Karnataka High Court
Dr K Raviprakash vs Union Of India Rep By on 25 January, 2025
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 25TH DAY OF JANUARY, 2025
BEFORE
THE HON'BLE MRS. JUSTICE K.S. HEMALEKHA
WRIT PETITION No.11417/2015 (L-ESI)
BETWEEN:
DR. K. RAVIPRAKASH
S/O. KAJE TIMMANNA BHAT,
AGED 48 YEARS,
MANAGING PARTNER,
OF M/S. DHANVANTHARI HOSPITAL,
DURBE, PUTTUR,
DAKSHINA KANNADA DIST.-574202. ... PETITIONER
(BY SRI S.P. SHANKAR, SENIOR COUNSEL FOR
SMT. MAMATA G. KULKARNI, ADVOCATE)
AND:
1. UNION OF INDIA REP. BY
MINISTRY OF LABOUR AND EMPLOYMENT
SHRAMSHAKTI BHAVAN,
RAFI MARG, NEW DELHI - 110 001.
2. EMPLOYEES STATE INSURANCE CORPORATION
REP. BY REGIONAL DIRECTOR AND
ADDL. COMMISSIONER,
REGIONAL OFFICE NO.10,
BINNI FIELDS, BINNIPET,
BANGALORE-28.
3. INSURANCE REGULATORY AND
DEVELOPMENT AUTHORITY,
REP. BY ITS CHAIRMAN,
PARISHRAM BHAVAN,
3RD FLOOR, BASHEER BAGH,
HYDERABAD-500004. ... RESPONDENTS
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(BY SRI ARAVIND KAMAT, ASG FOR R-1;
SMT. GEETHADEVI M.P., ADVOCATE FOR R-2;
SRI SRIRANGA, SENIOR COUNSEL FOR
SMT. SUMANA NAGANAND, ADVOCATE FOR R-3)
THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE
CONSTITUTION OF INDIA, PRAYING TO DIRECT TO RESPONDENT
NOS.1 AND 2 TO PROVIDE FOR THE CHOICE OF HOSPITALS
/NURSING HOMES / CLINICS IN THE MATTER OF AVILAING MEDICAL
RELIEF/HELP/TREATMENT TO THE EMPLOYEES OF THE INSURED
UNDER ESI ACT 1948 AS AMENDED FROM TIME TO TIME AND TO
DISPENSE AND DISCONTINUE WITH THE PROCEDURE FOLLOWED BY
RESPONDENT NOS.1 AND 2 IN DIRECTING THE EMPLOYEES OF THE
INSURED TO GO TO SPECIFIED / NETWORKED HOSPITAL OF THE
CHOICE OF 2ND RESPONDENT AND FURTHER TO DIRECT
RESPONDENT NOS.1 AND 3 TO TAKE CONTROL OF AND ADMINISTER
THE AFFAIRS OF 2ND RESPONDENT ESIC, AS ONE OF THE GENERAL
INSURERES IN TERMS OF INSURANCE ACT 1938, INSURANCE
REGULATORY AND DEVELOPMENT ACT 1939, GENERAL INSURANCE
BUSINESS ACT, 1972 AND FURTHER PLEASE TO STRIKE DOWN
PROVISIONS OF SECTION 57 AND 59 OF ESI ACT, 1948 AS BEING
UNREASONABLE, OPPRESSIVE AND BEING VIOLATIVE OF ARTICLES
14, 19 AND 21 OF CONSTITUTION OF INDIA.
THIS WRIT PETITION HAVING BEEN HEARD AND RESERVED
FOR ORDERS ON 25/10/2024, COMING ON FOR PRONOUNCEMENT
THIS DAY, THE COURT MADE THE FOLLOWING:
CORAM: HON'BLE MRS JUSTICE K.S. HEMALEKHA
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CAV O R D E R
The petitioner a Managing Partner of the Dhanavanthari
Hospital, Puttur, seeking to issue a writ of
mandamus/direction to respondent Nos.1 and 2 to provide
for the choice of hospitals/nursing homes/clinics in the
matter of availing medical relief/help/treatment to the
employees of the insured under the Employees State
Insurance Act, 1948 ('the ESI Act' for short) as amended
from time to time and to dispense and discontinue with the
procedure followed by respondent Nos.1 and 2 in directing
the employees of the insured to go to specified/networked
hospital of the choice of respondent No.2, further to direct
respondent Nos.1 and 3 to take control of and administer the
affairs of respondent No.2 -ESI Corporation, as one of the
general insurers in terms of Insurance Act, 1938 ('the
Insurance Act, 1938' for short), the Insurance Regulatory
and Development Authority Act, 1939 ('IRDA Act' for short),
General Insurance Business Act, 1972 and to strike down
provisions of Section 57 and 59 of the ESI Act, as being
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unreasonable, oppressive and being violative of Articles 14,
19 and 21 of the Constitution of India.
