JUDGMENT :

K. M. JOSEPH, J.

(1) Respondent No. 1 is a municipality. There is a factory which ran under the name and style of M/s. Victoria Water Works and controlled by the first respondent. The said factory was covered under the Employees’ State Insurance Act, 1948 (hereinafter referred to as ‘Act’ for brevity) from 12.01.1965. Contributions under the Act were paid by the respondent No. 1, according to the appellant till 31.12.1996. The appellant issued show cause notices proposing assessment for the period from which the first respondent was in default in the matter of payment of contributions. Various orders demanding sums as found due from the first respondent were issued. A speaking order under Section 45A of the Act was passed on 04.10.2001. It is on 05.02.2002 that the first respondent filed application purporting to be under Section 75(1)(g) of the Act before the Employees Insurance Court. The reliefs which have been sought in the said application are noticed as follows:

“(1) to declare that the Petitioner Municipality being a local self Government, functioning under the statute and providing better amenities to its employees is covered by the provisions to sub-section 4 of Section 1 of ESI Act, 1948.

(2) To declare that the provisions of ESI Act are not applicable to the employees working in Water Works Department of the Petitioner Municipality as the Petitioner Municipality is providing better and superior benefits and facilities than by the 1st Respondent Corporation.

(3) Alternately direct the Respondents to grant exemption under Section 90 of ESI Act, 1948 and also set aside the attachment order dated 15.01.2002.

(4) And pass such other relief/reliefs to which the petitioner may entitled to in law and equality.

(5) To pass such other or further orders as it deems fit and proper.”

(2) The Insurance Court, in fact, granted a stay, on payment by respondent No. 1 of Rs.3 lakhs. Evidence was taken and the Insurance Court rejected the application which must be treated as essentially an application under Section 75 of the Act. Against the same, the first respondent filed a statutory appeal as provided under Section 82 of the Act. It is by the impugned judgment, the High Court allowed the appeal filed by the first respondent and proceeded to set aside the impugned order passed by the Insurance Court.

(3) We have heard Shri Santosh Krishnan, learned counsel for the appellant, and Shri C. Nageswara Rao, learned senior counsel appearing on behalf of the first respondent.

(4) Shri Santosh Krishnan, learned counsel for the appellant, would point out that the High Court has overlooked the relevant statutory provisions contained in the Act. It is his case that the first respondent was running the factory which attracted the provisions of the Act as contained in Section 1(4):

“It shall apply, in the first instance, to all factories (including factories belonging to the Government) other than seasonal factories.”

He would further contend that there is a proviso to the said provision which reads as follows:

“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.”

He would submit that with reference to its terms that the factory which is run by the first respondent cannot be described as a factory which is owned by the Government or a factory which is controlled by the Government. In this regard, he sought to receive reinforcement from the provisions of Section 90 of the Act. Section 90 reads as follows:

“90. Exemption of factories or establishments belonging to Government or any local authority. - The appropriate Government may, after consultation with the Corporation, by notification in the Official Gazette and subject to such conditions as may be specified in the notification, exempt any factory or establishment belonging to any