26 February 1964
Supreme Court
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BASANT KUMAR SARKAR AND OTHERS Vs EAGLE ROLLING MILLS LTD. AND OTHERS

Bench: GAJENDRAGADKAR, P.B. (CJ),WANCHOO, K.N.,SHAH, J.C.,AYYANGAR, N. RAJAGOPALA,SIKRI, S.M.
Case number: Appeal (civil) 721 of 1962


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PETITIONER: BASANT KUMAR SARKAR AND OTHERS

       Vs.

RESPONDENT: EAGLE ROLLING MILLS LTD.  AND OTHERS

DATE OF JUDGMENT: 26/02/1964

BENCH: GAJENDRAGADKAR, P.B. (CJ) BENCH: GAJENDRAGADKAR, P.B. (CJ) WANCHOO, K.N. SHAH, J.C. AYYANGAR, N. RAJAGOPALA SIKRI, S.M.

CITATION:  1964 AIR 1260            1964 SCR  (6) 913  CITATOR INFO :  C          1980 SC 882  (16)  RF         1985 SC 790  (4)

ACT: Employees  State  Insurance  Act  (XXXIV  of  1948),s.  1(3) Constitutional  validity-Central  Government  empowered   to apply   provisions  of  Act  by  notification-If   excessive delegation.

HEADNOTE: The  appellants  as workmen of respondent No. 1 in  all  the three respondent concerns were getting free medical benefits of a very high order in a well furnished hospital maintained by  respondent No. 1. Respondent No. 3. the Union  of  India issued  a notification under s. 1(3) of the Employees  State Insurance  Act appointing 28th August, 1960 as the  date  on which  some provisions of the Act should come into force  in certain  areas of the State of Bihar and the area  in  which the  appellants  were working came within the scope  of  the Act.   In  pursuance  of the said  notification,  the  Chief Executive Officer of Respondent No. 1 issued notices to  the appellants  that  the  medical  benefits  upto  the   extent admissible  under  the  Act will cease  to  be  provided  to insurable  persons  from the appointed day and  the  medical benefits  would  thereafter  be  governed  by  the  relevant provisions of the Act.  The appellants in a writ petition to the High Court challenged the validity of s. 1(3) of the Act and  legality  of the notifications issued under  it,  inter alia,  on  the  ground that it contravened Art.  14  of  the Constitution   and  suffers  from  the  vice  of   excessive delegation.  The High Court rejected the plea and  dismissed the  writ  petitions.   On  appeal  by  special  leave   the appellants  contended that s. 1(3) of the Act  suffers  from excessive delegation and is, therefore, invalid. Held:     (i)  S. 1(3) of the Act is not an illustration  of delegated  legislation  at  all,  it  can  be  described  as conditional  legislation.   It  purports  to  authorise  the Central  Government  to  establish  a  corporation  for  the administration  of the scheme of Employees’ State  Insurance

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by  a notification.  As to when the notification  should  be issued and in respect of what factories it should be issued, has  been left to the discretion of the  Central  Government and  that is precisely what is usually done  by  conditional legislation. Queen v. Burah, 5. I.A. 178, relied on. (ii) Assuming there is an element of delegation, the plea is equally  unsustainable,  because there  is  enough  guidance given  by  the relevant provisions of the Act and  the  very scheme of the Act itself.  In the very nature of things,  it would have been impossible for the legislature to decide  in what areas and in respect of which factories the  Employees’ State  Insurance Corporation should be established.   It  is obvious that a scheme of this kind, though very  beneficent, could not be introduced 34 -159 S.C.-58 914 in  the whole of the country all at once.  Such  -beneficial measures  which need careful experimentation have  sometimes to  be  adopted by stages and in different phases,  and  so, inevitably, the question of extending the statutory benefits contemplated by the Act has to be left to the discretion  of the appropriate Government.  That cannot amount to excessive delegation. Edward Mills Co. Ltd.  Beawar v. The State of Ajmer,  [1955] 1  S.C.R.  735, M/s Bhikusa Yamasa  Kshatriya  v.  Sangamner Akola  Taluka Bidi Kamgar Union, [1963] Supp. 1  S.C.R.  524 and  Bhikusa  Yamasa Kahtriva v. Union of  India,  [1964]  1 S.C.R. 860 followed:

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 721-723  of 1962. Appeals  by special leave from the judgment and order  dated March  1, 1961, of the Patna High Court in  Misc.   Judicial Cases Nos. 1167, 1122 and 1235 of 1960. N.   C.  Chatterjee,  Rai  Behari  Singh  and  Udai   Pratap Singh,for the appellants (in all the appeals). B.   P.  Singh,  N.  P.  Singh and I.  N.  Shroff,  for  the respondent No. 1 (in all the appeals). C.   K.   Daphtary,  Attorney-General,  N.  S.  Bindra,   V. D.Mahajan and B. R. G. K. Achar, for respondents Nos. 2  and 3. February 26, 1964.  The Judgment of the Court was  delivered by GAJENDRAGADKAR.   C.J.-The  short question which  arises  in these  appeals by special leave is whether section  1(3)  of the  Employees’ State Insurance Act, 1948 (No. 34  of  1948) (hereinafter  called  the Act) is invalid.   By  their  writ petitions filed before the Patna High Court, the  appellants who  are the workmen of the three respondent  concerns,  the Eagle  Rolling Mills Ltd., the Kumardhubi Engineering  Works Ltd.,  and  Kumardhubi  Fire Clay  and  Silica  Works  Ltd., respectively,   alleged  that  the  impugned   section   has contravened  Art. 14 of the Constitution, and  suffers  from the  vice of excessive delegation, and as such  is  invalid. These   employers  were  impleaded  as  respondent   No.   1 respectively  in the three writ petitions.  The  High  Court has rejected the plea and the writ petitions filed by  915 the  appellants  have  accordingly been  dismissed.   It  is against this decision of the High Court that the  appellants have  come  to  this  Court and  have  impleaded  the  three

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employers  respectively.   The  three  appeals  proceed   on similar  facts  and raise an identical question of  law  and have, therefore, been heard together. It  appears that respondents No. 1 in all the three  appeals are under the management of M/s.  Bird.& Co. Ltd., through a General  Manager, and the appellants are their workmen.   As such  workmen,  the  appellants  were  getting  satisfactory medical  benefits of a very high order free of  any  charge. Respondent  No. 1 in each appeal maintained a  wellfurnished hospital  with  provision  for 60  permanent  beds  for  the workmen,  their  families and their  dependents.   The  main grievance  made by the appellants is that as a result of  s. 1(3) of the Act, the appellants have now to be content  with medical benefits of a less satisfactory nature.  That is why they  challenged  the validity of the impugned  section  and contest  the  propriety  and legality  of  the  notification issued under it.  To these writ petitions as well as to  the appeals, the Employees’ State Insurance Corporation and  the Union  of India have been impleaded as respondents 2  and  3 respectively. On  the  22nd  August,  1960,  respondent  No.  3  issued  a notification under section 1, sub-section (3) appointing the 28th  August, 1960 as the date on which some  provisions  of the Act should come into force in certain areas of the State of  Bihar.   By  this notification, the area  in  which  the appellants are working came within the scope of the Act.  In pursuance  of  the said notification,  the  Chief  Executive Officer  of respondent No. 1 informed the appellants on  the 25th August, 1960 that the medical benefits including indoor and  outdoor treatment upto the extent admissible under  the Act will cease to be provided to insurable person-, from the appointed day.  A notice in that behalf was duly issued  and published by the said Officer.  Similar notices were  issued indicating  to  the appellants that medical  benefits  would thereafter be governed by the relevant provisions of the Act and not by the arrangements which had been made 916 earlier by respondent No. 1 in that behalf.  That, in brief, is the genesis of the present writ petitions and the  nature of the dispute between the parties. The first point which Mr. Chatterjee has raised before    us is  that s. 1(3) of the Act suffers from excessive,  delega- tion  and is, therefore, invalid.  In order to consider  the validity _of this argument, it is necessary to read  section 1, sub-section (3):-               "The Act shall come into force on such date or               dates  as  the  Central  Government  may,   by               notification in the Official Gazette, appoint,               and  different  dates  may  be  appointed  for               different  provisions  of  this  Act  and  for               different   States  or  for  different   parts               thereof’. The  argument  is  that  the  power  given  to  the  Central Government  to apply the provisions of the Act by  notifica- tion, confers on the Central Government absolute discretion, the  exercise  of  which is not guided  by  any  legislative provision  and  is, therefore, invalid.  The  Act  does  not prescribe  any  considerations  in the light  of  which  the Central Government can proceed to act under s. 1(3) and such uncanalised power conferred on, the Central Government  must be  treated  as  invalid.   We are  not  impressed  by  this argument.   Section  1(3) is really not an  illustration  of delegated  legislation  at all; it is what can  be  properly described   as   conditional  legislation.   The   Act   has prescribed a self-contained code in regard to the  insurance

