Maharaja College of Arts & Science Vs. State of Tamil Nadu

 


IN THE HIGH COURT OF JUDICATURE AT MADRAS

DATED :  14.03.2011 

CORAM

THE HONOURABLE MR.JUSTICE K.CHANDRU

W.P.NOs.2872, 2873, 4570, 4722, 5084, 5257 of 2011 and

M.P.NOs.1,1,1,1 and 1 AND 2,2,2,2,2 and 2 OF 2011

Maharaja College of Arts and Science,
represented by its Chairman, Neelambur, Arasur,
Coimbatore-641 407.  ..  Petitioner in W.P.No.2872 of 2011

Association of Management of Coimbatore
Anna University Affiliated Colleges
(Registration No.140/2008),
represented by its President,
119,Bhavani Road,
Erode-638 004.        ..  Petitioner in  W.P.No.2873 of 2011 

Tamil Nadu Nursery, Primary,
Matriculation and Higher Secondary
Schools Managements Association,
represented by its General Secretary, Mr.D.Christdass
Old No.64, New No.122, T.P.Koil Street,
Triplicane,Chennai-600 005.  ..  Petitioner in W.P.No.4570 of 2011 

Federation of Association of Private
Schools in Tamil Nadu, represented by its President Mrs.R.Visalakshi,
No.6A, New No.11, P.T.Rajan Road,
20th Avenue, Ashok Nagar,
Chennai-600 083.  ..  Petitioner in W.P.No.4722 of 2011 

R.V.S.College of Arts & Science, represented by its Chairman,
K.V.Kuppusamy,
Door No.242-B,Trichy Road,
Sulur, Coimbatore-641 402. ..  Petitioner in W.P.No.5084 of 2011

Tamil Nadu Self Financing College of
Education Management Association,
represented by its Secretary Mr.S.Vijayakumar
Old No.7, New No.11, 3rd Cross Street,
West C.I.T. Nagar,Chennai-600 035. ..  Petitioner in W.P.No.5257 of 2011 

Vs. 

1.The State of Tamil Nadu, represented by its Principal Secretary to Government,
Labour and Employment Department,
Fort St. George,
Chennai-600 009. .. 1st respondent in all writ petitions  

2.Employees' State Insurance Corporation,
represented by Assistant Director (Inspection),
1897, Trichy Road,
Panchdeep Complex,
Ramanathapuram, Coimbatore-641 045. .. 2nd respondent in W.P.Nos.2872, 2873, 5084, of 2011  

2.Employees' State Insurance Corporation, represented by its Regional Director,
"Panchdeep", Sterling Road,
Nungambakkam,
Chennai-600 034. .. 2nd Respondent in W.P.Nos.4570 and 5257 of 2011 

2.Employees' State Insurance Corporation, represented by its Additional Commissioner and
Regional Director,
143, Sterling Road,
Nungambakkam,
Chennai-600 034. ..  2nd respondent in W.P.No.4722 of 2011

W.P.Nos.2872, 2873 and 5084 of 2011 are preferred under Article 226 of the Constitution of India praying for the issue of a writ of certiorari to call for the records relating to the G.O.Ms.No.237, Labour and Employment (K1) Department, dated 26.11.2010 and published at page 879 of Part II Section 2 of the Tamil Nadu Government Gazette No.51, dated 29.12.2010 and the order of the second respondent in No.56/8/II/12/2(SSO)/Inspn/2011 dated 04.01.2011 and to quash the same insofar as they relate to the petitioner and the members of the petitioner herein.

W.P.No.4722 of 2011 is preferred under Article 226 of the Constitution of India praying for the issue of a writ of certiorari to call for the records relating to the G.O.Ms.No.237, Labour and Employment (K1) Department, dated 26.11.2010  passed by the first respondent and to quash the same.

W.P.Nos.4570 and 5257 of 2011 are preferred under Article 226 of the Constitution of India praying for the issue of a writ of certiorari to call for the records in respect of the impugned notification issued by the first respondent in G.O.Ms.No.237, Labour and Employment (K1) Department, dated 26.11.2010 as published in the Tamil Nadu Government Gazette No.51, dated 29.12.2010 in Part II Section II and to quash the same.

For Petitioners : 

Mr.Kandan Doraisami in W.P.Nos.2872 and 2873 of 2011
Mr.R.Sureshkumar in W.P.Nos.4570 and 5257 of 2011
Mr.K.Selvaraj in W.P.No.5084 of 2011
Mr.AR.L.Sundaresan, SC for Mr.K.Surendar in W.P.No.4722 of 2011

For Respondents : 

Mr.S.Sivashanmugam, GA for R1 in W.P.Nos.2872, 2873, 4570, 5084 and 5257 of 2011
Ms.C.Devi, GA for R-1 in W.P.No.4722 of 2011
Mrs.S.Jayakumari for R-2 in all writ petitions

COMMON ORDER

Heard the arguments of learned counsels in W.P.Nos.2872, 2873, 4570, 5084 and 5257 of 2011 on 10.3.2011 and in W.P.No.4722 of 2011 on 11.3.2011.   

2.The short question that arises for consideration in these writ petitions is whether the attempt by the State Government in covering the educational institutions employing 20 or more persons under the provisions of the Employees' State Insurance Act, 1948 (for short ESI Act) is legally valid? If the coverage of such institutions are legally valid whether the exclusion of the educational institutions run by the Government and Government Aided institutions from the purview of the notification is discriminatory? and that the impugned notification covering the petitioners alone are liable to be struck down on ground of Article 14 of the Constitution of India.

3.The State Government by the exercise of its power under Section 1(5) of the ESI Act had issued a preliminary notification by G.O.No.58, Labour and Employment Department, dated 15.4.2005 notifying the educational institutions, excluding the Government and Government Aided institutions, run by various types of bodies and individuals employing more than 20 to be brought within the purview of Section 1(3) of the ESI Act. By the said notification, the Government had expressed its intention to extend the provisions of the ESI Act to these institutions any day on or after six months after publication of the notification in the Tamil Nadu Government Gazette. The said notification was published in Part II Section 2 of the Tamil Nadu Government Gazette, dated 11.5.2005. The said notification reads as follows:

Extension of Employees' State Insurance Scheme to certain New Sectors of Establishments in all the Implemented area under Employees' State Insurance Act. [G.O.No.58, Labour and Employment (K1), 15th April, 2005.]

No.II(2)/LE/366/2005.-In exercise of the powers conferred by sub-section (5) of Section 1 of the Employees' State Insurance Act, 1948 (Central Act XXXIV of 1948), the Governor of Tamil Nadu in consultation with the Employees State Insurance Corporation and with the approval of the Central Government hereby gives notice of its intention to extend the provisions of the said Act to the class of establishments specified in column (1) of the Schedule below situated in the areas specified in the corresponding entries in column (2) thereof, on or after six months from the date of publication of this Notification in the Tamil Nadu Government Gazette.

 

THE SCHEDULE

----------------------------------------------------------------------------------------------

Description of class of                              Areas in which the

establishments                                       establishments are situated.

-----------------------------------------------------------------------------------------------

            (1)                                                        (2)

--------------------------------------------------------------------------------------------------

Educational Institutions (excluding                        Areas where the Scheme

Government and Government Aided                       has already been brought

Institutions), run by individuals, trustees,              into force under sub-

societies or other organisations, wherein               section (3) of Section 1

20 or more persons are employed or                      and sub-section (5) of

were employed on any day of the                          Section 1 of the Act.

preceding twelve months.

------------------------------------------------------------------------------------------------

4.The petitioners herein were not able to pinpoint any objection raised by any one of the petitioners with reference to the preliminary notification. Though vague allegations were made that some of them have sent their representations, neither copies of such representations were enclosed in the typed set nor any attempt to produce those copies during the hearing was made by the counsel for the petitioners. On the other hand, some of the counsel for petitioners have fairly admitted that no representations were sent by them as there was no wide publicity on the said notification. They had also taken this as a ground for impugning the final notification. In any event, the State Government subsequent to the expression of its intention to notify the educational institutions had published a final notification vide G.O.Ms.No.237, Labour and Employment Department, dated 26.11.2010 and the same was also published in the Tamil Nadu Government Gazette as required under Section 1(5) of the ESI Act. The said notification reads as follows:

LABOUR AND EMPLOYMENT DEPARTMENT

Extension of Employees' State Insurance Scheme to Private Educational Institutions in all the implemented area under Employees' State Insurance Act.

