IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 5138-40/2007
ZUARI CEMENT LTD. ..Appellant
Versus
REGIONAL DIRECTOR
E.S.I.C. HYDERABAD & ORS. ..Respondents
J U D G M E N T
R. BANUMATHI, J.
These appeals are preferred against the judgment dated
21.09.2007 passed by the High Court of Andhra Pradesh allowing Civil
Miscellaneous Appeals and thereby setting aside the order of ESI Court
granting exemption to the appellant from the operation of Employees State
Insurance Act, 1948 (for short ‘the Act’).
2. Brief facts which led to the filing of these appeals are as
under:- The appellant is engaged in the business of manufacture and sale of
cement situated at Yerraguntla in Cuddapah District. The said area was
brought under the purview of ESI Scheme with effect from 1.03.1986. The
Government of Andhra Pradesh granted exemption to the appellant-cement
factory from the operation of the Act by various orders for the period from
1.03.1986 to 31.03.1993. The State Government rejected appellant’s
application for exemption for the period from 1.04.1993 to 31.03.2001.
Following rejection of claim for exemption, the Regional Director, ESI
Corporation, issued various demand notices cumulatively demanding a sum of
Rs. 65,38,537/- towards contributions for the period from 1.04.1993 to
31.03.1999. Challenging the order of appropriate government rejecting
its claim for exemption and also challenging the demand notices, the
appellant filed number of writ petitions before the High Court. The High
Court disposed of those writ petitions with direction to the appellant to
approach the ESI Court constituted under Section 74 of the Act. The
appellant filed the review petition before the High Court, interalia,
praying to remit the matter back to the government to rehear the
representation of the appellant-company pertaining to its exemption of ESI
Scheme under Section 87 of the Act for the period from 01.04.1993 to
31.03.1999 by affording personal hearing to the appellant. The review
petition was dismissed observing that the appellant has an alternative
remedy before the ESI Court constituted under Section 74 of the Act and
therefore the question of remanding the matter back to the State Government
does not arise.
3. The appellant again filed number of writ petitions before the
High Court expressing apprehension that ESI Court may not have the power to
grant the relief of exemption from the scheme of the Act and therefore
prayed that the appropriate government be directed to consider the issue of
exemption by personal hearing to the appellant and by conducting an
inquiry. However, vide order dated 11.10.2001 those writ petitions were
disposed of holding that ESI Court has jurisdiction to decide the issue and
all questions including the applicability of the Act can be raised before
the ESI Court. The appellant then approached the ESI Court, Hyderabad under
Section 75(1)(g) of the Act challenging the demand notice. The ESI Court
appointed an Advocate Commissioner to submit a report as to the medical
benefits made available to the workmen in the industry. An affirmative
report was filed by the Court Commissioner stating that appellant is
providing all the due benefits. On the basis of the report, vide Order
dated 18.10.2004, the petitions filed by the appellant as well as by the
workmen union were allowed and the ESI Court granted future exemption to
the appellant from the coverage of the ESI Scheme and the ESI Court also
set aside the impugned demand notices for the period between 1993 to 2001
and the interest thereon. Assailing the said order, the ESI Corporation
filed appeal before the High Court contending that ESI Court does not have
power under Section 75 of the Act and it is only the appropriate government
which has got the power under Section 87 of the Act to exempt anyone from
the application of the Act. By the impugned judgment dated 21.09.2007, the
High Court allowed the appeals of the Corporation holding that ESI Court
does not have the power to grant exemption under Section 75(1)(g) of the
Act. In these appeals, the appellant assails the correctness of the above
judgment.
4. Mr. Debal Kumar Banerji, learned Senior Counsel for the
appellant contended that the appellant approached the ESI Court pursuant
to the directions of the High Court issued in different writ petitions that
the ESI Court has the jurisdiction to decide the issue of exemption and in
the second round of litigation, the High Court was not right in saying that
ESI Court has no jurisdiction. Learned Senior Counsel for the appellant
further contended that Section 75(1)(g) of the Act specifically empowers
the ESI Court to decide the matter which is in dispute between the
principal employer and the Corporation in respect of any contribution or
benefit or other dues payable or recoverable under the Act and thus ESI
Court has been conferred wide jurisdiction under Section 75(1)(g) of the
Act to adjudicate any dispute under the Act and while so, the High Court
erred in observing that ESI Court has no jurisdiction. It was interalia
urged that the appellant has a full-fledged hospital with medical officers
and para medical staffs and has spent around 4.09 crores towards
establishment of hospital and the appellant is providing better medical and
other benefits to the workers than available under the Act and considering
those aspects, ESI Court rightly directed grant of exemption and set aside
the demand notices and the High Court erred in reversing the order of the
ESI Court.
5. Mr. M.N. Krishnamai, learned Senior Counsel appearing for the
respondent-Corporation contended that as per Section 87 of the Act, only
the appropriate government can grant exemption under the Act and under
Section 75 of the Act, ESI Court has no jurisdiction to grant exemption and
since ESI Court has acted beyond its jurisdiction, High Court rightly
reversed the said order of ESI Court. It was contended that the
jurisdiction can be conferred only in accordance with the statute and
neither the order of the High Court nor the consent of the parties can
confer the jurisdiction in the ESI Court.
