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CASE NO.: Appeal (civil)  1726 of 2005

PETITIONER: Employees State Insurance Corporation & Ors

RESPONDENT: Jardine Henderson Staff Association & Ors

DATE OF JUDGMENT: 25/07/2006

BENCH: Dr. AR. Lakshmanan & Lokeshwar Singh Panta

JUDGMENT: J U D G M E N T WITH Civil Appeal Nos.3132, 3133, 3134, 3135, 3149, 3136, 3137,  3138, 3139, 3140, 3141, 3142, 3143, 3144, 3145, 3146,  3148, 3147 & 3150 of 2006  (@ SLP (C) Nos. 17431-17435, 19447-19451, 19453-19457,  19466-19470, 24210, 20831-20834, 20836-20840, 20841- 20847, 20849-20853, 20855-20864, 20866-20873, 20874- 20881, 20882-20891, 20893-20897, 20898-20907, 20933- 20939, 24197-24206, 22783-22790 and 25482 of 2004)

Dr. AR. Lakshmanan, J.

Leave granted in the special leave petitions. Civil Appeal No. 1726 of 2005 and 119 special leave  petitions (now civil appeals) have been filed by the Employees  State Insurance Corporation (in short the "Corporation") against  the common final judgment and order dated 16.03.2004 passed  by the Division Bench of High Court at Calcutta in APO No. 124  of 2001.   Civil Appeal No. 1726 of 2005 arises out of the writ petition  filed by Jardine Henderson Staff Association and Others wherein  they challenged the Notification dated 23.12.1996.  The  Notification was issued by the Union of India by which the  Central Government amended Rules 50, 51 and 54 of the  Employees State Insurance (Central) Rules, 1950, pursuant to  which the wage limit for coverage of an employee under Section  2(9)(b) of the Employees State Insurance Act (in short ’the Act’)  was enhanced from Rs.3,000/- to Rs.6,500/- instead of the  existing wage ceiling of Rs.3,000/- p.m.  Various Employees  Associations challenged the Notification.  They prayed for  quashing the Notification and also, in some of the appeals, for  declaring the Amended Rules as ultra vires.  Petitions were filed  mostly by the Employees Union both in the original side and the  appellate side of the High Court at Calcutta.   A learned Single Judge of the High Court disposed off all the  writ petitions by a common judgment and order, by quashing the  amendment of the Rules of 1950 with the result that there was  no enhancement of wage ceiling.  About 63 appeals were filed by  the Corporation as well as by the Union of India against that part  of the order by which the amendment was quashed.  No appeals  and/or cross appeals were filed by any of the writ petitioners.   Therefore, the Division Bench of the High Court, by the  impugned common judgment, allowed the appeals and set aside  the judgment of the learned Single Judge of the High Court.  The  High Court held that the enhancement could not be termed as  ultra vires for the purpose of the Act or being inconsistent  therewith as held by the learned Single Judge.  The High Court

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further held that all interim orders passed in this connection,  inter alia, staying the operation of the said enhancement are  vacated.  However, the High Court did not stop at that, but,  proceeded to direct that the employers who had stay order in  their favour, will implement the amendment only from the date of  the impugned judgment of the High Court dated 16.03.2004  though the amendment came into operation w.e.f. 01.01.1997.  The Corporation, being aggrieved of this direction of the  High Court giving liberty to the employers to comply with the  Notification on and from 16.03.2004, preferred the above civil  appeals.  The High Court also gave liberty to the employers to  apply for exemption and directed the State Government to  dispose off the same within two months.           Mr. C.S.  Rajan, learned senior counsel ably assisted by Mr.  V.J. Francis, learned counsel argued the case on behalf of the  Corporation.         Mr. Rajan submitted that the condition imposed by the  Division Bench of the High Court is not proper for the reason  that once the Notification is enforced, the applicability of the  same will be from the date of Notification and not from any future  date.  This submission, according to him, was upheld by this  Court in the case of Employees’ State Insurance Corpn. Vs.  Kerala State Handloom Development Corpn. Employees  Union (CITU), Kannur, Dist. Kannur, Kerala and Others,  (1994) 1 SCC 268 and that the interim orders passed at different  stages will not have any effect on the applicability and  enforceability.         Mr. Rajan further argued that the principle of prospective  overruling was laid down for the first time by this Court in the  case of I.C. Golak Nath & Ors. vs. State of Punjab & Anrs.,  [1967] 2 SCR 762 and applied by this Court in a series of  decisions till now, will not be applicable to the present case  coming under the Act for various reasons.  Another Constitution  Bench of this Court reiterating the above principles has also  observed in the case of Managing Director, ECIL, Hyderabad  and Others vs. B. Karunakar and Others, (1993) 4 SCC 727 as  under: "It is now well settled that the courts can make the law  laid down by them prospective in operation to prevent  unsettlement of the settled positions, to prevent  administrative chaos and to meet the ends of justice"

       According to Mr. Rajan, the law is well settled in this case  i.e. the upward revision from Rs.400/- p.m. in the ceiling of  wages has been upheld by various High Courts and also by this  Court inasmuch as that with the upward revision more  employees will be eligible to the benefits under the Act and they  will have to make a little contribution @ 1.75% from their wages  every month.  The employees share is to the extent of 4.75% p.m.  under Rule 51 of the Employees State Insurance (Central) Rules,  1950.  The law is also settled to the effect that once interim stay  is granted with regard to the operation of the new law, and the  writ petition is dismissed subsequently, the operation of the law  will relate back to the original date of enforcement and, therefore,  there is nothing in this case to unsettle the settled law which  would have effect on past transactions and, therefore, it is not  necessary to bring in the principle.  Moreover, in this case, the  Act is made applicable for giving medical benefits to all those  employees only, whose wages do not exceed the prescribed limit  notified by the Central Government as stated above.  In this case,  there was no dispute about the applicability of the Act but the  question was about the ceiling limit.  The reason, as pointed out  above, is to give benefits to more number of employees.  The  employees will not get benefit unless the proper machinery are  set up for the purpose.  That cannot be done overnight but over a

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period of years.   In this context, the observations made by this Court in  Gasket Radiators Pvt. Ltd. Vs. Employees’ State Insurance  Corporation and Another, (1985) 2 SCC 68 was relied on as  relevant.  Learned senior counsel relies upon the following  observations from that case:  "In fact, it may often happen that the rendering of a  service or the conferment of a benefit may only follow  after the consolidation of a fund from the fee levied.  Hospitals, for instance, cannot be built in a day nor  medical facilities provided right from the day of the  commencement of the scheme. It is only after a  sufficient nucleus is available that one may reasonably  expect a compensating return."