[G.O.Ms.No.237, Labour and Employment (K1), 26th November 2010, Karthigai 10, Thiruvalluvar
Aandu-2041.]

No.II(2)/LE/767/2010.-In exercise of the powers conferred by sub-section (5) of Section 1 of the Employees' State Insurance Act, 1948 (Central Act XXXIV of 1948), the Governor of Tamil Nadu, in consultation with the Employees' State Insurance Corporation and with the approval of the Central Government, after complying with the statutory requirement of giving six months notice of the intention of the Tamil Nadu Government vide Labour and Employment Department Notification No.II (2)LE/265/2008, published at page 206 of Part-II Section 2 of the Tamil Nadu Government Gazette, dated the 4th June 2008, hereby extends the provisions of the said Act, to the educational Institutions (excluding Government and Government aided institutions) run by individuals, trustees, societies or other organizations, wherein twenty or more persons are employed or were employed on any day of preceding twelve months, with effect from the date of publication of this Notification.

                                                T.PRABHAKARA RAO,

                                           Principal Secretary to Government.

5.The object of the Employees' State Insurance Act, 1948 (Central Act 34 of 1948) reads as follows:

"An Act to provide for certain benefits to employees in case of sickness, maternity and employment injury and to make provision for certain other matters in relation thereto."

6.The Statement of Objects and Reasons attached to the Bill sets out the purpose for which the Act is enacted, which reads as follows:

"Statement of Objects and Reasons.- The introduction of a scheme of Health Insurance for industrial workers has been under the consideration of the Government of India for a long time. The necessity for such a scheme has become more urgent in view of the conditions brought about by war. The scheme envisaged is one of compulsory State Insurance providing for certain benefits in the event of sickness, maternity and employment injury to workmen employed in or in connection with the work in factories other than seasonal factories.

(2)A scheme of this nature has to be planned on an all-India basis and administered uniformly throughout the country. With this object, the administration of the Scheme is proposed to be entrusted to a Corporation constituted by central legislation." 

7.The ESI Act was enacted after India had achieved its independence and was made on 19.4.1948. Even before India's independence, the British Indian Government was a member of the International Labour Organization (ILO). But no welfare legislation concerning labours were ever brought into force for reasons best known. The colonial Government was indifferent to such issues. The plight of the labours in India was recognised by the freedom fighters of our Country. They had resolved that no sooner India became independent, the conventions of the International Labour Organization to which our Country was a party will be translated to ground realities through appropriate legislations. The ILO Convention No.24 related to sickness and insurance to workers in industry, commercial and domestic service. It was adopted on 15.7.1928. Likewise recommendation No.69 adopted by the ILO on 20.4.1944 related to medical care for workers. Detailed guidelines were made with reference to medical care, coverage, etc. However, those conventions and recommendations became a ground reality only on 19.4.1948 the day when the ESI Act was enacted as the Central Act 34/1948. But, even then different sections of the labour force were made to wait for coverage through subsequent notifications made under the said Act. 

8. Initially the ESI Act was made applicable only to the factories including the factories belonging to the Government. But subsequently, by an amendment made by the Central Act 29/1989, a proviso was inserted to Section 1(4) thereby the Act was made inapplicable in respect of factories or establishments belonging to or under the control of the Government, whose employees are otherwise in receipt of benefits substantially similar or superior to the benefit provided under the ESI Act. Section 1(4) reads as follows:

"1(4)It shall apply, in the first instance, to all factories (including factories belonging to the Government) other than seasonal factories:

[Provided that nothing contained in this sub-section shall apply to a factory or establishment belonging to or under the control of the Government whose employees are otherwise in receipt of benefits substantially similar or superior to the benefits provided under this Act.]"

9.Under Section 1(5), the Act also empowered the appropriate Government to notify the other establishments such as industrial, commercial, agricultural or otherwise by giving six months' notice of its intention of doing so and publishing the same in the official Gazette. Section 1(5) reads as follows:

"1(5)The appropriate Government may, in consultation with the Corporation and [where the appropriate Government is a State Government, with the approval of the Central Government], after giving six months' notice of its intention of so doing by notification in the Official Gazette, extend the provisions of this Act or any of them, to any other establishment or class of establishments, industrial, commercial, agricultural or otherwise:"

                                                (Emphasis added)

10.Subsequent to the enactment of the ESI Act, the Constitution of India was adopted and was brought into force with effect from 26.1.1950. Part IV of the Constitution made specific directive principles of State Policy. Though they were not enforceable by any Court, the principles set out therein were made fundamental to the governance of the Country. The State was given its duty to apply those principles in making laws.

11.Articles 39(e), 41, 42 and 43 of the Constitution of India reads as follows:

"39.Certain principles of policy to be followed by the State.-The State shall, in particular, direct its policy towards securing-
(a) to (d) omitted
(e) that the health and strength of workers, men and women, and the tender age of children are not abused and that citizens are not forced by economic necessity to enter avocations unsuited to their age or strength;

 41.Right to work, to education and to public assistance in certain cases.-The State shall, within the limits of its economic capacity and development, make effective provision for securing the right to work, to education and to public assistance in cases of unemployment, old age, sickness and disablement, and in other cases of undeserved want.

42.Provision for just and humane conditions of work and maternity relief.-The State shall make provision for securing just and humane conditions of work and for maternity relief.

43. Living wage, etc., for workers.-The State shall endeavour to secure, by suitable legislation or economic organisation or in any other way, to all workers, agricultural, industrial or otherwise, work, a living wage, conditions of work ensuring a decent standard of life and full enjoyment of leisure and social and cultural opportunities and , in particular, the State shall endeavour to promote cottage industries on an individual or co-operative basis in rural areas."                     (Emphasis added)

12.The substance of these Articles only reinforce the principles of the State policy to enact laws with a view to taking care of health and safety of workers and provide benefits for old age, sickness, disablement, maternity relief and  conditions of work ensuring decent standard of life. Therefore, the ESI Act and the subsequent amendment and the notification were in effect to fulfill the State's obligation in safeguarding the rights provided under Part IV of the Constitution.

13. It must also be noted that until New Educational Policy (NEP) was made by the Central Government in the year 1986, education was dealt with by the State Governments and the Central Government with some exceptions. Some Private Managements who were allowed to run institutions were assured of State's assistance. There was no concept of any self financing educational institutions at the relevant time. The employees of the State Governments and the Central Government as well as local body employees were given decent pay which were revised from time to time by successive Pay Commissions. Health care of those Government servants and their family members were taken care of by suitable rules framed by the Government either under Article 309 of the Constitution, by various executive orders and by other statutory rules. Subsequently, even the employees (both teachers and non teaching staff) employed by the private educational institutions (governed by the grant-in-aid code of the State Government) were slowly extended to the benefits applicable to Government servants. Today, in the State of Tamil Nadu, it can be said without fear of contradiction that employees (whether teachers or non teaching staff) employed by Aided schools or Colleges have been brought almost on par with Government servants in the matter of pay scales, conditions of service and retirement benefits including health care.

14. Even after getting aid from the State, the educational institutions who are entitled to protection under Article 30(1) of the Constitution were resisting the application of several labour legislations on the specious plea that those legislations were in conflict with the minority right given to them under Article 30(1) of the Constitution. Therefore, such of those legislations which interfered with their "right to establish and administer" educational institutions of their choice were per se unconstitutional. But their attempt in this regard was rejected by the Supreme Court vide its judgment in Christian Medical College Hospital Employees' Union v. C.M.C. Vellore Assn., reported in (1987) 4 SCC 691.