6. We have carefully considered the rival contentions and perused
the impugned judgment and also the order passed by the ESI Court and the
material placed on record. The appellant actually is paying the ESI
contribution from 1.04.1999. The dispute in these appeals, therefore,
pertains only to the period from 1.04.1993 to 31.03.1999.
7. Before adverting to the contention put forth by the learned
counsel appearing for the parties, it would be appropriate to refer to
Section 87 and Section 75(1)(g) of the Act which are relevant for
considering the various contentious points urged. The power to grant
exemption is specifically dealt with under Section 87 of the Act. Section
87 of the Act reads as follows:-
“87. Exemption of a factory or establishment or class of factories or
establishments.—The appropriate Government may by notification in the
Official Gazette and subject to such conditions as may be specified in
the notification, exempt any factory or establishment or class of
factories or establishment in any specified area from the operation of
this Act for a period not exceeding one year and may from time to time by
like notification renew any such exemption for periods not exceeding one
year at a time.”
A close perusal of Chapter VIII of the ESI Act i.e. Sections 87 to 91A of
the Act will show that only the appropriate government has been empowered
to exempt any factory or establishment or class of factories or
establishments in any specified area from the operation of the Act for a
period not exceeding one year and may from time to time renew such
exemption for a period not exceeding one year at a time. Under Section 89,
the appropriate Government shall not grant exemption under Section 87 or
Section 88 unless a reasonable opportunity has been given to the
Corporation to make any representation it may wish to make in this regard.
A combined reading of Sections 87, 88 and 89 would go to show that it is a
two tier consideration, namely, a factory or establishment as the case may
be, submits an application seeking exemption and the appropriate government
would scrutinize the application and afford an opportunity to the
Corporation and then grant an order of exemption or reject the same as the
case may be.
8. Section 75 of the Act deals with the matters to be decided by
the ESI Court constituted under Section 74 and the relevant provision of
Section 75(1)(g) of the Act reads as under:-
“75. Matters to be decided by the Employees’ Insurance Court. – (1) If any
question or dispute arises as to –
(a) to (ee)………
g) any other matter which is in dispute between a principal employer and
the Corporation, or between a principal employer and an immediate employer,
or between a person and the Corporation or between an employee and a
principal or immediate employer, in respect of any contribution or benefit
or other dues payable or recoverable under this Act, or any other matter
required to be or which may be decided by the Employees’ Insurance Court
under this Act. Such question or dispute subject to the provisions of sub-
section (2A) shall be decided by the Employees’ Insurance Court in
accordance with the provisions of this Act.”
A reading of the above would show that the question or dispute can be
adjudicated as is provided for in clauses (a) to (ee) of sub-section (1) of
Section 75. Section 75(1) (g) of the Act essentially deals with any other
matter/dispute between the employer and the Corporation or in respect of
any contribution or benefit payable or recoverable under the Act in respect
of an establishment covered by it. Section 75(1)(g) of the Act does not
speak of a dispute between the employer and the appropriate government
which only has got the plenary power to consider the question of grant of
exemption.
9. As per the scheme of the Act, the power to grant exemption is a
plenary power given to an appropriate government. It follows that the ESI
Court constituted under Section 74 of the Act has no jurisdiction to take
up the question of grant of exemption. The Court constituted under
Section 74 of the Act cannot decide such matters including the validity of
an exemption notification. The order granting or denying exemption is
certainly open to judicial review under Article 226 of the Constitution of
India. But the question of exemption under Section 87 cannot be raised
under Section 75 of the Act and the ESI Court constituted under Section 74
of the Act, cannot decide the legality or otherwise of an order relating to
exemption passed by the appropriate government.
10. Learned Senior Counsel for the appellant vehemently contended
that grant of exemption to a factory or establishment from the operation of
the Act falls within the jurisdiction of ESI Court under Section 75(1)(g)
of the Act which specifically empowers the ESI Court to decide any matter
which is in dispute between a principal employer and the Corporation in
respect of any contribution or benefit or other dues payable or recoverable
under the Act. It was submitted that only pursuant to the orders of the
High Court, the appellant approached the ESI Court and the ESI Court has
exercised its power to grant exemption on the basis of the orders of the
Division Bench of the High Court. It was submitted that ESI Corporation
submitted itself to the jurisdiction of ESI Court and while so, it cannot
turn round and raise objection as to its jurisdiction to consider the issue
of exemption and in support of his contention, learned Senior Counsel for
the appellant placed reliance upon the decision of this Court in Sohan
Singh & Ors. vs. G.M. Ordnance Factory & Ors., (1984) Supp. SCC 661.
11. While disposing the writ petitions, of course, the High Court
directed the appellant to approach the ESI Court constituted under Section
74 of the Act for the relief which the appellant had claimed in the writ
petitions. Notably, both the appellant as well as the ESI Corporation did
not challenge the order of the High Court but subjected themselves to the
jurisdiction of the ESI Court. In our view, neither the order of the High
Court nor the act of Corporation subjecting itself to the jurisdiction of
ESI Court would confer jurisdiction upon ESI Court to determine the
question of exemption from the operation of the Act. By consent, parties
cannot agree to vest jurisdiction in the Court to try the dispute when the
Court does not have the jurisdiction.
