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IN THE HIGH COURT OF KERALA AT ERNAKULAM
P.V.KUNHIKRISHNAN, J.
Arya Vaidya Sala – Appellant
Versus
The State Of Kerala - Respondent
W.P.(C) Nos.37647 of 2010, 29454 of 2011, 18456 of 2012, 6644 of 2013, 24786 of 2014 & 32536 of 2017
Decided on : 01-11-2022
Employees’ State Insurance Act, 1948 – Section 87, 91-A, 88, 89 - Cooperative Societies Act, 1969 - Section 101 – Constitution of India, 1950 - Article 14 or 19(1)(a) - Principles of Natural Justice - Exemption Orders - Whether appropriate Government while passing orders under Sec.87 of ESI Act should pass a speaking order - Whether exemption orders can be passed based on date of application for exemption in light of Sec. 91-A of ESI Act are some of ancillary points to be decided - Powers of Government under Section 87 of ESI Act cannot be treated as conditional legislation – Para 22.
Finding of the Court :
Subordinate legislation cannot be questioned on principles of natural justice - Here case is whether before passing orders on an application under Section 87 of ESI Act, an opportunity of hearing is to be given to applicants and ESI Corporation - A reading of Section 87 coupled with its proviso, makes it clear that an enquiry is to be done by Government after hearing all affected parties before passing orders in exemption application - Under such circumstances, a speaking order is necessary while deciding an exemption application filed under Section 87 of ESI Act - Moreover, powers of Government under Section 87 of ESI Act cannot be treated as conditional legislation - Petitioner impleaded recognised trade unions in these writ petitions - They filed an affidavit before this Court to the effect that they are getting superior benefits when compared to benefits under ESI Act - Under such circumstances, it cannot be said that there is no pleadings in these cases - From above discussions, it is clear that impugned orders in these writ petitions are unsustainable and are to be set aside - Matter is to be reconsidered by State Government, in light of observations in this judgment, after giving an opportunity of hearing to petitioner and respondents.
Result: Petitions allowed.
JUDGMENT :
The short point to be decided in these writ petitions is the validity of an order passed by the 1st respondent -State of Kerala by invoking the powers under Sec. 87 of the Employees' State Insurance Act, 1948 (for short “ESI Act”). Whether the appropriate Government while passing orders under Sec.87 of the ESI Act should pass a speaking order and whether the exemption orders can be passed based on the date of the application for exemption in the light of Sec. 91-A of the ESI Act are some of the ancillary points to be decided. Since in all these cases, common questions are raised, the narration of the facts in one of the case will be sufficient for resolving the issue. Therefore, W.P.(C) No. 32536/2017 can be treated as the leading case and the exhibits marked in this case is referred in this judgment unless it is specifically mentioned otherwise.
2. The petitioner in all these writ petitions is Arya Vaidya Sala Kottakkal, which is a charitable trust constituted as per the will executed by late Vaidyaratnam P.S.Warrier in the year 1939. The petitioner is engaged in the manufacture and sale of Ayurvedic medicines. Besides this the petitioner is imparting ayurvedic treatment by establishing hospitals and is also conducting research in Ayurveda. The head office of the petitioner is situated at Kottakkal and the petitioner also has branches at different parts of the country. The petitioner is employing about 2500 employees including temporary, casuals and Doctors attached to its hospitals and branches. The service conditions of the workmen of the petitioner are governed by the certified standing orders and long-term settlements entered into between the management and the trade unions regularly. As per the referendum of trade unions conducted in terms of the settlement the petitioner has recognized respondents 3 to 6 namely Kottakkal Arya Vaidya Sala Workers Federation (CITU), Arya Vaidya Sala Employees Union, Arya Vaidya Sala Mazdoor Sangh (BMS) and Arya Vaidya Sala Workers Union (AITUC) as bargaining agents of the employees of the petitioner.
3. The petitioner is exempted from the provisions of the ESI Act by the 1st respondent by invoking the powers under Sec.87 of the ESI Act on year-to-year basis from 1978 onwards during which period the area wherein the petitioner's establishment is located has been brought under the umbrella of the ESI Act. The trade unions of the employees of the petitioner have also represented to the petitioner, the 1st respondent and the 2nd respondent -The Employee State Insurance Corporation, that the employees are satisfied with the benefits provided by the petitioner which according to them is superior to the benefits provided under the ESI Act. They also submitted that they do not want to be covered under the provisions of the ESI Act. The 1st respondent on being satisfied that the employees of the petitioner are in receipt of benefits superior than the benefits provided under the ESI Act, was exempting the petitioner from the provisions of the ESI Act on year-to-year basis, i.e., from 1978 to 2009. Exts.P1 to P29 are the different Government Orders granting exemption to the petitioner from the provisions of the ESI Act.
4. Subsequently, as per the Employees’ State Insurance (Amendment) Act, 2010 (for short “Amendment Act”), certain provisions of ESI Act including Secs. 87 and 91-A were amended. The amendment to Secs. 87 and 91-A of the ESI Act came into force with effect from 01.06.2010.
5. In the meanwhile, for the period starting from 01.10.2009 to 30.09.2010, the petitioner submitted an 1st application dated 15.09.2009 to the respondent for exemption under Sec. 87 of the ESI Act. Subsequently the 1st respondent referred the matter for enquiry to the District Labour Officer, Malappuram and the District Labour Officer conducted the enquiry by issuing notice dated 03.03.2010 to the petitioner. Respondents 3 to 6 send their submission to the District Labour Officer, Malappuram admitting that th
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