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Madras High Court

Maharaja CollegeOf Arts And ... vs The State Of Tamil Nadu on 14 March, 2011

DATED : 14.03.2011

CORAM

THE HONOURABLE MR.JUSTICE K.CHANDRU

W.P.NOs.2872, 2873, 4570, 4722, 5084, 5257 of 2011

and
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20th Avenue, Ashok Nagar,

Chennai-600 083. .. Petitioner in

W.P.No.4722 of 2011

R.V.S.College of Arts & Science,

rep by its Chairman,

K.V.Kuppusamy,

Door No.242-B,Trichy Road,

Sulur, Coimbatore-641 402. .. Petitioner in

W.P.No.5084 of 2011

Tamil Nadu Self Financing College of

Education Management Association,

rep by its Secretary Mr.S.Vijayakumar

Old No.7, New No.11, 3rd Cross Street,

West C.I.T. Nagar,Chennai-600 035. .. Petitioner in

W.P.No.5257 of 2011

Vs.

1.The State of Tamil Nadu,

rep by its Principal Secretary to Government,

Labour and Employment Department,

Fort St. George,

Chennai-600 009. .. 1st respondent in

all writ petitions

2.Employees' State Insurance Corporation,

represented by Assistant Director (Inspection),

1897, Trichy Road,


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Panchdeep Complex,

Ramanathapuram, Coimbatore-641 045. .. 2nd respondent in

W.P.Nos.2872, 2873,

5084, of 2011


rep by its Regional Director,

"Panchdeep", Sterling Road,

Nungambakkam,

Chennai-600 034. .. 2nd Respondent in

W.P.Nos.4570 and

5257 of 2011


rep by its Additional Commissioner and

Regional Director,

143, Sterling Road,

Nungambakkam,

Chennai-600 034. .. 2nd respondent in

W.P.No.4722 of 2011

W.P.Nos.2872, 2873 and 5084 of 2011 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 the G.O.Ms.No.237, Labour and Employment

(K1) Department, dated 26.11.2010 and published at page 879 of Part II Section 2 of the Tamil Nadu

Government Gazette No.51, dated 29.12.2010 and the order of the second respondent in

No.56/8/II/12/2(SSO)/Inspn/2011 dated 04.01.2011 and to quash the same insofar as they relate to the

petitioner and the members of the petitioner herein. W.P.No.4722 of 2011 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 the

G.O.Ms.No.237, Labour and Employment (K1) Department, dated 26.11.2010 passed by the first respondent

and to quash the same. W.P.Nos.4570 and 5257 of 2011 are preferred under Article 226 of the Constitution of

India praying for the issue of a writ of certiorari to call for the records in respect of the impugned notification

issued by the first respondent in G.O.Ms.No.237, Labour and Employment (K1) Department, dated

26.11.2010 as published in the Tamil Nadu Government Gazette No.51, dated 29.12.2010 in Part II Section II

and to quash the same.


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For Petitioners : Mr.Kandan Doraisami

in W.P.Nos.2872 and 2873 of 2011

Mr.R.Sureshkumar

in W.P.Nos.4570 and 5257 of 2011

Mr.K.Selvaraj in W.P.No.5084 of 2011

Mr.AR.L.Sundaresan, SC

for Mr.K.Surendar in W.P.No.4722 of 2011

For Respondents : Mr.S.Sivashanmugam, GA for R1

in W.P.Nos.2872, 2873, 4570, 5084 and

5257 of 2011

Ms.C.Devi, GA for R-1 in W.P.No.4722 of 2011

Mrs.S.Jayakumari for R-2

in all writ petitions

- - - -

COMMON ORDER

Heard the arguments of learned counsels in W.P.Nos.2872, 2873, 4570, 5084 and 5257 of 2011 on 10.3.2011

and in W.P.No.4722 of 2011 on 11.3.2011. 2.The short question that arises for consideration in these writ

petitions is whether the attempt by the State Government in covering the educational institutions employing 20 or

more persons under the provisions of the Employees' State Insurance Act, 1948 (for short ESI Act) is legally

valid? If the coverage of such institutions are legally valid whether the exclusion of the educational institutions run

by the Government and Government Aided institutions from the purview of the notification is discriminatory? and

that the impugned notification covering the petitioners alone are liable to be struck down on ground of Article 14

of the Constitution of India.

3.The State Government by the exercise of its power under Section 1(5) of the ESI Act had issued a preliminarynotification by G.O.No.58, Labour and Employment Department, dated 15.4.2005 notifying the educational

institutions, excluding the Government and Government Aided institutions, run by various types of bodies and

individuals employing more than 20 to be brought within the purview of Section 1(3) of the ESI Act. By the said

notification, the Government had expressed its intention to extend the provisions of the ESI Act to these

institutions any day on or after six months after publication of the notification in the Tamil Nadu Government

Gazette. The said notification was published in Part II Section 2 of the Tamil Nadu Government Gazette, dated

11.5.2005. The said notification reads as follows: Extension of Employees' State Insurance Scheme to certain

New


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Sectors of Establishments in all the Implemented area under

Employees' State Insurance Act.

[G.O.No.58, Labour and Employment (K1),

15th April, 2005.]