12. As discussed earlier, in terms of Section 87 of the Act, only
the appropriate government has the power to grant exemption to a factory or
establishment or class of factories or establishments from the operation of
the Act. In fact, the appellant-factory itself has obtained exemption from
the appropriate Government-State Government under Section 87 of the Act for
the period from 1986 to 1993. Likewise, the rejection of exemption was also
under Section 87 of the Act. While so, seeking the relief of declaration
from the ESI Court that the appellant is entitled to exemption from the
operation of the Act is misconceived. Contrary to the scheme of the
statute, the High Court, in our view, cannot confer jurisdiction upon the
ESI Court to determine the issue of exemption. ESI Corporation, of course,
did not raise any objection and subjected itself to the jurisdiction of the
ESI Court. The objection as to want of jurisdiction can be raised at any
stage when the Court lacks jurisdiction, the fact that the parties earlier
acquiesced in the proceedings is of no consequence.
13. The Employees Insurance Court is a tribunal specially
constituted for the purpose of deciding any controversy that may arise on
the matters enumerated in Section 75 of the Act. A reading of Section 75
of the Act would show that the ESI Court has full jurisdiction to decide
all the matters arising between the employer and the Corporation under the
Act. Section 75 of the Act sets out the matters to be decided by the ESI
Court. As per Section 75(1)(g) of the Act, ESI Court is empowered to
decide any matter which is in dispute between the employer and the
Corporation in respect of any contribution or benefit or other dues
payable or recoverable under the Act or any other matter required to be or
which may be decided by the ESI Court under the Act and such question or
dispute subject to the provisions of sub-section (2-A) shall be decided by
the ESI Court in accordance with the provisions of the Act. When
considered in the light of clauses (a) to (d) in Section 75 (1) of the Act,
the expression “any other matter” occurring in Section 75(1) (g) only means
any other dispute between an employer and corporation or a person and
Corporation pertaining to the contribution or benefit or other dues payable
under the Act or any other matter required to be decided by ESI Court under
the provisions of the Act. Grant or refusal of exemption by the
appropriate government cannot be said to be a dispute between the employer
and the Corporation. For grant or refusal of exemption, a specific
provision is prescribed under the Act, it cannot be brought within the
ambit of “any other matter” required to be decided by the Employees’
Insurance Court under this Act.
14. As per the scheme of the Act, appropriate government alone
could grant or refuse exemption. When the statute prescribed the procedure
for grant or refusal of exemption from the operation of the Act, it is to
be done in that manner and not in any other manner. In State of Jharkhand
and Others vs. Ambay Cements and Another, (2005) 1 SCC 368, it was held
that “It is the cardinal rule of interpretation that where a statute
provides that a particular thing should be done, it should be done in the
manner prescribed and not in any other way”. In Babu Verghese and Others
vs. Bar Council of Kerala and Others, (1999) 3 SCC 422, it was held as
under:
“31. It is the basic principle of law long settled that if the manner of
doing a particular act is prescribed under any statute, the act must be
done in that manner or not at all. The origin of this rule is traceable to
the decision in Taylor v. Taylor, (45 LJCH 373) which was followed by Lord
Roche in Nazir Ahmad v. King Emperor, (AIR 1936 PC 253) who stated as
under:
“[W]here a power is given to do a certain thing in a certain way, the thing
must be done in that way or not at all.”
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32. This rule has since been approved by this Court in Rao Shiv Bahadur
Singh v. State of V.P., (AIR 1954 SC 322 and again in Deep Chand v. State
of Rajasthan (AIR 1961 SC 1527). These cases were considered by a three-
Judge Bench of this Court in State of U.P. v. Singhara Singh (AIR 1964 SC
358) and the rule laid down in Nazir Ahmad case (AIR 1936 PC 253) was again
upheld. This rule has since been applied to the exercise of jurisdiction by
courts and has also been recognised as a salutary principle of
administrative law.”
15. Where there is want of jurisdiction, the order passed by the
court/tribunal is a nullity or non-est. What is relevant is whether the
Court had the power to grant the relief asked for. ESI Court did not have
the jurisdiction to consider the question of grant of exemption, order
passed by the ESI Court granting exemption and consequently setting aside
the demand notices is non-est. The High Court, in our view, rightly set
aside the order of ESI Court and the impugned judgment does not suffer from
any infirmity warranting interference.
16. Since the order passed by the ESI Court is a non-est, which
was rightly set aside by the High Court, we are not inclined to go into
the merits of the appellant’s contention that they have a full-fledged
hospital and are providing various medical facilities and better health
schemes to its employees and their family members.
17. In the result, all the appeals are dismissed. In the facts and
circumstances of the case, we make no order as to costs.
.……………………J.
(T.S. THAKUR)
…………………….J.
(R. BANUMATHI)
New Delhi;
July 2, 2015