are rendered under various other enactments and do not lay down any binding precedent to be followed in this case. Further, having regard to the words employed in the above sub-section, the principle of ejusdem generis cannot be pressed into service. There is nothing in common between industrial establishment and agricultural establishment. They do not belong to the same genus. The doctrine of ejusdem generis is applied where the words of the same category are used, followed by general words. In that context, the meaning of the general words can be read down to mean only something similar to the category mentioned preceding them. For the above reasons, the contentions of the writ petitioners that this Court should give a restricted meaning to the words ‘or otherwise’ cannot be upheld.”
32.Apart from the decisions of the Allahabad High Court and Kerala High Court, the issue can also be looked into in a different angle. The Supreme Court in Bangalore Water Supply and Sewerage Board Vs. A.Rajappa and others reported in 1978 (2) SCC 213 [(which was distinguished by the Supreme Court in the context of the term establishment found in Bihar Shops and Establishments Act, but followed by the Kerala High Court in the context of Section 1(5) in CBSE School Management’s Association (cited supra))] considered the term “educational institution” as an industry within the meaning of Section 2(j) of the I.D.Act. It was held that though majority of persons working in educational institutions are teachers, but that cannot be a factor to decide the term “industry” found under the Industrial Disputes Act. On the other hand, even in respect of the educational institution, if only few persons are employed as non teaching staff, they can be covered by the provisions of the Industrial Disputes Act. Therefore, Ruth Soren’s case (cited supra), rendered in the context of Bihar Shops and Establishments Act cannot have any relevance to decide a matter under the ESI Act.
33.Similarly, the decision of the Supreme Court in Haryana Unrecognised Schools’ Association (cited supra) in relation to the minimum Wages Act has no application. The term “otherwise” found under Section 1(5) has got wider application as held by the Allahabad and Kerala High Courts. At this stage, it is unnecessary to go into the question whether majority of persons employed in the petitioners institutions will be covered by the ESI Act pursuant to the impugned notification since the definition of employee found in Section 2(9) do not correspond with any other definition in any other law. If ultimately the petitioners want to dispute the coverage of a particular person being covered by the scheme, the Act itself provides disputes to be raised under Section 75 of the ESI Act. Such issues need not be decided on an academic basis at this stage. It is also worthwhile to note that by amendment to ESI Central Rules, 2010, dated 20.4.2010, the scheme only covers the employees who are drawing wages not exceeding Rs.15000/-. Therefore, as to how many persons will be covered by the scheme itself has to be determined only if the respondent ESI issues an appropriate notice and determine the liability of the petitioners under Section 45-A of the ESI Act.
34.The Supreme Court in Osmania University v. Regional Director, ESI Corporation reported in (1985) 4 SCC 514 held that even if the printing press run by the University if it is otherwise covered by the ESI Act, the provisions of the Act can be made applicable and the employees of the printing press must be covered by the ESI Scheme. Therefore, even if a part of the employees in an establishment are covered the Act can be made applicable in respect of those persons.
35.In construing the definition of the term “establishment” found under Section 1(3)(b) of the Payment of Gratuity Act, the Supreme Court in its judgment in State of Punjab v. Labour Court reported in (1980) 1 SCC 4 has held that the term “establishment” need not be having any reference to the establishments covered by the provisions of the Shops and Establishments Act and it should have a general meaning. It also held that if the term “establishment” is defined in any other law, for the time being in force it will also be covered by the provisions of the Gratuity Act. The following passage found in paragraph 3 of the said judgment may be extracted below:
“3.In this appeal, the learned Additional Solicitor General contends on behalf of the appellant that the Payment of Gratuity Act, 1972 cannot be invoked by the respondents because the Project does not fall within the scope of Section 1(3) of that Act. Section 1(3) provides that the Act will apply to:
(a) every factory, mine, oilfield, plantation, port and railway company;
(b) every shop or establishment within the meaning of any law for the time being in force in relation to shops and establishments in a State, in which ten or more persons are employed, or were employed, on any day of the preceding twelve months;
(c) such other establishments or class of establishments, in which ten or more employees are employed, or were employed, on any day of the preceding twelve months, as the Central Government may, by notification, specify in this behalf.
