IN THE GAUHATI HIGH COURT (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)

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1 IN THE GAUHATI HIGH COURT (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH) Writ Petition (C) No.4121/ All Assam English Medium Schools' Association, A Society Registered under the Society Registration Act, 1860 Having its office at Modern English School, Kahilipara, Guwahati-19 & Represented by its President Sri Mritunjoy Sukla. 2. Sri Mritunjoy Sukla Proprietor Cum Principal, Pragjyotish English Medium High School, Maligaon, Guwahati- 12. Petitioners. Versus 1 The State of Assam, Represented by the Chief Secretary to the Govt. of Assam, Dispur, Guwahati Commissioner & Secretary Govt. of Assam, Labour & Employment Department, Dispur, Guwahati Deputy Secretary Govt. of Assam Labour & Employment Department, Dispur, Guwahati A body corporate & represented by its Chairman. 5. Regional Director, Panchdeep Bhawan, Bamunimaidam, Guwahati Respondents. For the Petitioners: For the Respondents: Mr. SC Keyal, Advocate Mr. SK Ghosh, Advocate & Mr. SP Choudhury, Advocate. Mr. N. Upadhyay, Govt. Advocate & Mr. KK Nandi, Advocate. Writ Petition (C) No.6311/ All India Association of Catholic Schools. A Society Regd. under the Societies Registration Act, 1860, represented by Rev. Fr. Joseph Thelekkatt, Principal, Don Bosco School, Panbazar, Guwahati , As the Convenor of the Association in Assam. 2. Rev. Fr. Joseph Thelakkatt, Principal, Don Bosco School, Panbazar, Guwahati Petitioners. Versus 1. The State of Assam, Rep. by the Chief Secretary to the Govt. of Assam, Dispur, Guwahati -6. W.P. (C) No.4121/2009, W.P. (C) No.6311/2010, W.P. (C) No.5183/2012, Page 1 of 10

2 2. The Commissioner and Secretary. 3. The Dy. Secretary, 4. The Kotla Road, New Delhi, a body corporate and represented by its Chairman. 5. The Regional Director, Panchdeep Bhawan, Bamunimaidam, Guwahati The Dy Director, Panchdeep Bhawan, Bamunimaidam, Guwahati Respondents. For the Petitioners: Mr. S. Banik, Advocate Ms. B. Sarma, Advocate & Mr. P. Bhuyan, Advocate. For the Respondents: Mr. N. Upadhyay, Govt. Advocate, Mr. KK Nandi, Advocate & Mr. B. Sarkar, Advocate. Writ Petition (C) No.5183/ Little Flower School, Chapaguri, Bongaigaon, National Highway-31, Dist- Chirang, Assam, Represented by the Principal, Little Flower School, Chapaguri, Bongaigaon, National Highway-31, Dist- Chirang, Assam. 2. Sr. Arokia Mary, Principal, Little Flower School, Chapaguri, Bongaigaon, National Highway-31, Dist- Chirang, Assam. Petitioners. Versus 1. The State of Assam, Represented by the Chief Secretary to the Govt. of Assam, Dispur, Guwahati The Commissioner and Secretary, 3. The Deputy Secretary, 4. The Kotla Road, New Delhi, a body corporate and Rep. by its Chairman. 5. The Regional Director, Panchdeep Bhawan, Bamunimaidam, Guwahati The Dy. Director, Panchdeep Bhawan, Bamunimaidam, Guwahati The Asstt. Director (Authorised Officer) Employees' State Insurance Corporation, Regional Office Guwahati, Panchadeep Bhawan, P.O. Bamunimaidam, Ghy Respondents W.P. (C) No.4121/2009, W.P. (C) No.6311/2010, W.P. (C) No.5183/2012, Page 2 of 10