            X                      X                      X

"Therefore, whether the special contribution is to  be viewed as a tax, fee or neither it has sufficient  constitutional protection."

While replying to the arguments advanced by learned  counsel for the respondents that many employees have retired  from service or have left the company or organisation, as  according to Mr. Rajan, has no relevance because the liability  under the Act continues till the date of employment of the  employee concerned, or till the closure of the establishment.   This is also settled by this Court in the case of Employees’ State  Insurance Corporation vs. Hotel Kalpaka International,  (1993) 2 SCC 9.  The Division Bench has also noticed that the Corporation  has to spend approximately Rs.800/- p.a. for each insured  employee who has to be given the benefit.  Naturally, therefore,  once the machinery is set up it must keep going and its  functioning cannot be stopped merely because some employees  approach the High Court and has obtained stay against  extending the benefits to more employees.  While answering the complaint of efficiency of the ESIC  Health System as not up to the mark comparing it with other  large hospitals in the country, Mr. Rajan submitted that large  hospitals are not available in every part of the country and it is at  that moment the need of an ESI Hospital comes into picture.  It  can never be said at that time that the ESI machinery will not be  useful.  It is also well known that the ESI Hospital which is run  in a remote area also makes reference of a serious case to a big  hospital at the cost of the Corporation and for that purpose a  share from the wages of the employees is not deducted and for  this purpose there is no limit with regard to the wages earned by  the insured employees.   Mr. Rajan also made reference to the principles laid down  by this Court in the case of Employees’ State Insurance Corpn.  vs. All India ITDC Employees’ Union and Others, (2006) 4  SCC 257 wherein this Court had accepted, on principle, the  submission of the Corporation that it is not open to the High  Court that the Notification has to operate prospectively.  It is  submitted that the law in this respect has been reiterated by this  Court in the said ruling of this Court and the appellant also  relies on the said ruling which is the latest judgment.   According to Mr. Rajan the amounts that are collected by  the Corporation goes into the fund maintained under Section 26  of the Act and the same is utilized as contemplated under Section  28 of the Act.  It is laid down in the case of Hotel Kalpaka  International (supra) as under:         "Under Section 26 of the Act all contributions are paid  into a common fund. Such a fund will have to be

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administered for the purposes of the Act as indicated  under Section 28.  Therefore, the employer cannot  contend that he did not collect the employees’  contribution and hence, he cannot be called upon to  pay".

He also submitted that the principle of unjust enrichment  as enunciated by this Court in the case of Mafatlal Industries  Ltd. And Others vs. Union of India and Others, (1997) 5 SCC  536 will not be applicable to this case because this is not a case  where there has been any illegal collection of any levy on the  basis of an enhancement, which was declared unconstitutional  and illegal by the Courts due to which the party who collected  the amount had to refund the amount or otherwise it would have  become an unjust enrichment.  It is also pointed out that this Court has noticed in the case  of Bharagath Engineering vs. R.Ranganayaki and Another,  (2003) 2 SCC 138 that even after the death of the insured  employee who survived for a day, and even before the registration  with the Corporation, his dependants are entitled to receive the  benefit under the Act.  Therefore, it is submitted that the benefits  that are granted under the Act are unique.  Moreover, if any  employee or employer makes a claim that they are giving better  benefits, then it is open to that party to apply to the appropriate  Government for exemption under any of the provisions of  Chapter-VIII of the Act, i.e. Sections 87 to 91A.  That only means  that the liability of both the employee and the employer under  the Act continue till the law takes its course as provided under  the Act.  Mr. Rajan, therefore, submitted that all the 120 appeals  filed by the Corporation against the common judgment of the  High Court are fit to be allowed with such directions as this  Court may be inclined to give which will have the effect under  Article 141 of the Constitutional of India.  On behalf of the respondents, we heard the arguments of  Mr. Gaurab Kumar Banerjee, learned senior counsel, Mr.  P.H.Parekh, Mr. Gaurav Agrawal, Mr. Avijit Bhattacharjee  learned counsel, Mr. Pradip Ghosh, Mr. Kailash Vasdev, learned  Senior counsel, Mr. E.C.Agrawala, Mr. K.V. Viswanathan, Mr.  Rauf Rahim, Mr. Suresh Kumar, Dr. Sumeet Bhardwaj, Mr. Vipin  Gogia, Mr. Maninder Singh, Ms. Meera Mathur, Mr. Deepak  Sabharwal, Mr. Chiraranjan Addey, Mr. Rajindra Dhawan, Ms.  Anitha Shenoy, Mr. A. Bhattacharya, Mr. Rana Mukherjee, Mr.  Arun Kumar Sinha, Mr. K.V. Mohan, Ms. Kumud Lata Das, Mr.  Sushil Kumar Jain, Mr. Bharat Sangal, Mr. Jatin Zaveri, Mr.  Pradeep Misra, Mr. Vairav Gaggar, Mr. Ghanshyam Joshi,  learned counsel and Mr. R. Venkatramani, learned senior  counsel for their respective parties.  M/s Jardine Henderson Ltd. submitted a statement of  expenditure for medical expenses incurred by the Company on  the staff, during the period from the year 2001-2004.  Likewise,  other respondents have also filed statement of submissions in  the form of affidavit on behalf of their parties.  Lagan Jute Machinery Company Limited \026 respondent  No.14 in SLP (Civil) No. 19454 of 2004 in APO No. 80 of 2001  submitted its submissions.  It was submitted by learned counsel  for the said Company that the Company was prevented by orders  of Court from making deductions for ESI contribution from wages  and salaries of the employees.  These orders were passed in writ  petitions filed by the Employees Unions and in view of the  injunction order dated 22.05.1997 passed by the Calcutta High  Court, the Company was prevented from deducting ESI  contribution and thus was prevented from making any payment  to ESI.  In order to provide medical facilities and benefits to the  employees, the Company entered into a Settlement Agreement