15. The Supreme Court in the said judgment had categorically held that in the matter of application of laws relating to public health, taxation, municipal laws and labour legislation, the minority managements cannot claim any privilege and those laws must be uniformly applied to the workmen employed by those institutions irrespective of character of those institutions. The Supreme Court had forewarned that if not done in that fashion, it may result in maladministration of those institutions. It is necessary to extract the following passages found in paragraph 18 of the said judgment which reads as follows:

"18.... It has to be borne in mind that these provisions have been conceived and enacted in accordance with the principles accepted by the International Labour Organisation and the United Nations Economic, Social and Cultural Organisation. The International Covenant on Economic, Social and Cultural Rights, 1966 which is a basic document declaring certain specific human rights in addition to proclaiming the right to work as a human right treats equitable conditions of work, prohibition of forced labour, provision for adequate remuneration, the right to a limitation of work hours, to rest and leisure, the right to form and join trade unions of ones choice, the right to strike etc. also as human right. The Preamble to our Constitution says that our country is a socialist republic. Article 41 of the Constitution provides that the State shall make effective provision for securing right to work. Article 42 of the Constitution provides that the State shall make provision for securing just and humane conditions of work and for maternity relief. Article 43 of the Constitution states that the State shall endeavour to secure by suitable legislation or economic organisation or in any other way to all workers agricultural, industrial or otherwise work, a living wage, conditions of work ensuring a decent standard of life and full enjoyment of leisure and social and cultural opportunities. These rights which are enforced through the several pieces of labour legislation in India have got to be applied to every workman irrespective of the character of the management. Even the management of a minority educational institution has got to respect these rights and implement them. Implementation of these rights involves the obedience to several labour laws including the Act which is under consideration in this case which are brought into force in the country. Due obedience to those laws would assist in the smooth working of the educational institutions and would facilitate proper administration of such educational institutions. If such laws are made inapplicable to minority educational institutions, there is very likelihood of such institutions being subjected to maladministration. Merely because an impartial tribunal is entrusted with the duty of resolving disputes relating to employment, unemployment, security of work and other conditions of workmen it cannot be said that the right guaranteed under Article 30(1) of the Constitution of India is violated. If a creditor of a minority educational institution or a contractor who has built the building of such institution is permitted to file a suit for recovery of the money or damages as the case may be due to him against such institution and to bring the properties of such institution to sale to realise the decretal amount due under the decree passed in such suit is Article 30(1) violated? Certainly not. Similarly the right guaranteed under Article 30(1) of the Constitution is not violated, if a minority school is ordered to be closed when an epidemic breaks out in the neighbourhood, if a minority school building is ordered to be pulled down when it is constructed contrary to town planning law or if a decree for possession is passed in favour of the true owner of the land when a school is built on a land which is not owned by the management of a minority school. In the same way if a dispute is raised by an employee against the management of a minority educational institution such dispute will have necessarily to be resolved by providing appropriate machinery for that purpose. Laws are now passed by all the civilised countries providing for such a machinery....."

16. From the above, it can be safely concluded that whether an educational institution run by minority or by non minority, with reference to application of welfare legislation there is no distinction and they should be treated on par. In this batch of writ petitions, there was no challenge on the touchstone of Article 30(1) of the Constitution. Even otherwise, the observations made by the Supreme Court will clearly show that these legislations were made on an obligation arising out of conventions of International Labour Organization and they should be implemented uniformly to all employees.

17. It is only after the New Educational Policy conceived, there were  mushroom growth of educational institutions in the private sector. It gave rise to multiple problems relating to service conditions of employees working in those institutions. Therefore, the State belatedly woke up to the conditions of employees both teaching and non teaching staff working in these so-called self financing educational institutions so as to bring reasonable conditions of work. It is with this view as well as to safeguard the Health of the employees, the preliminary notification came to be published. Subsequently, in accordance with Section 1(5), a final notification was also issued. Once a notification under Section 1(5) is issued covering the establishment, then under Section 2-A, it is the obligation of the establishments to register themselves within such time and in such manner as specified in the regulation with the authorities under the ESI Act. Regulation 10-B of the ESI General Regulations, 1950 provides the manner by which an establishment can be registered. The Act obliges both employer and employees to contribute towards ESI. The contributions were levied in terms of Rule 51 of the ESI Central Rules 1950 obliges an employer to pay 4.75% of wages payable to an employee as their contribution and it is 1.75% in respect of employee's contribution for coverage under the Act. Both employer and employee will contribute 6.50% of wages payable to an employee towards the ESI Fund. An employee of an institution covered by the ESI Act if he draws Rs.15000/-, which is the maximum wage limit, his contribution will only come to Rs.113/- per month. The total contribution by both will be Rs.875/-. This is the contribution for an highest paid employee. Based upon this contribution, which will be kept by the ESI Corporation in a special fund, the employees were paid various benefits including for sickness, maternity, disablement, dependent benefits, funeral payments, medical care and treatment.  But for the benefit derived from the Act for such a limited payment, the contribution is enormous as it takes care of an umbrella services as noted above. 

18. The term "employee" is defined under Section 2(9) of the ESI Act and it does not exclude any person and couched in a general term. In fact, the ESI Act covers even the contract labours who are engaged through an agency. As per the notification issued on 20.4.2010 by G.S.R. 349E, the Central Government has now fixed the wage limit at Rs.15000/- per month for coverage in terms of Section 95(2)(a) of the ESI Act.

19. Since the petitioners are running educational institutions both schools and colleges and if the Government/UGC scales as well as pay commission recommendations are paid to them as required under law, there will be hardly any teacher employed by these institutions will be covered by the provisions of the ESI Act in view of the wage limit prescribed thereunder. Even in respect of the non teaching staff, the highly paid staff like clerical and laboratory assistants will also be not covered by the Act if the Government scales of pay are an indicator for payment of salary to those employees. After the coverage of the Act, hardly few employees like watchmen, conductors, drivers, canteen and hostel staff and other menials, such as sweeper and scavengers alone will be covered by the provisions of the Act. If case of any institutions having health benefits if they are substantially similar or superior to the benefits provided under the ESI Act, Chapter VIII provides for various exemptions that can be obtained from the Government. Therefore, there is no difficulty for the institutions seeking exemptions if only the benefits extended by them are substantially similar or superior benefits than the ESI Act. Even otherwise, in this batch of writ petitions, no contentions were raised that their employees are in receipt of benefits substantially similar or superior to the benefits provided under the Act.

20. Further, in respect of application of similar notification to educational institutions situated in the Union Territory of Puducherry, this Court had an occasion to deal with the same elaborately vide in W.P.Nos.W.P.NOs.2471, 3234, 30509 and 16273 of 2007, etc batch cases in  Muthu Rathina Arangam Matriculation school Vs. The Government of Pondicherry, represented by Additional Secretary to Government (Labour), Labour Department, General Secretariat, Puducherry. By judgment, dated 04.01.2011, this Court upheld similar notifications issued by the Administrator of the Union Territory of Puducherry. Notwithstanding the said judgment, the counsel for the petitioners urged several grounds and they may be briefly set out below :

(i) The ESI Act is essentially covered the factories and other industries and it will not apply to educational institutions.

(ii)The Supreme Court vide its judgment in T.M.A. Pai Foundation v. State of Karnataka, reported in (2002) 8 SCC 481 held that once it is not an industry, then it cannot be covered by the provisions of the ESI Act.

(iii) The Supreme Court had given guidelines for fixing fees received from the students. There is oversight Committee to oversee the fees receivable from students whether the institutions have not received more than what has been fixed by the Committee. At the time of fixation of fees, this additional burden was not taken into account. Therefore, the State was not entitled to levy more amount than what was contemplated under law.