3 For the Petitioners: For the Respondents: Mr. S. Banik, Advocate & Ms. B. Sarma, Advocate. Mr. N. Upadhyay, Govt. Advocate & Mr. KK Nandi, Advocate. Writ Petition (C) No.4259/ Silchar Collegiate School, Ramkrishna Mission Road, Cachar, Silchar-3 2. Mr. Premangshu Paul Choudhury President, Managing Committee, Silchar Collegiate School, Ramkrishna Mission Road, Cachar, Silchar-3 3. Mr. Subash Chandra Paul, Head Master, Silcharr Collegiate School, Ramkrishna Mission Road, Cachar, Silchar-3. Versus 1 The State of Assam, Represented by the Chief Secretary to the Govt. of Assam, 2 Dispur, Guwahati Commissioner & Secretary to the Govt. of Assam, Labour & Employment Deptt, Dispur, Guwahati being represented by its Chairman, Guwahati Regional Director, Guwahati Recovery Officer, Guwahati -21. Petitioners. For the Petitioners: For the Respondents: Mr. SK Ghosh, Advocate, Mr. SP Choudhury, Advocate, Mr. G. Sarmah, Advocate and Mr. B. Kaushik, Advocate. Mr. N. Upadhyay, Govt. Advocate & Mr. KK Nandi, Advocate. Writ Petition (C) No.352/2013 Respondents. 1 Little Flower Higher Secondary School, Khalihamari, Dibrugarh, Dist- Dibrugarh, Assam, Represented by the Principal, Little Flower Higher Secondary School, Dibrugarh, Dist- Dibrugahr, Assam, Pin Sr. Victoria Nunes, Principal, Little Flower Higher Secondary School, Dibrugarh, Dist-Dibrugarh, Assam, Pin Petitioners. Versus W.P. (C) No.4121/2009, W.P. (C) No.6311/2010, W.P. (C) No.5183/2012, Page 3 of 10

4 1. The State of Assam, Represented by the Chief Secretary to the Govt. of Assam, Dispur, Guwahati The Commissioner and Secretary. 3. The Deputy Secretary, 4. The Kotla Road, New Delhi, a body corporate and represented by its Chairman. 5. The Regional Director, Panchdeep Bhawan, Bamunimaidam, Guwahati The Deputy Director, Panchadeep Bhawan, Bamunimaidam, Guwahati The Asstt. Director (Authorised Officer) Employees' State Insurance Corporation, Regional Office Guwahati, Panchadeep Bhawan, P.O. Bamunimaidam, Guwahati Respondents. For the Petitioners: For the Respondents: Mr. S. Banik, Advocate, Ms. B. Sarma, Advocate & Mr. SK Roy, Advocate. Mr. N. Upadhyay, Govt. Advocate & Mr. KK Nandi, Advocate. BEFORE HON BLE MR. JUSTICE HRISHIKESH ROY Date of hearing: & Date of judgment: JUDGEMENT AND ORDER (ORAL) Heard Mr. S.P. Choudhury, the learned counsel appearing on behalf of the petitioners in the WP(C) No.4124/2009 and WP(C) No.4259/2012. The learned Advocate Mr. S. Banik appears for the petitioners in WP(C) No.6311/2010, WP(C) No.5183/2012 and WP(C) No.352/2013. The respondent Employees' State Insurance Corporation and their Regional Director are represented by the learned counsel Mr. KK Nandi. The learned Govt. Advocate Mr. N. Upadhyay appears for the State respondents. 2. The petitioners espouses the interest of Private Schools and they challenge the notification dated , issued under Section 1(5) of the Employees' State Insurance Act, 1948 (hereinafter referred to as ' the ESI Act ), whereby the Act was extended to the educational institutions. Since common arguments were advanced from both sides, this judgment will dispose of all the five cases. W.P. (C) No.4121/2009, W.P. (C) No.6311/2010, W.P. (C) No.5183/2012, Page 4 of 10

