JUDGMENT :

DHANANJAYA Y. CHANDRACHUD, J.

(A) Introduction

1. Leave granted.

2. The Employees' State Insurance Corporation¹ [“ESIC” (interchangeably referred to as the appellant)] is in appeal against a judgment of a Division Bench of the Karnataka High Court dated 5 September 2019. The Division Bench rejected the petition filed by the appellant against the promotion of the contesting respondents-Respondent 3 to 25, to the post of “Associate Professor” under the Dynamic Assured Career Progression ² [“DACP”] Scheme as opposed to the appellant’s recruitment regulations.

3. ESIC, the appellant, is a statutory body constituted under the Employees' State Insurance Act 1948³ [“ESI Act”]. The recruitment and promotion of its teaching staff are governed by the Employees' State Insurance Corporation (Medical Teaching Faculty Posts) Recruitment Regulations 2015⁴ [“ESIC Recruitment Regulations 2015”] which came into effect on 5 July 2015. Respondent 3 to 25⁵ [Interchangeably referred to as “contesting respondents”] joined the appellant as Assistant Professors at ESIC Model Hospital, Rajajinagar, Bengaluru. They joined service between 7 February 2012 and 26 June 2014. The Central Government, through the Central Health Service Division of the Ministry of Health and Family Welfare, had issued the DACP Scheme through an Office Memorandum dated 29 October 2008. The DACP Scheme contemplated promotion as Associate Professor upon completion of two years of service in the post of Assistant Professor as an officer under the Ministry of Health and Family Welfare. After two years of service as Assistant Professor on 2 February 2017, the contesting respondents sought promotion under the DACP Scheme and instituted proceedings before Central Administrative Tribunal, Bengaluru⁶ [“CAT”].

4. On 7 February 2018, the CAT relied on the submission by the Counsel for the appellant and held that the ESIC Recruitment Regulations 2015 were not relevant for adjudication of the matter. The CAT also relied on a letter dated 23 September 2014 addressed by the Joint Director of ESIC to the Dean of ESIC which mentioned the implementation of the DACP Scheme to the Medical Officer Cadres. Thus, the CAT directed the appellant to consider the contesting respondents for promotion under the DACP Scheme.

5. The appellant challenged the order of the CAT in a writ petition before the High Court of Karnataka. The High Court dismissed the petition on 5 September 2019 by holding that:

(i) Since the contesting respondents were recruited before the ESIC Recruitment Regulations 2015 came into effect, they would get the benefit of the DACP Scheme.

(ii) The DACP Scheme has statutory effect under Section 17 of the ESI Act. The ESIC Recruitment Regulations 2015 have departed from the DACP Scheme without seeking the prior approval of the Central Government.

(iii) Counsel for the appellant conceded that the appellant would implement the DACP Scheme and the ESIC Recruitment Regulations 2015 do not apply.

(B) Submissions

6. Mr. Santhosh Krishnan, appearing on behalf of the appellant has urged the following submissions:

(i) The appellant is an autonomous statutory corporation incorporated under the ESI Act. It is within the administrative control of the Ministry of Labour and Employment of the Government of India.

(ii) Section 97 of the ESI Act confers power on the appellant to frame its own regulations. The terms and conditions of service of Assistant Professors are governed by the ESIC Recruitment Regulations 2015. These regulations stipulate that a minimum of five years of qualifying service as Assistant Professor is mandatory for promotion as Associate Professor. The ESIC Regulations 2015 cannot be overridden by the DACP Scheme.

(iii) The Office Memorandum dated 29 October 2008 implementing the DACP