R.N. Misra, J.
1. The Koraput Division of M/s. Hindustan Aeronautics Limited has its establishment at Sunabeda within the district of Koraput under the territorial jurisdiction of this Court. The company is a defence oriented project and its factory at Sunabeda is engaged in the manufacture of aero-engines for the MIG fighter planes, The Regional Director of Employees' State Insurance Corporation (opposite party No. 1) an authority operating under the Employees' State Insurance Act, 34 of 1948 (hereinafter referred to as the Act) required the company to pay the special contribution in terms of Section 73A of the Act and demanded a sum of Rs. 18,919 for the quarter ending 31-3-1972. Prior to the said period, the petitioner. company had already contributed to the tune of Rs. 1,63,898 without knowing its liability. Armed with a decision of the Division Bench of the Andhra Pradesh High Court in its support, the company resisted the demand, but when coercive steps were threatened, it has come before this Court asking for a declaration that Section 73A of the Act is not applicable to the company, the said provision is ultra vires the Constitution and the demands are liable to be quashed. On 27th of April, 1972, this Court issued the rule nisi and granted stay of collection.
2. In the counter-affidavit of the opposite parties, the statute as also the demand are supported as valid and reliance is placed upon a decision of the Allahabad High Court supporting the said stand.
3. The Act is a beneficial legislation and seeks to confer benefits on employees in case of sickness, maternity and employment injury. Chapter 11 makes provisions for establishment of Employees' State Insurance Corporation, Standing Committee, Medical Benefit Council and oilier ancillary matters. Chapters IV and V respectively provide for contributions and benefits. Chapter VA was brought into the Act by the amending Act 53 of 1951 and was in force with effect from 24th November, 1951. Styled as transitory provisions it continued in the Act until 1-7-1973, when it has been repealed. This chapter was designed to meet the needs of the transitory period and it was indicated that when the Act would be brought into force to the whole area to which it extends, the provisions of Chapter VA may not be kept in force by the Central Government and then the contributions would become payable by Employer according to the provision in the First Schedule.
Admittedly the benefits contemplated under Chapter V are not provided for in the area where the petitioner's factory operates. It is not disputed that for conferring some of the benefits contemplated under the Act, the petitioner runs a full equipped hospital as a part of its establishment.
4. The attack advanced against the demand is mainly on the ground that the special contribution referred to in Section 73A is in the nature of a fee and as long as no service is rendered as a quid pro quo for the opposite parties does not dispute the contention of the petitioner that the special contribution is a fee. He, however, takes the stand that there is no requirement of immediate return to sustain the legality of a fee. If in the scheme a return is contemplated, that justifies the levy of the fee.
5. Quid pro quo is a necessary element to sustain the demand of a fee. Law in that regard has been settled by several pronouncements of the Supreme Court. We are not in a position to accept the contention of Mr. M. N. Das that on the possibility of service being offered at some future time, fee can be collected now. The concept of quid pro quo does not admit of chance of some service in return at a future date. In fact the legality of a fee is usually tested in terms of quid pro quo which obviously would refer to return in present.
6. A Bench of the Andhra Pradesh High Court in the case of Food Fats and Fertilisers Ltd. v. The Regional Director, Employees' State Insurance Corporation I.L.R. 1972 Andhra Pradesh 1103, examined the validity of the levy of special contribution under Section 73A of the Act and held after examining the cases on the point-
What emerges from the abovesaid discussion is that the main feature of a fee is the services rendered in quid pro quo of the fee. If there is correlationship between the fee levied and the services rendered to the persons from whom it is levied, then the fee would be justified. It need not be mathematically accurate that is to say, the quid pro quo need not be mathematically exact. It is true that it is not necessary to render service to each and everyone of the persons from whom fee is levied in exact proportion to the fee. It is enough that the services are made available and it is irrelevant if no occasion for the utilisation of services had arisen to any individual who is required to pay the fees. It is also true that for a class of employees fee can be levied and if any employee belonging to that class does not get service because no occasion for it arose, even then the fees would be justified. It must, however, be remembered that the services must be rendered to those who are made to pay the fees although some of them may not actually get the benefit. It must, however, be remembered that the benefit, if any, received by the employees of other factories is not enough. The factory from which the special contribution is collected must be benefitted. If it appears that it is not for special services rendered to the persons or employees of the factory on whom the levy is imposed, then it cannot be a fee.
Chapter VA was inserted in 1951 and since years the factories to which Chapters IV and V have not yet been applied are paying the special contribution under Section 73A. Merely because in some future date the benefits under the Act would be conferred upon the employees of the factories, fees, cannot be levied from them without providing any service.
Similarly the contention that the employees of the factories in India constitute a class and inasmuch as 90% of the employees of that class are being benefitted, 10% who may not get actual benefits but who are likely to get benefit in the near future cannot grudge the payment of fees is also unacceptable. Even a casual reading of the Act would indicate that each factory of establishment is taken as a unit and it is from the employees in the factory or establishment as the unit that the fee is taken for rendering service to the employees of that particular unit. It would be incorrect to take employees of India as one unit or class. There is no justification whatsoever for any such contention which can be said to legitimately arise from any provision of the Act. The contribution collected from one area or class of employees cannot be said to be conferring benefit on them when services are rendered or benefits are conferred as in this case on altogether different factories.
We respectfully agree with the view expressed by the Division Bench of the Andhra Pradesh High Court. As Chapter VA has been deleted from the statute book, it is no more necessary to examine its vires. We must, however, hold that the demand for special contribution is not tenable in law.
7. We would accordingly quash the demand already raised against the petitioner and issue a writ of mandamus to the opposite parties not to enforce the said demand or to raise any demand in future in regard to the subsequent period until repeal of Chapter VA of the Act. There was a prayer for a direction for repayment of the amounts of special contribution already made. We do not think, it would be appropriate in the facts and circumstances of the case to direct refund thereof. The writ application is accordingly allowed in part. We make no order as to costs.
B.K. Ray, J.
8. I agree.