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TMI Blog2006 (7) TMI 580X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.6,500/- instead of the existing wage ceiling of Rs.3,000/- p.m. Various Employees Associations challenged the Notification. They prayed for quashing the Notification and also, in some of the appeals, for declaring the Amended Rules as ultra vires. Petitions were filed mostly by the Employees Union both in the original side and the appellate side of the High Court at Calcutta. A learned Single Judge of the High Court disposed off all the writ petitions by a common judgment and order, by quashing the amendment of the Rules of 1950 with the result that there was no enhancement of wage ceiling. About 63 appeals were filed by the Corporation as well as by the Union of India against that part of the order by which the amendment was quashed. No appeals and/or cross appeals were filed by any of the writ petitioners. Therefore, the Division Bench of the High Court, by the impugned common judgment, allowed the appeals and set aside the judgment of the learned Single Judge of the High Court. The High Court held that the enhancement could not be termed as ultra vires for the purpose of the Act or being inconsistent therewith as held by the learned Single Judge. The High Court further held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of wages has been upheld by various High Courts and also by this Court inasmuch as that with the upward revision more employees will be eligible to the benefits under the Act and they will have to make a little contribution @ 1.75% from their wages every month. The employees share is to the extent of 4.75% p.m. under Rule 51 of the Employees State Insurance (Central) Rules, 1950. The law is also settled to the effect that once interim stay is granted with regard to the operation of the new law, and the writ petition is dismissed subsequently, the operation of the law will relate back to the original date of enforcement and, therefore, there is nothing in this case to unsettle the settled law which would have effect on past transactions and, therefore, it is not necessary to bring in the principle. Moreover, in this case, the Act is made applicable for giving medical benefits to all those employees only, whose wages do not exceed the prescribed limit notified by the Central Government as stated above. In this case, there was no dispute about the applicability of the Act but the question was about the ceiling limit. The reason, as pointed out above, is to give benefits to more numb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... poration and for that purpose a share from the wages of the employees is not deducted and for this purpose there is no limit with regard to the wages earned by the insured employees. Mr. Rajan also made reference to the principles laid down by this Court in the case of Employees' State Insurance Corpn. vs. All India ITDC Employees' Union and Others, (2006) 4 SCC 257 wherein this Court had accepted, on principle, the submission of the Corporation that it is not open to the High Court that the Notification has to operate prospectively. It is submitted that the law in this respect has been reiterated by this Court in the said ruling of this Court and the appellant also relies on the said ruling which is the latest judgment. According to Mr. Rajan the amounts that are collected by the Corporation goes into the fund maintained under Section 26 of the Act and the same is utilized as contemplated under Section 28 of the Act. It is laid down in the case of Hotel Kalpaka International (supra) as under: "Under Section 26 of the Act all contributions are paid into a common fund. Such a fund will have to be administered for the purposes of the Act as indicated under Section 28. Therefore, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... averi, Mr. Pradeep Misra, Mr. Vairav Gaggar, Mr. Ghanshyam Joshi, learned counsel and Mr. R. Venkatramani, learned senior counsel for their respective parties. M/s Jardine Henderson Ltd. submitted a statement of expenditure for medical expenses incurred by the Company on the staff, during the period from the year 2001-2004. Likewise, other respondents have also filed statement of submissions in the form of affidavit on behalf of their parties. Lagan Jute Machinery Company Limited respondent No.14 in SLP (Civil) No. 19454 of 2004 in APO No. 80 of 2001 submitted its submissions. It was submitted by learned counsel for the said Company that the Company was prevented by orders of Court from making deductions for ESI contribution from wages and salaries of the employees. These orders were passed in writ petitions filed by the Employees Unions and in view of the injunction order dated 22.05.1997 passed by the Calcutta High Court, the Company was prevented from deducting ESI contribution and thus was prevented from making any payment to ESI. In order to provide medical facilities and benefits to the employees, the Company entered into a Settlement Agreement with the Employees Union under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Rules, 1950 which is given below. Rule 51 of the Employees' State Insurance (Central) Rules, 1950 is as follows: "Rates of contribution- The amount of contribution for a wage period shall be in respect of- (a) employer's contribution, a sum (rounded to the next higher multiple of five paise) equal to [four and three-fourth per cent] of the wages payable to an employee; and (b) employee's contribution, a sum (rounded to the next higher multiple of five paise) equal to [one and three- fourth per cent] of the wages payable to an employee" In view of interim stay order which continued for almost seven years, the employers were restrained from making any deduction. Whereas, the employers continued to provide satisfactory medical benefits to its employees. The said interim order was not appealed or challenged by the Corporation nor was it stayed during the pendency of the appeal before the Division Bench. It is further submitted that with the passage of time several employees would have left the organization and to deduct the employees contribution from their salary is not workable. In the matter of Rajesh D. Darbar & Ors vs. Narasingrao