(iv) Even assuming an educational institution can be an "industry" within the meaning of Section 2(j) of the Industrial Disputes Act as held by the Supreme Court vide its judgment in Bangalore Water Supply and Sewerage Board v. A. Rajappa reported in (1978) 2 SCC 213, the said judgment of seven Judges bench has been doubted by an another smaller bench of five Judges in State of U.P. Vs. Jai Bir Singh reported in (2005) 5 SCC 1 and the issue has been referred to the Chief Justice of India for constituting a larger bench. Therefore, the view of the Bangalore Water Supply and Sewerage Board case (cited supra) will have no efficacy.

(v) Further, the Supreme Court in A.Sundarambal Vs. Government of Goa, Daman and Diu reported in (1988) 4 SCC 42 has held that a teacher is not a workman within a meaning of Section 2(s) of the Industrial Disputes Act, 1947. The predominant activity of the educational institution is to impart education and majority employees are teachers. The notification applying the Act to the entire institution including their teachers is invalid.

(vi) The State Government while issuing notification had not adopted due  procedure, Principles of fair play in consultation or natural justice to the extent necessary.

(vii) The exercise of power is conditional legislation and satisfaction arrived at by the Government was not based upon any objective consideration and relevant data. Hence the impugned notification was invalid. Reliance was also placed upon a judgment of the Supreme Court in State of Tamil Nadu Vs. K.Sabanayagam reported in (1998) 1 SCC 318.

(viii) The impugned notification so far as it excludes the aided educational institutions which are also running unaided courses is discriminatory. Therefore, it is violative of Article 14 of the Constitution.

(ix) The preliminary notification was issued by the State Government on 4.6.2008. Immediately after six months, a final notification was not published. On the other hand, the Government had published the final notification only on 29.12.2010 nearly after a period of 2-1/2 years. Therefore, the notification was invalid as it had become stale. On the ground of delay in publishing the final notification, the impugned order should be set aside.

21. On the side of the respondents, a preliminary objection was raised regarding maintainability of the writ petitions in W.P.Nos.2873, 4570, 4722 and 5257 of 2011 which were admittedly filed by the societies comprising of various educational institutions. Such writ petitions are not maintainable as they were filed by societies and they have no locus standi to maintain the writ petitions.

22. In the light of the rival contentions, it has to be seen whether the petitioners have made out any case?

23. The first six contentions can be taken up together. In respect of the objection that the educational institutions cannot be covered by the provisions of the ESI Act and that the impugned notification covers the educational institutions within the purview of the ESI Act, it was contended by the counsel for the petitioners that the educational institutions cannot be covered by the ESI Act as they were not commercial or industrial enterprises. Reliance was placed upon the judgment of the Supreme Court in Haryana Unrecognised Schools' Association v. State of Haryana reported in (1996) 4 SCC 225. In that case, the Supreme Court held that a teacher in an educational institution is not employed to do any skilled or unskilled manual or clerical work and therefore, once he is not an employee within the meaning of Section 2(i) of the Minimum Wages Act, the State Government by adding  employments in educational institutions into the schedule to the Minimum Wages Act by virtue of the power conferred under Section 27 was not valid and it was beyond its competence. Therefore, insofar as the teacher of the educational institutions being covered by the provisions of the Minimum Wages Act was invalid. But in that case, the only question that was considered was whether teachers in educational institutions can be brought within the purview of the Minimum Wages Act. It was found that the definition of the term "employee" defined under Section 2(i) of the Minimum Wages Act was not covering the teachers. In fact, the said definition more or less borrows the definition of term "workman" found under Section 2(s) of the Industrial Disputes Act. Therefore, the observation of the Supreme Court in A.Sundarambal Vs. Government of Goa, Daman and Diu reported in 1988 (4) SCC 42 was quoted with approval. In paragraphs 10 and 11, it was observed as follows:

"10....Since the teachers of an educational institution are not employed to do any skilled or unskilled or manual or clerical work and therefore could not be held to be an employee under Section 2(i) of the Act, it is beyond the competence of the State Government to bring them under the purview of the Act by adding the employment in educational institution in the Schedule in exercise of power under Section 27 of the Act. This Court while examining the question whether the teachers employed in a school are workmen under the Industrial Disputes Act had observed in A. Sundarambal v. Govt. of Goa, Daman & Diu3: (SCC p.48, para 10)

We are of the view that the teachers employed by educational institutions whether the said institutions are imparting primary, secondary, graduate or postgraduate education cannot be called as 'workmen' within the meaning of Section 2(s) of the Act. Imparting of education which is the main function of teachers cannot be considered as skilled or unskilled manual work or supervisory work or technical work or clerical work. Imparting of education is in the nature of a mission or a noble vocation. A teacher educates children, he moulds their character, builds up their personality and makes them fit to become responsible citizens. Children grow under the care of teachers. The clerical work, if any they may do, is only incidental to their principal work of teaching.

11.Applying the aforesaid dictum to the definition of employee under Section 2 (i) of the Act it may be held that a teacher would not come within the said definition. In the aforesaid premises we are of the considered opinion that the teachers of an educational institution cannot be brought within the purview of the Act and the State Government in exercise of powers under the Act is not entitled to fix the minimum wage of such teachers. The impugned notifications so far as the teachers of the educational institution are concerned are accordingly quashed. This appeal is allowed. Writ petition filed succeeds to the extent mentioned above. There will be no order as to costs."

24. Reliance was also placed upon a judgment of the Supreme Court in Ruth Soren v. Managing Committee, East I.S.S.D.A., reported in (2001) 2 SCC 115 wherein the Supreme Court considered whether an educational institution is an establishment within the meaning of Bihar Shops and Establishments Act, 1953. It was held that though it may be an industry within the meaning of Section 2(j) of the I.D.Act, it cannot be an establishment within the meaning of Bihar Shops and Establishments Act. In that context, the Supreme Court in paragraphs 4 and 5 observed as follows:

"4.An establishment for the purposes of the Act means an establishment which carries on any business, trade or profession or any work in connection with, or incidental or ancillary thereto. Concept of industry, as defined under the Industrial Disputes Act, would include any business, trade, undertaking, manufacture or calling of employers and includes any calling service, employment, handicraft, or industrial occupation or avocation of workmen. There is an organised activity between employers and employees to impart education. Such an activity, though may be industry will not be a profession, trade or business for the purposes of Article 19(1)(g) of the Constitution, would not be one falling within the scope of establishment under the Act. Therefore, the view taken by the Division Bench of the High Court is unexceptionable. The High Court did appreciate that Unni Krishnan case1 itself made a distinction between what was stated in Bangalore Water Supply & Sewerage Board v. A. Rajappa2.

5. In Corpn. of City of Nagpur v. Employees 4, LLJ at p.(540) this Court held the Education Department of the Corporation to be an industry. The reason given is that imparting education amounts to service and can be done by a private person also. In University of Delhi v. Ram Nath5 this Court held that imparting education is not an industry as the work of the University cannot be assimilated to the position of trade, calling, business or service and hence cannot be an industry. The majority view in Bangalore Water Supply & Sewerage Board v. A. Rajappa2 a decision of seven-Judge Bench, is that in the case of an educational institution, the nature of activity is exhypothesi and imparting education being service to community is an industry. Various other activities of the institution such as printing press, transport department, clerical, etc. can be severed from teaching activities and these operations either cumulatively or separately form an industry. Even so, the question for consideration is whether educational institution falls within the definition of 'establishment' carrying business, trade or profession or incidental activities thereto. 'Establishment', as defined under the Act, is not as wide as 'industry' as defined under the Industrial Disputes Act. Hence reliance on Bangalore Water Supply & Sewerage Board v. A. Rajappa2 for the appellant is not of any help."

