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REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL  NO.  8335  OF 2004

Employees  State  Insurance  Corporation

.... Appellant

Versus

Bhakra Beas Management Board &  Anr.  

.... Respondents

WITH

CIVIL APPEAL NO. 8336 OF 2004

O R D E R

CIVIL APPEAL  NO.  8335  OF 2004

Heard learned counsel for the parties.

This appeal has been filed against the judgment and  

order dated 14.11.2002 of the High Court of Delhi at New  

Delhi  whereby  the  appeal  filed  by  the  respondent  No.  1  

herein has been allowed and it has been declared that the  

respondent  No.  1  Board  is  not  liable  to  make  any  

contribution  towards  the  Employees  State  Insurance  in  

respect of the impugned demand.  

The facts in detail have been given in the impugned  

judgment and hence we need not repeat the same herein.

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It appears that the appellant had issued a notice  

under  Section  45-A  of  the  Employees  State  Insurance  Act,  

1948 (hereinafter for short 'the Act') for making employer's  

contribution  towards  the  employees  state  insurance.  The  

respondent  No.1  Board  challenged  that  notice  before  the  

Employees  State  Insurance  Court,  Delhi.   It  appears  that  

neither the workers concerned of the respondent No. 1 Board  

nor any one of them in representative capacity were made  

parties in the petition under Section 75 of the Act before  

the  Employees  State  Insurance  Court  or  before  the  High  

Court.

The  Employees  State  Insurance  Court  decided  in  

favour of the appellant and against the respondent No. 1  

Board  and  directed  the  respondent  No.  1  to  pay  its  

contribution  towards  the  employees  insurance.  Against  the  

said  order  of  the  Employees  State  Insurance  Court,  the  

respondent No. 1-Board filed an appeal under Section 82 of  

the Act before the High Court and the High Court has allowed  

the  said  appeal  holding  that  the  sub-stations  of  the  

respondent No. 1 Board are not factories within the meaning  

of the Act.  Hence this appeal by special leave.

This  Court  has  recently  held  in  the  case  of  

Fertilizer  &  Chemicals  Tranvancore  Ltd. Vs.  Regional

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Director, ESIC & Ors. 2009 (11)SCALE 766 as under :

“5. It  may  be  noted  that  in  its  petition  

before  the  Employees  Insurance  Court,  the  

appellant  herein  only  impleaded  the  Employees  

State  Insurance  Corporation  and  the  District  

Collectors  of  Alleppey,  Palaghat  and  Cannanore  

as  the  respondents  but  did  not  implead  even  a  

single workman as a respondent.

6. Labour statutes are meant for the benefit  

of the workmen.  Hence, ordinarily in all cases  

under labour statutes the workmen, or at least  

some of them in a representative capacity, or the  

trade-union  representing  the  concerned  workmen  

must be made a party. Hence, in our opinion the  

appellant  (petitioner  before  the  Employees  

Insurance  Court)  should  have  impleaded  atleast  

some of the persons concerned, as respondents.   

7. The case of the appellant was that, in  

fact,  none  of  the  concerned  persons  was  its  

employee and  it was difficult to identify them.  

8. In  this  connection  we  may  refer  to  

Section 75(1)(a) of the Act which states that if  

any question or dispute arises as to whether any  

person is an employee of the employer concerned,  

or  whether  the  employer  is  liable  to  pay  the  

employer's contribution towards the said persons'  

insurance,  that  is  a  matter  that  has  to  be  

decided by the Employees Insurance Court.  Hence,  

in our opinion, the concerned person has to be

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heard before a determination is made against him  

that  he  is  not  an  employee  of  the  employer  

concerned.   

9. The rules of natural justice require that  

if any adverse order is made against any party,  

he/she must be heard.  Thus if a determination is  

given by the Employees Insurance Court that the  

concerned persons are not the employees of the  

petitioner, and that determination is given even  

without hearing the concerned persons, it will be  

clearly against the rules of natural justice.   

10. It may be seen that Section 75 of the Act  

does not mention who will be the parties before  

the Insurance Court.  Since the determination by  

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/court.   

11. In our opinion, wherever any petition is  

filed by an employer under Section 75 of the Act,  

the employer has not only to implead the ESIC but  

has also to implead atleast some of the workers  

concerned (in a representative capacity if there  

are a large number of workers) or the trade-union  

representing the said workers.   If that is not  

done, and a decision is given in favour of the  

employer, the same will be in violation of the  

rules of natural justice.  After all, the real

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concerned  parties  in  labour  matters  are  the  

employer and the workers.  The ESI Corporation  

will not be in any way affected if the demand  

notice  sent  by  it  under  Section  45A/45B  is  

quashed.   

12. It must be remembered that the Act has  

been enacted for the benefit of the workers to  

give  them  medical  benefits,  which  have  been  

mentioned in Section 46 of the Act.  Hence the  

principal beneficiary of the Act is the workmen  

and not the ESI Corporation.  The ESI Corporation  

is only the agency to implement and carry out the  

object of the Act and it has nothing to lose if  

the decision of the Employees Insurance Court is  

given in favour of the employer.  It is only the  

workmen who have to lose if a decision is given  

in favour of the employer.  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.   

13. In the present case the workmen concerned  

were  not  made  parties  before  the  Employees  

Insurance Court, nor was notice issued to them by  

the said Court.”   

Neither the workers of the respondent No. 1 nor any  

one of them in representative capacity were impleaded either

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before  the  Employees  State  Insurance  Court  or  before  the  

High Court.  In our opinion, this is in violation of the  

principles of natural justice.  Hence, we allow this appeal,  

set aside the impugned judgment and order of the High Court  

as well as that of the Employees State Insurance  Court and  

remand the matter to the Employees State Insurance Court for  

deciding  the  same  after  impleading  the  workers  of  the  

respondent No. 1 Board or their  union in a representative  

capacity.  Since, the case pertains to the year 1987, we  

request the Employees State Insurance Court to decide the  

same expeditiously.

Appeal allowed.  No order as to the costs.

Civil Appeal No. 8336/2004

For  the  reasons  stated  in  order  passed  in  Civil  

Appeal No. 8335/2004, this appeal is also allowed and the  

impugned judgment of the High Court as also of the Employees  

Insurance Court are set aside and the matter remanded to the  

Employees State Insurance Court for deciding a fresh after  

impleading  the  workers  of  the  Respondent  No.  1  or  their  

union  in  a  representative  capacity.   Since,  the  case  

pertains to the year 1987, we request the Employees State  

Insurance Court to decide the same expeditiously.

Appeal allowed.  No order as to the costs.

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.....................J.       (MARKANDEY KATJU)

.....................J.                (ASOK KUMAR GANGULY)

NEW DELHI; SEPTMBER 17, 2009