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2025 Supreme(Online)(Mad) 47123
IN THE HIGH COURT OF JUDICATURE AT MADRAS
R.VIJAYAKUMAR, J
M/s.Noor Sait Beedi Company – Appellant
Versus
The State of Tamil Nadu – Respondent
W.P(MD)No.18779 of 2018
For the Appellants/Petitioners: Mr.M.Jerin Mathew
For the Respondents: Mrs.D.Farjana Ghoushia, Mr.R.Ravindran
Exemption from the provisions of the Employees' State Insurance Act requires current justification of employee benefits, not merely reliance on past exemptions.
Headnote:(A) Employees' State Insurance Act, 1948 - Section 87 - Exemption from the provisions of ESI Act - Granting exemption subject to certain conditions - The petitioner has been receiving exemptions based on past benefits but failed to provide assurance of similar benefits for the specific period - Previous exemptions cannot guarantee future ones without specific justification. (Paras 2, 10, 11)
(B) Judicial Precedents - The court refers to earlier judgments emphasizing that the rights to exemption cannot be automatic but require substantiation of benefits provided by the employer. (Paras 5, 11)
Facts of the case:
The petitioner challenged a rejection of their application for exemption from the ESI Act for a specific period, claiming they provided better benefits to employees.
Findings of Court:
The court found the earlier judgments relied upon were not applicable, and the rejection of the petitioner’s application was valid.
Issues: The main issues included whether exemptions could be granted based on previous approvals without current justification.
Ratio Decidendi: The court ruled that each exemption application must be assessed on its own merits, based on current benefits provided to employees and that previous grants do not guarantee future ones.
Result: Writ Petition dismissed.
| Table of Content |
|---|
| 1. challenge to exemption from esi act. (Para 1 , 3) |
| 2. contentions regarding employee benefits. (Para 4 , 5) |
O R D E R
The present Writ Petition has been filed by the Beedi Company challenging the order passed by the first respondent herein on 11.07.2017 rejecting the request of the petitioner/Company to grant exemption from the provisions of the Employees' State Insurance Act, 1948 for the period between 22.10.16 and 21.10.2017.
2. Section 87 of the Employees' State Insurance Act, 1948 provides for granting exemption to factories or establishment from the purview of the ESI Act, subject to certain conditions as may be specified in the notification. As per the first proviso such exemptions may be granted only if the employees in such factories or establishments are otherwise in receipt of benefits substantially similar or superior to the benefits provided under this Act. The exemption application for renewal has to be made three months before the date of expiry of the exemption period and a decision on the same shall be taken by the appropriate Government within two months of receipt of such application.
3. It is not in dispute that the petitioner/ Management was enjoying exemption benefits from the year 2007 onwards, on year to year basis based upon the order passed by the authority under the Act. The petitioner Management has made an application on 15.06.2016 seeking exemption for the period between 22.10.2016 and 21.10.2017. This application came to be rejected under the impugned order dated 11.07.2017. This order is put to challenge in the present Writ Petition.
4. According to the learned counsel appearing for the writ petitioner, the petitioner/Management provides similar as well as the better benefits to the employees of the Beedi Company. Therefore, they were granted exemption from the purview of the Act for various years. In fact, the exemption was granted in the next year, covering the period between 22.10.2017 and 21.10.2018. In such circumstances, the authorities should not have rejected the request for exemption for the period between 22.10.2016 and 21.10.2017.
5. The learned counsel appearing for the petitioner had relied upon the decision of a learned Single Judge of the this Court in W.P.Nos.17572 of 2010, 5186, 5187 and 10143 of 2011, dated 21.06.2011 wherein, the learned Single Judge has held that if the exemption is granted for a particular year, the same cannot be rejected for a different year without assigning any specific reasons and there cannot be any discrimination between the employees. 6. The learned counsel appearing for the petitioner has also relied upon the judgment of the Hon'ble Supreme Court reported in(2006) 3LW 771 ( Employees State Insurance Corporation and others Vs.Jardine Henderson Staff Association and others ), wherein in paragraph Nos.34 and 35 of the Judgment, the Hon'ble Supreme Court has held that tremendous hardship will be caused if arrears are sought to be paid and nobody stands to gain, neither the employer nor the employee. Therefore, directing the Management to pay E.S.I contribution at a belated point of time would cause prejudice. The learned counsel appearing for the petitioner has also relied upon the judgment of Jharkhand High Court reported in(2008) 117 FLR 781 ( Tata-Yodogawa Limited and Tayo Workers union and another Vs.State of Bihar and others )
in support of the contentions.
7. Per contra, the learned counsel appearing for the second respondent/
ESI Corporation relied upon the judgment of Hon'ble Division Bench of this Court in W.A.(MD) No.204 of 2019, dated 29.09.2023, wherein the Hon'ble Division Bench was pleased to hold that the exemption can be claimed based upon the records submitted by the Management from year to year basis and they cannot seek exemption as a matter of right, unless, the Management has pointed out that they were providing similar or better benefits to the employees, the right of exemption cannot be granted automatically.
8. Heard