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with the Employees Union under which the company has  incurred a total expense of Rs.97,06,000/- for the period 1997- 2004 till the time of passing of the impugned order.  It is  submitted that in the event the respondent-Company was liable  to pay ESI contribution, the total payment would have been  approximate at Rs. 33 lacs.  Therefore, as against a total  expenditure of Rs.33 lacs under the ESI, the respondent has  incurred an expense of Rs. 97 lacs for providing medical  facilities.  After the impugned judgment in the year 2004, the  respondent-Company is making payment of ESI contribution.  In  these circumstances, it is submitted by learned counsel that the  respondent should not be made liable to make payment from the  period 1997-2004 to the Corporation and that the order passed  by the Calcutta High Court is just and fair in the facts and  circumstances of the case.   M/s Philips India Limited - respondent Nos. 8 & 9 (arising  out of APO No. 82 of 2001) also filed their statement.  Mr. Jay  Savla, learned counsel submitted that in the year 1999, a  Memorandum of Settlement was arrived at between this  Company and the Workmen Union and by virtue of the said  Memorandum, benefits extended to the employees were far  superior in comparison to the medical benefits extended under  the said Act.  The Memorandum of Settlement has also been  annexed as Annexure-R2 with the counter affidavit filed by them.   The said settlement was amended in the year 2000 and  thereafter in 2002 (Annexure-R3).  He made the following legal  submissions: a) the Division Bench while upholding the Notification has  held that the same would apply from the date of the judgment.   The said observation, according to the learned counsel, is  justified in view of the following legal submissions: (i)     Principles of Actus Curiae Neminem Gravabit - No  party shall be prejudiced for the act of Court. It is submitted that interim stay order was granted on 25.03.97  which continued till the passing of the Division Bench judgment  dated 16.3.2004.  By the interim order, the respondents were  restrained from deducting the contribution required to be  deposited with the Corporation. Further, the respondents were  directed to continue to provide existing medical benefits. Under  Section 39 of the ESI Act employees’ contribution is to be  deducted from their salary. The contribution by the employer is  to be made as per Rule 51 of The Employees’ State Insurance  (Central) Rules, 1950 which is given below. Rule 51 of the  Employees’ State Insurance (Central) Rules, 1950 is as follows:  "Rates of contribution- The amount of contribution for  a wage period shall be in respect of-

(a)     employer’s contribution, a sum (rounded to the next  higher multiple of five paise) equal to [four and  three-fourth per cent] of the wages payable to an  employee; and (b)     employee’s contribution, a sum (rounded to the next  higher multiple of five paise) equal to [one and three- fourth per cent] of the wages payable to an  employee"  

In view of interim stay order which continued for almost seven  years, the employers were restrained from making any  deduction.  Whereas, the employers continued to provide  satisfactory medical benefits to its employees.  The said interim  order was not appealed or challenged by the Corporation nor  was it stayed during the pendency of the appeal before the  Division Bench. It is further submitted that with the passage of time several  employees would have left the organization and to deduct the

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employees contribution from their salary is not workable. In the matter of Rajesh D. Darbar & Ors vs. Narasingrao  Krishnaji Kulkari & Ors., (2003) 7 SCC 219, this Court held  that where the nature of relief, as originally sought, has become  obsolete or unserviceable on account of developments  subsequent to the suit or even during appellate stage, it is unfair  that the relief is moulded, varied or reshaped in the light of the  updated facts. In the matter of Mohammed Gazi vs. State of M.P.,  (2000) 4 SCC 342, the facts were that on account of litigation  initiated by one of the respondents, the appellant was prevented  from taking benefit of the acceptance of his tender notice. For no  fault of his, the appellant was prevented from collecting the  tendu leaves. The High Court directed that a sum of Rs.  30,000/- be deducted from the earnest money of the appellant.  Such a direction was not sustained by this Court. The maxim of equity which is founded upon justice and  good sense was applied as well as other maxim "lex non cogit  ad impossibilia" \026 the law does not compel a man to do what he  cannot possibly perform. The applicability of the aforesaid  maxim has been approved by this Court in Raj Kumar Dey vs.  Tarapada Dey (supra) and Gursharan Singh vs. New Delhi  Municipal Committee (supra).      (ii) Prospective applicability/ overruling of the Judgment: It is well settled that declaration of law can be made prospective  i.e. operative from the date of the judgment. This Court in  several decisions has laid down the law and declared it to be  operative only prospectively. The Constitution Bench of this  Court in the matter of Somaiya Organics (India) Ltd. & Anr.  vs. State of U.P. & Anr. reported in (2001) 5 SCC 519 has  discussed at length the principles of Prospective over-ruling  which are enunciated in the following paras:- "27. In the ultimate analysis, prospective overruling,  despite the terminology, is only a recognition of the  principle that the court moulds the reliefs claimed to meet  the justice of the case- justice not in its logical but in its  equitable sense. As far as this country is concerned, the  power has been expressly conferred by Article 142 of the  Constitution which allows this Court to "pass such decree  or make such order as is necessary for doing complete  justice in any cause or matter pending before it." In  exercise of this power, this Court has often denied the  relief claimed despite holding in the claimants’ favour in  order to do "complete justice."