According to the parties, it is clause (b) alone which needs to be considered for deciding whether the Act applies to the Project. The Labour Court has held that the Project is an establishment within the meaning of the Payment of Wages Act, Section 2(ii)(g) of which defines an industrial establishment to mean any establishment in which any work relating to the construction development or maintenance of buildings, roads, bridges or canals, relating to operations connected with navigation, irrigation or the supply of water, or relating to the generation, transmission and distribution of electricity or any other form of power is being carried on. It is urged for the appellant that the Payment of Wages Act is not an enactment contemplated by Section 1(3)(b) of the Payment of Gratuity Act. The Payment of Wages Act, it is pointed out, is a Central enactment and Section 1(3)(b), it is said, refers to a law enacted by the State Legislature. We are unable to accept the contention. Section 1(3)(b) speaks of any law for the time being in force in relation to shops and establishments in a State. There can be no dispute that the Payment of Wages Act is in force in the State of Punjab. Then, it is submitted, the Payment of Wages Act is not a law in relation to shops and establishments. As to that, the Payment of Wages Act is a statute which, while it may not relate to shops, relates to a class of establishments, that is to say, industrial establishments. But, it is contended, the law referred to under Section 1(3)(b) must be a law which relates to both shops and establishments, such as the Punjab Shops and Commercial Establishments Act, 1958. It is difficult to accept that contention because there is no warrant for so limiting the meaning of the expression law in Section 1(3)(b). The expression is comprehensive in its scope, and can mean a law in relation to shops as well as, separately, a law in relation to establishments, or a law in relation to shops and commercial establishments and a law in relation to non-commercial establishments. Had Section 1(3)(b) intended to refer to a single enactment, surely the appellant would have been able to point to such a statute, that is to say, a statute relating to shops and establishments, both commercial and non-commercial. The Punjab Shops and Commercial Establishments Act does not relate to all kinds of establishments. Besides shops, it relates to commercial establishments alone. Had the intention of Parliament been, when enacting Section 1(3)(b), to refer to a law relating to commercial establishments, it would not have left the expression establishments unqualified. We have carefully examined the various provisions of the Payment of Gratuity Act, and we are unable to discern any reason for giving the limited meaning to Section 1(3)(b) urged before us on behalf of the appellant. Section 1(3)(b) applies to every establishment within the meaning of any law for the time being in force in relation to establishments in a State. Such an establishment would include an industrial establishment within the meaning of Section 2(ii)(g) of the Payment of Wages Act. Accordingly, we are of opinion that the Payment of Gratuity Act applies to an establishment in which any work relating to the construction, development or maintenance of buildings, roads, bridges or canals, or relating to operations connected with navigation, irrigation or the supply of water, or relating to the generation, transmission and distribution of electricity or any other form of power is being carried on. The Hydel Upper Bari Doab Construction Project is such an establishment, and the Payment of Gratuity Act applies to it.” (Emphasis added)
36.Therefore, as correctly held by the Allahabad and Kerala High Courts, the term “establishment” under Section 1(5) will include every establishment which need not have the characteristics of industrial, commercial or agricultural establishments. Any Establishments can be validly notified by the appropriate Government to be covered by the provisions of the Act. Therefore, the second contention must also fail.
37.In fact, in W.PNo.32284 of 2007 in Sri Venkateswara Medical College Hospital & Research Centre Vs. The Government of Pondicherry, rep by Joint Secretary to Government (Labour), Labour Department, Puducherry and others, a learned Judge of this court by an order, dated 8.10.2007 dismissed the writ petition by giving liberty to raise issues before the appropriate authority. In any event, since the issue regarding the legality of the impugned notification as well as application of the Act cannot be determined by the ESI Court, this Court dealt with the two principal contentions raised by the petitioners and found against them.
38.With reference to the prosecution notices and the orders passed under Section 45-A of the ESI Act as well as levy of damages under Section 85-B of the Act, the petitioners have got remedy by way of raising a dispute under Section 75 of the ESI Act before the ESI Court. The Supreme Court has held that in the absence of a dispute raised challenging such notices, the authorities can invoke the execution machinery under the Act since the order would become final. The position of law has been clarified by the Supreme Court in ESI Corporation Vs. C.C. Santhakumar reported in (2007) 1 SCC 584. The following passages found in paragraphs 17, 25, 28,30 and 31 may be usefully extracted below:
“17.Prior to the incorporation of Section 45-A under Act 44 of 1966, the only resort available to the Corporation was Section 75, for recovery of contribution through the court. Since this procedure was found to be impracticable and delayed process involved, a special provision was contemplated whereunder adjudication is to be made by the Corporation itself. By reason of incorporation of Section 45-A with effect from 17-6-1967, it became possible for the Corporation to have determination of the question, binding on the principal employer, without resorting to the ESI Court. In regard to the order under Section 45-A, the same is enforced, as envisaged under Section 45-B, which was similarly brought into the Act, by which the contribution may be recovered as arrears of land revenue. With regard to the decision reached by the ESI Court in the application under Section 75, the said decision is enforced, as envisaged in sub-section (4) of Section 75 as if it is a civil court. The mode of recovery under Section 45-B of the Corporation and the mode of recovery as per Section 75(4) by the ESI Court as the civil court are entirely different as both Sections 45 and 75 operate in different spheres.
