Jyothi Chemical Industries v. Regional Director, E.S.I. Corporation

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT :** **THE HONOURABLE MR. JUSTICE M.N.KRISHNAN** **THURSDAY, THE 2ND DECEMBER 2010 / 11TH AGRAHAYANA 1932** **Ins.APP.No. 30 of 2010()** **---------------------------------** **IC.57/2006 of EMPLOYEE'S INSURANCE COURT, ALAPPUZHA** **....................** ## **APPELLANT/APPLICANT** **---------------------------------------** **M/S.JYOTHI CHEMICAL INDUSTRIES, V/494-D, IDA, EDAYAR, COCHIN-683 110.** **BY ADV. SRI.BECHU KURIAN THOMAS** ## **RESPONDENT(S):** **-------------------------** **THE REGIONAL DIRECTOR, E.S.I.CORPORATION, PANCHADEEP BHAVAN, TRICHUR-20.** **BY ADV. SRI.T.P.M.IBRAHIM KHAN, SC, ESI CORPN.** **THIS INSURANCE APPEALS HAVING BEEN FINALLY HEARD ON 02/12/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **sts** ## **INAP.NO.30/2010** ||**ORDER ON I.A.NO. 1088/2010**|**IN INAP.NO.30/2010**| |---|---|---| ||**DISMISSED**|| |**02/12/2010**||**SD/- M.N.KRISHNAN, JUDGE**| |||**/TRUE COPY/**| |||**P.A.TO.JUDGE**| ## **sts** ## **M.N. KRISHNAN, J.** ........................................... Ins.A.NO.30 OF 2010 ............................................. Dated this the 2[nd] day of December, 2010. ## **J U D G M E N T** This is an appeal preferred against the order of the Employees' Insurance Court, Alappuzha in I.C.No.57/2006. The appellant before me is the applicant before the court below, who had moved an application for declaration to the effect that the applicant establishment is not liable to be covered under the E.S.I.Act. 2. According to the applicant, M/s. Jhothi Chemical Industries is a small scale industrial unit and it was never employed more than 8 persons and therefore, provisions of the Employees' Insurance Act cannot be extended to it. 3. On the contra, the E.S.I Corporation would contend that when inspections were effected by the authorised officers, they were able to find 13 persons on 5.5.2005 and 16 persons on 6.5.2005. Therefore they contend for the position that establishment is liable to be covered. 4. Both sides adduced evidence and the trial court on analysis found in favour of the Corporation and ordered the Ins.A.NO.30 OF 2010 : 2 : establishment to be covered under the E.S.I. Act. It is against that decision, the present appeal is preferred. 5. Now a situation has arisen where if the appeal is to be allowed, then interest of the workers will have to be affected. When such a contingency arose, the Hon'ble Supreme Court of India in the decisions reported in **Fertilizers & Chemicals Travancore Ltd. v. E.S.I. Corporation** (2009 (3) KLT 946 (SC) and in **Employees State Insurance Corporation v.Bhakra Beas Management Board** (2009 (10) SCC 671) had taken the view that the workers have to be impleaded or at least their representatives must be heard before passing an order. 6. In **Fertilizers & Chemicals Travancore Ltd. v. E.S.I. Corporation** (2009 (3) KLT 946 (SC), the Supreme Court in para 10 of its judgment made it clear that : “It may be seen that Section 75 of the Act does not mention who will be the parties before the Insurance Court. Since determination by the Insurance Court is a quasi judicial determination, natural justice requires that any party which may be : 3 : Ins.A.NO.30 OF 2010 adversely affected or may suffer civil consequences by such determination must be heard before passing any order by the authority/court”. In para12 it is reiterated that: “Hence the workmen (or at least some of them in a representative capacity, or their trade union) have to be necessarily made a party/parties because the Act is a labour legislation made for the benefit of the workmen”. 7. In the later decision in **Employees State Insurance Corporation v. Bhakra Beas Management Board** (2009 (10) SCC 671) the Supreme Court reiterated that: “Thus, if a determination is given by the Employees Insurance Court that the persons concerned are not employees of the petitioner and that determination is given even without hearing the persons concerned, it will be clearly against the rules of natural justice”. 8. It may be seen that Section 75 of the Act does not : 4 : ## Ins.A.NO.30 OF 2010 mention who will be the parties before the Insurance Court. Since determination of the Insurance Court is a quasi judicial determination, natural justice requires that any party which may be adversely affected or may suffer civil consequences by such determination, must be heard before passing any order by the authority or the court. So the enunciated principles explicitly make it clear that if an order is to be passed in favour of the establishment, then it will prejudicially affect the workers and therefore junction of the workers or their representative is necessary for a proper disposal of the matter. Therefore, I am not going deep into other materials leaving everything wide open for reconsideration. 9. Therefore, the order under challenge is set aside and the matter is remitted back to the trial court with a direction to direct the parties to implead the workers or their representatives and thereafter permit all concerned to produce both documentary as well as oral evidence in support of their respective contentions and the whole matter be decided afresh in accordance with law. The Employees : 5 : ## Ins.A.NO.30 OF 2010 Insurance Court is directed to issue notice to the parties fixing the date of appearance. Needless to say that no coercive action is to be initiated by the Corporation for realisation of the amount until a final decision is taken in the matter. Disposed of accordingly. ## **M.N. KRISHNAN, JUDGE.** **cl** : 6 : ## Ins.A.NO.30 OF 2010 ## **M.N. KRISHNAN, J.** ........................................... A.S.NO.389 OF 2001 ............................................. 11[th] day of November, 2010. **J U D G M E N T**