28. Given this constitutional discretion, it was perhaps  unnecessary to resort to any principle of prospective  overruling, a view which was expressed in Narayanibai  Vs State of Maharastra at p.470 and in Ashok Kumar  Gupta Vs. State of U.P. In the latter case, while dealing  with the "doctrine of prospective overruling", this Court  said that it was a method evolved by the courts to adjust  competing rights of parties so as to save transactions  "whether statutory or otherwise, that were effected by  the earlier law". According to this Court, it was a rule.

"of judicial craftsmanship with pragmatism and judicial  statesmanship as a useful outline to bring about smooth  transition of the operation of law without unduly affecting  the rights of the people who acted upon the law operated  prior to the date of the judgment overruling the previous  law."

Ultimately, it is a question of this Court’s discretion and  is, for this reason, relatable directly to the words of the

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Court granting the relief."   

In the matter of Harsh Dhingra vs. State of Haryana & Ors.,  (2001) 9 SCC 550, this Court held as follows: "7. Prospective declaration of law is a device innovated  by this Court to avoid reopening of settled issues and to  prevent multiplicity of proceedings. It is also a device  adopted to avoid uncertainty and avoidable litigation. By  the very object of prospective declaration of law it is  deemed that all actions taken contrary to the declaration  of law, prior to the date of the declaration are validated.  This is done in larger public interest."

This proposition of prospective overruling has been followed in  several other decisions as well. (iii) Undue Hardship: It is submitted that if the order of the Division Bench is not  held to be operative prospectively, the same would cause grave  and undue hardship to the employers including M/s Philips  India Ltd. Philips India Ltd. have not only extended medical  benefits by spending huge amount but have further not deducted  any amount statutorily required from the salary of the employees  in view of interim prohibition order. To direct the deposit of  monies, for this period would amount to undue and grave  hardship and would be inequitable to the employer. Mr. Chiraranjan Addey, who is the counsel for respondent  No.3 in civil appeal (arising out SLP (C) Nos. 19447-451/2004  made the following submissions: According to the learned counsel, the Company had spent  by way of medical benefits for such employees who came outside  the purview of the Act pursuant to stay order granted by the  Court is estimated for the three establishments a sum of Rs. 30  lacs upto 16.03.2004 and that the employees who have retired  from the respondent-Organisation during this period of 7 years  when the stay order of the Court was in operation had also  availed of the benefit and, therefore, if the liability of the  respondent-Company towards payment of ESI contribution is  made retrospective, the employer will not be able to recover the  contributions from the concerned employees and the employer  will have to make both the employer’s and the employees’  contribution retrospectively, notwithstanding the fact that the  company has incurred huge expenditure for granting liberal  medical benefits as coverage of such employees was stayed.  It is also pointed out that the employers were not the  petitioners in the writ court and the order was imposed upon  them and the management was compelled to abide by the same  and so far as the Corporation is concerned, they are in the most  enviable position.  The Corporation took full advantage of the  interim order and did not provide any benefit to the employees at  all nor did they move to get the order vacated and yet now they  are claiming the contributions for the past period which was  covered by the said interim order of the learned Single Judge.   That will be an unjust enrichment by the Corporation at the cost  of the employers.  Learned counsel also cited the following  decisions for invoking the doctrine of prospective overruling: Raymond Ltd. vs. M.P. Electricity Board, (2001) 1 SCC 534 Managing Director,ECIL vs. B. Karunakar,(1993) 4 SCC 727 (supra) Ashok Kr. Gupta vs. State of U.P., (1997) 5 SCC 201 Somaiya Organics Ltd. vs. State of U.P., (2001) 5 SCC 519 (supra)  Sarwar Kumar vs. M. Agarwal, (2002) 4 SCC 147 In the light of the principles laid down in the aforesaid  decisions with regard to the innovative concept of prospective  overruling which are applicable also in matters arising out of  statutory interpretation for the purpose of substantial justice in  the exigencies of peculiar fact situations, the counsel requested

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this Court to uphold the decision of the Division Bench of the  Calcutta High Court and that this Court in any event under  Article 142 of the Constitution may make such order as may be  warranted in the peculiar facts and circumstances of this case  for doing complete justice.  M/s. Gaurav Agrawal, E.C. Aggarwala, Jay Salve, C.R.  Addy, A.N. Bardiayar and M/s P.H.Parekh and Co. counsel for  the appellants respectively made their submissions in SLP (Civil)  Nos. 20855-64, 19453-57 etc. they reiterated the submissions  made in their special leave petitions and submitted that, asking  the respondent to pay the contribution now will cause undue  hardship by citing the decisions in Shree Cement vs. State of  Rajasthan, (2000) 1 SCC 765 and British Physical Lab India  Ltd. Vs. State of Karnataka, (1999) 1 SCC 170.  Mr. K.V. Viswanathan, learned counsel on behalf of  respondent No.1/CESC Ltd. in SLP (Civil) No. 19466-19470  made lengthy submissions both on facts and on law.  A written  submission was also made with details of the amounts paid and  spent by the management on various items.  According to him,  around 14,000 employees of the Company availed the benefits  each year during the period from 1996-2003 and an amount of  Rs.55.30 crores was incurred by CESC Ltd. in providing such  benefits vis-‘-vis the cost incurred for providing such benefits  was also furnished.  It is submitted that, as a matter of fact, that  on 03.08.2004 the appropriate authority had exempted CESC  under Section 87 of the Act pursuant to the application filed in  February, 1997 and in the proforma prescribed as on  18.11.1997.  It is stated that the delay in disposal of the  application was solely due to the inaction on the part of the  Appropriate Authority.  In fact as can be seen from the exemption  order the Assistant Director, CESC had himself reported that  CESC Ltd. has been providing free medical treatment domiciliary,  round the clock emergency treatment, ambulatory facility,  hospitalisation facilities irrespective of the cost involved to all the  permanent employees including employees termed as  apprentices/trainees.  It was also noted that M/s CESC Ltd. has  tie up arrangements with 40 different reputed hospitals/nursing  homes in Kolkata and Howrah and that the organization runs as  many as 24 dispensaries with 28 appointed doctors at the factory   locations and has tie-up arrangements with 36 investigation  centres and 42 chemist shops.  The Assistant Director, in his  report, has indicated that 98 specialists in and around Kolkata  are empanelled for medical care of CESC employees.  The cost of  spectacles, cervical collars, hearing aid etc. are also reimbursed  to the employees.  After noticing this report that the prayer for  granting of exemption under Section 87 of the Act for the  permanent employee was granted and that this order has also  been accepted by the Corporation. The factual situation that emerges according to Mr.  K.V.Viswanathan, therefore, are as under:  1)      Today CESC Ltd. pursuant to the application dated  03.02.1997 stands exempted by order dated  03.08.2004 under Section 87 of the Act; 2)      During the period from 1997-2003 because of  operation of the injunction order, it was not able to  deduct contribution and pay its contribution.   Moreover, it extended medical facilities as directed  by the interim order; 3)      In the exemption application (page 86 of the paper- book at page 88) the medical benefits given by the  company are set out.  Mr. K.V. Viswanathan submitted that once a party is  injuncted, then violating the order would result in party being  hauled up for contempt.  CESC Ltd., the respondent No.1 herein  obeyed the orders and granted its own medical facilities.  Order