No.II(2)/LE/366/2005.-In exercise of the powers conferred by sub-section (5) of Section 1 of the Employees'State Insurance Act, 1948 (Central Act XXXIV of 1948), the Governor of Tamil Nadu in consultation with the

Employees State Insurance Corporation and with the approval of the Central Government hereby gives notice of

its intention to extend the provisions of the said Act to the class of establishments specified in column (1) of the

Schedule below situated in the areas specified in the corresponding entries in column (2) thereof, on or after six

months from the date of publication of this Notification in the Tamil Nadu Government Gazette.

THE SCHEDULE

------------------------------------------------------------------------------------------------------------

Description of class of Areas in which the

establishments establishments are situated.

-------------------------------------------------------------------------------------------------------------

(1) (2)

------------------------------------------------------------------------------------------------------------

Educational Institutions (excluding Areas where the Scheme

Government and Government Aided has already been brought

Institutions), run by individuals, trustees, into force under sub-

societies or other organisations, wherein section (3) of Section 1

20 or more persons are employed or and sub-section (5) of

were employed on any day of the Section 1 of the Act.

preceding twelve months.

-------------------------------------------------------------------------------------------------------------

4.The petitioners herein were not able to pinpoint any objection raised by any one of the petitioners with

reference to the preliminary notification. Though vague allegations were made that some of them have sent their

representations, neither copies of such representations were enclosed in the typed set nor any attempt to

produce those copies during the hearing was made by the counsel for the petitioners. On the other hand, some o


7/25



the counsel for petitioners have fairly admitted that no representations were sent by them as there was no wide

publicity on the said notification. They had also taken this as a ground for impugning the final notification. In any

event, the State Government subsequent to the expression of its intention to notify the educational institutions had

published a final notification vide G.O.Ms.No.237, Labour and Employment Department, dated 26.11.2010 and

the same was also published in the Tamil Nadu Government Gazette as required under Section 1(5) of the ESI

Act. The said notification reads as follows: LABOUR AND EMPLOYMENT DEPARTMENT

Extension of Employees' State Insurance Scheme to

Private Educational Institutions in all the implemented

area under Employees' State Insurance Act.

[G.O.Ms.No.237, Labour and Employment (K1),

26th November 2010, Karthigai 10,

Thiruvalluvar Aandu-2041.]

No.II(2)/LE/767/2010.-In exercise of the powers conferred by sub-section (5) of Section 1 of the Employees'

State Insurance Act, 1948 (Central Act XXXIV of 1948), the Governor of Tamil Nadu, in consultation with the

Employees' State Insurance Corporation and with the approval of the Central Government, after complying with

the statutory requirement of giving six months notice of the intention of the Tamil Nadu Government vide Labour

and Employment Department Notification No.II (2)LE/265/2008, published at page 206 of Part-II Section 2 of

the Tamil Nadu Government Gazette, dated the 4th June 2008, hereby extends the provisions of the said Act, to

the educational Institutions (excluding Government and Government aided institutions) run by individuals,

trustees, societies or other organizations, wherein twenty or more persons are employed or were employed on

any day of preceding twelve months, with effect from the date of publication of this Notification.

T.PRABHAKARA RAO,

Principal Secretary to Government.

5.The object of the Employees' State Insurance Act, 1948 (Central Act 34 of 1948) reads as follows:

"An Act to provide for certain benefits to employees in case of sickness, maternity and employment injury

and to make provision for certain other matters in relation thereto."

6.The Statement of Objects and Reasons attached to the Bill sets out the purpose for which the Act is enacted,which reads as follows:

"Statement of Objects and Reasons.- The introduction of a scheme of Health Insurance for industrial

workers has been under the consideration of the Government of India for a long time. The necessity for such a

scheme has become more urgent in view of the conditions brought about by war. The scheme envisaged is one

of compulsory State Insurance providing for certain benefits in the event of sickness, maternity and employment

injury to workmen employed in or in connection with the work in factories other than seasonal factories. (2)A

scheme of this nature has to be planned on an all-India basis and administered uniformly throughout the country.

With this object, the administration of the Scheme is proposed to be entrusted to a Corporation constituted by


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central legislation."

7.The ESI Act was enacted after India had achieved its independence and was made on 19.4.1948. Even

before India's independence, the British Indian Government was a member of the International Labour

Organization (ILO). But no welfare legislation concerning labours were ever brought into force for reasons best

known. The colonial Government was indifferent to such issues. The plight of the labours in India was recognised

by the freedom fighters of our Country. They had resolved that no sooner India became independent, the

conventions of the International Labour Organization to which our Country was a party will be translated to

ground realities through appropriate legislations. The ILO Convention No.24 related to sickness and insurance to

workers in industry, commercial and domestic service. It was adopted on 15.7.1928. Likewise recommendation

No.69 adopted by the ILO on 20.4.1944 related to medical care for workers. Detailed guidelines were made

with reference to medical care, coverage, etc. However, those conventions and recommendations became a

ground reality only on 19.4.1948 the day when the ESI Act was enacted as the Central Act 34/1948. But, even

then different sections of the labour force were made to wait for coverage through subsequent notifications made

under the said Act.

8.Initially the ESI Act was made applicable only to the factories including the factories belonging to the

Government. But subsequently, by an amendment made by the Central Act 29/1989, a proviso was inserted toSection 1(4) thereby the Act was made inapplicable in respect of factories or establishments belonging to or

under the control of the Government, whose employees are otherwise in receipt of benefits substantially similar

or superior to the benefit provided under the ESI Act. Section 1(4) reads as follows: "1(4)It shall apply, in

the first instance, to all factories (including factories belonging to the Government) other than 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.]"

