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Tuesday, July 7, 2015

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’).= 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.

                                                                  REPORTABLE

                        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





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