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of injunction was passed since workers Union had obtained  reliefs in similar writ petitions.  CESC Ltd. did not get any  interim order from which it benefited.  In fact it was an order of  injunction against CESC Ltd. and not an order of Stay in its  favour.  The Corporation did not take any steps to vacate such  injunction order which was passed on 17.04.1997.  In fact, the  CESC Ltd. was incurring huge expenditure on medical benefits  and the employees were happy with such arrangement and as of  today also the employees are not aggrieved.  Permitting the  Corporation to recover contribution for the year 1996 to 2003,  under such circumstances, would apart from resulting in undue  hardship to CESC Ltd. would also result in unjustly enriching  the Corporation.  As rightly held by the Division Bench of the  High Court in impugned judgment, undue hardship will be  caused to the CESC Limited if the arrears are asked to be paid as  the employees would have to pay arrear contribution although  they did not enjoy any benefits during the said period.  This is a  fortiori in a case like the present, wherein now the CESC Ltd. has  been exempted under Section 87 of the Act on the ground that its  medical benefits are far superior to the medical benefits as  provided by the Corporation.  Mr. K.V. Viswanathan cited the following two decisions on  the principles of justice, equity and good conscience.  By citing  the same, he submitted that this Court has the power to relieve a  party from undue hardship.  1. West Bengal Hosiery Association vs. State of Bihar &  Ors, (1998) 4 SCC 134 and 2. Sree Cement Ltd. and Anr.  Vs. State of Rajasthan & Ors., 2001 (1) SCC 765 He next submitted that the act of Court can prejudice no  party.  He said the maxim "actus curiae neminum gravebit" fully  applies to the present case as pointed out in Mohammed Gazi  vs. State of Madhya Pradesh and Ors., 2000 (4) SCC 342.   According to the learned counsel, the judgment cited by the  counsel for the Corporation in All India ITDC Employees Union  case (supra) has no application to the facts of the present case.   This is for the reason that the nature of relief sought by the  Petitioner in the said case was different and also the interim  order as passed in the said case was different from the present  case.  In the said case relied by the Corporation, the prayer in  the Writ Petition was for exemption on the ground that the  employer was the Government of India undertaking and  employee stood covered under Section 1(4) of the Act.  Furthermore in the said case there was no positive direction  injuncting the employer from making contributions and  deductions and the only order in that case was an order of stay.  This can be distinguished from the present case as despite being  an order of stay, the employer could have made contributions  and deductions in the said case, however in the present case  since there was a specific order injuncting the CESC Ltd. from  making contributions and deductions such contributions and  deductions could not have been made by the Respondent No.1.  Moreover none of the circumstances which have been set out  herein above were present in the said case as cited by the  Corporation.  Concluding his submission, learned counsel submitted that  no case has been made out by the Corporation which warrants  interference by this Court.  Mr. Gaurab Kumar Banerjee, learned senior counsel  appearing on behalf of respondent Nos. 6 & 7 in civil appeals  (arising out of SLP (Civil) Nos. 20841-47 of 2004) Hindustan  Lever Ltd submitted that, during the 7 years period under  dispute and as a result of the High Court’s order, the Company  has spent far greater amount on the medical facilities to the 39  covered employees who would otherwise have been covered by  the Corporation and the Corporation would have had to provide

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the medical benefits.  Learned senior counsel submitted that this  Court will not interfere with an order simply because it is lawful  to do so even if it has legal errors, if the impugned order results  in substantial justice.  He relied on Council of Scientific and  Industrial Research vs. K.G.S. Bhatt, (1989) 4 SCC 635 (para  12) and para 23 of ONGC vs. Sendhabhai Vastram Patel,  (2005) 6 SCC 454.  He submitted that under Article 142 of the  Constitution, this Court is empowered to pass such orders as  would do complete justice between the parties.  It was also  submitted that it is permissible in law to prospectively overrule a  judgment as has been done recently in the case of SBP & Co. vs.  Patel Engineering Ltd., (2005) 8 SCC 618.  According to the  learned senior counsel, the decision of this Court in All India  ITDC Employees Union (supra) is clearly distinguishable as  unlike in the present case.  In that case, the High Court did not  give any positive directions and the decision of the High Court  was not reversed by this Court.  Concluding his argument, the  counsel submitted that if the respondent now starts recovering  from the erstwhile employees, it would severely affect industrial  relations.  M/s K.L.Mehta & Co. advocates argued for respondent No.2  BOC India Limited.  Learned counsel also submitted that the  principle of ’actus curiae neminem gravabit’ i.e. the act of Court  shall prejudice no man is fully applicable and, therefore, the  Division Bench qua the respondent directed the said Notification  to operate prospectively.  Referring to the decision in Union of  India & Anr. vs. Murugan Talkies, (1996) 1 SCC 504, learned  counsel submitted that this Court has also applied the above  principle in several decisions including 1988 (2) SCC 602 and in  1996 (1) SCC 504 and observed as follows: "3.  It is contended for the respondents that the High  Court has granted the relief taking into consideration  that some workmen had retired and it would be  inequitable to deduct from the meagre wages of existing  employees with retrospective period. Therefore, the  High Court directed deduction of their share from the  date of the judgment. It is needless to mention that  since some of the workmen have already retired and  from some existing workmen deduction from date of  enforcement of the notification would cause great  hardship to them, so it cannot be made to bear the  burden of their contribution with retrospective effect  from the date of the notification towards their share of  contribution.