9.Under Section 1(5), the Act also empowered the appropriate Government to notify the other establishmentssuch as industrial, commercial, agricultural or otherwise by giving six months' notice of its intention of doing so

and publishing the same in the official Gazette. Section 1(5) 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:" (Emphasis

added)

10.Subsequent to the enactment of the ESI Act, the Constitution of India was adopted and was brought into

force with effect from 26.1.1950. Part IV of the Constitution made specific directive principles of State Policy.Though they were not enforceable by any Court, the principles set out therein were made fundamental to the

governance of the Country. The State was given its duty to apply those principles in making laws.

11.Articles 39(e), 41, 42 and 43 of the Constitution of India reads as follows:

"39.Certain principles of policy to be followed by the State.-The State shall, in particular, direct its policy

towards securing-

(a) to (d) omitted


9/25



(e)that the health and strength of workers, men and women, and the tender age of children are not abused and

that citizens are not forced by economic necessity to enter avocations unsuited to their age or strength;

41.Right to work, to education and to public assistance in certain cases.-The State shall, within the limits of its

economic capacity and development, make effective provision for securing the right to work, to education and to

public assistance in cases of unemployment, old age, sickness and disablement, and in other cases of undeserved

want.

42.Provision for just and humane conditions of work and maternity relief.-The State shall make provision for

securing just and humane conditions of work and for maternity relief.

43.Living wage, etc., for workers.-The State shall endeavour to secure, by suitable legislation or economic

organisation or in any other way, to all workers, agricultural, industrial or otherwise, work, a living wage,

conditions of work ensuring a decent standard of life and full enjoyment of leisure and social and cultural

opportunities and , in particular, the State shall endeavour to promote cottage industries on an individual or co-

operative basis in rural areas." (Emphasis added)

12.The substance of these Articles only reinforce the principles of the State policy to enact laws with a view to

taking care of health and safety of workers and provide benefits for old age, sickness, disablement, maternity

relief and conditions of work ensuring decent standard of life. Therefore, the ESI Act and the subsequent

amendment and the notification were in effect to fulfill the State's obligation in safeguarding the rights provided

under Part IV of the Constitution.

13.It must also be noted that until New Educational Policy (NEP) was made by the Central Government in the

year 1986, education was dealt with by the State Governments and the Central Government with some

exceptions. Some Private Managements who were allowed to run institutions were assured of State's assistance.

There was no concept of any self financing educational institutions at the relevant time. The employees of the

State Governments and the Central Government as well as local body employees were given decent pay whichwere revised from time to time by successive Pay Commissions. Health care of those Government servants and

their family members were taken care of by suitable rules framed by the Government either under Article 309 of

the Constitution, by various executive orders and by other statutory rules. Subsequently, even the employees

(both teachers and non teaching staff) employed by the private educational institutions (governed by the grant-in-

aid code of the State Government) were slowly extended to the benefits applicable to Government servants.

Today, in the State of Tamil Nadu, it can be said without fear of contradiction that employees (whether teachers

or non teaching staff) employed by Aided schools or Colleges have been brought almost on par with

Government servants in the matter of pay scales, conditions of service and retirement benefits including health

care.

14.Even after getting aid from the State, the educational institutions who are entitled to protection under Article

30(1) of the Constitution were resisting the application of several labour legislations on the specious plea that

those legislations were in conflict with the minority right given to them under Article 30(1) of the Constitution.

Therefore, such of those legislations which interfered with their "right to establish and administer"

educational institutions of their choice were per se unconstitutional. But their attempt in this regard was rejected

by the Supreme Court vide its judgment in Christian Medical College Hospital Employees' Union v. C.M.C.

Vellore Assn.,reported in (1987) 4 SCC 691.

15.The Supreme Court in the said judgment had categorically held that in the matter of application of laws
http://www.indiankanoon.org/doc/88269/


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relating to public health, taxation, municipal laws and labour legislation, the minority managements cannot claim

any privilege and those laws must be uniformly applied to the workmen employed by those institutions

irrespective of character of those institutions. The Supreme Court had forewarned that if not done in that fashion,

it may result in maladministration of those institutions. It is necessary to extract the following passages found in

paragraph 18 of the said judgment which reads as follows: "18.... It has to be borne in mind that these

provisions have been conceived and enacted in accordance with the principles accepted by the International

Labour Organisation and the United Nations Economic, Social and Cultural Organisation. The International

Covenant on Economic, Social and Cultural Rights, 1966 which is a basic document declaring certain specifichuman rights in addition to proclaiming the right to work as a human right treats equitable conditions of work,

prohibition of forced labour, provision for adequate remuneration, the right to a limitation of work hours, to rest

and leisure, the right to form and join trade unions of ones choice, the right to strike etc. also as human right. The

Preamble to our Constitution says that our country is a socialist republic. Article 41 of the Constitution provides

that the State shall make effective provision for securing right to work. Article 42 of the Constitution provides

that the State shall make provision for securing just and humane conditions of work and for maternity relief.

