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Mettur Beardsell Limited and Ors. Vs. the Employees' State Insurance' Corporation of India, represented by the Regional Director and Ors. (21.03.1973 - MADHC) - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtChennai High Court
Decided On
Reported in(1973)2MLJ195
AppellantMettur Beardsell Limited and Ors.
RespondentThe Employees' State Insurance' Corporation of India, represented by the Regional Director and Ors.
Cases ReferredHindustan Lever Ltd. v. Employees
Excerpt:
- .....government may, in consultation with the corporation and where the appropriate government is a state government, with the approval of the central government, after giving six months' notice of its intention of so doing by notification in the official gazette, extend the provisions of this act or any of them, to any other establishment or class of establishments, industrial, commercial, agricultural or otherwise.the main limbs of section i (5) are : (1) if at any time parliament intends to extend the provisions of the act or any of them to any other establishment etc., it can do so ; (2) before doing so, the appropriate government should consult the corporation and if the appropriate government is the state government, it should get the approval of the central government to initiate.....
Judgment:
ORDER

T. Ramaprasada Rao, J.

1. These writ petitions are connected; for the purpose of narrating the facts, it is enough to notice the facts in Writ Petition No. 3238 of 1971. The petitioner is a private limited company having its factory at Madhavaram within the limits of the City of Madras. But it has an independent administrative office at No. 52/53, Jehangir Street, Madras-1. The petitioner's case is that there are about 67 workers exclusively working in the factory of the petitioner-company and there are a few others numbering about 30 as on date working in the administrative office of the company in the address as above. The respondent as the statutory functionary under the Employees' State Insurance Act, 1948 was of the view that by reason of the amendment of the word 'employee' in Section 2 (9) of the Act, the employees of the petitioner, even, though working in the administrative office as above, would squarely come within the meaning of the word 'employee' as defined in Section 2 (9) and therefore the respondent called upon the petitioner to bring in the personnel working in the administrative office also within the purview and mischief of the Act in the matter of the contribution payable by an employer in relation to the services of its employees. The petitioner's case is that by letter, dated 29th September, 1971, the respondent called upon the petitioner-company to register in the books of the respondent as a Regional Director of the Employees' State Insurance Corporation, the staff in the head office or administrative office also with effect from 28th January, 1968 and make contributions in accordance with law, failing which, the respondent threatened legal action. There were incessant reminders. The petitioner, however, was of the view that even though the definition of an employee has been modified by an amending Act of Parliament, Act XLIV of 1966, yet the respondent did not have the requisite jurisdiction in law to call upon the petitioner to register the members of the staff as demanded and claim contribution for the reason that no notification was issued by the appropriate Government under Section 1 (5) of the Act. This position was explained by the petitioner to the authorities. But it appears that the respondent is threatening to take proceedings under the Revenue Recovery Act against the petitioner to recover contribution in respect of the employee's working in administrative offices, such as head office, branch office etc. Apprehending that the threat to invoke the provisions of the Revenue Recovery Act would be processed through in the usual course, the petitioner, without having recourse to the alternative remedy provided for in the Act to the Employees' State Insurance Court has come up to this Court for the issue of a writ in the nature of a writ of mandamus directing the respondent from further processing its action as threatened as, according to the petitioner, the respondent has no jurisdiction to call for contribution in the absence of a statutory notification under Section 1 (5) of the Act. As the applicability of the Act itself is in question, recourse to this Court under Article 226 of the Constitution is sought to be justified. In the counter-affidavit, the respondent no doubt admits that prior to the amendment of the definition of ' employee ' under Section 2 (9) of the Act, no such demand was raised as against the petitioner. Bat according to the respondent, the amended provision is only clarificatory of the subject-matter and cannot be understood as amendatory or a substitute for the quondam definition of an employee under the Act. It is also said that such head office or branch office or sales office being integrally connected with the factory, its work in one office cannot be dissociated from the other and such an integration by itself is sufficient to attract the provisions of the Act notwithstanding the absence of any notification under Section 1 (5). What is suggested is that even though a head office or a branch office can, for certain purposes, be considered to be an establishment other than a factory, as the employees therein are virtually the employees of the factory, the amended definition need not at all be invoked and on the basis of the unamended definition of ' employees ' the stand taken by the respondent is legal and therefore no writ under Article 226 of the Constitution can issue.

