The principles of natural justice, including the right to a hearing and the duty to provide reasons, apply to the State Government's decision-making process in granting or refusing exemption from the Employees' State Insurance Act, 1948.

( 1 ) THE petitioner is the registered union of the employees of the Lohiya Machines Ltd. . C-10, site ii, Panki Industrial Area. Kanpur and has come forward to espouse the cause of its members. By means of the present writ petition under Article 226 of the Constitution of India, the Government order dated 3. 10. 1997 rejecting the application of the petitioner, whereby exemption from the operation of the provisions of Employees State Insurance Act, 1948 (hereinafter referred to as the Act) was sought, has been challenged on a variety of grounds, inter alia , that the petitioner has not, at all. been given an opportunity of hearing and the order has been passed in a most cursory and perfunctory manner without recording any reasons.

( 2 ) PUT briefly, the facts of the case are that by notification No. G. S. R. 582 (E) dated 23rd december, 1996. Employees State Insurance (Central) Rules. 1950 were amended by the amendment Rules of 1996. to come into force w. e. f. 1st January, 1997. The effect of this amendment/notification was that the employees who were drawing wages/salary ranging between Rs. 3. 000 and 6,500 also came within the sweep of the Act. The petitioner addressed an application to the Labour Secretary, Union of India, New Delhi on 7. 1. 1997. Annexure-5 to the writ petition, praying for exemption from the operation of notification dated 23rd December, 1996 on the ground that the medical facilities and other privileges which the members of the petitioner are enjoying under the employer are much better and far superior than the benefits available through the agencies prescribed under the Act. It appears that no action was taken on the said application and consequently, the petitioner preferred Civil Misc. Writ No. 7844 of 1997 before this Court. It was finally disposed of by order dated 4th March, 1997. The relevant portion of the order runs as follows : "however, I direct that if the petitioner moves such an application before the State Government within two weeks from today, the impugned circular dated 1. 1. 1997 shall remain stayed until the disposal of the said exemption application. The State Government will decide the said exemption application within a period of three months of production of a certified copy of this order in accordance with law after hearing the parties concerned. " an application for modification of the aforesaid order was moved. The above order was modified by this Court on 12. 3. 1997 to the following extent : "on the facts of the case, I direct that respondent No. 3 will not make deduction of E. S. I, contribution from the salary of the members of the petitioner and shall provide medical benefits to them which they were getting prior to 1. 1. 997 until the decision of the State Government on the exemption application. My judgment dated 4. 3. 1997 stands modified accordingly. Let the modification be made in the certified copy also. " in terms of the directions made by this Court in the aforesaid writ petition, the petitioner made a representation to the Secretary, Labour Department, U. P. Government on 10. 3. 1997, a copy of which is Annexure-8 to the writ petition. Through letter dated 9. 9. 1998, the Deputy Director of the Employees State Insurance Corporation established under the Act informed the respondent no. 3 M/s. Lohiya Machines Ltd. . that the State Government has refused to grant exemption as prayed by the petitioner. A copy of the Government order dated 3. 10. 1997, which is annexure-11 to the writ petition, was also enclosed. It was through this communication that the petitioner came to know of the rejection of their application for exemption moved by them. Consequence of the rejection of the exemption application is that the members of the petitioner, who are drawing salary/wages between Rs. 3,000-6. 500 have come within the ambit of the Act and in view of Section 39 of the Act. and the rules framed thereunder, deductions have to be made to remit their share of co