Article 43 of the Constitution states that the State shall endeavour to secure by suitable legislation or economic

organisation or in any other way to all workers agricultural, industrial or otherwise work, a living wage,

conditions of work ensuring a decent standard of life and full enjoyment of leisure and social and cultural

opportunities. These rights which are enforced through the several pieces of labour legislation in India have got to

be applied to every workman irrespective of the character of the management. Even the management of a

minority educational institution has got to respect these rights and implement them. Implementation of these rights

involves the obedience to several labour laws including the Act which is under consideration in this case which

are brought into force in the country. Due obedience to those laws would assist in the smooth working of the

educational institutions and would facilitate proper administration of such educational institutions. If such laws are

made inapplicable to minority educational institutions, there is very likelihood of such institutions being subjected

to maladministration. Merely because an impartial tribunal is entrusted with the duty of resolving disputes relating

to employment, unemployment, security of work and other conditions of workmen it cannot be said that the right

guaranteed under Article 30(1) of the Constitution of India is violated. If a creditor of a minority educationalinstitution or a contractor who has built the building of such institution is permitted to file a suit for recovery of the

money or damages as the case may be due to him against such institution and to bring the properties of such

institution to sale to realise the decretal amount due under the decree passed in such suit is Article 30(1)

violated? Certainly not. Similarly the right guaranteed under Article 30(1) of the Constitution is not violated, if a

minority school is ordered to be closed when an epidemic breaks out in the neighbourhood, if a minority school

building is ordered to be pulled down when it is constructed contrary to town planning law or if a decree for

possession is passed in favour of the true owner of the land when a school is built on a land which is not owned

by the management of a minority school. In the same way if a dispute is raised by an employee against the

management of a minority educational institution such dispute will have necessarily to be resolved by providing

appropriate machinery for that purpose. Laws are now passed by all the civilised countries providing for such amachinery....."

16.From the above, it can be safely concluded that whether an educational institution run by minority or by non

minority, with reference to application of welfare legislation there is no distinction and they should be treated on

par. In this batch of writ petitions, there was no challenge on the touchstone of Article 30(1) of the Constitution.

Even otherwise, the observations made by the Supreme Court will clearly show that these legislations were made

on an obligation arising out of conventions of International Labour Organization and they should be implemented

uniformly to all employees.


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17.It is only after the New Educational Policy conceived, there were mushroom growth of educational institutions

in the private sector. It gave rise to multiple problems relating to service conditions of employees working in

those institutions. Therefore, the State belatedly woke up to the conditions of employees both teaching and non

teaching staff working in these so-called self financing educational institutions so as to bring reasonable conditions

of work. It is with this view as well as to safeguard the Health of the employees, the preliminary notification came

to be published. Subsequently, in accordance with Section 1(5), a final notification was also issued. Once a

notification under Section 1(5) is issued covering the establishment, then under Section 2-A, it is the obligation of

the establishments to register themselves within such time and in such manner as specified in the regulation withthe authorities under the ESI Act. Regulation 10-B of the ESI General Regulations, 1950 provides the manner by

which an establishment can be registered. The Act obliges both employer and employees to contribute towards

ESI. The contributions were levied in terms of Rule 51 of the ESI Central Rules 1950 obliges an employer to

pay 4.75% of wages payable to an employee as their contribution and it is 1.75% in respect of employee's

contribution for coverage under the Act. Both employer and employee will contribute 6.50% of wages payable

to an employee towards the ESI Fund. An employee of an institution covered by the ESI Act if he draws

Rs.15000/-, which is the maximum wage limit, his contribution will only come to Rs.113/- per month. The total

contribution by both will be Rs.875/-. This is the contribution for an highest paid employee. Based upon this

contribution, which will be kept by the ESI Corporation in a special fund, the employees were paid various

benefits including for sickness, maternity, disablement, dependent benefits, funeral payments, medical care and

treatment. But for the benefit derived from the Act for such a limited payment, the contribution is enormous as it

takes care of an umbrella services as noted above.

18.The term "employee" is defined under Section 2(9) of the ESI Act and it does not exclude any

person and couched in a general term. In fact, the ESI Act covers even the contract labours who are engaged

through an agency. As per the notification issued on 20.4.2010 by G.S.R. 349E, the Central Government has

now fixed the wage limit at Rs.15000/- per month for coverage in terms of Section 95(2)(a) of the ESI Act.

19.Since the petitioners are running educational institutions both schools and colleges and if the

Government/UGC scales as well as pay commission recommendations are paid to them as required under law,

there will be hardly any teacher employed by these institutions will be covered by the provisions of the ESI Act in

view of the wage limit prescribed thereunder. Even in respect of the non teaching staff, the highly paid staff like

clerical and laboratory assistants will also be not covered by the Act if the Government scales of pay are an

indicator for payment of salary to those employees. After the coverage of the Act, hardly few employees like

watchmen, conductors, drivers, canteen and hostel staff and other menials, such as sweeper and scavengers

alone will be covered by the provisions of the Act. If case of any institutions having health benefits if they are

substantially similar or superior to the benefits provided under the ESI Act, Chapter VIII provides for various

exemptions that can be obtained from the Government. Therefore, there is no difficulty for the institutions seeking

exemptions if only the benefits extended by them are substantially similar or superior benefits than the ESI Act.Even otherwise, in this batch of writ petitions, no contentions were raised that their employees are in receipt of

benefits substantially similar or superior to the benefits provided under the Act.

20.Further, in respect of application of similar notification to educational institutions situated in the Union

Territory of Puducherry, this Court had an occasion to deal with the same elaborately vide in

W.P.Nos.W.P.NOs.2471, 3234, 30509 and 16273 of 2007, etc batch cases in Muthu Rathina Arangam

Matriculation school Vs. The Government of Pondicherry, represented by Additional Secretary to Government

(Labour), Labour Department, General Secretariat, Puducherry. By judgment, dated 04.01.2011, this Court

upheld similar notifications issued by the Administrator of the Union Territory of Puducherry. Notwithstanding the


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said judgment, the counsel for the petitioners urged several grounds and they may be briefly set out below :

(i)The ESI Act is essentially covered the factories and other industries and it will not apply to educational

institutions.