5 3. The petitioners contend that the ESI Act was intended to cover the employees of only the industrial, commercial and agricultural establishments and application of the Act for the educational institutions is legally impermissible. According to the petitioners, the educational institutions are neither industrial nor commercial venture and therefore the extension of the Ac to such establishments in the State, is not justified. 4. The counsel for the All Assam English Medium Schools' Association contend that some of the member schools are providing superior benefits to their staff than what is envisaged under the ESI Act and therefore such schools should be kept out of the purview of the ESI Act. The instance of the Modern English School, Kahilipara is cited as a model employer providing better benefits to the school staff than those contemplated by the ESI Act. 5. The statement of objects and reasons of the ESI Act are read by the Counsel to submit that the benefits under the Act is intended to be provided for the workers in the industrial sector and the explanation other establishment, appearing in Sub-Section (5) of Section 1 of the ESI Act should be read as ejusdem generis with the industrial, commercial and agricultural establishments and it should not be extended for educational institutions. 6. The ESI Act was intended to provide certain benefits to employees in the event of sickness, pregnancy or employment injuries and at the first instance, the Act was made applicable to all factories other than seasonal factories. But extension of the Act to cover other establishment was also envisaged under Sub-Section (5) of Section 1 provision of the ESI Act. 7. The Assam Government notified its intention to apply the ESI Act to educational institutions initially through the notification dated But this defective notification was cancelled subsequently as it was issued without approval of the Central Government. Thereafter the appropriate notification was issued on with the approval of the Central Government, whereby the Assam Government declared its intention to cover the educational institutions within the ambit of the ESI Act. This was followed by the final notification issued on , which is the subject matter of challenge in the present proceedings. W.P. (C) No.4121/2009, W.P. (C) No.6311/2010, W.P. (C) No.5183/2012, Page 5 of 10

6 8. In Bangalore Water Supply & Sewerage Board vs. A. Rajappa, reported in (1978) 2 SCC 213, the Supreme Court noticed that an educational institution satisfies the triple test of systematic activity, cooperation between the employer and the employee and production of services and thus the Court declared that education in its institutional format is an industry. 9. The expression industry is defined under Section 2(j) of the Industrial Disputes Act, 1947 and although the Government through the Amendment Act 46 of 1982 proposed to exclude the educational institutions from the purview of the definition of industry, the necessary amendments are yet to be incorporated during the last 34 years. On the proposed amendment to exclude the educational institutions from the purview of the definition of industry, the Apex Court in the Union of India vs. Shree Gajanan Maharaj Sansthan reported in (2002) 5 SCC 44, noted the factors for which the Government was unable to amend the Industrial Disputes Act. Then the Supreme Court through its verdict quashed the direction given by the Bombay High Court to give effect to the provisions of the amending Act. Thus for the present litigation we have to proceed on the basis that educational institutions are industry, as was declared by the Apex Court, in Bangalore Water Supply (Supra) The placement of the words or otherwise after the words industrial, commercial or agricultural establishments in the Sub-Section (5) of Section 1 indicates that the Government is empowered to extend the ESI Act, to any other establishment or class of establishment. The implications of these words were examined in Bangalore Turf Club Limited vs. Regional Director, Employees' State Insurance Corporation, reported in (2014) 9 SCC 657 where the Apex Court observed as under - the meaning of the words or otherwise after the words industrial, commercial or agricultural establishments in Sub-Section (5) of Section 1 indicates that the Government can extend the ESI Act or any portion thereof to any other establishment or class of establishments. The genus lies in the words any other establishment or class of establishments. The three words industrial, commercial and agricultural represent a species. Since the legislature did not want to restrict the operation of the ESI Act of these three species, has used the catch words or otherwise In the same case, the Supreme Court also referred to the definition of the term establishment in various dictionaries for guidance or as an aid of construction of the term establishment. According to the Black s Law Dictionary, 7 th Edn. (1999), the term establishment means, inter alia : establishment n.. (2) An institution or place of business. According to Words and Phrases, Permanent Edn., Vol. 15, the term establishment has been held to mean, inter alia, the following : W.P. (C) No.4121/2009, W.P. (C) No.6311/2010, W.P. (C) No.5183/2012, Page 6 of 10