25. Therefore, it was contended that the educational institution also is not an establishment within the meaning of Section 1(5) of the ESI Act. But, however unlike the Bihar Shops Act, which was considered by the Supreme Court, the term "establishment" was not defined in the ESI Act. On the other hand, Section 1(5) of the ESI Act is couched in a language which can include establishments which necessarily need not have the characteristics as industrial, commercial or agricultural establishments. They can even include the other types of establishments. Section 1(5) of the ESI Act reads as follows:

"1(5)The appropriate Government may, in consultation with the Corporation and [where the appropriate Government is a State Government, with the approval of the Central Government], after giving six months' notice of its intention of so doing by notification in the Official Gazette, extend the provisions of this Act or any of them, to any other establishment, or class of establishments, industrial, commercial, agricultural or otherwise." (Emphasis added)

26. The term "otherwise" found in Section 1(5) came to be considered by the Allahabad High Court in Maharishi Shiksha Sansthan and another Vs. State of Uttar Pradesh and another reported in 2009 (1) LLN 381. In paragraphs 9 and 10, it was observed as follows:

"9.Learned counsel for the petitioner has argued that the word "establishment" must have some relation with factory and educational institution is not even remotely connected with the activity, which is carried out in factories. This argument is not tenable for the reason that under S.1(5), there is no such restriction. Thereafter, learned counsel for the petitioner has argued that the aforesaid sub-section suffers from the vice of excessive delegation as the power to bring any establishment under the Act has been conferred upon the Government without providing any guidelines.

10.This argument is also not acceptable. The purpose of the Act is to confer certain benefits upon the employees and employees of any establishment may deserve such benefits. This question has also been considered in the Supreme Court authority in Hindu Jea Band, Jaipur V. Regional Director, Employees' State Insurance Corporation, and others [1987 (1) L.L.N. 778],..."

27.The very same question also came to be considered by a division bench of the Kerala High Court in CBSE School Management's Association Vs. State of Kerala reported in 2010 (II) LLJ 240 (Ker). In paragraphs 17 and 18, the Kerala High Court observed as follows:

"17.We hold that the notification under Section 1(5) of the ESI Act can cover an educational institution for two reasons:-  Our first reason is that, the educational   institutions like schools are industrial establishments, in view of the decision of the Apex Court in Bangalore Water Supply and Sewerage Board's case, (supra). Though a few Benches of    lesser    strength      have  expressed  the  necessity  for   reconsidering the dictum in Bangalore Water Supply and Sewerage Board's case, (supra), until such a reconsideration is done by a larger Bench, we are absolutely bound by the decision of the Apex Court in Bangalore Water Supply and Sewerage Board's case, (supra).  If that be so, the only possible view that could be taken in the face of the words contained in Section 1(5) of the ESI Act is that educational   institutions are also covered by the expression 'industrial establishment'.  The main thrust of the argument of the writ petitioners was that educational institution is not an industry. In view of the binding precedent mentioned above, we cannot accept that contention. Further, the interpretation of the definition of "industry" in Section 2(j) of the Industrial Disputes Act is applicable to the interpretation of the word "industrial" in Section 1(5) of the E.S.I. Act, in view of Section 2(24) of the latter Act which reads as follows:

"2. Definitions:-

xxx xxx xxx

(24) all other words and expressions used but not defined in this Act and defined in the Industrial Disputes Act, 1947 (14 of 1947), shall have the meanings respectively assigned to them in that Act.". 

18. Our second reason is that, the words employed 'or otherwise' should be given the widest possible meaning and therefore, they will cover the educational institutions also. The petitioners contend that the words 'or otherwise' should be   given a restricted meaning, following the principle of ejusdem generis.  Whether the words should be given a restricted meaning will depend upon the context in which they are used. There cannot be any principle of universal application concerning this.  The learned    author, Sri.G.P.Singh, in his  book, Principles of Statutory Interpretation, 10th Edition, 2006, points out that the words "or otherwise" are not usually considered ejusdem generis. The learned author has stated as follows:

"It also appears that the words 'or otherwise' have not been usually considered  ejusdem generis.  They are words of wide import, but context may limit their scope...".

The learned author has stated the above principle, referring to various decisions of the Apex Court. The decisions cited by the learned counsel for the petitioners to persuade this Court to give a restricted meaning, applying ejusdem generis cannot be upheld, having regard to the context in which the words "or  otherwise" are used. We are not referring to each and every decision cited by the petitioners, but we would point out that those are decisions which are rendered under various other   enactments and do not lay down any binding precedent to be  followed in this case. Further, having regard to the words employed in the above sub-section, the principle of ejusdem generis cannot be pressed into service.  There is nothing in common between industrial establishment and agricultural establishment. They do not belong to the same genus. The doctrine of ejusdem generis is applied where the words of the same category are used, followed by general words. In that context, the meaning of the general words can be read down to mean only something similar to the category mentioned preceding them. For the above reasons, the contentions of the writ petitioners that this Court should give a restricted meaning  to the words 'or otherwise' cannot be upheld."

28. Apart from the decisions of the Allahabad High Court and Kerala High Court, the issue can also be looked into in a different angle. The Supreme Court in Bangalore Water Supply and Sewerage Board Vs. A.Rajappa and others reported in 1978 (2) SCC 213 [(which was distinguished by the Supreme Court in the context of the term establishment found in Bihar Shops and Establishments Act, but followed by the Kerala High Court in the context of Section 1(5) in CBSE School Management's Association (cited supra))] considered the term "educational institution" as an industry within the meaning of Section 2(j) of the I.D.Act. It was held that though majority of persons working in educational institutions are teachers, but that cannot be a factor to decide the term "industry" found under the Industrial Disputes Act. On the other hand, even in respect of an educational institution, even if few persons are employed as non teaching staff, they can be covered by the provisions of the Industrial Disputes Act. Therefore,  Ruth Soren's case (cited supra), rendered in the context of  Bihar Shops and Establishments Act cannot have any relevance to decide a matter under the ESI Act.

29. Similarly, the decision of the Supreme Court in Haryana Unrecognised Schools' Association (cited supra) in relation to the minimum Wages Act has no application. The term "otherwise" found under Section 1(5) has got wider application as held by the Allahabad and Kerala High Courts. At this stage, it is unnecessary to go into the question whether majority of persons employed in the petitioners institutions will be covered by the ESI Act pursuant to the impugned notification since the definition of employee found in Section 2(9) do not correspond with any other definition in any other law. If ultimately the petitioners want to dispute the coverage of a particular person being covered by the scheme, the Act itself provides disputes to be raised under Section 75 of the ESI Act. Such issues need not be decided on an academic basis at this stage. It is also worthwhile to note that by amendment to ESI Central Rules, 2010, dated 20.4.2010, the scheme only covers the employees who are drawing wages not exceeding Rs.15000/-. Therefore, as to how many persons will be covered by the scheme itself has to be determined only if the respondent ESI issues an appropriate notice and determine the liability of the petitioners under Section 45-A of the ESI Act.

30. Further, the Supreme Court in Osmania University v. Regional Director, ESI Corporation reported in (1985) 4 SCC 514 held that even if the printing press run by the University if it is otherwise covered by the ESI Act, the provisions of the Act can be made applicable and the employees of the printing press must be covered by the ESI Scheme. Therefore, even if a part of the employees in an establishment are covered  the Act can be made applicable in respect of those persons.

31.In construing the definition of the term "establishment" found under Section 1(3)(b) of the Payment of Gratuity Act, the Supreme Court in its judgment in State of Punjab v. Labour Court reported in (1980) 1 SCC 4 has held that the term "establishment" need not be having any reference to the establishments covered by the provisions of the Shops and Establishments Act and it should have a general meaning. It also held that if the term "establishment" is defined in any other law, for the time being in force it will also be covered by the provisions of the Gratuity Act. The following passage found in paragraph 3 of the said judgment may be extracted below:

"3.In this appeal, the learned Additional Solicitor General contends on behalf of the appellant that the Payment of Gratuity Act, 1972 cannot be invoked by the respondents because the Project does not fall within the scope of Section 1(3) of that Act. Section 1(3) provides that the Act will apply to:

(a) every factory, mine, oilfield, plantation, port and railway company;

(b) every shop or establishment within the meaning of any law for the time being in force in relation to shops and establishments in a State, in which ten or more persons are employed, or were employed, on any day of the preceding twelve months;

(c) such other establishments or class of establishments, in which ten or more employees are employed, or were employed, on any day of the preceding twelve months, as the Central Government may, by notification, specify in this behalf.