(ii)The Supreme Court vide its judgment in T.M.A. Pai Foundation v. State of Karnataka,reported in (2002) 8

SCC 481 held that once it is not an industry, then it cannot be covered by the provisions of the ESI Act.

(iii)The Supreme Court had given guidelines for fixing fees received from the students. There is oversight

Committee to oversee the fees receivable from students whether the institutions have not received more than

what has been fixed by the Committee. At the time of fixation of fees, this additional burden was not taken into

account. Therefore, the State was not entitled to levy more amount than what was contemplated under law.

(iv)Even assuming an educational institution can be an "industry" within the meaning of Section 2(j)

of the Industrial Disputes Act as held by the Supreme Court vide its judgment in Bangalore Water Supply and

Sewerage Board v. A. Rajappareported in (1978) 2 SCC 213, the said judgment of seven Judges bench has

been doubted by an another smaller bench of five Judges in State of U.P. Vs. Jai Bir Singh reported in (2005) 5

SCC 1 and the issue has been referred to the Chief Justice of India for constituting a larger bench. Therefore, the

view of the Bangalore Water Supply and Sewerage Board case (cited supra) will have no efficacy. (v)Further,

the Supreme Court in A.Sundarambal Vs. Government of Goa, Daman and Diu reported in (1988) 4 SCC 42has held that a teacher is not a workman within a meaning of Section 2(s) of the Industrial Disputes Act, 1947.

The predominant activity of the educational institution is to impart education and majority employees are

teachers. The notification applying the Act to the entire institution including their teachers is invalid. (vi)The State

Government while issuing notification had not adopted due procedure, Principles of fair play in consultation or

natural justice to the extent necessary.

(vii)The exercise of power is conditional legislation and satisfaction arrived at by the Government was not based

upon any objective consideration and relevant data. Hence the impugned notification was invalid. Reliance was

also placed upon a judgment of the Supreme Court in State of Tamil Nadu Vs. K.Sabanayagam reported in

(1998) 1 SCC 318. (viii)The impugned notification so far as it excludes the aided educational institutions whichare also running unaided courses is discriminatory. Therefore, it is violative of Article 14 of the Constitution.

(ix)The preliminary notification was issued by the State Government on 4.6.2008. Immediately after six months,

a final notification was not published. On the other hand, the Government had published the final notification only

on 29.12.2010 nearly after a period of 2-1/2 years. Therefore, the notification was invalid as it had become

stale. On the ground of delay in publishing the final notification, the impugned order should be set aside.

21.On the side of the respondents, a preliminary objection was raised regarding maintainability of the writ

petitions in W.P.Nos.2873, 4570, 4722 and 5257 of 2011 which were admittedly filed by the societies

comprising of various educational institutions. Such writ petitions are not maintainable as they were filed bysocieties and they have no locus standi to maintain the writ petitions.

22.In the light of the rival contentions, it has to be seen whether the petitioners have made out any case?

23.The first six contentions can be taken up together. In respect of the 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.
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State of Haryanareported 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."

24.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 educationalinstitution 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
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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."

25.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." (Emphasis added)

26.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],..."

27.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


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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 alsocovered 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 abovesub-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."

28.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


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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 an educational institution, even if 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 thecontext of Bihar Shops and Establishments Act cannot have any relevance to decide a matter under the ESI Act.

29.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 notethat 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.

30.Further, the Supreme Court in Osmania University v. Regional Director, ESI Corporationreported 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.

31.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 Courtreported 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.
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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, i

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 includean 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)

32.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 contentions made in this regard must fail.

33.It is rather unfortunate that the counsel should press into service a judgment of TMA Pai's case (cited supra)

without any relevance to the facts on hand. Whether an educational institution is an industry within the meaning of

Section 2(j) of the ID Act may not be relevant while considering the application of the ESI Act, since such

phraseology is not applied here. The power is vested with the Government to notify the establishment and it can

be any type of establishments. The term "otherwise" found along with the term "industrial,

commercial or agricultural" under Section 1(5) need not take colour from the preceding one and it could


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have an independent application as noted above. The purpose of the legislation is to cover the health aspects of

employees. Therefore, the impugned notification on the ground does not suffer from want of jurisdiction. Even

reference made by the subsequent smaller bench (State of U.P. v. Jai Bir Singh)for reviewing the Bangalore

Water Supply and Sewerage Board case (cited supra) need not be looked into as it is only an order of

reference. Even after 15 years have gone by the successive Chief Justices of India have not thought it fit to

constitute any larger bench to review the earlier judgment. So long as that judgment is not reversed in the manner

known to law, that judgment will be a binding precedent. No one can rely upon an order of reference to disobey

a binding precedent of a larger bench of the Supreme Court.

34.It must also be noted that subsequent to the Bangalore Water Supply and Sewerage Board case (cited

supra), the Parliament itself has amended Section 2(j) and defined the term "industry" and brought it

in tune with the ratio of the said judgment by an amendment Act 46/1982. Since alternative modes of redressal

of grievance after excluding those establishment from the I.D. Act have not been made, the said section is yet to

be brought into force. Nevertheless, it is the intention of the Parliament to fall in line with the decision of the large

bench is a matter of record.

