Hari R. Nair and Sudharma Amma v. Employees' State Insurance Corporation and Others

**IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT:** **THE HONOURABLE MR. JUSTICE DAMA SESHADRI NAIDU WEDNESDAY, THE 4TH DAY OF JULY 2018 / 13TH ASHADHA, 1940** **WP(C).No. 17305 of 2018** ## **PETITIONER(S)** **------------** **1 HARI.R.NAIR, AGED 20 YEARS, S/O. RAJASEKHARAN NAIR(LATE), CHAKKICHINRIKATH VEEDU, SANGEETHA JUNCTION, KAVANAD P.O, KOLLAM-691 003.** **2 SUDHARMA AMMA, AGED 52 YEARS, W/O. RAJASEKHARAN NAIR (LATE), CHAKKICHINARIKATH VEEDU, SANGEETHA JUNCTION, KAVANAD P.O, KOLLAM 691 003.** **BY ADVS.SRI.M.SASINDRAN SRI.V.VENUGOPAL** ## **RESPONDENT(S):** **--------------** ## **1. THE DIRECTOR GENERAL,** **"PANCHDEEP BHAWAN", ESI CORPORATION HQ OFFICE, C.I.G MARG, NEW DELHI 110 002.** **2. THE REGIONAL DIRECTOR, SUB REGIONAL OFFICE, ESI CORPORATION, THIRUVANANTHAPURAM-695 014.** ## **3. THE BRANCH MANAGER,** **ESI CORPORATION, BRANCH OFFICE, THYCADU, THIRUVANANTHAPURAM-695 014.** ## **4. THE EMPLOYEES STATE INSURANCE CORPORATION,** **"PANCHADEEP BHAWAN, ESI CORPORATION HQ OFFICE, C.I.G MARG, NEW DELHI- 110 002. REPRESENTED BY THE DIRECTOR GENERAL.** ## **BY ADVS. SRI.K.SANDESH RAJA** ## **SRI.P.SANKARANKUTTY NAIR** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 04-07-2018, ALONG WITH WPC.NO.19850/2018 AND CONNECTED CASES,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **TS** ## **WP(C).No. 17305 of 2018** ## **APPENDIX** **PETITIONER(S)' EXHIBITS ----------------------** **EXHIBIT P1 A TRUE COPY OF THE INSURED PERSONS CARD OF THE 2ND PETITIONER.** **EXHIBIT P2 A TRUE COPY OF THE INCOME CERTIFICATE ISSUED BY THE TAHSILDAR, KOLLAM.** **EXHIBIT P3 A TRUE COPY OF THE WAGE SLIP FOR THE MONTH OF OCTOBER, 2013.** **EXHIBIT P4 A TRUE COPY OF THE ADMISSION NOTICE DATED 9.5.2018 ISSUED BY THE ESI CORPORATION.** **EXHIBIT P5 A TRUE COPY OF THE ADMIT CARD OF NEET(UG) 2018 OF THE 1ST PETITIONER.** **EXHIBIT P6 A TRUE COPY OF THE APPLICATION SUBMITTED BY THE PETITIONER FOR WARD OF IP CERTIFICATE, BEFORE THE 2ND RESPONDENT.** **EXHIBIT P7 A TRUE COPY OF THE REGISTRATION DETAILS DOWNLOADED FROM THE WEBSITE OF THE ESI CORPORATION EVIDENCING REGISTRATION OF THE 1ST PETITIONER.** ## **RESPONDENT(S)'EXHIBITS - NIL** **-----------------------------** ## **/TRUE COPY/** **PS TO JUDGE** **TS 04.07.2018** ## **C.R.** ## **Dama Seshadri Naidu, J.** -------------------------------------------------------------------------------------- WPC Nos. 17305, 18858, 19035, 18964, 17469, 18267, 18363, 18234, 18283, 17502, 16900, 16797, 18167, 17272, 18079, 18565, 18238, 16343, 18448, 19850, 18671, 19759, 19006, 19044, 19094, 19188, 19451, 19491, 19558, 19187 and 19969 of 2018 -------------------------------------------------------------------------------------- Dated this the 4[th] July 2018 ## **JUDGMENT** ## **Introduction:** It is a case of _déjà vu_ . Last year, many employees questioned the ESI Corporation’s 2017-policy of admission into the undergraduate course of MBBS in the colleges run by the Corporation. A Division Bench of this Court, in _Bindu Radhakrishnan v. ESI Corporation_ , dealt with the issue, faulted the policy, and interdicted it. The appeal taken to the Supreme Court, it yielded no result. This year, too, employees in droves question the Admission Policy, 2018. 2. This time, the policy contains changed parameters, and so does the challenge mounted against it. Many employees, technically termed “Insured Persons,” applied for “Ward of Insured Person Certificate.” In some cases, the certificate was denied; the reasons vary. In this batch, however, the reason of rejection is that the insured persons did not contribute to the WPC No.17305/2018 & conn.cases 2 Corporation on time; payments were delayed. Or, put differently, the employer did not file the “returns” on time. Faced with a strict time frame in the admission policy, the insured persons maintain that the employer’s delay cannot defeat their “life-changing” right to give their children medical education. 3. So the question is, Can the Corporation’s time-frame on contributions and returns in its Admission Policy be sustained? Or, is the time-frame an arbitrary administrative action amenable to judicial review? **Facts:** ## **WP (C) No.17305 of 2018:** 4. Hari R.Nair and Sudharma Amma, the son and the mother, are the petitioners. The Employees’ State Insurance Corporation, its Director General, the Regional Director, and its Branch Manager are the respondents. 5. The factual controversy runs in a narrow compass. Sudhrama Amma works in an establishment covered by the Employees’ State Insurance Company Act, 1948 ('the Act'), and its schemes; so she has been an insured person since 01.09.2010, the date of her admission. 6. Sudharma Amma is a worker in BSNL, through an agency/contractor who has been contributing to the ESI Corporation. She WPC No.17305/2018 & conn.cases 3 has been, the pleadings reveal, drawing Rs.4,000/ per month. Her son Hari R. Nair took NEET entrance and got qualified for admission into MBBS, under the Insured Person (IP) quota. To claim that benefit, Hari must produce a certificate of “Ward of Insured Person”. For this, Sudharma Amma, through Ext.P6, applied to the ESI Corporation. 7. The authorities refused her request: Sudharma Amma’s employer contributed the premium beyond 42 days after the “termination of the contribution period,” twice, once each in 2013 and 2014. The employer filed the returns on those occasions beyond 42 days permitted under Section 44 of the Act, read with Regulation 26A. The certificate denied, the son and the mother filed this writ petition. ## **WP (C) No.19850 of 2018:** 8. Here, the facts are peculiar. This case illustrates how anomalously a situation can affect, and how inequitably a rule can apply. Mother Sandhya, a nurse, began her career, in August 2006, in a private hospital. Her name registered with the Corporation, her employer contributed regularly from 2010. Later, she left the private service and joined—of all other services— the Government. Her present employer is National Health Mission (NHM), a Government of Kerala undertaking. In fact, the NHM is said to be a Central WPC No.17305/2018 & conn.cases 4 Government Project implemented by the State Government. This Government undertaking did not contribute, covering its employees from 01.04.2009 to 31.03.2017, nor has it filed returns. Under the pain of coercive steps taken by the Corporation, the NHM registered its employees in March 2018 and paid all its arrears of contribution—Rs.93,85,221. 