According to the parties, it is clause (b) alone which needs to be considered for deciding whether the Act applies to the Project. The Labour Court has held that the Project is an establishment within the meaning of the Payment of Wages Act, Section 2(ii)(g) of which defines an 'industrial establishment' to mean any 'establishment in which any work relating to the construction development or maintenance of buildings, roads, bridges or canals, relating to operations connected with navigation, irrigation or the supply of water, or relating to the generation, transmission and distribution of electricity or any other form of power is being carried on'. It is urged for the appellant that the Payment of Wages Act is not an enactment contemplated by Section 1(3)(b) of the Payment of Gratuity Act. The Payment of Wages Act, it is pointed out, is a Central enactment and Section 1(3)(b), it is said, refers to a law enacted by the State Legislature. We are unable to accept the contention. Section 1(3)(b) speaks of 'any law for the time being in force in relation to shops and establishments in a State'. There can be no dispute that the Payment of Wages Act is in force in the State of Punjab. Then, it is submitted, the Payment of Wages Act is not a law in relation to 'shops and establishments'. As to that, the Payment of Wages Act is a statute which, while it may not relate to shops, relates to a class of establishments, that is to say, industrial establishments. But, it is contended, the law referred to under Section 1(3)(b) must be a law which relates to both shops and establishments, such as the Punjab Shops and Commercial Establishments Act, 1958. It is difficult to accept that contention because there is no warrant for so limiting the meaning of the expression 'law' in Section 1(3)(b). The expression is comprehensive in its scope, and can mean a law in relation to shops as well as, separately, a law in relation to establishments, or a law in relation to shops and commercial establishments and a law in relation to non-commercial establishments. Had Section 1(3)(b) intended to refer to a single enactment, surely the appellant would have been able to point to such a statute, that is to say, a statute relating to shops and establishments, both commercial and non-commercial. The Punjab Shops and Commercial Establishments Act does not relate to all kinds of establishments. Besides shops, it relates to commercial establishments alone. Had the intention of Parliament been, when enacting Section 1(3)(b), to refer to a law relating to commercial establishments, it would not have left the expression 'establishments' unqualified. We have carefully examined the various provisions of the Payment of Gratuity Act, and we are unable to discern any reason for giving the limited meaning to Section 1(3)(b) urged before us on behalf of the appellant. Section 1(3)(b) applies to every establishment within the meaning of any law for the time being in force in relation to establishments in a State. Such an establishment would include an industrial establishment within the meaning of Section 2(ii)(g) of the Payment of Wages Act. Accordingly, we are of opinion that the Payment of Gratuity Act applies to an establishment in which any work relating to the construction, development or maintenance of buildings, roads, bridges or canals, or relating to operations connected with navigation, irrigation or the supply of water, or relating to the generation, transmission and distribution of electricity or any other form of power is being carried on. The Hydel Upper Bari Doab Construction Project is such an establishment, and the Payment of Gratuity Act applies to it."     (Emphasis added)

32. Therefore, as correctly held by the Allahabad and Kerala High Courts, the term "establishment" under Section 1(5) will include every establishment which need not have the characteristics of industrial, commercial or agricultural establishments. Any Establishments can be validly notified by the appropriate Government to be covered by the provisions of the Act. Therefore, the contentions made in this regard must fail.

33.It is rather unfortunate that the counsel should press into service a judgment of TMA Pai's case (cited supra) without any relevance to the facts on hand. Whether an educational institution is an industry within the meaning of Section 2(j) of the ID Act may not be relevant while considering the application of the ESI Act, since such phraseology is not applied here. The power is vested with the Government to notify the establishment and it can be any type of establishments. The term "otherwise" found along with the term "industrial, commercial or agricultural" under Section 1(5) need not take colour from the preceding one and it could have an independent application as noted above. The purpose of the legislation is to cover the health aspects of employees. Therefore, the impugned notification on the ground does not suffer from want of jurisdiction. Even reference made by the subsequent smaller bench (State of U.P. v. Jai Bir Singh) for reviewing the Bangalore Water Supply and Sewerage Board case (cited supra) need not be looked into as it is only an order of reference. Even after 15 years have gone by the successive Chief Justices of India have not thought it fit to constitute any larger bench to review the earlier judgment. So long as that judgment is not reversed in the manner known to law, that judgment will be a binding precedent. No one can rely upon an order of reference to disobey a binding precedent of a larger bench of the Supreme Court.

34. It must also be noted that subsequent to the Bangalore Water Supply and Sewerage Board case (cited supra), the Parliament itself has amended Section 2(j) and defined the term "industry" and brought it in tune with the ratio of the said judgment by an amendment Act 46/1982. Since alternative modes of redressal of grievance after excluding those establishment from the I.D. Act have not been made, the said section is yet to be brought into force. Nevertheless, it is the intention of the Parliament to fall in line with the decision of the larger bench is a matter of record.

35. The reference to A. Sundarambal's case (cited supra) holding that teachers are not workmen has no relevance for two reasons. The term "employee" as found in the ESI Act is not similar to the word "workmen" under Section 2(s) of the ID Act. Further assuming that teacher is not a workman, the Act even then can apply to the non teaching staff employed by educational institutions, who are admittedly covered within the meaning of Section 2(s) of the ID Act. Further, that stage had not arisen in the present case.

36. Further, first of all after the impugned notification has come into existence, the petitioners institutions will have to register themselves under Section 2-A. Only when a doubt arises as to whether persons from whom contributions are to be deducted, a decision will have to be taken initially by the ESI Corporation under Section 45A of the ESI Act. If there is any further dispute, a petition can be filed before the appropriate ESI Court under Section 75 to determine the employees to be covered and the contributions to be recovered under the ESI Act. There is further appeal to this Court against an order of the ESI Court under Section 82. Therefore, there is time enough to decide such issues for every management.

37. It is suffice to state that those issues are not germane for the purpose of validating the impugned notification. Even otherwise, as held by the Supreme Court in Osmania University case (cited supra), if a particular activity of the educational institution is covered, notwithstanding the other areas are not covered, still the ESI Act will apply. Therefore, the contentions raised in this regard have to be rejected.

38. The contention that the notification under Section 1(5) being a conditional legislation and the satisfaction of the delegate has to be based on objective consideration of relevant data for and against the exercise of such power should be there, reliance was placed upon a judgment of the Supreme Court in State of T.N. v. K. Sabanayagam, reported in  (1998) 1 SCC 318. The following passage found in paragraph 22 may be usefully reproduced below:

"22. But there may be a third category of cases wherein the exercise of conditional legislation would depend upon satisfaction of the delegate on objective facts placed by one class of persons seeking benefit of such an exercise with a view to deprive the rival class of persons who otherwise might have already got statutory benefits under the Act and who are likely to lose the existing benefit because of exercise of such a power by the delegate. In such type of cases the satisfaction of the delegate has necessarily to be based on objective consideration of the relevant data for and against the exercise of such power. Maybe such an exercise may not amount to any judicial or quasi-judicial function, still it has to be treated to be one which requires objective consideration of relevant factual data pressed into service by one side and which could be tried to be rebutted by the other side who would be adversely affected if such exercise of power is undertaken by the delegate. In such a third category of cases of conditional legislation the legislature fixes up objective conditions for the exercise of power by the delegate to be applied to past or existing facts and for deciding whether the rights or liabilities created by the Act are to be denied or extended to particular areas, persons or groups. This exercise is not left to his subjective satisfaction nor is it a mere ministerial exercise. Section 36 of the Act with which we are concerned falls in this third category of conditional legislative functions....."