35.The reference to A.Sundarambal's case (cited supra) holding that teachers are not workmen has no relevance

for two reasons. The term "employee" as found in the ESI Act is not similar to the word"workmen" under Section 2(s) of the ID Act. Further assuming that teacher is not a workman, the

Act even then can apply to the non teaching staff employed by educational institutions, who are admittedly

covered within the meaning of Section 2(s) of the ID Act. Further, that stage had not arisen in the present case.

36.Further, first of all after the impugned notification has come into existence, the petitioners institutions will have

to register themselves under Section 2-A. Only when a doubt arises as to whether persons from whom

contributions are to be deducted, a decision will have to be taken initially by the ESI Corporation under Section

45A of the ESI Act. If there is any further dispute, a petition can be filed before the appropriate ESI Court under

Section 75 to determine the employees to be covered and the contributions to be recovered under the ESI Act.

There is further appeal to this Court against an order of the ESI Court under Section 82. Therefore, there is timeenough to decide such issues for every management.

37.It is suffice to state that those issues are not germane for the purpose of validating the impugned notification.

Even otherwise, as held by the Supreme Court in Osmania University case (cited supra), if a particular activity of

the educational institution is covered, notwithstanding the other areas are not covered, still the ESI Act will apply

Therefore, the contentions raised in this regard have to be rejected.

38.The contention that the notification under Section 1(5) being a conditional legislation and the satisfaction of the

delegate has to be based on objective consideration of relevant data for and against the exercise of such power

should be there, reliance was placed upon a judgment of the Supreme Court in State of T.N. v. K.Sabanayagam, reported in (1998) 1 SCC 318. The following passage found in paragraph 22 may be usefully

reproduced below: "22.But there may be a third category of cases wherein the exercise of conditional

legislation would depend upon satisfaction of the delegate on objective facts placed by one class of persons

seeking benefit of such an exercise with a view to deprive the rival class of persons who otherwise might have

already got statutory benefits under the Act and who are likely to lose the existing benefit because of exercise of

such a power by the delegate. In such type of cases the satisfaction of the delegate has necessarily to be based

on objective consideration of the relevant data for and against the exercise of such power. Maybe such an

exercise may not amount to any judicial or quasi-judicial function, still it has to be treated to be one which


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requires objective consideration of relevant factual data pressed into service by one side and which could be

tried to be rebutted by the other side who would be adversely affected if such exercise of power is undertaken

by the delegate. In such a third category of cases of conditional legislation the legislature fixes up objective

conditions for the exercise of power by the delegate to be applied to past or existing facts and for deciding

whether the rights or liabilities created by the Act are to be denied or extended to particular areas, persons or

groups. This exercise is not left to his subjective satisfaction nor is it a mere ministerial exercise. Section 36 of the

Act with which we are concerned falls in this third category of conditional legislative functions....."

39.It is not clear as to how the said judgment will have any relevance to the case on hand. In that case,

employees who are entitled for bonus under the Payment of Bonus Act, 1965 were sought to be deprived by

grant of exemption which power was exercised under Section 36 of the Payment of Bonus Act. Section 36

reads as follows: "36.Power of exemption.-If the appropriate Government, having regard to the financial

position and other relevant circumstances of any establishment or class of establishments, is of opinion that it will

not be in public interest to apply all or any of the provisions of this Act thereto, it may, by notification in the

Official Gazette, exempt for such period as may be specified therein and subject to such conditions as it may

think fit to impose, such establishment or class of establishments from all or any of the provisions of this

Act." (Emphasis added)

40.It is also necessary to refer to a judgment of the Supreme Court in Hindu Jea Band v. Regional Director, ESI

Corpn.,reported in (1987) 2 SCC 101 where similar contentions were rejected by the Supreme Court in the

context of the ESI Act itself. The following passage found in paragraph 5 may be usefully reproduced below:

"5.Alongwith the special leave petition the petitioner has presented before this Court a writ petition under

Article 32 of the Constitution questioning the validity of the notification issued by the State Government on the

ground that the power conferred under the Act on the State Government by sub-section (5) of Section 1

authorising the State Government to extend all or any of the provisions of the Act to other establishments in the

State suffers from the vice of excessive delegation of essential legislative powers. It is also contended that the

application of the Act to businesses like the one which is being carried on by the petitioner during certain seasons

only of the year is violative of Article 14, Article 19(1)(g) and Article 21 of the Constitution. Having carefully

considered the submission made by the learned Counsel for the petitioner we find no merit in any of the

contentions urged in the writ petition. The writ petition is also, therefore, dismissed."

41.In the case of the Bonus Act, the legislation itself obliges the exempting authority to deal with the request for

exemption by legislative guidelines and hence those observations came to be made. But in the present case, the

impugned notification extends the provisions of the ESI Act to a class of establishment. The only requirement is

the expression of previous intent through a gazetted notification which was done in this case. The petitioners who

have not raised any particular objection, cannot now be heard to plead that either they were not heard or there

was no satisfaction by the Government in finalizing the notification. Further the plea that notification came to be

issued after 2-1/2 years from the preliminary notification and hence it is invalid also cannot be accepted as the

petitioners are not bound to be losers by such delay. There cannot be said to be any prejudice by the said delay.

On the other hand, the coverage of establishment only starts from a final notification. If at all, to some extent the

petitioners were said to be benefited by the delay. It may be their employees who are affected by the belated

coverage and they are said to have lost valuable benefits arising out of the labour legislation. Therefore, the

contention based upon non application of mind in passing the order pursuant to the conditional legislation will not

arise.