9. When daughter Sreedhanya secured a rank in NEET, Sandhya applied for the Ward of Insured Person certificate. It was denied on two grounds: (1) there was a break in Sandhya’s registration; (2) that the employer contributed belatedly. 10. Besides Sudharma Amma and Sandhya, many other mothers or fathers, and their children, faced the same problem. So all the affected filed writ petitions. Barring a few anomalous cases, most cases fall into two batches. In this batch, issues are identical and the respondents, too, are the same. I propose, therefore, to dispose of the writ petitions through a common judgment. I have briefly recorded the rival submission, mentioning the names of only the lead counsel. The others adopted the submissions. In all cases, I may note, this Court protected the petitioners’ interest through interim orders: The insured persons were given provisional certificates subject to the outcome of the writ petitions. WPC No.17305/2018 & conn.cases 5 ## **Submissions:** ## **Petitioners’:** 11. Sri M. Sasindran, the learned counsel for the petitioners in W.P. (C) No.17305 of 2018, has submitted that Sudharma Amma has nothing to do with how and when the contributions should be made or the returns should be filed. According to him, it is the employer that contributes. Once the employer deducts the contribution from the employee’s wages, he asserts, the employee stands protected. So, for no fault of the employee, the learned counsel continues, she cannot be deprived of a life-changing benefit. 12. Once the Corporation has accepted the amount with interest as statutorily mandated, they are, Sri Sasindran further contends, estopped from taking a contrary stand. In this regard, he assails clause 8(a) which disqualifies the employees because their employer delayed remittances or returns. Sri Sasidharan has drawn my attention to the statutory scheme, especially, Sections 39(5), 31A, 44, and Regulation 31. 13. To elaborate, Sri Sasindran has submitted that once interest is paid and amounts are received, the Corporation must treat those contributions as if they had been paid on time. So, the Corporation’s classifying the so-called delayed contributions as a separate category is arbitrary, falling foul of WPC No.17305/2018 & conn.cases 6 Article 14 of the Constitution. Eventually, Sri Sasindran has submitted that a person cannot be punished for the default somebody else has committed. Therefore, he has urged this Court to allow the writ petition. 14. Sri R.T. Pradeep, appearing for the petitioner in WPC No.18079 of 2018, has supplemented Sri Sasindran's submissions. According to him, Clause 8 of the Admission Policy violates the statutory mandate under Section 44 of the Act and Regulation 26A. Further drawing my attention to Section 68 of the Act, Sri Pradeep strenuously contends that clause 8 of the admission policy is _ultra vires_ Section 44 and Regulation 68. 15. In WP (C) No.19850 of 2018, Smt. A. K. Preetha argued that the petitioner had been in continuous insurable employment since 2008. According to her, when Sandhya joined new service—the Government’s, at that—her employer delayed in registering its establishment and in contributing. So she contends that the break in her service in the Corporation’s records and delayed payments cannot be attributed to her. ## **Respondents’:** 16. Sri Sandesh Raja, the learned Standing Counsel for the Corporation, has submitted that the admission policy is a code by itself. It has nothing to do with the Act, under which the Corporation exists. WPC No.17305/2018 & conn.cases 7 Referring to Article 14 of the Constitution, Sri Sandesh Raja submits that the policy flouts no criteria judicially fixed by either this Court or the Supreme Court. To elaborate, he submits that the policy is non-discriminatory, reasonable, and fair on all counts. It contains various stipulations only to achieve the ultimate objective: the most qualified persons alone get the admission, submits Sri Sandesh Raja. 17. According to the learned Standing Counsel, all the claimants have a common excuse: If there is any delay or default, omission or commission, only the employer must be blamed. He agrees that the employer deals with the Corporation, but the ultimate beneficiary, he asserts, is the employee. According to him, if the petitioners’ logic prevails, the very definition of insured person renders itself meaningless. Then, Sri Raja has taken me to the definitional clause in the scheme and submitted that what has not been explained in the scheme alone can be drawn from the statute. For him, the Act does not control the admission policy. 18. When queried about the source of power under which the Corporation has formed the policy, Sri Raja has taken me to Section 59B of the Act. He says this is the only provision. Section 59B does not, Sri Raja WPC No.17305/2018 & conn.cases 8 continues, deal with anything other than the formation of the Board of Directors. 19. Sri Raja has consistently submitted that the Corporation has only extended a concession or, at best, a benefit. And the petitioners, as a matter of right, cannot insist on a policy that suits their convenience. Briefly stated, the admission into medical colleges maintained by the Corporation cannot be stretched to suit every individual need, nor should it conform to the statute in every detail. 20. Referring to the eligibility criteria, the learned Standing Counsel asserts that the Corporation aims to weed out the indolent or the dishonest. The policy cannot accommodate those who played truant in securing the registration and in filing the returns on time. Touching on the hardship some candidates may face, he submits that falling short by one day or by 1000 days makes no difference if the delay is a definitive criterion. A deficiency is a deficiency, according to him. 21. To support his contentions that the Court will refrain from tinkering with the executive’s policy preferences, Sri Raja has relied on _State of Jammu & Kashmir v Shri Triloki Nath Khosa,_[1] _Bhagirath Kanoria v_ 1(1974) 1 SCC 19 WPC No.17305/2018 & conn.cases 9 _State of M.P_ .,[2] _Asif Hameed v. State of J & K_[3] , _Hindi Hitrakshak Samiti v. Union of India_ ,[4] and _Samiksha v. Union of India_ .