2012 (11) TMI 1317 - HC - Indian Laws

Writ petitions Challenging the liability of Nalco (Project) on non-compliance with the provisions of Employees' State Insurance Act, 1948 (ESI Act), 1948 and Regulations framed therein until the ESI Dispensary functions effectively and starts parallel service to such Contract Labourers - The petitioner (NALCO) manages some of its work in the Project establishment through Contractors by way of tender works and at present its project establishment has contract labourers. Such works are generally conducted through tender process to different Contractors and as per conditions the Contractors used to have their own E.S.I. Code as well as P.F. Code and under the terms of contract they are bound to follow the statutory provisions and responsibility of NALCO comes only when such contractors fail in undertaking such statutory obligations. NALCO has its own hospital at all its units. The hospitals of NALCO are providing the hospital benefits only to its regular employees and providing medical facility to the Contractors' workers as per the settlement, the Management of NALCO entered into a settlement with the Contractors Association representing the Contractors working and the Alumina Mazdoor Sangh representing such workmen on 26.02.2007. Under Clause-3 of the said settlement the NALCO Management has agreed to provide medical allowance @ 4.75% of the earned wages to the contract labourers w.e.f. 01.02.2007 and to continue such facilities till the workmen are covered under the E.S.I. Scheme. The said settlement even though was operative up to 25.02.2008, but the condition as narrated above is allowed to continue as on date and all the contractors workers are being paid by their employer the aforesaid benefits every month and their employer used to get the same reimbursed from NALCO. HELD THAT - The petitioner-employer has not paid his own contribution and the employee's contribution. This is a clear case of violation of statutory provision. The plea of the management that the ESI authorities have not established the ESI Hospital providing facilities to the contractor labourers cannot exonerate the employer from discharging its statutory obligation of payment of the employer's contribution and employee's contribution which has no relation with the benefit to be provided by the Corporation to the employees under the Employees' State Insurance Act. all the pleas taken by the petitioners not to discharge its statutory obligation are not legally sustainable. Therefore, The petitioner-employer is bound to discharge its statutory obligation under the E.S.I. Act and cannot impose any condition which is not provided under the statute to discharge its statutory obligation. To insist implementation of the provisions of ESI Act and scheme framed therein until the ESI Dispensary functions effectively and starts parallel service to such Contractor Labourers cannot be granted to the petitioner. It may be noted that the benefit provided under the ESI Act is not confined to hospital facility; the benefit covers to sickness, maternity, employment injury etc. The notices challenged by the petitioners in the present writ petitions, are all show cause notices. It does not appear that show cause notices have been issued by opposite parties without having authority of law or without having jurisdiction.the petitioners have approached the Employees' State Insurance Court under Section 75 of the ESI Act, 1948. In the above premises, it is not a fit case where interference of this Court in exercise of its extraordinary jurisdiction under Article 226 of the Constitution of India is called for. Thus, this Court is not inclined to entertain the writ petitions. Accordingly, both the writ petitions are dismissed.

Summary

Issues Involved:
1. Whether the petitioner-management can impose conditions not provided under the statute to discharge statutory obligations.
2. Relationship between the contribution made by the employer and employee and the benefits availed by the employees.
3. Validity of suspending statutory provisions based on settlements between management and union representatives.
4. Issuance of writ of mandamus to prevent implementation of ESI Act provisions until ESI Dispensary functions effectively.

Detailed Analysis:

Issue 1 & 2: Statutory Obligations and Relationship Between Contributions and Benefits
The court addressed whether the petitioner-management can impose conditions not provided under the statute to discharge statutory obligations and the relationship between contributions made by the employer and employee and the benefits availed by the employees. The Employees State Insurance Act, 1948 mandates that the employer is liable to pay both the employer's and employee's contributions. The Supreme Court in E.S.I.C. v. C.C. Santhakumar emphasized that the scheme depends on contributions from both the employer and employee, and non-payment constitutes a statutory violation. The court reiterated that the employer's obligation to contribute is independent of the benefits provided by the ESI Corporation, as established in Employees' State Insurance Corpn. v. M/s. Harrison Malayalam Pvt. Ltd. The court held that the petitioner-employer must discharge its statutory obligations without imposing any additional conditions.

Issue 3: Suspension of Statutory Provisions Based on Settlements
The court examined whether settlements between management and union representatives can suspend statutory obligations. It was held that any settlement cannot override statutory provisions. The court referenced the Hon'ble Supreme Court's position that statutory obligations under the ESI Act cannot be nullified by any settlement, emphasizing that the duty to deposit contributions is mandatory once the establishment is covered by the Act.

Issue 4: Issuance of Writ of Mandamus
The petitioners sought a writ of mandamus to prevent the implementation of the ESI Act provisions until the ESI Dispensary functions effectively. The court denied this request, stating that the benefits under the ESI Act are not limited to hospital facilities but include sickness, maternity, and employment injury benefits. The court noted that the show-cause notices issued were within the authority and jurisdiction of the ESI authorities and did not warrant interference at this stage.

Conclusion:
The court concluded that the petitioner-employer must comply with the statutory obligations under the ESI Act without imposing additional conditions. Settlements cannot suspend statutory obligations, and the writ of mandamus to prevent the implementation of the ESI Act provisions was denied. The court dismissed the writ petitions, emphasizing that show-cause notices issued by the ESI authorities were valid and within their jurisdiction.