Krishnaji Kulkari & Ors., (2003) 7 SCC 219, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essary to resort to any principle of prospective overruling, a view which was expressed in Narayanibai Vs State of Maharastra at p.470 and in Ashok Kumar Gupta Vs. State of U.P. In the latter case, while dealing with the "doctrine of prospective overruling", this Court said that it was a method evolved by the courts to adjust competing rights of parties so as to save transactions "whether statutory or otherwise, that were effected by the earlier law". According to this Court, it was a rule. "of judicial craftsmanship with pragmatism and judicial statesmanship as a useful outline to bring about smooth transition of the operation of law without unduly affecting the rights of the people who acted upon the law operated prior to the date of the judgment overruling the previous law." Ultimately, it is a question of this Court's discretion and is, for this reason, relatable directly to the words of the Court granting the relief." In the matter of Harsh Dhingra vs. State of Haryana & Ors., (2001) 9 SCC 550, this Court held as follows: "7. Prospective declaration of law is a device innovated by this Court to avoid reopening of settled issues and to prevent multiplicity of proceedings. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they move to get the order vacated and yet now they are claiming the contributions for the past period which was covered by the said interim order of the learned Single Judge. That will be an unjust enrichment by the Corporation at the cost of the employers. Learned counsel also cited the following decisions for invoking the doctrine of prospective overruling: Raymond Ltd. vs. M.P. Electricity Board, (2001) 1 SCC 534 Managing Director,ECIL vs. B. Karunakar,(1993) 4 SCC 727 (supra) Ashok Kr. Gupta vs. State of U.P., (1997) 5 SCC 201 Somaiya Organics Ltd. vs. State of U.P., (2001) 5 SCC 519 (supra) Sarwar Kumar vs. M. Agarwal, (2002) 4 SCC 147 In the light of the principles laid down in the aforesaid decisions with regard to the innovative concept of prospective overruling which are applicable also in matters arising out of statutory interpretation for the purpose of substantial justice in the exigencies of peculiar fact situations, the counsel requested this Court to uphold the decision of the Division Bench of the Calcutta High Court and that this Court in any event under Article 142 of the Constitution may make such order as may be warranted in the peculiar facts and circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also reimbursed to the employees. After noticing this report that the prayer for granting of exemption under Section 87 of the Act for the permanent employee was granted and that this order has also been accepted by the Corporation. The factual situation that emerges according to Mr. K.V.Viswanathan, therefore, are as under: 1) Today CESC Ltd. pursuant to the application dated 03.02.1997 stands exempted by order dated 03.08.2004 under Section 87 of the Act; 2) During the period from 1997-2003 because of operation of the injunction order, it was not able to deduct contribution and pay its contribution. Moreover, it extended medical facilities as directed by the interim order; 3) In the exemption application (page 86 of the paper- book at page 88) the medical benefits given by the company are set out. Mr. K.V. Viswanathan submitted that once a party is injuncted, then violating the order would result in party being hauled up for contempt. CESC Ltd., the respondent No.1 herein obeyed the orders and granted its own medical facilities. Order of injunction was passed since workers Union had obtained reliefs in similar writ petitions. CESC Ltd. did not get any interim order from whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... direction injuncting the employer from making contributions and deductions and the only order in that case was an order of stay. This can be distinguished from the present case as despite being an order of stay, the employer could have made contributions and deductions in the said case, however in the present case since there was a specific order injuncting the CESC Ltd. from making contributions and deductions such contributions and deductions could not have been made by the Respondent No.1. Moreover none of the circumstances which have been set out herein above were present in the said case as cited by the Corporation. Concluding his submission, learned counsel submitted that no case has been made out by the Corporation which warrants interference by this Court. Mr. Gaurab Kumar Banerjee, learned senior counsel appearing on behalf of respondent Nos. 6 & 7 in civil appeals (arising out of SLP (Civil) Nos. 20841-47 of 2004) Hindustan Lever Ltd submitted that, during the 7 years period under dispute and as a result of the High Court's order, the Company has spent far greater amount on the medical facilities to the 39 covered employees who would otherwise have been covered by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hem, so it cannot be made to bear the burden of their contribution with retrospective effect from the date of the notification towards their share of contribution. 4. To that extent, the order of the High Court is upheld. " Learned counsel further submitted that because of the interim/final order passed by the High Court, the Corporation has not rendered any service like medical benefits to the employees whose wages were above Rs.3,000/- but less than Rs.6,500/- p.m. Therefore, in absence of any quid pro quo for the said period of 7 years, no contribution can be claimed by the ESI either from the respondent-Company or from the employees especially, when no service/benefit was rendered to the concerned employees. Mr. Gaurab Banerji, learned senior counsel also made submissions on behalf of respondent No.4 Modern Food Industries Ltd. in SLP (Civil) No. 20861of 2004. He made similar submissions and cited the same authorities as others did. Mr. Rana Mukherjee, learned counsel appearing on behalf of respondent No.5, Engel India Machines & Tools (1987) Limited made the following submissions. He submitted that various labour Unions of different industries including that of respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2004, the Company's representative duly attended the hearing in connection with the Company's exemption application. It is stated that the Company has submitted the Comparative Table of Benefits given by the Company to its employees and benefits under the ESI scheme etc. However, no order has yet been passed or communicated by the Labour Department in regard to the respondent-Company's application for exemption. Learned counsel has also furnished the amount of medical expenses paid by the respondent- Company to its employees since 1996-97. Mr. C.K. Ganguli, learned counsel for the respondent in civil appeal (arising out of SLP (Civil) Nos. 20933-20939 of 2004 made submissions on behalf of Hahnemann Publishing Company Ltd. The learned counsel furnished the details about the medical allowances given to the employees and submitted that if the liability is made retrospective, the employer will not be able to recover the contributions from the concerned employees and the employer will have to make both employers and employees contribution. Notwithstanding the fact that the company has incurred huge expenditure for granting liberal medical benefits as coverage of such employees since th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eration of the ESI Act for further period upto September, 2006. In view of the above, learned counsel submitted that the special leave petition Nos. 20938 and 39 of 2004 be dismissed against respondent No. 21. Mr. P. Gaur, learned counsel for respondent No.4 in S.L.P. No. 20840 of 2004 (Siemens Workers Union & Others) submitted that this Court will be reluctant to interfere with the discretion exercised by the High Court. In this connection, he cited Municipal Corporation of Faridabad vs. Siri Niwas, (2004) 8 SCC 195. He also submitted that it is not the case of the Corporation that the said exercise of jurisdiction is irrational. In Union of India vs. Murugan Talkies (supra) similar relief granted by the High Court was not interfered with by this Court. Therefore, he submitted that the discretion exercised by the High Court is justified in view of various facts and circumstances and thus prayed that the appeal filed by the Corporation be dismissed. We have given our thoughtful consideration to the questions and issues involved in this matter. We have also perused the pleadings, the order passed by the learned Single Judge and the orders passed by the Division Bench and the writt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of the facilities, non-deduction of contribution from the members of the union for several years and provision of medical relief by the Management. The High Court's direction for deduction of contribution w.e.f. the date of the judgment in our view, is perfectly justified. This apart, the members of the union included casual, temporary contractual and it will be practically impossible to find each and every member of the union to recover their contribution for the past several years and in fact some of the workmen who would have been the employees during all these years would have left, expired etc. and on account thereof also their contribution cannot be recovered. The order passed by the High Court, in our opinion, is perfectly justified in view of the peculiar facts and circumstances of the case. The High Court, in our opinion, while disposing of the matter has taken a just, pragmatic, fair and judicious view after considering all the equities and facts and circumstances of the case. Extreme hardship might have been caused to both the employer as well as the employee since no medical facilities admittedly have been availed by the workmen from ESIC and the employer had provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , this Court exercised its discretionary jurisdiction under Article 136 of the Constitution of India which need not be exercised in a case where the impugned judgment is found to be erroneous if by reason thereof substantial justice is being done. [See S.D.S. Shipping Pvt. Ltd. v. Jay Container Services Co. Pvt. Ltd. & Ors. [2003(4) Supreme 44]. Such a relief can be denied, inter alia, when it would be opposed to public policy or in a case where quashing of an illegal order would revive another illegal one. This Court also in exercise of its jurisdiction under Article 142 of the Constitution of India is entitled to pass such order which will do complete justice to the parties. 44.--------------------------------- 45. This Court said that this principle applies to all kinds of appeals admitted by special leave under Article 136, irrespective of the nature of the subject-matter. So even after the appeal is admitted and special leave is granted, the appellant must show that exceptional and special circumstances exist, and that, if there is no interference, substantial and grave injustice will result and that the case has features of sufficient gravity to warrant a review of the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the facts of the case. Likewise, the judgment cited by learned counsel for the appellant-Corporation are in a different context altogether and the ratio of the said cases are not applicable to the present case. This apart the maxim of equity which is founded upon justice and good sense was applied as well as other maxim: lex non cogit ad impossibilia (i.e. the law does not compel a man to do what he cannot possibly perform) The applicability of the aforesaid maxim has been approved by this Court in Raj Kumar Dey and Others vs. Tarapada Dey and Others, (1987) 4 SCC 398 and Gursharan Singh and Others vs. New Delhi Municipal Committee and Others, (1996) 2 SCC 459 The ESI Act has enacted to provide for certain benefits to employees in case of sickness, maternity and employment injury. Under the scheme of the Act, function of the ESI Corporation is to derive insurance fund from the contribution from employees and workmen. The employer is entitled to recover workmen's share from the wages of the workmen concerned. It was argued by the respondent that the employer is providing better medical facilities to the workmen and, therefore, the object and purpose of the Act has been fully sa ..... 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