[5] 22. Sri Sandesh Raja has submitted that this Court has earlier interpreted this scheme and cited these decisions in proof: _Employee's State Insurance Corporation v Jemin Elizabeth Mathew_[6] and _Geetha N. v Employees State Insurance Corporation._[7] 23. In the alternative, Sri Sandesh Raja has submitted that if this Court, on merits, is inclined to invalidate any admission clause, it does not mean that all the petitioners will get automatic admission. According to him, the Corporation must be permitted to re-draft its policy and allow fresh admissions based on the redrafted policy. Thus, all others who have not sought the certificate under this policy can apply. At any rate, Sri Raja has urged this Court to dismiss the writ petition because the admission concerns medical education, and the Corporation has only extended a privilege or a concession with conditions, which cannot be diluted. 21984 (4) SC 24 3AIR 1989 SC 1899 4(1990) 2 SCC 352 5AIR 2018 Bombay 493 62015 (1) KLT 328 72016 (5) KLT 148 WPC No.17305/2018 & conn.cases 10 ## **Reply:** 24. In reply, Sri Sasindran reiterated his contentions on arbitrary administrative action—that is, artificial and affected classification. To support his contention that once the defect is cured, the rights stand restored, he had relied on _Asha v Sharma University of Health Service._[8] 25. Sri R.T. Pradeep submits that the Corporation's stand that the scheme has nothing to do with the Act carries no conviction. He emphasizes the principle of estoppel. ## **Discussion:** ## **The Corporation and Its Admission Policy:** 26. ESI Corporation, a statutory body established under the ESI Act, 1948, is under the administrative control of Ministry of Labour & Employment, Government of India. It has started Medical Education Institutions across the country. The Central Government has approved the Corporation's admission policy and procedure for undergraduate (MBBS/BDS) Course in ESIC Medical Education Institutions. The policy provides for 'Insured Persons (IPs) Quota' after completing the "All India 8(2012) 7 SCC 389 WPC No.17305/2018 & conn.cases 11 Quota" and the "State Government Quota." Under the ESI Scheme, the "Wards of Insured Persons" who meet the eligibility criteria and who have been qualified in NEET (UG)-2018 will be eligible under the 'Insured Person Quota' for academic session 2018-19. 27. As it annually does, the Corporation now too has come up with a modified admission policy, and the policy fixes all the norms of admission. Many Insured Persons have challenged a few provisions of this policy. They all contended that those offending provisions are arbitrary and unreasonable, falling foul of Article Constitution of India. ## **The Policy and the Problem:** 28. The employees’ children, indeed, secured ranks in the NEET entrance. But they will not get admission into UG Course (MBBS) in the Corporation’s colleges—under the Insured person quota—unless they produce the certificate. The Admission Scheme or Policy, 2018, mandates so. So the employees, “insured persons” under the Act, applied to the Corporation for the “Ward of Insured Person” Certificate for their children. It was denied. The Corporation maintained that the “employers” did not contribute under the scheme periodically; in other words, they filed returns beyond the permissible period. WPC No.17305/2018 & conn.cases 12 29. The Insured Persons’ quota comes after the All India Quota and the State Government Quota. To get the certificate, the employees relied on various provisions of the Act; on the other hand, the Corporation has insisted that it is the Scheme of Admission that governs the issue and that alone prevails. According to it, the Act has nothing to do with the admissions. So we will pay attention to the Admission Scheme and, then, try to reconcile it with the Act if it binds the Scheme. ## **The Admission Scheme & Policy:** 30. The Corporation issued the Admission Notice on 9th May 2018, stipulating the criteria for “Admission of ‘Wards of Insured Persons’ (IPs) in UG Course (MBBS/BDS) . . . Under-Insured Persons (IPs) Quota’ for Academic Session 2018-19.” The Guiding Principle (GP) 5.2.1 divides the candidates into three groups: Group I, Group II, and Group III. The division is on “merit cum preference” basis. And every applicant seeking admission must have a valid Ward of Insured Person Certificate issued by a competent authority—that is, the Corporation. According to GP 6.2 of the Scheme, the last date for submitting applications to the authority concerned to get the Certificate is 30th May 2018. No application will be entertained thereafter. WPC No.17305/2018 & conn.cases 13 31. GP 7.9 of the Scheme determines an important eligibility criterion: The critical date for determining the eligibility under the ‘Insured Persons Quota’ is 1st January 2018. The Scheme also incorporates the “Admission Policy” and “Admission Procedure”. Clause 3 of the Policy clarifies that, to admit the candidates on “merit cum preference”, the Corporation will follow the due process as specified in the Admission Policy or as it will specify “from time to time.” 32. GP 4.5 describes how the division of IPs into three groups takes place. |Group|Insurable<br>Employment<br>Period|Contribution<br>Paid or<br>Payable in a<br>Year|Total<br>Contribution<br>before 1stJan<br>2018|Exigencies| |---|---|---|---|---| |Gr. I|Five Years|For not less<br>than 78 days|Nine|Out of 9 Periods, two<br>shortfalls of minimum 78<br>days could be condoned,<br>by adding the immediate<br>preceding two: 9+2| |Gr. II|Four Years|-Do-|Seven|7+2 Contributions| |Gr.III|Three Years|-Do-|Five|5+2 Contributions| ## GP 4.5 has these features: (1) The employee must be in “continuous insurable employment” for “a minimum period of” five/four/three years by 1st January 2018, the year admission. Thus, there are three Groups. WPC No.17305/2018 & conn.cases 14 (2) Obvious is the rank of preference. First the IPs in Group I will get preference for admission, followed by Group II and Group III. (3) The unfilled seats, if any, will be surrendered to the “respective State Governments.” (4) The five-/four-/three-year continuous-insurable-employment will be reckoned based on the contribution period. (5) Each block of 12 months (Financial Year) has two contribution periods —April to September and October to March. (6) The five-year block must have nine contribution periods; four-year block seven contribution periods; and three-year block five contribution periods. (7) Each contribution period must have received the contribution for minimum 78 days. That is, in every six months, the contribution must be at least for 78 days. (8) In each block, the contribution may fall below the “78-days minimum” twice. (9) Then, under the condition of “exigency”, two contribution periods beyond five/four/three years could be counted in. Cut to chase, the contribution periods for five, four, and three years are 11, 9, 7 respectively. 