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of  the, employees covered by it; several remedial  measures which  the  Legislature thought it necessary to  enforce  in regard to such workmen have been specifically dealt with and appropriate  provisions  have  been made to  carry  out  the policy  of  the Act as laid down in its  relevant  sections. Section  3(1) of the Act purports to authorise  the  Central Government to establish a Corporation for the administration of   the   scheme  of  Employees’  State  Insurance   by   a notification.  In other words, when the notification  should be  issued  and in respect of what factories ’it  should  be issued,  has  been  left to the discretion  of  the  Central Government  and that is precisely what is usually  done,  by conditional legislation.  917 What  Lord Selborne said about the powers conferred  on  the Lieutenant-Governor by virtue of the relevant provisions  of Act 22 of 1869 in Queen v. Burah(1), can be said with  equal justification  about  the powers conferred  on  the  Central Government by s. 1(3).  Said Lord Selborne in that case:               "Their Lordships think that it is a fallacy to               speak  of the powers thus conferred  upon  the               Lieutenant-Governor (large as they undoubtedly               are)  as"  if, when they were  exercised,  the               efficacy of the acts done under them would  be               due  to arty other legislative authority  than               that  of  the  Governor-General  in   Council.               Their   whole   operation  is   directly   and               immediately  under and by virtue of  this  Act               (XXII of 1869) itself.  The proper Legislature               has  exercised  its  judgment  as,  to  place,               person,  laws, powers; and the result of  that               judgment  has been to legislate  conditionally               as to all these things. The Conditions  having               been   fulfilled,  the  legislation,  is   now               absolute". That  is  the  first  answer  to  the  plea  raised  by  Mr. Chatterjee. Assuming that there is an element of delegation, the plea is equally  unsustainable,  because there  is  enough  guidance given  by the  relevant provisions  of the Act      and  the very  scheme  of the Act itself.  The preamble  to  the  Act shows that it  was passed because the legislature thought it expedient  to  provide for certain benefits to employees  in case  of sickness, maternity and employment injury  and.  to make  provision  for  certain  other  matters  in   relation thereto.   So,  the  policy of the Act  is  unambiguous  and clear.   The  material’  definitions  of  "benefit  period", "employee", "factory","injured     person   ",   "sickness", "wages" and other terms contained in    s.  2 give  a  clear ’idea as to the nature of the factories to   which  the  Act is  intended to be applied, the class of persons  for  whose benefit  it has’ been passed and the nature of  the  benefit which  is intended to be conferred on them.  Chapter  II  of the Act deals with the (1)  5 I.A. 178 at p. 195. 918 Corporation, Standing Committee and Medical Benefit  Council and  their constitution; Chapter III deals with the  problem of  finance  and  audit; Chapter  IV  makes  provisions  for contribution  both by the employees and the employer,    and Chapter V prescribes the benefits which have to be conferred on the workmen; it also gives general provisions in  respect of  those  benefits.   Chapter  V-A  deals  with  transitory provisions;  Chapter  VI  deals  with  the  adjudication  of disputes  and claims; and Chapter VII prescribes  penalties.