7 An establishment means a permanent commercial organization or a manufacturing establishment. Spielman v. Industrial Commission, NW p.4. An establishment is the place where one is permanently fixed for residence or business such as an office or place of business with its fixtures. Lorenzetti v. American Trust Co., F Supp p.139. According to Corpus Juris Secundum, Vol.LXXX, the term establishment has been explained as follows: Establishment.. More specifically, a fixed place where business is conducted, or a place where the public is invited to come and have its work done; an institution or place of business with its fixtures and organized staff; any office or place of business, with its fixtures, the place in which one is permanently fixed for residence or business; a permanent commercial organization, as a manufacturing establishment; the place of business or residence with grounds, fixtures, equipage, etc., with which one is fitted out; also that which serves for the carrying on of a business After noting the common parlance dictionary meaning of the word, the Supreme Court observed that establishment is a term which can have wide meaning. According to the Apex Court, the conventional definition of establishment, attributed to trade or commerce can t be wholly valid for constructing a social welfare legislation in a modern welfare State. Therefore it was opined that the test of finding out whether professional activity falls within the meaning of the expression establishment is whether the activity is systematically and habitually undertaken for production or distribution of the goods or services to the community with the help of employees in the manner of a trade or business in such an undertaking. If these criterions are satisfied by an organization it would come within the meaning of establishment for the purpose of the ESI Act. 11. In the context of applicability of the ESI Act to a printing press the Division Bench of Orissa High Court opined in Sundar Paper Box Co. vs. State of Orissa, reported in MANU/OR/0247/1977 that :-.. There is no dispute that petitioners press in an establishment. There is also no dispute that as per the definition of factory in Section 2(12) of the Act, Petitioners establishment would not be a factory. Mr. Mohanty for the petitioners has strenuously contended that the power under Section 1(5) of the Act cannot be so exercised as to bring into the fold of the Statute the establishments which are otherwise factories but are not strictly factories by the definition of the Act. It is claimed that such an action in fact amounts to a change of the definition in the Statute which is in excess of power in Section 1(5) of the Act. We see no force in such a contention. Reading Sub-Section (4) and (5) together, it is clear that the Act applies on its own force to factories answering the definition in Section 2(12) of the Act. Establishment is a wide term which is capable of embracing even a factory. The use of the words any other preceding establishment in Section 1(5) of the Act supports the view that a factory is also an establishment and an establishment which is not a factory in view of the definition, can be brought within the fold of the power to extend application of the Statute. 12. Likewise, in Maharishi ShikshaSansthan and Maharishi VidyaMandir vs. State of U.P. reported in 2009 Lab.IC (NOC) 350 (Alla.) it is held by the Allahabad High Court that the W.P. (C) No.4121/2009, W.P. (C) No.6311/2010, W.P. (C) No.5183/2012, Page 7 of 10

8 word otherwise being of wide amplitude covers all establishments including educational institutions. 13. When we apply the ratio of the above cases, the educational institutions can certainly be categorized under any other establishment of Section 1(5) of the ESI Act, as they satisfy the triple test of systematic activity, cooperation between the employer and the employee and production of services. 14. However the Apex Court in the State of U.P. vs. Jai Bir Singh reported in (2005) 5 SCC 1 noted that the definition of Industry given through judicial interpretation in the Bangalore Water Supply (supra) is causing impediments in bringing into force the Amendment Act, 1982 and therefore referred the issue on the expanded meaning of industry in the Industrial Disputes Act for re-consideration, by a larger bench. 15. In the recent decision in Delhi Gymkhana Club Limited vs. Employees State Insurance Corporation reported in (2015) 1 SCC 142, the Supreme Court observed that the ESI Act provides a kind of social security to the most vulnerable and deprived section of the society who are in constant need of protection, security and assistance. Moreover the social security system needs to be effective and constructive with wider coverage. The obligation of the Government to protect the working class from uncertain contingencies was also highlighted by the Court. Hence it can be said that The provisions of the ESI Act is intended to realize the State s obligation in safeguarding the rights provided under Part-IV of the Constitution. 16. While the Industrial Disputes Act operates in the field of industrial relation, the ESI Act is intended to protect the working class from uncertain contingencies in course of their employment. Of course the two Acts may apply generally to all employees but in the field of operation, the two enactments do not overlap and have mutually exclusive operational area. Therefore the applicability of the ESI Act with reference to its coverage at first instance to the employees in the industrial sector, can t be a correct mode of interpretation as the two Acts are not parimateria with each other. Hence the restrictive interpretation to confine coverage only to the three species i.e. Industrial, Commercial and Agricultural establishment in my opinion, would defeat the intended objection of the Act. Consequently such arguments of the petitioners must fail as otherwise, the words other establishment and otherwise W.P. (C) No.4121/2009, W.P. (C) No.6311/2010, W.P. (C) No.5183/2012, Page 8 of 10