33. So five-/four-/three-year periods do not necessarily mean calendar or financial years; instead, they are reckoned based on the contribution periods. That accepted, we face a contradiction: The “Note” attached to GP 4.5 adds another element to the “minimum continuous period”: The period WPC No.17305/2018 & conn.cases 15 must commence from 01.01.2012 for five-year slab; from 01.01.2013 for four-year slab; and from 01.01.2014 for three-year slab. ## **Clarification:** 34. When the Court pointed out what it felt to be an anomaly between the body of GP 4.5 and the Note, Sri Sandesh Raja, for the Corporation, explained that if an insured person could not fulfill the length of continuous service based on contribution periods, the Corporation, in the alternative, could reckon the service from the commencing date, rather than the culminating date. He has, however, assured the Court that none of the cases here presents any difficulty for the Court to consider that contingency. Let us see. ## **How are the half-yearly periods reckoned?** |S. No.|<br>Contribution Periods for Academic Ses<br>2018-19|sion<br>Minimum Days of<br>Contribution| |---|---|---| |(i)|1stApril 2012-30thSeptember 2012|78| |(ii)|1stOctober 2012-31stMarch 2013|78| |1|1stApril 2013-30thSeptember 2013|78| |2|1stOctober 2013-31stMarch 2014|78| |3|1stApril 2014-30thSeptember 2014|78| |4|1stOctober 2014-31stMarch 2015|78| |5|1stApril 2015-30thSeptember 2015|78| |6|1stOctober 2015-31stMarch 2016|78| |7|1stApril 2016-30thSeptember 2016|78| |8|1stOctober 2016-31stMarch 2017|78| |9|1stApril 2017-30thSeptember 2017|78| WPC No.17305/2018 & conn.cases 16 Note: (i) and (ii) are the “exigencies.” That is, if there are any two breaks in the nine periods, (i) and (ii) could be counted in. ## **The Elaboration of the Scheme:** 35. To understand the Scheme and the Policy, we must, among other things, consider these expressions: Employee, Insurable Employment, Contribution, Contribution Period, the Return of Contribution Period, Exigency & Enlarged Time, “78 days of paid or payable contribution”, the date of entry and the date of Registration, the Corporation’s disclaimer, “words not defined.” ## **Employees' State Insurance Act, 1948:** 36. Section 2(9) defines an "employee." Then, Section 2(13A) defines "insurable employment" to mean employment in a factory or establishment to which the ESI Act applies. Section 2 (14) of the Act defines "insured person" to mean a person who is or was an employee “regarding whom contributions are or were payable under this Act and who is by reason thereof, entitled to any of the benefits provided by this Act.” So, I may note, to be entitled to the benefits provided by the Act, the employee must have contributions paid or payable. No other constraint found mentioned. WPC No.17305/2018 & conn.cases 17 37. Section 39 defines "contribution." The contribution to be paid to the Corporation comprises the employer's contribution and the employee's. We may pay attention to sub-section (5)(a) of Section 39. It says if any contribution payable under this Act is not paid by the principal employer when it has become due, “he must pay simple interest" at 12% per annum or at such higher rate as specified, until its actual payment. Remedially, the Corporation can recover the dues from the defaulting employer by invoking the Revenue Recovery Act. 38. Regulation 2A of the Employees’ State Insurance (Central) Rules, 1950 (the Regulations), defines “contribution period.”. It is the period not exceeding six consecutive months, as may be specified in the in the Regulations. The Scheme refers to exigency. If there is a break in the contribution periods—that is, if the contribution for any half-yearly block is for less than 48 days—the next period can be counted in. This counting-in beyond the permissible 9/7/5 blocks can happen twice. Not more. 39. The statute further scanned, Section 40 (1) lays down the employer’s obligation: the principal employer shall pay for every employee, whether directly employed by him or through an immediate employer, both the employer's and the employee's contribution. As per sub-section (2), in WPC No.17305/2018 & conn.cases 18 the case of an employee directly employed by him, the principal employer will be entitled to deduct from the employee's wages her contribution, but not otherwise. 40. Section 42 of the Act deals with the general provisions for paying the contributions. Sub-section (2) mandates that the employer must pay both its contribution and the employee's, too. Section 44, read with Regulations 26, compels the employers to furnish returns and maintain registers ‘in certain cases.’ Section 45, further, gives extensive powers to the Inspectors of the Corporation. These Inspectors can inspect any establishment falling within the sweep of the Act and ensure that the employer complies with the statutory mandates. Under Sections 45A-D provide for the steps the Corporation could take to collect the arrears of contribution from the employer. The Corporation can invoke the recovery mechanism under the Revenue Recovery Act. 41. Where the funds go and how they ought to be used fall within Section 26 (1), which directs that all contributions paid under this Act and all other money received on behalf of the Corporation shall be paid into a fund called the Employees' State Insurance Fund, which the Corporation shall hold and administer for the purposes of this Act. The purposes for which the WPC No.17305/2018 & conn.cases 19 funds may be used fall within Section 28 of the Act. Among the fields of expenditure are the “establishment and maintenance of hospitals, dispensaries and other institutions and the provision of medical and other ancillary services for the benefit of insured persons.” 42. Section 59B, pertinently, pertains to medical and para-medical education: The Corporation may establish medical colleges, nursing colleges and training institutes for its para-medical staff and other employees, to improve the quality of services provided under the Employees' State Insurance Scheme. 