25.Section 45-A of the Act contemplates a summary method to determine contribution in case of deliberate default on the part of the employer. By Amendment Act 29 of 1989, Sections 45-C to 45-I were inserted in the Principal Act, for the purpose of effecting recovery of arrears by attachment and sale of movable and immovable properties or establishment of the principal or immediate employer, without having recourse to law or the ESI Court. Therefore, it cannot be said that a proceeding for recovery as arrears of land revenue by issuing a certificate could be equated to either a suit, appeal or application in the court. Under Section 68(2) and Sections 45-C to 45-I, after determination of contribution, recovery can be made straightaway. If the employer disputes the correctness of the order under Section 45-A, he could challenge the same under Section 75 of the Act before the ESI Court.
28.What Section 75(2) empowers is not only the recovery of the amounts due to the Corporation from the employer by recourse to the ESI Court, but also the settlement of the dispute of a claim by the corporation against the employer. While this is so, there is no impediment for the Corporation also to apply to the ESI Court to determine a dispute against an employer where it is satisfied that such a dispute exists. If there is no dispute in the determination either under Section 45-A(1) or under Section 68, the Corporation can straightaway go for recovery of the arrears.
30.The legislature has provided for a special remedy to deal with special cases. The determination of the claim is left to the Corporation, which is based on the information available to it. It shows whether information is sufficient or not or the Corporation is able to get information from the employer or not, on the available records, the Corporation could determine the arrears. So, the non-availability of the records after five years, as per the Regulations, would not debar the Corporation to determine the amount of arrears. Therefore, if the provisions of Section 45-A are read with Section 45-B of the Act, then, the determination made by the Corporation is concerned. It may not be final so far as the employer is concerned, if he chooses to challenge it by filing an application under Section 75 of the Act. If the employer fails to challenge the said determination under Section 75 of the Act before the Court, then the determination under Section 45-A becomes final against the employer as well. As such, there is no hurdle for recovery of the amount determined under Section 45-B of the Act, by invoking the mode of recovery, as contemplated in Sections 45-C to 45-I.
31.In ESI Corpn. v. F. Fibre Bangalore (P) Ltd.2 it was observed that it is not necessary for the Corporation to seek a resolution of the dispute before the ESI Court, while the order was passed under Section 45-A. Such a claim is recoverable as arrears of land revenue. If the employer disputes the claim, it is for him to move the ESI Court for relief. In other cases, other than cases where determination of the amount of contributions under Section 45-A is made by the Corporation, if the claim is disputed by the employer, then, it may seek an adjudication of the dispute before the ESI Court, before enforcing recovery.”
Hence all the writ petitions must fail.
39.Mr.G.Masilamani, learned Senior Counsel appearing for some of the petitioners pleaded that if ultimately this court should hold if the provisions of the ESI Act are applicable to the petitioners, then the coverage should be made only from the date of the judgment and not from the date of the notification issued under Section 1(5). However, this court cannot grant any such relief, since passing such an order would amount to prevent the respondents from enforcing the provisions of a valid law. In a writ in the nature of mandamus, the High Court acting under Article 226 of the Constitution of India cannot direct the authorities either to disobey the law or to act contrary to the provisions of the enactment.
40.In the light of the above, all the writ petitions will stand dismissed. No costs. Consequently, connected miscellaneous petitions stand closed.
vvk
To
1.The Additional Secretary
to Government (Labour),
The Government of Pondicherry,
Labour Department,
General Secretariat, Puducherry.
2.The Regional Directorate
The Employees’ State Insurance Corporation,
Regional Office (Puducherry),
Bouvankare Street, Mudaliarpet,
Puducherry-605 004.
3.The Deputy Director,
The Employees’ State Insurance Corporation,
Regional Office (Puducherry),
Bouvenkare Street, Mudaliarpet,
Puducherry-605 004.
4.The Chief Secretary,
Union of India,
Union Territory of Puducherry,
Govt. of Puducherry,
Puducherry.
5.The Assistant Director,
Authorised Officer,
ESI Corporation,
No.178,100 Feet Road,
Ansari Duraisamy Nagar,
Puducherry 605 004