39. It is not clear as to how the said judgment will have any relevance to the case on hand. In that case, employees who are entitled for bonus under the Payment of Bonus Act, 1965 were sought to be deprived by grant of exemption which power was exercised under Section 36 of the Payment of Bonus Act. Section 36 reads as follows:

"36.Power of exemption.-If the appropriate Government, having regard to the financial position and other relevant circumstances of any establishment or class of establishments, is of opinion that it will not be in public interest to apply all or any of the provisions of this Act thereto, it may, by notification in the Official Gazette, exempt for such period as may be specified therein and subject to such conditions as it may think fit to impose, such establishment or class of establishments from all or any of the provisions of this Act." (Emphasis added)

40. It is also necessary to refer to a judgment of the Supreme Court in Hindu Jea Band v. Regional Director, ESI Corpn., reported in (1987) 2 SCC 101 where similar contentions were rejected by the Supreme Court in the context of the ESI Act itself. The following passage found in paragraph 5 may be usefully reproduced below:

"5. Alongwith the special leave petition the petitioner has presented before this Court a writ petition under Article 32 of the Constitution questioning the validity of the notification issued by the State Government on the ground that the power conferred under the Act on the State Government by sub-section (5) of Section 1 authorising the State Government to extend all or any of the provisions of the Act to other establishments in the State suffers from the vice of excessive delegation of essential legislative powers. It is also contended that the application of the Act to businesses like the one which is being carried on by the petitioner during certain seasons only of the year is violative of Article 14, Article 19(1)(g) and Article 21 of the Constitution. Having carefully considered the submission made by the learned Counsel for the petitioner we find no merit in any of the contentions urged in the writ petition. The writ petition is also, therefore, dismissed."

41. In the case of the Bonus Act, the legislation itself obliges the exempting authority to deal with the request for exemption by legislative guidelines and hence those observations came to be made. But in the present case, the impugned notification extends the provisions of the ESI Act to a class of establishment. The only requirement is the expression of previous intent through a gazetted notification which was done in this case. The petitioners who have not raised any particular objection, cannot now be heard to plead that either they were not heard or there was no satisfaction by the Government in finalizing the notification. Further the plea that notification came to be issued after 2-1/2 years from the preliminary notification and hence it is invalid also cannot be accepted as the petitioners are not bound to be losers by such delay. There cannot be said to be any prejudice by the said delay. On the other hand, the coverage of establishment only starts from a final notification. If at all, to some extent the petitioners were said to be benefited by the delay. It may be their employees who are affected by the belated coverage and they are said to have lost valuable benefits arising out of the labour legislation.  Therefore, the contention based upon non application of mind in passing the order pursuant to the conditional legislation will not arise.

42. In the context of Section 5 of the Minimum Wages Act, the Courts have considered the question of delay in publishing a final notification will invalidate such a notification. The Bombay High Court in Ramkrishna Ramnath, Nagpur and another Vs. The state of Maharashtra and another reported in AIR 1964 Bombay 51 held in paragraph 35 as follows:

"35....There is however nothing in the statute which requires that Government should consider it on that very date and not thereafter. In fact, it seems to us that it will be impossible for Government to consider all the representations received on one and the same date, namely, the date specified."

43. Further, a Full Bench of the Kerala High Court in Malayalam Plantations Limited and others Vs. State of Kerala and others reported in  1976 (I) LLJ 114 (FB) held in paragraph 11 as follows:

"11....We do not think that the selection enables any person to contend that notwithstanding the specification of a date within which the representations have to be filed the notification revising/fixing minimum wages would be bad if the proposals are not taken up for consideration on the date specified. Nor does the section, according to us, provide for a right to file representations till the moment the proposals are actually taken up for final decision. There must necessarily be an interval between the last moment for filing the representations and the final decision, the length of the interval depending upon the nature of the representations, the necessity for deliberations on such representations, the time taken for the proceedings of the Advisory Board and the period that the Government would usually take for reaching a final decision on such matters. The fact that the final notification fixing or revising the minimum wages or the decision of the Government is made on a date subsequent to the specified date does not by itself give any right to any person likely to be affected by the proposal to claim that he is, as of right, entitled to file the representation till the last moment." (Emphasis added)

44. It is further doubtful the power exercise herein is at all conditional legislation. On the other hand, the nature of power vested with the State Government is only delegated legislation. Therefore, if the objective consideration of legislation are satisfied, than the Government by following the statutory prescription can notify an establishment.

45. The petitioners cannot be heard to contend as there was only gazette notification and that they did not have any notice, is also not relevant. The ESI Act is not like the Land Acquisition Act where Section 4(1) notification is not only gazetted, but also published in a prominent place in the locality as well as in two newspapers having wide circulation in that area. Each legislation has to be seen only in the context in which it has been made. No other legislation can be telescoped into  another legislation for the purpose of deciding the vires of that law. Hence that objection must also fail.

46. The other argument that aided educational institutions are exempted is discriminatory and violative of Article 14 of the Constitution also cannot be a valid objection and they stand a class apart. First of all, in theoretical term "employee" of an educational institution is more or less on par with the employees of Government institutions and also in respect of conditions of service including health, insurance. Therefore, it is a valid classification not hit by the mischief of Article 14. It is also to be noted that the proviso to Section 1(4) of the Act itself exempts an establishment belonging to or under the control of the Government whose employees otherwise are in receipt of benefits substantially similar or superior to the benefits provided under the Act. Hence they are exempted from the purview of the Act. Therefore, the statute itself contemplates exempting  the establishment owned by the Government from the purview of the Act with a rider that those employees must receive substantially similar or superior benefits provided under the Act. The same conditions are also available to a private employer for the purpose of getting exemption in terms of the provisions available under Chapter VIII of the ESI Act.

47.As to whether an aided educational institution can also be said to be falling under the definition of "establishment" belonging to or under the control of the Central or State Government came to be considered in the context of similar provisions under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 by the Supreme Court vide its judgment in Regional Provident Fund Commissioner Vs. Sanatan Dharam Girls Secondary School and Others reported in 2007 (1) SCC 268. The Supreme Court while construing  similar definition provided under Section 16(1)(b) of the said Act in relation to aided schools, in paragraphs 26 to 29, 31,32 and 35 held as follows:

"26.Section 16(1)(b) of the EPF Act, 1952 provides as under:

'16. (1) This Act shall not apply

(a)        *          *          *

(b) to any other establishment belonging to or under the control of the Central Government or a State Government and whose employees are entitled to the benefit of contributory provident fund or old age pension in accordance with any scheme or rule framed by the Central Government or the State Government governing such benefits; or

(c)-(e)  *          *          *

27. In order to be covered under the exception to the EPF Act, 1952 stated above, the following two conditions have to be satisfied by the establishment seeking to be exempted from the provisions of the EPF Act, 1952:

(1) it must be an establishment belonging to or under the control of the Central Government or a State Government, and

(2) it must be an establishment whose employees are entitled to the benefit of contributory provident fund or old age pension in accordance with any scheme or rule framed by the Central Government or the State Government governing such benefits.

28. We heard the parties in detail. The submissions made by the learned counsel appearing for the respondents merit acceptance. It is not in dispute that the respondent institutions have been paying the provident fund dues to the State Government in accordance with the scheme framed by the State Government under the State Act and thus the employees of the respondent institutions are entitled to the benefit of the provident fund. By the orders impugned by the respondent institutions, the State Government has sought to transfer the balance standing to its credit to the Regional Provident Fund Commissioner. Thus it is clear that the respondent institutions have been paying in accordance with the scheme and there is no grievance with regard to the same.

29.In respect to the contention of the respondent that the establishment belonging to or under the control of the Central Government or a State Government, it was submitted that the establishments must either be (a) belonging to, or (b) under the control of the Central Government or the State Government. In our view, the two words used in the said section have different connotations. The words 'belonging to' signify ownership i.e. the Government-owned institutions would be covered under the said part and the words 'under the control of' signify control other than ownership since ownership has already been covered under the words 'belonging to'. It must also be noted that the two words are separated by the word 'or' and therefore these two words refer to two mutually exclusive categories of institutions. While the institutions 'belonging' to the Central or the State Government would imply the control of the State but the privately-owned institutions can be 'under the control of' the Government in various ways.

31.The State Government also exercises administrative control over the institution. Section 17 deals with the manner of recruitment and Section 18 deals with the procedure by which the employees may be removed or dismissed or reduced in rank. Section 28 permits the State Government to prescribe the code of conduct of the employees and Section 29 enjoins upon the institutions not to give to its employees a pay lesser than the scales of pay and the allowances paid to similar categories of the State Government.