43. Finally, we may refer to Section 68; it deals with the Corporations’ rights when a principal employer fails or neglect to contribute. It pays to extract Section 68, for it may affect the dispute in these writ petitions: Section 68 - Corporation's rights where a principal employer fails or neglects to pay any contribution (1) If any principal employer fails or neglects to pay any contribution which under this Act he is liable to pay in respect of any employee and _by reason thereof such person becomes disentitled to any benefit or entitled to a benefit on a lower scale, the Corporation may, on being satisfied that the contribution should have been paid by the principal employer, pay to the person the benefit at the rate to which he would have been entitled if the failure or neglect had not occurred_ and the Corporation shall be entitled to recover from the principal employer either-- WPC No.17305/2018 & conn.cases 20 (i) the difference between the amount of benefit which is paid by the Corporation to the said person and the amount of the benefit which would have been payable on the basis of the contributions which were in fact paid by the employer; or (ii) twice the amount of the contribution which the employer failed or neglected to pay, whichever is greater. (2) The amount recoverable under this section may be recovered as if it were an arrear of land-revenue or under section 45C to section 45-I. (italics supplied) ## **Why is the minimum contribution period fixed at 78 days?** 44. An employee under the Act gets benefits. The benefits, mostly, depend on the employee’s length of service or the number of days the employer contributed for. Under Rule 55 of the Employees’ State Insurance (Central) Rules, 1950 (the Rules), to get the sickness benefit, the contribution must have been for not less than 78 days. So the learned Standing Counsel has submitted that the Corporation had to fix certain threshold criteria for granting the “Ward of Insured Person” certificate. An employee may not have been working throughout the year. Because of various constraints, he or she will be working for different number of days in each year. The Corporation wanted to pick a period that appeared WPC No.17305/2018 & conn.cases 21 reasonable. Then, it chose the days fixed under Rule 55, as that period appeared to be reasonable. ## **The Date of Entry and the Date of Registration:** 45. Under Section 2A of the Act, read with Regs. 10B and 32 of the Regulations, every factory or establishment to which this Act applies shall be registered within such time and in such manner as may be specified in the regulations made in this behalf. Regulations 11 to 14 mandate the method of registering the employees’ names with the Corporation. The employer must do it. 46. Regulation 31 prescribes the time for payment of contribution: “15 days of the last day of the calendar month in which the contribution falls due.” Regulation 31A enables the Corporation to collect interest on the delayed payments, whereas Regulation 26 compels the employer to file the return “within 42 days of the termination of contribution period to which it relates.” ## **Disclaimer & “Words Not Defined”:** 47. The Corporation disclaims any responsibility for the employers’ shortcoming; say, their registering the establishment of the employees late, their contributing late, filing the returns late, or any other flaws. Moreover, WPC No.17305/2018 & conn.cases 22 the words employed in the Policy must be given the same meaning as they have been defined in the Scheme or Policy. Only if they have not been defined, can the meaning of those undefined words be drawn from the Act. ## **Accusation & Refutation:** 48. In this batch of cases, the contributions were made, on more occasions than one, belatedly—beyond the statutorily mandated period. So were the returns. The employees contend that the employer deducted from their salaries on time, but could have contributed it to the corporation late and, similarly, filed returns later, too. They are activities over which the employees have no control. For what they have not done or for what they could have no control over, the employees cannot be made to suffer. In other words, the law does not compel the employee to do the impossible.[9] 49. To counter this assertion, the Corporation’s refutation comes quickly. It contends that timely contributions and timely returns are the _sine qua non_ for eligibility. According to it, Section 44 of the Act, read with Regulation 26 (a) of the Regulations, leaves no room for relaxation: the return of contribution must be filed within 42 days after the contribution > 9 _Lex non cogit ad impossibilia_ WPC No.17305/2018 & conn.cases 23 period. The Corporation also says that a Division Bench of this Court has already clinched this issue. ## **Contribution Period – Its Fall Out:** 50. This policy existed, with minor changes, last year, too. And it underwent judicial scrutiny. Then came this year’s modified policy. Even this year’s policy, the Corporation contends, received judicial interpretation. So, with _stare decis_ staring at our adjudication, we will examine those decisions. Before we set out to examine the challenge mounted against this policy, we must first examine the jurisdictional bounds of judicial review _vis-à-vis_ policy matters. ## **Policy & Adjudication:** 51. For Parliament, policy is its prerogative, so must it be for the Executive. The Executive has its hierarchies with cascading delegation. And the courts ought to adopt a deferential, if not “hands-off”, approach. The scope for judicial intervention in policy matters, trite to observe, is minimal. Judicial review, as such, finds constricted space in the arena of legislative and, even, administrative policies. One may say policy, by its very nature, is experimental and aims to find the golden mean of welfare—the ideal position among competing priorities. It keeps changing. WPC No.17305/2018 & conn.cases 24 52. Change inevitable, the policy offers only a few well-accepted grounds for judicial review. That said, we should acknowledge that the legislative policy and the executive policy stand on different pedestals. And judicial intervention _vis-à-vis_ either follows different standards. Granted policy can be quasi-legislative or purely administrative, we will confine ourselves to the executive policy and the discretionary element in it. 53. Though a quasi-legislative policy needs legislative backing, the administrative policy does not. In the “fluid times of today,” classification or codification of Governmental powers in a welfare