42.In the context of Section 5 of the Minimum Wages Act, the Courts have considered the question of delay in


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publishing a final notification will invalidate such a notification. The Bombay High Court in Ramkrishna Ramnath,

Nagpur and another Vs. The state of Maharashtra and another reported in AIR 1964 Bombay 51 held in

paragraph 35 as follows: "35....There is however nothing in the statute which requires that Government

should consider it on that very date and not thereafter. In fact, it seems to us that it will be impossible for

Government to consider all the representations received on one and the same date, namely, the date

specified."

43.Further, a Full Bench of the Kerala High Court in Malayalam Plantations Limited and others Vs. State of

Kerala and others reported in 1976 (I) LLJ 114 (FB) held in paragraph 11 as follows:

"11....We do not think that the selection enables any person to contend that notwithstanding the

specification of a date within which the representations have to be filed the notification revising/fixing minimum

wages would be bad if the proposals are not taken up for consideration on the date specified. Nor does the

section, according to us, provide for a right to file representations till the moment the proposals are actually taken

up for final decision. There must necessarily be an interval between the last moment for filing the representations

and the final decision, the length of the interval depending upon the nature of the representations, the necessity for

deliberations on such representations, the time taken for the proceedings of the Advisory Board and the period

that the Government would usually take for reaching a final decision on such matters. The fact that the finalnotification fixing or revising the minimum wages or the decision of the Government is made on a date subsequent

to the specified date does not by itself give any right to any person likely to be affected by the proposal to claim

that he is, as of right, entitled to file the representation till the last moment." (Emphasis added)

44.It is further doubtful the power exercise herein is at all conditional legislation. On the other hand, the nature of

power vested with the State Government is only delegated legislation. Therefore, if the objective consideration o

legislation are satisfied, than the Government by following the statutory prescription can notify an establishment.

45.The petitioners cannot be heard to contend as there was only gazette notification and that they did not have

any notice, is also not relevant. The ESI Act is not like the Land Acquisition Act where Section 4(1) notificationis not only gazetted, but also published in a prominent place in the locality as well as in two newspapers having

wide circulation in that area. Each legislation has to be seen only in the context in which it has been made. No

other legislation can be telescoped into another legislation for the purpose of deciding the vires of that law. Hence

that objection must also fail.

46.The other argument that aided educational institutions are exempted is discriminatory and violative of Article

14 of the Constitution also cannot be a valid objection and they stand a class apart. First of all, in theoretical term

"employee" of an educational institution is more or less on par with the employees of Government

institutions and also in respect of conditions of service including health, insurance. Therefore, it is a valid

classification not hit by the mischief of Article 14. It is also to be noted that the proviso to Section 1(4) of the Acitself exempts an establishment belonging to or under the control of the Government whose employees otherwise

are in receipt of benefits substantially similar or superior to the benefits provided under the Act. Hence they are

exempted from the purview of the Act. Therefore, the statute itself contemplates exempting the establishment

owned by the Government from the purview of the Act with a rider that those employees must receive

substantially similar or superior benefits provided under the Act. The same conditions are also available to a

private employer for the purpose of getting exemption in terms of the provisions available under Chapter VIII of

the ESI Act.

47.As to whether an aided educational institution can also be said to be falling under the definition of


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"establishment" belonging to or under the control of the Central or State Government came to be

considered in the context of similar provisions under the Employees' Provident Funds and Miscellaneous

Provisions Act, 1952 by the Supreme Court vide its judgment in Regional Provident Fund Commissioner Vs.

Sanatan Dharam Girls Secondary School and Others reported in 2007 (1) SCC 268. The Supreme Court while

construing similar definition provided under Section 16(1)(b) of the said Act in relation to aided schools, in

paragraphs 26 to 29, 31,32 and 35 held as follows: "26.Section 16(1)(b) of the EPF Act, 1952 provides

as under:

16. (1) This Act shall not apply

(a) * * *

(b) to any other establishment belonging to or under the control of the Central Government or a State

Government and whose employees are entitled to the benefit of contributory provident fund or old age pension in

accordance with any scheme or rule framed by the Central Government or the State Government governing such

benefits; or (c)-(e) * * *

27.In order to be covered under the exception to the EPF Act, 1952 stated above, the following two conditions

have to be satisfied by the establishment seeking to be exempted from the provisions of the EPF Act, 1952:

(1) it must be an establishment belonging to or under the control of the Central Government or a State

Government, and

(2) it must be an establishment whose employees are entitled to the benefit of contributory provident fund or old

age pension in accordance with any scheme or rule framed by the Central Government or the State Government

governing such benefits.

28.We heard the parties in detail. The submissions made by the learned counsel appearing for the respondents

merit acceptance. It is not in dispute that the respondent institutions have been paying the provident fund dues to

the State Government in accordance with the scheme framed by the State Government under the State Act and

thus the employees of the respondent institutions are entitled to the benefit of the provident fund. By the orders

impugned by the respondent institutions, the State Government has sought to transfer the balance standing to its

credit to the Regional Provident Fund Commissioner. Thus it is clear that the respondent institutions have been

paying in accordance with the scheme and there is no grievance with regard to the same.