4.  To that extent, the order of the High Court is upheld.  \005 "    

Learned counsel further submitted that because of the  interim/final order passed by the High Court, the Corporation  has not rendered any service like medical benefits to the  employees whose wages were above Rs.3,000/- but less than  Rs.6,500/- p.m.  Therefore, in absence of any quid pro quo for the  said period of 7 years, no contribution can be claimed by the ESI  either from the respondent-Company or from the employees  especially, when no service/benefit was rendered to the  concerned employees.   Mr. Gaurab Banerji, learned senior counsel also made  submissions on behalf of respondent No.4 Modern Food  Industries Ltd. in SLP (Civil) No. 20861of 2004.  He made similar  submissions and cited the same authorities as others did.  Mr. Rana Mukherjee, learned counsel appearing on behalf  of respondent No.5, Engel India Machines & Tools (1987) Limited  made the following submissions. He submitted that various labour Unions of different

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industries including that of respondent No.5 challenged the said  Notification by filing separate writ petitions in the Calcutta High  Court and the High Court by different orders from time to time  granted injunction with regard to the said Notification.  The said  injunction was extended from time to time which, in effect,  injuncted the Management from either collecting or making any  contributions towards the Corporation.  Such injunctions were  extended and continued from time to time.  On 30.06.1997, by  judgment and order, the learned Single Judge of the High Court  declared the said amendments as ultra vires.  Being aggrieved by  the said order, the appellant-Corporation filed 120 appeals before  the Division Bench of the High Court which stood disposed off by  the impugned judgment and order on 16.03.2004.  It is  submitted that respondent No.5 by way of abundant caution had  also in the meantime applied for exemption for the said period of  1997-2004 i.e. the date of the impugned judgment and order  under Section 87 of the Act of 1948 which is still pending before  the appropriate Government.  Learned counsel has also annexed  certificates, details of expenditure and extracts from the annual  report.  It is submitted that the respondent should not be  proceeded against by the Corporation under Section 68 of 1948  inasmuch as the contributions towards ESI fund had not been  made during the period since the Company was prevented by an  order of injunction of the Calcutta High Court and that the said  directions, therefore, require no interference by this Court and  this Court may exercise its powers under Article 142 of the  Constitution of India to do complete justice to the respondent  No.5-herein.  Ms. Mridula Ray Bhardwaj, learned counsel for the  respondent in Civil appeal arising out of SLP 20882-20891 of  2004 etc. submitted repeatedly the same arguments on behalf of  respondent No.5 Westinghouse Saxby Farmer Limited.  An  application in the prescribed Proforma-A for exemption from the  provisions of the Act as per and after the Calcutta High Court’s  direction passed in this order dated 07.06.2004 in writ petition  No. 8791 of 2004.  On 03.08.2004, the Company further  submitted another set of application in Proforma-A as asked for  by the West Bengal Labour Department’s letter dated  22.07.2004.  Thereafter, pursuant to the Government of West  Bengal Labour Department’s notice dated 30.08.2004,  29.10.2004, 16.11.2004 and 26.11.2004, the Company’s  representative duly attended the hearing in connection with the  Company’s exemption application.  It is stated that the Company  has submitted the Comparative Table of Benefits given by the  Company to its employees and benefits under the ESI scheme  etc.  However, no order has yet been passed or communicated by  the Labour Department in regard to the respondent-Company’s  application for exemption.  Learned counsel has also furnished  the amount of medical expenses paid by the respondent- Company to its employees since 1996-97.  Mr. C.K. Ganguli, learned counsel for the respondent in civil  appeal (arising out of SLP (Civil) Nos. 20933-20939 of 2004 made  submissions on behalf of Hahnemann Publishing Company Ltd.  The learned counsel furnished the details about the medical  allowances given to the employees and submitted that if the  liability is made retrospective, the employer will not be able to  recover the contributions from the concerned employees and the  employer will have to make both employers and employees  contribution.  Notwithstanding the fact that the company has  incurred huge expenditure for granting liberal medical benefits  as coverage of such employees since the notification was stayed.  The Central Inland Water Transport Corporation,  respondent No. 21 through Mr. S.D. Gupta who is the Head of  the Central Inland Water Transport Corporation Ltd. filed an  affidavit.  It is stated that some employees/workers

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Union/Associations in CIWIC filed a writ petition in the High  Court praying for their exemption from the provisions of the ESI  Act, 1948.  That pursuant to an order dated 07.09.2004 passed  by the High Court, the Government of India, Ministry of Labour  and Employment issued a notice dated 16.02.2005 informing  that in connection with exemption from provisions of the Act it  has been decided that hearing would be held on 04.03.2005 in  the said Ministry and all the concerned parties were requested to  attend the hearing and make their submissions.  The  representative of CIWIC Ltd. attended the aforesaid hearing on  04.03.2005 and made his submissions.  As decided in the said  meeting, CIWIC under cover of its letter dated 23.03.2005  submitted two separate applications both dated 22.03.2005 for  exemption from the provisions of the ESI Act as amended upto  date in respect of its factory establishments which were covered  under the provisions of the said Act.  That due consideration of  the aforesaid appeal and the two applications dated 22.03.2005,  the Ministry of labour and Employment issued a notification S- 38014/6/2005-SSS-I dated 05.01.2006 thereby granting  exemption to CIWIC Ltd.  From the operation of the ESI Act,  1948 for the period from 01.01.1997 to 30.09.  The order reads  as follows:- "In exercise of the power conferred by section 88  read with section 91-A of the Employees’ State  Insurance Act, 1948 (34 of 1948) the Central  Government hereby exempts the regular  employees in respect of two units of M/s Central  Inland Water Transport Corporation Limited i.e.  M/s. Marine Workshop and M/s Rajabagan Dock  yard both in Kolkata, West Bengal from the  operation of the said Act for the period from  01.01.1997 to 30.09.2006"

