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2025 Supreme(Online)(Mad) 47135
IN THE HIGH COURT OF JUDICATURE AT MADRAS
R.VIJAYAKUMAR, J
M/s.Kajah Enterprises (P) Limited – Appellant
Versus
The Government of Tamil Nadu – Respondent
W.P(MD)No.23672 of 2023 | W.M.P(MD) No.19844 of 2023
For the Appellants/Petitioners: Mr.M.Jerin Mathew
For the Respondents: Mrs.D.Farjana Ghoushia, Mr.I.Pinaygash
Exemption from Employees' State Insurance Act requires current proof of benefits provided; past exemptions do not guarantee future approvals.
Headnote:(A) Employees' State Insurance Act, 1948 - Section 87 - Exemption from ESI Act - Petitioner seeks exemption for the period from 01.08.2023 to 31.07.2024, but the request was rejected on the grounds that similar or better benefits were not substantiated - Previous exemptions do not establish an automatic right for current claims - Exemption must adhere to current entitlement criteria and cannot be based on past approvals. (Paras 2-12)
(B) Discretion of Government - The Government has the discretion to reject exemption applications if conditions are not met and must not discriminate between employee benefits. (Paras 6-10)
Facts of the case:
The petitioner, a Beedi Company, petitioned for an exemption from the ESI Act but was denied despite having received similar exemptions in prior years.
Findings of Court:
The court observed that previous exemptions do not guarantee future ones unless similar benefits are continually proven.
Issues: Key issue related to determining whether the petitioner provides benefits comparable to those required by the ESI Act.
Ratio Decidendi: The court held that without the proof of equivalent benefits being conferred to employees, exemption requests cannot be automatically granted based on prior approvals.
Result: Writ Petition dismissed.
| Table of Content |
|---|
| 1. petitioner seeks exemption from the esi act. (Para 1 , 3) |
| 2. historical exemptions do not guarantee current application. (Para 2 , 4) |
| 3. previous rulings establish importance of present proof for exemptions. (Para 5) |
| 4. government holds discretion in evaluating exemption requests. (Para 7 , 8) |
| 5. court affirms that actual demonstration of benefits is crucial. (Para 10 , 11) |
| 6. writ petition dismissed based on lack of current compliance. (Para 12) |
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 17.07.2023 rejecting the request of the petitioner/Company to grant exemption from the provisions of the Employees' State Insurance Act, 1948 for the period between 01.08.2023 and 31.07.2024.
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 29.03.2023 seeking exemption for the period between 01.08.2023 and 31.07.2024. This application came to be rejected under the impugned order dated 17.07.2023. 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 01.08.2024 and 31.07.2025. In such circumstances, the authorities should not have rejected the request for exemption for the period between 01.08.2023 and 31.07.2024.
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 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
