Educational institutions qualify as 'establishments' under the Employees State Insurance Act, ensuring employee social security benefits, regardless of their non-commercial status.

JUDGMENT :

AMITENDRA KISHORE PRASAD, J.

1. In these bunch of cases, the petitioners have challenged the notification dated 27.10.2005 (Annexure P-1) published in Chhattisgarh Gazette under section 1 (5) of the Employees State Insurance Act, 1948 and the entire proceedings initiated by respondent no. 2 by its notice dated 27/28.01.2011 (Annexure P-2).

2. Heard Mr. K.R. Nair, Mr. Sourabh Sharma & Mr. Vinod Deshmukh, Counsel for the petitioners. Mr. Atanu Ghosh, Dy. G.A. for the State and Mr. Pranav Saxena, Counsel for the respondent-Employees State Insurance Corporation.

3. The petitioners, educational institutions operated by a registered society, challenge the applicability of the Employees State Insurance Act, 1948 (ESI Act) to its establishment following a notification issued by the State Government under Section 1(5) of the Act, published on 28.11.2005, making the Act applicable to educational institutions from 01.04.2006. Pursuant to this, a demand notice dated 27/28.01.2011 was issued by the authorities seeking contribution amounting to Rs. 13,83,168/- for specified periods between 2008 and 2010. The petitioners contend that the said notification is arbitrary, illegal, and beyond the scope of the Act, asserting that an educational institution is not an "establishment" within the meaning of Section 2(5) of the ESI Act, as it does not engage in any manufacturing or commercial activity. The institution’s sole purpose is to impart education, which involves moral, intellectual, and physical development of students and cannot be equated with profit-making activities or business enterprises. As such, the petitioners argue that extending the ESI Act to cover educational institutions is a misapplication of the law and seeks quashing of both the notification and the consequential recovery notices.

4. Since all the petitioners have filed separate petitions while raising a common grievance. Therefore, these petitions are being clubbed together, heard together, and decided together by this common order.

5. The reliefs prayed for by the petitioners in all the writ petitions are same and one with certain variations, however, in order to adjudicate these petitions, WPL No. 1327/2011 ( Adarsh Vidyalay vs. State of Chhattisgarh and Others ) has been taken as lead petition for deciding the issues involved in these cases.

6. The reliefs sought in the said petition are quoted hereinbelow:-

“10.1 That the Hon'ble court may kindly be pleased to issue a writ, writs, order, orders or direction etc. for quashing the notification dated 27.10.2005 (Annexure P-1) issued by respondent no.1 and the entire proceeding initiated by respondent no.2 by its notice dated 27/28.01.2011 (Annexure P-2) demanding the petitioner to pay contribution of a sum of Rs.13,83,168/- and declare them as void and inoperative in law.

10.2 Any other relief or relief(s) which this Hon'ble Court may think proper in view of the facts and circumstances of the case may also kindly be granted."

7. The petitioner in WPL No. 1327/2011, Adarsh Vidyalay Higher Secondary Schools in Raipur, managed by Raipur Kerala Samajam, challenges the validity of a State Government notification dated 27.10.2005, which extended the provisions of the Employees State Insurance Act, 1948 (hereinafter referred to as ‘ESI Act’) to educational institutions, including the petitioner schools, effective from 01.04.2006. The petitioner contests the demand notice issued by Respondent No. 2 on 27/28.01.2011, requiring payment of contributions totaling Rs. 13,83,168/- for the period between March 2008 and November 2010, asserting that educational institutions do not qualify as “establishments” under Section 1(5) of the ESI Act, and that imparting education is neither a commercial nor industrial activity but a charitable and societal service recognized by the Hon’ble Supreme Court in landmark cases such as Unni Krishnan and P.A. Inamdar. The petitioner argues that the Act, originally meant for factories and industrial establ