2. For a proper appreciation of the contentions of parties, it would be sufficient to refer to certain relevant provisions of the Employees' State Insurance Act, '1948. This Act, no doubt is one of those legislations which our Parliament undertook in the name of the welfare state and for the progression and welfare of certain sections of the community who deserve encouragement in the hands of Parliament and the Legislature. But whilst enacting the Act, Parliament bore in mind a specific dichotomy as between a factory and any other establishment or class of establishment, industrial, commercial, agricultural or otherwise. As it is not unusual for Parliament to do so, this Act, in the first instance, was made applicable to all factories including factories belonging to the Government other than seasonal factories (Vide : section (4) of the Act). But whilst preserving its prerogative to extend the provisions of the Act to other situations, Parliament contemporaneously provided for Section 1 (5) of the Act which reads as under:

The appropriate Government may, in consultation with the Corporation and where the appropriate Government is a State Government, with the approval of the Central Government, after giving six months' notice of its intention of so doing by notification in the Official Gazette, extend the provisions of this Act or any of them, to any other establishment or class of establishments, industrial, commercial, agricultural or otherwise.

The main limbs of section I (5) are : (1) if at any time Parliament intends to extend the provisions of the Act or any of them to any other establishment etc., it can do so ; (2) Before doing so, the appropriate Government should consult the Corporation and if the appropriate Government is the State Government, it should get the approval of the Central Government to initiate discussions and for the purpose of consultation, with the Corporation ; (3) if the Corporation and the appropriate Government as the case may be agreed that the provisions of the Act should be extended to any other establishment as described in the latter part of Section 1 (5), then it should notify in the Official Gazette its intention to do so ; and (4) lastly, the extension may be of the entirety of the Act or any part thereof. It is therefore clear that if the provisions of the Employees' State Insurance Act, 1948, are extended to any institution, other than a factory, which is popularly known in trade and commerce as an establishment, then the procedure prescribed in Section 1 (5) is absolutely necessary to be adhered to, as without following it, the appropriate statutory functionary would lack jurisdiction if it extends the provisions of the Act to any establishment or class of establishment.

3. It is in this context that Section 2 (9) of the Act has to be looked into. Section 2 (9) contains the definition of the word 'employee'. It no doubt means any person employed for wages in or in connection with the work of a factory or establishment to which this Act applies.

Prior to 28th January, 1968, the meaning of the word ' employee ' ended with the third sub-clause in Clause (9) of Section 2 of the Act. But by the amending Act (LXIV of 1966), an additional para. has been added after Sub-clause (3) of clause 9 which reads as under:

and includes any person employed, for wages on any work connected with the administration of the factory or establishment or any part, department or branch thereof or with the purchase of raw materials for, or the distribution or sale of the products of, the factory or establishment ; but does not include...

By such inclusion, a person employed for wages in any work connected with the administration of the factory or establishment would also come within the meaning of the word 'employee'. The contention of the learned Counsel for the respondent is that this inclusion by reason of the amending Act, (XLIV of 1966), is purely declaratory of an existing situation. It is also suggested, relying upon a decision reported in Hindustan Lever Ltd. v. Employees' State Insurance Corporation, New Delhi (1972) 42 F.J.R. 263, that the said paragraph is only clarificatory of the quondam situation. What is said is that even without the addition of the paragraph, a person employed for wages in or in connection with the work of an establishment would automatically be covered by the Act. It is in this sense that the additional paragraph added by the amending Act is said to be clarificatory. I am unable to agree. There is a distinction between clarification and amendment. If Parliament really intended that they should declare the pre-existing law by making clear, a situation which was ambiguous, then they should have said so while setting out the objects and reasons for the amendment. On the other hand, when the Bill came up in the Legislature for expanding this definition, it was stated in the statement of objects and reasons:

Experience of the administration of the Act has disclosed certain difficulties in its working. The object of the present Bill is to remove such difficulties and to make the administration of the Act simpler. The major amendments proposed in the Bill are indicated below:(b) the existing definition of the term 'employee ' does not cover administrative staff engaged in sale, distribution and other allied functions. The definition is being amended to cover such employees.