State is well-nigh impossible. At the same time, we cannot quarrel with the proposition that the executive powers are coextensive with the legislative. It cannot be different if the administrative power is exercised—say, a policy is formulated—even by a delegate, which the Corporation here is. 54. But any administrative decision can be questioned on the grounds, among others, that the power exercised contradicts the parent Act, is unconstitutional, arbitrary, unreasonable, or _mala fide_ . ## **Pivotal Provision:** WPC No.17305/2018 & conn.cases 25 ## 55. Here comes the pivotal provision around which the whole dispute revolves: Para 8 of the Admission Policy. It needs elaboration, so it bears reproduction: 8. Insured person for the purpose of availing benefit of Insured Persons (IPS) Quota for his/ her wards shall be, as under a) ''The 'Insured Person' shall be an 'employee' as defined in the ESI Act; and he/she _should have been in continuous insurable employment for a minimum period of five/ four / three years as on, and immediately preceding the 1st January of the year of admission_ ; and _contribution in respect of him/her were paid/ payable for not less than 78 days in all the 9/7/5 contribution periods immediately preceding 1st January of the year of admission_ with the proviso that the return of contribution as provided under Section 44 of the ESI Act read with Regulation 26(a) of the ESI (General) Regulation be _filed with 42 days of termination of contribution period to which it relates_ , during this five/ four/ three year period. However, if the IP does not fulfill the requirement of minimum 78 days of paid or payable contribution as above in the specified CPs _on account of exigency_ beyond contribution as above in the specified CPs on account of exigency beyond control of IP, 78 days of paid/ payable contribution _shall be allowed to reckon from among the 02* contribution periods shown in the tables_ in Para (4.5) during the five/ four/ three-year period for determining eligibility. _The five/ four / three-year period along with extended period of one year for the purpose eligibility for eligibility, i.e. 1st January of the year of admission._ b) The insured person for the said purpose having five/ four / three years of continuous insurable employment shall be grouped as Group- I/ II / III respectively. c) _The date of entry into the scheme for calculating the minimum continuous period would be the date of registration available in the IP database of the ESIC as uploaded by the employer in the Web Portal of ESIC._ d) In case there is default or delay on the part of the employer in getting itself or the concerned employee covered under the Scheme, the ESIC will not be responsible for the said default or delay. _e) Any period prior to the date of entry described above would not be counted towards the five / four / three-year period of eligibility for the purpose of availing benefit of Insured Persons (IPs) Quota._ WPC No.17305/2018 & conn.cases 26 f) The combined earnings of the IP and spouse (parents of the applicant) should not exceed Rs. 06 (six) lakh per annum. g) All other words and expressions used not defined/ explained in this Admission Policy shall have the meanings respectively assiged to them in the ESI Act 1948, ESI (Central) Rules, 1950 and the ESI (General) Regulations, 1950. (italics supplied) ## **Does the Policy suffer from the vice of arbitrariness or unreasonableness?** 56. Keeping those limitations in mind, let us examine the Corporation’s admission policy. Para 8 of the Policy, as I mentioned earlier, is pivotal. It bears scrutiny. It contains these conditions: (1) The insured person must have been in continuous insurable employment for five/ four / three years. (2) The period must have been completed by the 1st January of the year of admission (2018). (3) The contribution must have been paid/ payable for not less than 78 days in all the 9/7/5 contribution periods immediately preceding 1st January of the year of admission. (4) The return of contribution must have been filed in 42 days after the termination of contribution period to which it relates. (5) If the IP does not fulfill the requirement of minimum 78 days of paid or payable contribution because of exigency, the IP shall be allowed to reckon from among the 02 contribution periods shown in the tables. (6) The five/ four / three-year period [must be reckoned] along with the extended period of one year. WPC No.17305/2018 & conn.cases 27 (7) The date of entry into the scheme for calculating the minimum continuous period would be the date of registration available in the IP database of the ESIC as uploaded by the employer. (8) The employer’s delay cannot bind the Corporation. (9) Any period of employment before registration with ESIC would not be counted. (10) The combined earnings of the applicant’s parents should not exceed six lakh rupees. (11) Words and expressions not defined in the Policy shall have the meanings ascribed to them in the ESI Act 1948, the Rules, and the Regulations. ## **What has been complied with and what has not been?** 57. All the petitioners have been in continuous insurable employment for five/four/three years. They completed that period by the 1st January 2018. The contributions have been paid for not less than 78 days in all the nine/seven/five contribution periods. But, in most cases, this got fulfilled only when the two—(i) and (ii)—exigency periods (the extended one year) are added. But contributions, on occasions, have been paid late. The returns, too, were filed late. What should follow? 58. In all cases, the common theme is delayed filing of return. The employees do, however, fulfill the length of service and other criteria. In WP (C) No.19850 of 2008, besides delayed contribution, the registration too was WPC No.17305/2018 & conn.cases 28 delayed. So we will take this case first, before addressing the common issue: the delayed contribution and filing of returns. 