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Chapter  VIII  which is the last Chapter,  deals  with  mis- cellaneous matters.  In the very nature of things, it  would have  been impossible for the legislature to decide in  what areas and in respect of which factories the Employees’ State Insurance Corporation should be established.  It is  obvious that  a scheme of this kind, though very beneficient,  could not  be introduced in the whole of the country all at  once. Such beneficial measures which need careful  experimentation have  sometimes  to be adopted by stages  and  in  different phases,  and so, inevitably, the question of  extending  the statutory benefits contemplated by the Act has to be left to the discretion of the appropriate Government.   "Appropriate Government" under s. 2(1) means in respect of establishments under  the  control of the Central Government or  a  railway administration  or a major port or a mine or  oilfield,  the Central  Government,  and  in all  other  cases,  the  State Government.   Thus, it is clear that when extending the  Act to  different  establishments, the  relevant  Government  is given  the  power  to  constitute  a  Corporation  for   the administration of the scheme of Employees’ State  Insurance. The  course adopted by modern legislatures in  dealing  with welfare schemes has uniformly conformed to the same pattern. The  legislature evolves a scheme of socioeconomic  welfare, makes elaborate provisions in respect of it and leaves it to the  Government  concerned to decide when, how and  in  what manner  the  scheme  should be  introduced.   That,  in  our opinion, cannot amount to excessive delegation. The  question  of excessive delegation has  been  frequently considered  by this Court and the approach to be adopted  in dealing with it is no longer in doubt.  In the Edward  Mills Co. Ltd., Beawar and Others v. The State of Ajmer  919 and  Another(1),  this Court repelled the challenge  to  the validity of s. 27 of the Minimum Wages Act, 1948 (No.  XI of 1948),  whereby  power  had been given  to  the  appropriate Government  to  add  to  either part  of  the  schedule  any employment  in  respect  of which it  was  of  opinion  that minimum  wages  shall be fixed by giving notification  in  a particular manner, and it was provided that on the issue  of the  notification, the scheme shall, in its  application  to the State, be deemed to be amended accordingly.  In  dealing with  this  problem, this Court observed that there  was  an element  of delegation implied in the provisions of  s.  27, for  the  legislature, in a sense, authorised  another  body specified  by it to do something which it might  do  itself; but it was held that such delegation was not unwarranted and unconstitutional  and  it  did  not  exceed  the  limits  of permissible  delegation.  To the same effect are the  recent decisions  of this Court in M/s.  Bhikusa  Yamasa  Kshatriya and Another v. Sangamner Akola Taluka Bidi Kamgar Union  and Others(2), and Bhikusa Yamasa Kshatriya (P) Ltd. v. Union of India  and  Another(3).  Therefore, we must  hold  that  the impugned  section  1  (3)  of the Act is  not  shown  to  be constitutionally invalid. Before  we part with these appeals, there is one more  point to which reference must be made.  We have already  mentioned that  after  the notification was issued under  s.  1(3)  by respondent  No. 3 appointing August 28, 1960 as the date  on which  some  of the provisions of the Act should  come  into force  in  certain areas of the State of  Bihar,  the  Chief Executive Officer of respondent No. 1 issued notices  giving effect to the State Government’s notification and intimating to  the appellants that by reason of the said  notification, the  medical benefits which were being given to them in  the past would be received by then under the relevant provisions

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of the Act.  It was urged by the appellants before the  High Court  that these notices were invalid and should be  struck down.   The  argument  which was urged in  support  of  this contention was that respondent (1)[1955] 1 S.C.R. 735. (2)  [1963] Supp.  1 S.C.R. 524. (3)  [1964] 1 S.C.R. 860. 920 No. 1 in all the three appeals were not entitled to  curtail the benefits provided to the appellants by them and that the said benefits were not similar either qualitatively or quan- titatively  to the benefits under the Scheme which had  been brought  into force under the Act.  The High Court has  held that  the question as to whether the notices  and  circulars issued  by  respondent  No. 1 were  invalid,  could  not  be considered  under  Art. 226 of the Constitution; that  is  a matter  which can be appropriately raised in the form  of  a dispute  by  the appellants under s. 10  of  the  Industrial Disputes  Act.  It is true that the powers conferred on  the High  Courts  under Art. 226 are very wide, but  it  is  not suggested by Mr. Chatterjee that even these powers can  take in within their sweep industrial disputes of the kind  which this   contention  seeks  to  raise.    Therefore,   without expressing  any opinion on the merits of the contention,  we would confirm the finding of the High Court that the  proper remedy  which  is available to the appellants  to  ventilate their  grievances  in  respect  of  the  said  notices   and circulars  is  to take recourse to s. 10 of  the  Industrial Disputes Act, or seek relief, if possible, under sections 74 and 75 of the Act. The  result is, the appeals fail and are  dismissed.   There would be no order as to costs. Appeals dismissed.