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2025 Supreme(Online)(Mad) 47139
IN THE HIGH COURT OF JUDICATURE AT MADRAS
R.VIJAYAKUMAR, J
M/s.Kajah Enterprises (P) Limited, Represented by its Director – Appellant
Versus
The Government of Tamil Nadu, Represented by its Additional Chief Secretary to Government, Labour Welfare and Skill Development (L1) Department – Respondent
W.P(MD)No.261 of 2025 | W.M.P(MD) No.210 of 2025
For the Appellants/Petitioners: Mr.M.Jerin Mathew
For the Respondents: Mrs.D.Farjana Ghoushia, Mr.R.Ravikumar
Exemptions under the Employees' State Insurance Act must be substantiated annually with evidence of equal or superior benefits provided to employees.
Headnote:(A) Employees’ State Insurance Act, 1948 - Section 87 - Exemption from the provisions of the Act may be granted to factories or establishments subject to certain conditions. - The exemption application must demonstrate that employees receive benefits similar or superior to those under this Act. (Paras 2, 3, 10)
(B) Previous Exemptions - An exemption granted for one year cannot be automatically applied to subsequent years without justifying similar benefits for that period. (Paras 5, 10)
Facts of the case:
The petitioner/Management sought exemption from provisions of the Employees' State Insurance Act for the period from 01.08.2024 to 31.07.2025, which was rejected based on the inability to show similar benefits for the current year.
Findings of Court:
The provided evidence did not satisfy the requirement that similar or better benefits were being offered to employees; thus, the rejection of the exemption was lawful.
Issues: Whether the application for exemption could be denied without substantiating reasons.
Ratio Decidendi: The court emphasized that exemptions are not a matter of right and must be substantiated each year with relevant benefits provided.
Result: Writ Petition dismissed.
| Table of Content |
|---|
| 1. exemption request for esi act is challenged. (Para 1 , 3) |
| 2. past exemptions and employees' benefits are discussed. (Para 4 , 5) |
| 3. court confirmed validity of application rejection. (Para 7 , 11) |
| 4. court examines requirements for granting exemption. (Para 10) |
| 5. final judgment dismisses the writ petition. (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 02.08.2024 rejecting the request of the petitioner/Company to grant exemption from the provisions of the Employees' State Insurance Act, 1948 for the period between 01.08.2024 and 31.07.2025.
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 25.03.2024 seeking exemption for the period between 01.08.2024 and 31.07.2025. This application came to be rejected under the impugned order dated 02.08.2024. 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 01.08.2025 and 31.07.2026. In such circumstances, the authorities should not have rejected the request for exemption for the period between 01.08.2024 and 31.07.2025.
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 that the exemption can be claimed based upon the records submitted by the Management from year to year basis and they cannot seek ex