29.In respect to the contention of the respondent that the establishment belonging to or under the control of the

Central Government or a State Government, it was submitted that the establishments must either be (a) belonging

to, or (b) under the control of the Central Government or the State Government. In our view, the two words

used in the said section have different connotations. The words belonging to signify ownership i.e. the

Government-owned institutions would be covered under the said part and the words under the control of signify

control other than ownership since ownership has already been covered under the words belonging to. It must

also be noted that the two words are separated by the word or and therefore these two words refer to two

mutually exclusive categories of institutions. While the institutions belonging to the Central or the State

Government would imply the control of the State but the privately-owned institutions can be under the control of

the Government in various ways.

31.The State Government also exercises administrative control over the institution. Section 17 deals with the


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manner of recruitment and Section 18 deals with the procedure by which the employees may be removed or

dismissed or reduced in rank. Section 28 permits the State Government to prescribe the code of conduct of the

employees and Section 29 enjoins upon the institutions not to give to its employees a pay lesser than the scales o

pay and the allowances paid to similar categories of the State Government.

32.In our view, the State Act is a complete code in itself with regard to the educational institutions and the State

Government exercises substantive control over the institutions even though the institutions are not ownedby it.

The word control has not been defined under the EPF Act, 1952.

35.We further observe that the State Government has the power of superintendence or the authority to direct,

restrict or regulate the working of the educational institutions. It was, therefore, submitted that the institutions had

satisfied both Conditions (1) and (2) mentioned above and as such they would fall within the exception contained

under Section 16(1)(b) of the EPF Act, 1952." Hence it can be safely held that there are any

discrimination in leaving out the aided institutions for the purpose of the notification.

48.Though it was stated by the petitioner that within the aided educational institutions, there are self financing

courses conducted by them and for which staff are employed and that they may not receive similar benefits, it

must also be noted that there are no pleadings to that effect in the present writ petitions. Even otherwise, thepetitioners cannot said to be aggrieved parties. If those employees employed in the aided institutions do not have

similar benefits, as and when those employees make grievance, it is always open to the State Government to

issue appropriate notification covering even those employees who do not have similar or superior benefits given

under the ESI Act in respect of those institutions. On this ground, the impugned notification cannot be

invalidated.

49.Even assuming as held by the T.M.A. Pai's case (cited supra), carrying on educational institution is an

"occupation" covered by Article 19(1)(g). Article 19(6) do not prevent the State from making any

law in the interest of general public and impose reasonable restrictions on the exercise of the right conferred by

the sub clause. Providing health care and disablement benefits to the employees engaged by the privateentrepreneur is the concern of the Government and mandated by Chapter IV of the Constitution. It cannot be

said to be an unreasonable restriction on the right of the employer to carry on his trade or occupation as the case

may be.

50.The fact that contributions payable towards ESI was not conceived while fixing fee structure in respect of

private educational institutions and therefore, the present notification imposing unreasonable burden on them

cannot be accepted as any legal plea. First of all, the contribution payable in terms of Rule 51 as noted elsewhere

is only fraction of expenditure incurred by any institution. Secondly, the wage ceiling imposed for covering

number of employees by the impugned notification will minimise the percentage of total number of work force in

the establishment. The petitioners are making mountain out of mole hill and are making imaginary pleas, which arenot based upon factual foundation. Even if there are more number of work force, granting health care including

disablement benefits on them is a constitutional imperative which will have to be extended either by the

employers themselves or by a law made by the State as mandated by Part IV of the Constitution. It is only in

cases where an employer pleads that he has already extended the said benefits, an exemption provision

conceived under the Act. Therefore, this court is not inclined to accept the submissions made by the petitioners in

this regard.

51.Though the counsel for the respondent State and the Standing Counsel for the ESI contended that writ

petitions at the instance of the Association of private schools and college management are not maintainable and


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also referred to certain decisions and the same was also countered by Mr.AR.L.Sundaresan, learned Senior

counsel appearing for the petitioner in W.P.No.4722 of 2011, it is unnecessary to go into the said issue. Because

in W.P.Nos.2872 and 5084 of 2011, the petitioners are individual colleges and in respect of those two writ

petitions, the legal questions raised will have to be gone into. Hence this Court is not willing to undertake an

exercise to reject the cases of Associations, who are before this court. That issue can be relegated to a future

occasion. The merits of the contentions have already been dealt with in these writ petitions.

52.But at the same time, it must be noted that since the petitioners seek to challenge the impugned notification

which are in favour of their employees and in none of the writ petitions, employees who are to be benefited by

the application of the ESI Act have been made as parties. Hence, these writ petitions are liable to be rejected on

that ground also.

53.The Supreme Court in the context of exclusion of the ESI Act in its application to the employees clearly

stipulated that in such cases, the employees should be made either individually or in a representative capacity as

parties to such proceedings without which the court cannot adjudicate such issue. Reference was made to a

judgment of the Supreme Court in Fertilizers & Chemicals Travancore Ltd. v. ESI Corpn., reported in

(2009) 9 SCC 485. The following passages found in paragraphs 5 to 9 may be usefully extracted below:

"5.It may be noted that in its petition before the Employees Insurance Court, the appellant herein onlyimpleaded Employees State Insurance Corporation and the District Collectors of Alleppey, Palaghat and

Cannanore as the respondents but did not implead even a single workman as a respondent. Labour statutes are

meant for the benefit of the workmen. Hence, ordinarily in all cases under labour statutes the workmen, or at

least some of them in a representative capacity, or the trade union representing the workmen concerned must be

made a party. Hence, in our opinion the appellant (petitioner before the Employees Insurance Court) should

Documents

Maharaja College of Arts and