As it is the function of Courts to interpret laws and not to lay it down, it is sometimes necessary to look into the statement of objects and reasons for the purpose of interpreting a particular provision of a statute. The statement of objects clearly discloses that the Legislature never meant to include in the fold of the meaning of the expression ' employee ', an employee who is in an establishment and whose functions are purely administrative in character. It is reasonable to presume unless there is proof to the contrary that a person engaged in sale, distribution and other allied functions in a head office or a branch office, is purely rendering services to promote the administration of the establishment and not for the purpose of any work connected with a factory. In this batch of writ petitions, we are concerned either with head offices or branch offices. The staff therein certainly can be presumed to be administrative staff within the meaning of the objects propounded by the Legislature when it sought the amendment in 1966. In fact the statement of objects and reasons makes it clear that the existing definition of the term, meaning thereby Section 2 (9), shorn of additional paragraph included by Act XLIV of 4966, did not cover administrative staff. I am unable, therefore, to agree with the learned Counsel for the respondent that by reason of the amendment what was not clear was made fully clear, but according to me, there was no ambiguity in the quondam definition, of ' employee ' and by reason of adding the additional paragraph in 11966, there has been an expansion of the definition and not a clarification of it as suggested and as assumed by the learned Judge who disposed of the case in Hindustan Lever Ltd. v. Employees' State Insurance Corporation, New Delhi (1972) 42 F.J.R. 263.

4. If there is an establishment in which there is personnel working administratively as its staff, the question, is, whether the Act could be applied to the said establishment without making the appropriate notification in the proper and prescribed form as contemplated in Section 1 (5) of the Act. I have already referred to the purport of Section 1 (5) and its force. In the instant case there has not been any such notification. It is therefore rightly contended by the learned Counsel for the! petitioner that there is total absence of jurisdiction in these cases when the respondent, without reference to the prescribed statutory pre-requisities under Section 1(5) has included employee in the establishment of their companies' head offices, branch offices, etc., as being personnel who ought to be covered under the Act.

5. The fundamental principle of judicial interpretation is that every section of an Act of Parliament or of the State Legislature should be given effect to, and in certain circumstances, in conjunction one with the other. If by a mechanical understanding or interpretation of a particular section, a prima facie conflict arises in the matter of the application of that section with that of another, then, it becomes necessary for Courts while dealing with such a situation to harmonise the conflict and further the object of the Legislature and avoid the mischief. If literally Section 2 (9) of the Act, as contended by the learned Counsel for the respondent, has to be understood and implemented, then the force of Section 1 has to be ignored. If Section 1 and Section 2 (9) have to be interpreted together and worked harmoniously, then the contention of the learned Counsel for the Central Government cannot be accepted.

6. Again, the opening words of Section 2 (9) refer to factory or establishment to which this Act applies. Under Section 1 (4), this Act has been made applicable to factories, but till the amendment was introduced this Act was not made applicable to establishments. It could only be done by adopting the procedure prescribed in section. 1 (5). One accepted principle of interpretation is that when a thing has to be done in a particular or prescribed manner and if that prescription springs from the statute itself, it could be done only in the manner so ordained and not otherwise. No presumption or assumptions are possible. Therefore it follows that even assuming that the head office or branch office, sales office or distribution office of an establishment is an establishment, yet the link which enables the exercise of power not having been provided yet by the appropriate authority under the Act, obviously there is lack of power on the part of the respondent when he demanded the coverage of the personnel in the administrative sections of the establishment also within the compass of the previsions of the Employees' State Insurance Act, 1948.

7. As I am satisfied that the demand was made without authority and without adequate legal sanction, the respondent has violated a public duty on his part or is attempting to exceed his powers while exercising it. Therefore a writ of mandamus should issue. In the circumstances the rule nisi is made absolute and the writ petitions are allowed. There will be no order as to costs.


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