32. In our view, the State Act is a complete code in itself with regard to the educational institutions and the State Government exercises substantive control over the institutions even though the institutions are not 'owned' by it. The word 'control' has not been defined under the EPF Act, 1952. 

35. We further observe that the State Government has the power of superintendence or the authority to direct, restrict or regulate the working of the educational institutions. It was, therefore, submitted that the institutions had satisfied both Conditions (1) and (2) mentioned above and as such they would fall within the exception contained under Section 16(1)(b) of the EPF Act, 1952."

Hence it can be safely held that there are any discrimination in leaving out the aided institutions for the purpose of the notification.

48.Though it was stated by the petitioner that within the aided educational institutions, there are self financing courses conducted by them and for which staff are employed and that they may not receive similar benefits, it must also be noted that there are no pleadings to that effect in the present writ petitions. Even otherwise, the petitioners cannot said to be aggrieved parties. If those employees employed in the aided institutions do not have similar benefits, as and when those employees make grievance, it is always open to the State Government to issue appropriate notification covering even those employees who do not have similar or superior benefits given under the ESI Act in respect of those institutions. On this ground, the impugned notification cannot be invalidated.

49. Even assuming as held by the T.M.A. Pai's case (cited supra), carrying on educational institution is an "occupation" covered by Article 19(1)(g). Article 19(6) do not prevent the State from making any law in the interest of general public and impose reasonable restrictions on the exercise of the right conferred by the sub clause. Providing health care and disablement benefits to the employees engaged by the private entrepreneur is the concern of the Government and mandated by Chapter IV of the Constitution. It cannot be said to be an unreasonable restriction on the right of the employer to carry on his trade or occupation as the case may be.

50. The fact that contributions payable towards ESI was not conceived while fixing fee structure in respect of private educational institutions and therefore, the present notification imposing unreasonable burden on them cannot be accepted as any legal plea. First of all, the contribution payable in terms of Rule 51 as noted elsewhere is only fraction of expenditure incurred by any institution. Secondly, the wage ceiling imposed for covering number of employees by the impugned notification will minimise the percentage of total number of work force in the establishment. The petitioners are making mountain out of mole hill and are making imaginary pleas, which are not based upon factual foundation. Even if there are more number of work force, granting health care including disablement benefits on them is a constitutional imperative which will have to be extended either by the employers themselves or by a law made by the State as mandated by Part IV of the Constitution. It is only in cases where an employer pleads that he has already extended the said benefits, an exemption provision conceived under the Act. Therefore, this court is not inclined to accept the submissions made by the petitioners in this regard.

51.Though the counsel for the respondent State and the Standing Counsel for the ESI contended that writ petitions at the instance of the Association of private schools and college management are not maintainable and also referred to certain decisions and the same was also countered by Mr.A R. L. Sundaresan, learned Senior counsel appearing for the petitioner in W.P.No.4722 of 2011, it is unnecessary to go into the said issue. Because in W.P.Nos.2872 and 5084 of 2011, the petitioners are individual colleges and in respect of those two writ petitions, the legal questions raised will have to be gone into. Hence this Court is not willing to undertake an exercise to reject the cases of Associations, who are before this court. That issue can be relegated to a future occasion. The merits of the contentions have already been dealt with in these writ petitions.

52. But at the same time, it must be noted that since the petitioners seek to challenge the impugned notification which are in favour of their employees and in none of the writ petitions, employees who are to be benefited by the application of the ESI Act have been made as parties. Hence, these writ petitions are liable to be rejected on that ground also.

53. The Supreme Court in the context of exclusion of the ESI Act in its application to the employees clearly stipulated that in such cases, the employees should be made either individually or in a representative capacity as parties to such proceedings without which the court cannot adjudicate such issue. Reference was made to a judgment of the Supreme Court in Fertilizers & Chemicals Travancore Ltd. v. ESI Corpn., reported in (2009) 9 SCC 485. The following passages found in paragraphs 5 to 9 may be usefully extracted below:

"5. It may be noted that in its petition before the Employees' Insurance Court, the appellant herein only impleaded Employees' State Insurance Corporation and the District Collectors of Alleppey, Palaghat and Cannanore as the respondents but did not implead even a single workman as a respondent. Labour statutes are meant for the benefit of the workmen. Hence, ordinarily in all cases under labour statutes the workmen, or at least some of them in a representative capacity, or the trade union representing the workmen concerned must be made a party. Hence, in our opinion the appellant (petitioner before the Employees' Insurance Court) should have impleaded at least some of the persons concerned, as respondents.

6.The case of the appellant was that, in fact, none of the persons concerned was its employee and it was difficult to identify them. In this connection we may refer to Section 75(1)(a) of the Act which states that if any question or dispute arises as to whether any person is an employee of the employer concerned, or whether the employer is liable to pay the employer's contribution towards the said persons insurance, that is a matter that has to be decided by the Employees' Insurance Court. Hence, in our opinion, the person concerned has to be heard before a determination is made against him that he is not an employee of the employer concerned.

7. The rules of natural justice require that if any adverse order is made against any party, he/she must be heard. Thus if a determination is given by the Employees' Insurance Court that the persons concerned are not the employees of the petitioner, and that determination is given even without hearing the persons concerned, it will be clearly against the rules of natural justice. It may be seen that Section 75 of the Act does not mention who will be the parties before the Insurance Court. Since the determination by the Insurance Court is a quasi-judicial determination, natural justice requires that any party which may be adversely affected or may suffer civil consequences by such determination, must be heard before passing any order by the authority/court.

8. In our opinion, wherever any petition is filed by an employer under Section 75 of the Act, the employer has not only to implead ESIC but has also to implead at least some of the workers concerned (in a representative capacity if there are a large number of workers) or the trade union representing the said workers. If that is not done, and a decision is given in favour of the employer, the same will be in violation of the rules of natural justice. After all, the real parties concerned in labour matters are the employer and the workers. ESI Corporation will not be in any way affected if the demand notice sent by it under Sections 45-A/45-B is quashed.

9. It must be remembered that the Act has been enacted for the benefit of the workers to give them medical benefits, which have been mentioned in Section 46 of the Act. Hence the principal beneficiary of the Act is the workmen and not ESI Corporation. ESI Corporation is only the agency to implement and carry out the object of the Act and it has nothing to lose if the decision of the Employees Insurance Court is given in favour of the employer. It is only the workmen who have to lose if a decision is given in favour of the employer. Hence, the workmen (or at least some of them in a representative capacity, or their trade union) have to be necessarily made a party/parties because the Act is a labour legislation made for the benefit of the workmen."

54. The very same judgment came to be subsequently followed by the Supreme Court in ESI Corporation v. Bhakra Beas Management Board, reported in (2009) 10 SCC 671. The following passage found in paragraph 5 may be reproduced below:

"5. Neither the workers of Respondent 1 nor any one of them in representative capacity were impleaded either before the Employees' State Insurance Court or before the High Court. In our opinion, this is in violation of the principles of natural justice."

55. In the light of the above factual matrix and the legal precedents, there is no case made out by the writ petitioners. Hence all the writ petitions will stand dismissed. However, there will be no order as to costs. Consequently, connected miscellaneous petitions stand closed. 

vvk

To

1.The Principal Secretary to Government,
The State of Tamil Nadu,
Labour and Employment Department,
Fort St. George,
Chennai-600 009.    

2.The Assistant Director (Inspection),
Employees' State Insurance Corporation,
1897, Trichy Road,
Panchdeep Complex,
Ramanathapuram, Coimbatore-641 045.

3.The Regional Director,
Employees' State Insurance Corporation,
"Panchdeep", Sterling Road,
Nungambakkam,
Chennai-600 034.    

4.The Additional Commissioner and Regional Director,
Employees' State Insurance Corporation,
143, Sterling Road,
Nungambakkam,
Chennai 600 034