A copy of the said Notification has also been annexed and  marked as R-4.  It is submitted that in view of the above, CIWIC has been  exempted from the provisions and operations of the ESI Act,  1948 for the relevant period from 01.01.1997 to 15.03.2004 for  which the special leave petition has been filed by the  Corporation.  It is also further submitted that the Corporation  has also been granted exemption from the operation of the ESI  Act for further period upto September, 2006.  In view of the  above, learned counsel submitted that the special leave petition  Nos. 20938 and 39 of 2004 be dismissed against respondent No.  21.  Mr. P. Gaur, learned counsel for respondent No.4 in S.L.P.  No. 20840 of 2004 (Siemens Workers Union & Others) submitted  that this Court will be reluctant to interfere with the discretion  exercised by the High Court.  In this connection, he cited  Municipal Corporation of Faridabad vs. Siri Niwas, (2004) 8  SCC 195.  He also submitted that it is not the case of the  Corporation that the said exercise of jurisdiction is irrational.  In Union of India vs. Murugan Talkies (supra) similar  relief granted by the High Court was not interfered with by this  Court.  Therefore, he submitted that the discretion exercised by  the High Court is justified in view of various facts and  circumstances and thus prayed that the appeal filed by the  Corporation be dismissed.  We have given our thoughtful consideration to the questions  and issues involved in this matter.  We have also perused the  pleadings, the order passed by the learned Single Judge and the  orders passed by the Division Bench and the written  submissions made by the respective parties along with the  annexures filed therein.  We have already noticed that the respondent-Companies

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have spent large amount of money on the employees and  provided medical facilities in view of the order of the High Court  granting stay/injunction etc.  If the High Court had not passed  the order of injunction, the respondent-companies would have  contributed the ESI contribution instead of spending monies on  the medical facilities and allowances.  In these circumstances,  the submissions made by learned senior counsel appearing for  the respondents that it would be unfair and unjust to make the  employer to pay contribution towards ESIC since in lieu of the  contribution to ESIC, the employer provided better medical  facilities, in our view holds water and it would cause extreme and  grave hardship to the employer if they are required to pay  contribution for the past several years for no fault of their own.   In our view, no party much less the respondents should suffer  because of the orders of the Court if duly complied with.  We see much force, substance and merit in the submissions  made by the learned senior counsel appearing for the respective  respondents and as duly adopted by the other learned counsel  appearing for other civil appeals.   In our opinion, the High Court was fully justified in passing  the judicious order after considering the equities by directing the  employer and the employees to make ESIC contribution for the  future and should not bear with the liability for the past  inasmuch as the employees of the respondents have not availed  any medical facilities from ESIC and at the same time the  employer was providing the medical facilities due to interim  orders of the High Court.  The order passed by the High Court, in  our considered opinion, meets the ends of justice and does not  require interference by this Court under Article 136 of the  Constitution of India.  In our view, passing of the final order by the High Court  directing the payment of the ESI contribution from the date of  the said judgment does not amount to postponing the  enforcement of notification and the same is also not in violation  of the principles laid down by this Court in various judgments  referred to above.  There has been no postponing of the  enforcement of the Notification in view of the peculiar  circumstances of the case, namely, the non-availability of the  facilities, non-deduction of contribution from the members of the  union for several years and provision of medical relief by the  Management.  The High Court’s direction for deduction of  contribution w.e.f. the date of the judgment in our view, is  perfectly justified.  This apart, the members of the union  included casual, temporary contractual and it will be practically  impossible to find each and every member of the union to recover  their contribution for the past several years and in fact some of  the workmen who would have been the employees during all  these years would have left, expired etc. and on account thereof  also their contribution cannot be recovered.  The order passed by  the High Court, in our opinion, is perfectly justified in view of the  peculiar facts and circumstances of the case.  The High Court, in our opinion, while disposing of the  matter has taken a just, pragmatic, fair and judicious view after  considering all the equities and facts and circumstances of the  case.  Extreme hardship might have been caused to both the  employer as well as the employee since no medical facilities  admittedly have been availed by the workmen from ESIC and the  employer had provided medical facilities to the workmen as per  the Court orders and in view of the interim order also had paid  medical allowances.   A similar view was taken by us in the case of Employees  State Insurance Corporation vs. Distilleries & Chemical  Mazdoor Union & Ors. in Civil Appeal Nos. 1727 of 2005, 3002  and 3003 of 2006 by the very same Bench comprising of Dr. AR.  Lakshmanan and Lokeshwar Singh Panta, JJ.  We have also

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considered the submissions both factual and legal made by Mr.  C.S.Rajan, learned senior counsel appearing on behalf of the ESI  Corporation.  In our opinion, his argument has no merits in the  facts and circumstances of this case and the interim orders  passed by the High Court which prevented employer and  employee from making any contribution towards ESI.  In the present case, the law as well as the facts are in  favour of the respondents.  The High Court has correctly  appreciated the tremendous hardship that will be caused if  arrears are sought to be paid and nobody stands to gain, neither  the employer nor the employee under the circumstances. Even  assuming that the law is in favour of the ESI, keeping in view the  special facts and circumstances of the present case, relief can be  denied under Article 136 of the Constitution of India.  In view of  the judgment reported in Chandra Singh and Others vs. State  of Rajasthan and Another, (2003) 6 SCC 545 (Three Judges  Bench), Dr. AR. Lakshmanan, J speaking for the Bench held as  follows:- "42.    In any event, even assuming that there is  some force in the contention of the appellants,  this Court will be justified in following  Taherakhatoon v. Salambin Mohammad, (1999)  2 SCC 635 wherein this Court declared that even  if the appellants contention is right in law having  regard to the overall circumstances of the case,  this Court would be justified in declining to grant  relief under Article 136 while declaring the law in  favour of the appellants.   