9 occurring in the enabling section would be made redundant and such could not have been the legislative intent, for enactment of the Sub-Section (5) of Section 1 of the ESI Act. 17. When we proceed on the above basis, the application of ESI Act to cover educational institutions can t be faulted, although such institutions may not normally be bracketed in the category of Industrial, Commercial or Agricultural establishments. The word otherwise in Sub-Section (5) of Section 1 provides ample scope to cover all variety of establishments beyond the three identified species in the Section. Moreover if we see the beneficial effect of the ESI Act, the Court should strive to achieve the legislative objective and apply that interpretive exercise, which will extend the social security scheme under the ESI Act, to the vulnerable employees of the educational institutions. 18. Next we have to consider the merit of the representation of the All Assam English Schools Association addressed to the Regional Director, ESI Corporation. The representation said that the member schools have provided adequate medical reimbursement provision for the teachers and staff of the schools and in fact it was submitted that coverage under the ESI Act will result in lesser benefits for the school employees. To counter this, the respondents have averred on oath that a large number of educational institutes in the State have already accepted the coverage of the ESI Act for their staff. In fact the Modern English School, Kahilipara which is a members of the All Assam English Medium Schools Association, on the basis of the application made through a service provider, were issued the employers code under the ESI Act, in respect of 21 school staff. Thus it becomes apparent that all schools are not opposed to the ESI Act and many have applied for coverage of their employees under the Act. Thus the representation of the Association, in the context of this Courts interpretive exercise, is found to be without any substance. 19. However if the employees in a given establishment receive substantially similar or superior benefits than what is provided under the ESI Act, it can be exempted from the purview of the ESI Act under Section 87. Therefore even when though educational institutions are covered, for those where superior benefits are provided for the employees, exemption can certainly be an option. 20. Under the ESI Act, multiple benefits are envisaged whereas coverage of the insured under MEDICLAIM Policy opted by some schools, offer only limited relief in comparison. Apart from hospital treatment, the ESI Act provides for various contingencies as enumerated W.P. (C) No.4121/2009, W.P. (C) No.6311/2010, W.P. (C) No.5183/2012, Page 9 of 10

10 in Chapter-III and it is doubtful whether such contingencies are at all addressed by any of the writ petitioners for their school staff. But since a generous employer can always apply for exemption, this prima facie observation should not foreclose the option of the individual institution to apply for exemption under Section 87, when superior benefits than what is envisaged under the ESI Act, is provided by the concerned schools. 21. In the backdrop of the above reasoning, the extension of the ESI Act to cover the educational institutions through the impugned notification dated is found to be in order and accordingly the contention raised by the petitioners to the contrary, are rejected. However since the operation of the impugned notification was stayed by this Court, it should be applied prospectively to the educational institutions and no school should be forced to subjugate themselves retrospectively, under the ESI Act. It is ordered thus. 22. With the above order, these cases are disposed of without any order on cost. Barman. JUDGE W.P. (C) No.4121/2009, W.P. (C) No.6311/2010, W.P. (C) No.5183/2012, Page 10 of 10