59. In WP (C) No.19850 of 2008, Sandhya’s previous employer registered her name with the Corporation in 2008 and continued to contribute. In 2005, Sandhya left the service and joined a State Government establishment—NHM. This Government undertaking did not contribute from 01.04.2009 to 31.03.2017. Under the pain of the Corporation’s coercive measures, the NHM registered its employees in March 2018 and paid all its arrears of contribution—Rs.93,85,221/- 60. On the delayed registration, Sri Sandesh Raja has contended that the continuous insurable employment for five years is non-negotiable, unalterable, as was held in _Jemin Elizabeth Mathew_ . According to him, any dilution in this principle will lead to abuse. Abuse, I reckon, is essentially a matter of supervision, or the lack of it. If I confine myself to registration, Sandhya had not been registered for the first time in 2018. She had been on Corporation’s rolls since 2010; there was a hiatus because she changed her employer. That employer, a State Government Undertaking, neglected to comply with the statutory mandate. So there was a break. In these circumstances, I do not think _Jemin Elizabeth Mathew_ will apply; the WPC No.17305/2018 & conn.cases 29 registration was in 2010, the break notwithstanding. Now we will consider the other objection: delayed filing of returns. ## **The Previous Adjudication:** 61. To appreciate these decisions, we may first set out the legal bounds of the policy. Paragraph 8 of Ext. P1 mandates that the insured person must be an 'employee' as defined in the ESI Act and should have been in continuous insurable employment for a minimum period of five years by 1st January 2018, the year of admission. The employer must have paid at least 78 days of contribution in each Contribution Period, during these five years. The five-year period would be counted from the date of employee’s registration—entry into the ESI Scheme. That apart, if there is default or delay on the employer’s part, the Corporation will not be responsible for the default or delay. Any period before the date of entry would not be counted towards the five-year period of eligibility to avail benefit of Insured Persons Quota. 62. As I see, _Bindu Radhakrishnan_ , rendered last year by a Division Bench, has no precedential bearing on the issues now raised. So it needs no reference. WPC No.17305/2018 & conn.cases 30 63. _Jemin Elizabeth Mathew_ is another decision the Corporation has relied on. Para-8 of the Policy, while defining an “insured person”, has mandated that the employee must have been “in continuous insurable employment for a period of five years” as on 1st January of the year of admission. The learned Division Bench has explained the semantic significance of “five years continuous insurable employment.” 64. In the context of interpreting the above expression, the Division Bench has held that the Corporation is “free to choose any yardstick” for processing the application of the wards of insured persons. The Division Bench, to my mind, has not advanced a proposition that the “yardstick” can be arbitrary, unreasonable, or capricious. Nor has it even remotely suggested that the entire policy has gained immunity from judicial scrutiny. That apart, the issues here—the contribution or the returns—have not fallen for consideration. Against _Jemin Elizabeth Mathew_ , I reckon, an SLP—Appeal C No. 31983/2014—seems to be pending. ## _**Geetha**_ **- The Line of Limitation:** 65. Another case of significance is _Geetha_ . This case deals with the date of entry into the scheme. It has considered the significance of the date of establishment’s or the employee’s registration. Pertinently, the employer WPC No.17305/2018 & conn.cases 31 registers the employees in the ESI Scheme under Section 2A. We will examine _Geetha_ , for the devil is in the detail. 66. _Geetha_ , per a learned Single Judge, has held that the date of enrolment in the Scheme is material; in fact, it is mandatory. In other words, the five-year period must be counted from the date of entry into the ESI Scheme. The facts, however, set this case apart. The employer got the petitioner's name registered on 03.08.2012. And it was based on this Court’s interim direction. The contribution for the period before 03.08.2012 was paid after the Court rendered the judgment—after 18.07.2014. Acknowledging it to be a hard case, the Court has accepted the Corporation’s disclaimer: If there is default or delay on the employer’s part in getting itself or the employee concerned covered under the Scheme, the Corporation will not take responsibility. As we are concerned with the delayed contribution are filing of returns, _Geetha_ may not obstruct us on our adjudicatory track. Given the scope of adjudication, I have not referred to the other precedents the counsel on either side relied on. ## **Power and Privilege:** WPC No.17305/2018 & conn.cases 32 67. But before addressing other aspects, I am drawn to one consistent plea, almost the Corporation’s leitmotif, that the Act does not compel the Corporation to provide admissions into medical colleges. It is the Corporation’s “brainchild.” It is a privilege the Board has and a benefit it extends to the employees. The employees, the assertion goes, must accept the benefit with all the strings attached, or not at all. 68. Regrettably, this line of argument offends “We the People of India.” In a democratic polity, governed by the rule of law, “privilege” is an anachronism. The ruled give the power to the ruler—if these expressions do not sound incongruous and pejorative. The ruler is in trust of the people’s power. The power belongs to the people, so does a privilege. The Corporation can be no different; it holds powers in trust and exercises them in pursuit of the welfare of those who entrusted the powers to it. 69. There are many provisions in the Act—for example, Sections 26, 28, and 59B—to underline the assertion that the Corporation has no privileges to extend and no benefits to confer, outside the statute, the rules, and the regulations. The Corporation comes into existence with the funds contributed, not the other way around. So this argument stands rejected. **Paid or Payable:** WPC No.17305/2018 & conn.cases 33 70. Section 2 (14) defines "insured person", as we have already discussed, as a person who is or was an employee regarding whom contributions are or “were payable” under this Act. It also stresses that because of the contributions thus paid or payable, the employee is entitled to any of the benefits provided by this Act. 71. Let us take the Policy, too. Clause 8 (1) defines the 'Insured Person' as an 'employee' who should have been in continuous insurable employment for a minimum period of five/four/three years as on, and immediately preceding, the 1st January 2018; and the contribution in respect of him/her “were paid/payable” for not less than 78 days in all the nine/seven/five contribution periods, immediately preceding 1[st] January 2018. 