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High Court of Kerala
THE HONOURABLE MR. JUSTICE M.N. KRISHNAN
E.S.I. Corporation
Versus
Panickaveettil Sir Sebastian Public School
Ins. A.Nos.9, 13 & 25 of 2010
Decided on : 07-10-2010
Employees State Insurance Act, 1948 - Sections. 76(1), 75 and 75(1)(a) - Kerala Employees Insurance Courts Rules, 1958 - Rule 16 - Matters to be decided by Employees' Insurance Court - Institution of proceedings, etc. - Appeal Against the preliminary orders- All these insurance cases were filed by the employers challenging the order passed by the Employees State Insurance Corporation under S.75 of the Employees State Insurance Act - Objection regarding territorial jurisdiction of the court to deal with the matters - It was contended that by virtue of provisions under section 76(1) of E.S.I. Act proceedings can be instituted only before the court appointed for the local area in which the insured person was working at the time the question or dispute arose - That was seriously challenged by the applicants before the E.I. Court and after elaborate consideration of the arguments of both sides, the court held that action can be initiated for the reason that the Regional Director representing the Corporation is having his office which comes within the jurisdiction of E.I. Court. It is aggrieved by that decision, the Corporation has come up in appeal - Held, When the interest of the worker is involved in an Employees' State Insurance case and as the worker is the beneficiary and the Corporation is only acting as an agent to implement the provisions of the welfare legislation, when an employer comes denying the right of a worker or entitlement of a worker then necessarily the worker has to be heard before pronouncing an order for or against the employer. Or, in other words, in all type of these matters where the ultimate beneficiary is the worker either the worker or the representative of the worker has to be heard by impleading them as parties. The dispute is with respect to the coverage of establishment. If it is covered it is beneficial to the employee or the insured. If it is not covered, it is detrimental to his interest if he is not heard. Therefore in all these type of cases, since the junction of the employee is a must the court, viz., the E.I. Court has to give direction to the persons concerned to implead the workers or the representative of the workers or the representative of the union to be impleaded before a final decision is taken in the matter - If the interest of a worker or an insured is involved in a dispute, then S.76 (1) of the Act makes it very clear that it has to be filed in a court where he had worked or where he was working or the question or dispute arose. When the said principle is applied S.76(1) comes into play. When S.76(1) comes into play R.16 goes out for the reason that R.16 starts with the words "in cases not falling under sub-s.(1) of S.76". As S.76(1) is directly involved, only the courts stipulated in that section will have jurisdiction over the matter - In the result, all the appeals are allowed and orders under challenge are set aside. The applications are to be filed in the respective courts as contemplated under S.76(1)(b) of the Act and therefore the court below is directed to send the applications to the respective courts empowered to deal with it and shall inform the applicants and the opposite party accordingly. I make it very clear that the E.S.I. Corporation shall not proceed to recover the amount for a period of two months from today as a matter of precaution to safeguard the interest of the applicants to obtain appropriate orders from the appropriate courts.
INAP No.9/2010 is filed against the preliminary order passed in I.C.No.78/2009, INAP No.13/2010 is filed against the preliminary order passed in I.C.No.64/2009 and INAP No.25/2010 is filed against the preliminary order passed in I.C.No.105/2009 by the E.I.Court, Palakkad. All these insurance cases were filed by the employers challenging the order passed by the Employees State Insurance Corporation (for short ‘the Corporation’) under S.75 of the Employees State Insurance Act (for short ‘the ESI Act’).
2. When the matter came up for consideration, the Corporation raised an objection regarding the territorial jurisdiction of the court to deal with the matters. It was contended that by virtue of the provisions under S.76(1) of the E.S.I. Act the proceedings can be instituted only before the court appointed for the local area in which the insured person was working at the time the question or dispute arose. That was seriously challenged by the applicants before the E.I. Court and after elaborate consideration of the arguments of both sides, the court held that action can be initiated for the reason that the Regional Director representing the Corporation is having his office at Thrissur which comes within the jurisdiction of the Palakkad E.I. Court. It is aggrieved by that decision, the Corporation has come up in appeal.
3. Heard the learned counsel on both sides. Before analyzing the matter, it is relevant to understand the provisions regarding the adjudication of disputes and claims under the E.S.I. Act. S.74 of the E.S.I. Act empowers the State Government to constitute an Employees ‘Insurance Court for such local area as may be specified in the notification. There are other sub-sections relating to additional courts, etc. S.75 deals with the matters to be decided by Employees’ Insurance Court. It takes in the dispute between a principal employer and the Corporation, or between a principal employer and an immediate employer, etc. A perusal of the same would reveal that some of the disputes enumerated under S.75(2) are between the employer and immediate employer, etc. where really the junction of the worker or the insured person is not necessary. Then comes the disputed question and the provisions. Under S.76 of the ESI Act subject to the provisions of this Act and any rules made by the State Government, all proceedings before the E.I. Court shall be instituted in the Court appointed for the local area in which the insured person was working at the time the question or dispute arose. S.76 envisages a situation where the insured person is involved in the dispute. Then taking recourse to S.96 of the E.S.I. Act and also S.76 the State Governments are empowered to make rules regarding proceedings to be conducted. Accordingly the Kerala Government had framed the Kerala Employees Insurance Courts Rules 1958 as per the powers conferred on it under S.96(1) of the E.S.I. Act, 1948 (Central Act XXXIV of 1948. The relevant rule which requires attention is R.16 which is having the heading ‘place of suing’. It reads as follows:
“Place of suing – In cases not falling under sub-section (1) of Section 76, a proceeding against any person shall be instituted in the Court within the local limits of whose jurisdiction.
(a) the opposite party or each of the opposite parties where there are more than one, at the time of commencement of the proceedings, actually and voluntarily resides, or carries on business, or personally works for gain, or
(b) any of the opposite parties, where there are more than one, at the time of the commencement of the proceedings, actually and voluntarily resides, or carries on business, or personally works for gain, provided that in such case either the leave of the court is given, or the opposite parties who do not reside, carry on business or personally work for gain, as aforesaid, acquiesce in such institution; or
(c) the cause of action, wholly or in part arose.”
4. So reading of R.16 would make it clear that it
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