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REPORTABLE IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL  NOS. 917-918 OF 2004

Fertilizers  &  Chemicals  Travancore Ltd.  

.... Appellant

Versus

Regional Director, ESIC & Ors. .... Respondents

O R D E R

1. Heard learned counsel for the parties.

2. These  appeals have  been filed  against the  common  

impugned  judgment  and  order  dated  30.10.2002  of  the  High  

Court of Kerala at Ernakulam whereby the appeal filed by the  

respondent-Employees  State  Insurance  Corporation  

(hereinafter for short the 'ESIC') under Section 82(2) of  

the  Employees  State  Insurance  Act,  1948  (hereinafter  for  

short 'the Act') has been allowed and the appeal filed by  

the appellant herein has been dismissed.   

3. It appears that a demand notice was sent against the  

appellant company under Section 45A of the Act in respect of  

the  employers  contribution  under  the  Act.  The  appellant  

challenged the said demand notice by filing a petition under

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Section 75 of the Act before the Employees Insurance Court,  

Alleppey.  The Employees Insurance Court in its order dated  

4.2.1993 made the following observations:-

“12. If reliance is made on the rational  

laid down by the High Court in the abovesaid  

decisions it is very clear that the identities  

of the employees should be an essential factor  

for  bringing  under  coverage  employees  and  

paying contribution in respect of them.  Here,  

in this case, because of the peculiar nature  

of  the  work  arrangement,  at  Depots,  it  is  

impossible to register an employee engaged in  

the loading and unloading work under the ESI  

Scheme.  If  there is requirement, a group of  

headload  workers  will  come  and  they  do  the  

work collectively and payments are received on  

tonnage  basis.   On  behalf  of  this  group  

engaged, one person will collect payment from  

the  depot  and  distribute  the  same  among  

themselves.  Such labourers coming on one day  

may not be the same in next day.  That is  

because of this peculiar nature of arrangement  

among workers on the basis of understanding or  

agreement reached between trade unions.  After  

completing  work  in  the  depot  they  will  go  

elsewhere and do identical nature of work.  If  

such  is  the  nature  of  work  it  is  quite  

improper  to  compel  the  applicant  to  pay  

contribution on the payments given in various

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depots  merely  because  they  obtained  the  

services  of  such  workers.   However  as  a  

principal  employer  the  applicant  cannot  

absolve themselves from the responsibility of  

covering  such  employees  under  the  scheme  

because those employees are rendering service  

to them.  Therefore it would be appropriate  

that  in  close  co-operation  with  the  ESI  

Corporation they should take effort at least  

now  to  ascertain  the  identities  of  those  

headload  workers  so  as  to  cover  them  also  

under  the  ESI  Scheme.   The  ESI  Corporation  

will  also  make  immediate  arrangement  for  

bringing all the loading and unloading workers  

in the depots under the ESI Scheme.  The ESI  

Corporation shall work out the modus operandi  

for bringing these workers under the coverage.  

On such registration of the headload workers  

under  the  scheme,  the  applicant  will  pay  

contribution from the date of passing of the  

order passed under Sec. 45-A of the ESI Act  

viz.,  15.6.1989.   The  ESI  corporation  shall  

work out the contribution from that date in  

respect  of  workers  who  are  brought  under  

scheme and who were found to be working from  

that day onwards.   

With  the  above  observation  and  

direction, this application is disposed of.”  

4. Aggrieved against the said order dated 4.2.1993 of  

the Employees Insurance Court, both the appellant herein as

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well  as  the  Employees  State  Insurance  Corporation  filed  

appeals before the High Court under Section 82 of the Act.  

The appeal filed by the respondent-ESIC has been allowed and  

the appeal filed by the appellant herein has been dismissed.  

Hence, the appellant is before us by way of the present  

appeal by special leave.

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.  

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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 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

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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  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

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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.   

14. Also,  the order  of the  Employees Insurance  Court  

dated 4.2.1993, relevant portion of which we have quoted, is  

not a very happy one as no proper determination has been  

made therein as to whether the workmen concerned are the  

employees of the appellant and whether they are entitled to  

the benefit of the Act.  No doubt some observations have  

been made that some labourers come on one day but they may  

not come on the next day.  Having said so, a direction has  

been  given  that  the  ESI  Corporation  will  after  making  

inquiries  about  the  identities  of  the  said  workers  will  

register them and then extend the benefit of the Act.   

15. In our opinion, the Employees Insurance Court should  

have itself made a proper investigation of the facts after  

getting  evidence  from  the  parties,  including  the  workmen  

concerned,  and  after  impleading  them  as  party  in  the  

petition,  it  should  have  determined  the  question  as  to

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whether  the  persons  concerned  were  the  employees  of  the  

appellant or not.   

16. For  the  reasons  stated  above,  we  set  aside  the  

impugned judgment and order of the High Court as well as the  

order dated 4.2.1993 passed by the Employees Insurance Court  

and remand the matter to the Insurance Court for deciding  

the same afresh after impleading some of the workmen, if not  

all  of  them,  or  their  trade  union  in  a  representative  

capacity.  Needless to say, the Employees Insurance Court  

will grant an opportunity to all the parties, including the  

alleged  workmen,  to  lead  documentary  evidence  or  oral  

evidence and thereafter proceed in accordance with law.   

17.  We make it clear that nothing stated hereinabove  

shall be construed as an expression of opinion on the merits  

of the controversy involved.  All questions of law and fact  

are  left  open  for  the  parties  to  be  raised  before  the  

Insurance Court.

Appeals allowed.  No order as to the costs.

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

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

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NEW DELHI; AUGUST 20, 2009