72. Semantically, the expression “paid” refers to a past, completed event; “payable,” on the other hand, refers to a future event. But “were payable,” employed both in the Act and the Admission Policy, could only refer to an unfulfilled past event. So once an amount became due, it might remain unpaid; unpaid it earns interest, not disqualification. The Corporation’s insistence that the amount must have been paid, I am afraid, negates its own definition and its own policy. The Corporation is estopped. WPC No.17305/2018 & conn.cases 34 ## **Returns & Impossibility:** 73. The Corporation further insists that, in all these cases, the employers did not file the returns on time. True, Section 44 of the Act, read with Regulation 26(a) of the ESI (General) Regulation, is unambiguous: the employer must file the return in 42 days after the termination of contribution period to which it relates. 74. Section 45, I may note, gives extensive powers to the Inspectors of the Corporation. These Inspectors can inspect any establishment falling within the sweep of the Act and ensure that the employer complies with the statutory mandates. Regulations 31, the Corporation, besides charging interest, may recover damages, too, as mandated under Regulation 31-C. The Corporation’s Inspectors have enormous civil and police powers vis-avis the erring or lax establishments and employers 75. Under Common Law dispensation, maxims are a source of law. The judge made law operated as the primary source of law for several hundred years before Parliament acquired legislative powers to create statutory law. It is important to understand that common law is the older and more traditional source of law, and legislative power is merely a layer applied on top of the WPC No.17305/2018 & conn.cases 35 older common law foundation. Since the 12th century, courts have had parallel and co-equal authority to make law.[10] Sweeping as it may sound, it at least underlines that maxims, absent statutes, could be a source of law. Law, after all, under Article 13 (3) (a), includes any Ordinance, order, byelaw, rule, regulation, notification, custom or usage having the force of law. 76. As the maxim pithily puts— _lex non cogit ad impossibilia_ —the law compels no man to do that which he cannot possibly perform. The law itself and the administration of it, said Sir W. Scott, referring to an alleged infraction of the revenue laws, must yield to that to which everything must bend, to necessity; the law, in its most positive and peremptory injunctions, is understood to disclaim, as it does in its general aphorisms, all intention of compelling impossibilities, and the administration of laws must adopt that general exception in consideration of all particular cases.[11] In other words, where the law creates a duty or change, and the party is disabled to perform it, with no default in her, and has no remedy over, the law will in general excuse her. 10William Burnham, Introduction to the Law and Legal System of the United States, 4th Ed. (St. Paul, Thomson West, 2006) 42 11Rajkumar Dey v. Tarapada Dey, AIR 1987 SC 2195 WPC No.17305/2018 & conn.cases 36 77. Here, neither the contribution nor the filing of returns is in the employee’s hands. True, registration policy, tinkered with, may lead to abuse, as apprehended by the Corporation. But, here, we will confine ourselves to the delayed filing of returns. There is no gainsaying the fact that all the employees had their registration beyond five years. Corporation does not—rightly—insist on timely contributions, for they could be payable, too. Then what ails? ## **The Remedial Mechanism:** 78. Finally, I may observe that the Corporation cannot lay the blame at someone else’s door. The Regulations contain many safeguards against truant employers. Regulation 26 obliges the employer to send the returns of contributions in specific time frames: (a) within 42 days of the termination of contribution period to which it relates; (b) within 21 days of the date of permanent closure of the factory or establishment, as the case may be; and (c) within 7 days of the date of receipt of requisition in that behalf from the appropriate office. 79. As per Regulation 27, the employer must, on demand from the appropriate office, issue certificate of contributions paid or payable WPC No.17305/2018 & conn.cases 37 regarding an insured person in the from specified by the Director-General. An employer who is liable to pay contributions shall pay those contributions within 21 days of the last day of the calendar month in which the contributions fall due (Regulation 31). 80. Regulation 31-A inflicts interest on contribution due, but not paid on time. Regulation 31-B prescribes the mode of recovery. Further, if an employer fails to contribute within the periods specified under Regulations 31, the Corporation, besides charging interest, may recover damages, too, as mandated under Regulation 31-C. The Corporation’s Inspectors have enormous civil and police powers vis-a-vis the erring or lax establishments and employers. Corporation’s power covers the entire employer’s conduct, including the contributions and returns. For the Corporation’s supervision failure, if at all; the employee cannot be left holding the baby, as if it were. ## **Conclusion:** 81. So viewed from any perspective, the Corporation cannot deny the otherwise eligible Insured Person the Certificate on the premise the employer contributed or filed the returns late. To that extent, Clause 8 (a) (d) cannot be sustained. WPC No.17305/2018 & conn.cases 38 82. The learned Standing Counsel has submitted that once any clause is invalidated, it amounts to nullifying a legislative provision or obliterating it, as if it never existed. So, according to him, not only the petitioners before the Court, but also all others, if otherwise, eligible must be given the benefit. That means, the Corporation must be allowed to redraft its policy. 83. The objection noted. First, in a matter of this nature—medical admissions under a strict frame—this Court must mould the relief to suit not only the needs of the suitors, but also the very prevailing academic and administrative practices. Second, has been invalided, if it could be termed thus, is a mere administrative order. Its nullification does not amount to statutory invalidation. Then, necessarily it must follow that only those vigilant, assertive suitors must get the benefit. No order on costs. **sd/-Dama Seshadri Naidu, Judge** css/