43.     Issuance of a writ of Certiorari is a  discretionary remedy. [See Champalal Binani v.  CIT, West Bengal, [AIR 1970 SC 645]. The High  Court and consequently this Court while  exercising their extraordinary jurisdiction under  Article 226 or 32 of the Constitution of  India may  not strike down an illegal order although it would  be lawful to do so.  In a given case, the High  Court or this Court may refuse to extend the  benefit of a discretionary relief to the applicant.   Furthermore, this Court exercised its  discretionary jurisdiction under Article 136 of the  Constitution of India which need not be exercised  in a case where the impugned judgment is found  to be erroneous if by reason thereof substantial  justice is being done.  [See S.D.S.  Shipping Pvt.  Ltd. v. Jay Container Services Co. Pvt. Ltd. &  Ors. [2003(4) Supreme 44].  Such a relief can be  denied, inter alia, when it would be opposed to  public policy or in a case where quashing of an  illegal order would revive another illegal one.  This  Court also in exercise of its jurisdiction under  Article 142 of the Constitution of India is entitled  to pass such order which will do complete justice  to the parties.     44\005\005\005\005\005\005\005\005\005\005\005\005\005\005\005\005\005\005\005\005\005..  

45.     This Court said that this principle applies to  all kinds of appeals admitted by special leave  under Article 136, irrespective of the nature of the  subject-matter.  So even after the appeal is  admitted and special leave is granted, the  appellant must show that exceptional and special  circumstances exist, and that, if there is no  interference, substantial and grave injustice will

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result and that the case has features of sufficient  gravity to warrant a review of the decision  appealed against on merits.  So this Court may  declare the law or point out the lower courts’  error, still it may not interfere if special  circumstances are not shown to exist and the  justice of the case on facts does not require  interference or if it feels the relief could be  moulded in a different fashion.

46.     The observations made in paras 15-20 of  the Taherakhatoon (supra) can be usefully  applied to the facts and circumstances of the case  on hand.

47.     In the instant case, we are dealing with the  higher judicial officers. We have already noticed  the observations made by the committee of three  Judges. The nature of judicial service is such that  it cannot afford to suffer continuance in service of  persons of doubtful integrity or who have lost  their utility.  

48\005\005\005\005\005\005\005\005\005\005\005\005\005\005\005\005\005\005\005\005\005.

49.     We, therefore, would although dismiss the  appeals, but we would direct the High Court and  the State government to pay all retiral benefits to  the appellants herein as expeditiously as possible  preferably within a period of three months from  the date of communication of this order.  No  Costs."    

This Court under Article 142 of the Constitution of India is  empowered to pass such orders as would do complete justice  between the parties.  This Court is also empowered to mould the  relief in such a manner so that it is not only just but also  equitable even while declaring the law as observed in para 25 of  ONGC Ltd. vs. Sendhabhai Vastram Patel and Others, (2005)  6 SCC 454 and Raj Kumar and Others vs. Union of India and  Another, (2006) 1 SCC 737.  It is also permissible in law to  prospectively overrule the judgment as has been done recently in  the case of SBP Co. vs. Patel Engineering Ltd., (2005) 8 SCC  618.  If the respondent is now allowed to recover from the  erstwhile covered employees, it would severely affect industrial  relations.  Reversal of the impugned order would lead to  prosecution, penalty and also interest against the respondent  without any fault of the respondent.  The decision of this Court  in ITDC Employees Union (supra) is clearly distinguishable as  unlike in the present case.  In that case, the High Court did not  give any positive direction.  The decision of the High Court was  not reversed by this Court.     The High Court under Article 226 and this Court under  Article 136 read with Article 142 of the Constitution of India have  the power to mould the relief in the facts of the case.   Likewise, the judgment cited by learned counsel for the  appellant-Corporation are in a different context altogether and  the ratio of the said cases are not applicable to the present case.  This apart the maxim of equity which is founded upon  justice and good sense was applied as well as other maxim: lex  non cogit ad impossibilia (i.e. the law does not compel a man  to do what he cannot possibly perform) The applicability of the  aforesaid maxim has been approved by this Court in Raj Kumar  Dey and Others vs. Tarapada Dey and Others, (1987) 4 SCC  398 and Gursharan Singh and Others vs. New Delhi

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Municipal Committee and Others, (1996) 2 SCC 459  

The ESI Act has enacted to provide for certain benefits to  employees in case of sickness, maternity and employment injury.   Under the scheme of the Act, function of the ESI Corporation is  to derive insurance fund from the contribution from employees  and workmen.  The employer is entitled to recover workmen’s  share from the wages of the workmen concerned.  It was argued  by the respondent that the employer is providing better medical  facilities to the workmen and, therefore, the object and purpose  of the Act has been fully satisfied.  It is pertinent to notice that  none of the employees of the Union have complained about  medical services provided by the employer since the object is  otherwise fulfilled. No further direction, in our opinion, is  required to be passed.  The act of Court can prejudice no party either the ESI or the  respondent-companies.  We, therefore, relieve the respondents  from making any contributions for the period in question and  direct them to make the contribution as directed by the Division  Bench of the High Court.  It is stated that some of the  respondents have already filed exemption applications and that  the appellant-Corporation has also granted them necessary relief.    We also permit the other respondents who have not filed any  exemption application may now file the same and if such  application for exemption is filed, it is for the authorities to  consider the same on merits and in accordance with law.  For the foregoing reasons, we dismiss all the appeals filed  by the appellant-Corporation in the peculiar facts and  circumstances of the cases.  The High Court while upholding the  Notification has held that the same would apply from the date of  the judgment.  The said observation is justified in view of the  facts and circumstances and the legal submissions made and  considered in paragraphs supra. No costs.               27897