2. The petitioner avers that the hospital of the
petitioner has earned reputation for providing high quality
treatment at competitive price and is a hospital registered
under the ESI Act to provide medical benefits to its
employees and has followed all necessary procedures for
compliance. That Sections 57 and 59 of the ESI Act are
inconsistent with the intent of the insurance framework and
that the employees should have more autonomy in selecting
hospitals and clinics. the provisions of these Sections which
mandates that the insured employees under the ESI Scheme
must seek treatment only from the hospital or health care
providers that are part of the ESI Corporation network
infringes the fundamental rights of the insured employees.
That the ESI Corporation is functioning as a statutory insurer
akin to a general insurance company governed by the
Insurance Act, 1938 and should therefore allow the insured
employees to choose their treatment providers freely. That
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the hospital has been making a contribution to the ESI
Corporation as required by the law and that the medical
treatment and medical care is not a relief to be thrust upon
but chosen by the insured patients/employees or to collect
the amount demanded by respondent No.2 insofar as the
petitioner is concerned. That the impugned notice issued by
the ESI Corporation-respondent No.2 is without allowing the
employees to go to any hospital of their choice.
3. Statement of objections filed by respondent
No.1:
i. That the petitioner has no locus-standi to file
this writ petition, petitioner being the partner of an
hospital is not directly affected by the issues raised in
the petition, the employees whose rights are being
claimed have not been made as parties to the petition.
ii. There is an alternative statutory remedy under
Section 75 of the ESI Act, which pertains to the dispute
about the employer's contribution.
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iii. That petitioner is not entitled for the relief of
writ of mandamus, as the prayer sought is a statutory
right under the ESI Act, which vest with the insured
employees.
iv. That respondent Nos.1 and 2 have time and
again taken steps to improvise the nature of benefits
provided to the insured under the ESI Scheme.
v. The Ministry of Labour and Employment-
respondent No.1, in order to give effect to the
constitutional obligation vested upon it under Articles
41, 42 and 47 of the Constitution of India, adopted the
pre-constitutional law enacted by the then Government
and has carried out necessary amendment as and when
required for effective implementation of the Scheme.
vi. ESI Corporation is also continuously
discharging its statutory obligation vested upon it by
the Act, the ESI Corporation acts has a monetary
agency for the ESI Funds, ESI Corporation and ESI
Scheme Hospital to make provisions for medical
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facilities to the employees and has also laid down 11
contingencies situation when the employees can avail
reimbursement of the medical facility from non-ESI/ESI
Scheme hospitals.
vii. That to the insured employee and to his/her
family members provides cashless treatment which is
significant and unique feature of ESI Scheme and for
the said purpose, ESI Hospitals, ESI Scheme hospitals,
Dispensaries are established and maintained and
provisions for multi-specialty treatment for public sector
and private sectors are made, several benefits given to
the ESI employees.
viii. The scope and scheme of the ESI Act is
different from the Insurance Act, 1938, IRDA Act,
General Insurance Business Act, 1972.
ix. ESI Act is a beneficial legislation with social
welfare as its essence and there is a stark difference
between the general insurance and the ESI Scheme.
As in private insurance contracts, the relationship
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between the insured person and the insurer is
contractual and it is at the option of the contracting
parties, whereas, in the case of ESI Corporation and the
insured employee, the relationship is statutorily
mandated under Section 38 of the ESI Act.
x. The claim of the petitioner that Sections 57 and
59 of the ESI Act are unconstitutional, is unfounded as
these sections served the purpose of providing medical
treatment to the insured employees through designated
hospitals and maintaining medical facilities, which are
essential for the functioning of the ESI.
xi. The petitioner has not made out any
constitutionally tested grounds for challenging the
validity of a law and has not questioned the legislative
competence of the parliament to make the law under
challenge and fails to demonstrate as to how the
impugned law violates its fundamental right.
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4. Statement Objections by respondent No.2
i. Writ petition is not maintainable as the matter
pertains to the issues under the ESI Act, which has to
be adjudicated before the Employees Insurance Court
under Section 75 of the ESI Act.
ii. The petitioner has access to the statutory
remedy through ESI Courts, especially to challenge the
issues concerning the hospital coverage under the ESI
Act, the petitioner is covered under the ESI Act, despite
being informed of coverage, the hospital allegedly failed
to comply with the ESI Act, leading to recovery notices
for unpaid contributions and in the guise of challenging
the constitutional validity of Sections 57 and 59 of the
ESI Act, the recovery notices issued to the hospital has
been challenged when there is an alternative efficacious
remedy provided.
iii. Sections 57 and 59 are designed to ensure that
the employees receive benefits in line with the
scheme's objectives as the scheme provides
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comprehensive social medical facilities to the workers
and their employees.
iv. That the ESI Scheme provides medical benefits
through a network of hospitals and dispensaries across
India and in emergency or when specialized treatment
is required, the insured employees are entitled for
treatment at private hospital, which they are entitled
for reimbursement and the outline reimbursement
procedure for medical expenses has been made by the
said respondent ensuring timely treatment without
financial burden on insured employees.
v. The ESI is a statutory welfare scheme, not
governed by the Insurance Act, 1938, IRDA Act, as it is
distinct from commercial insurance, and it does not
involve traditional insurance policies or hospital choice
in the same way as private insurance schemes do.
5. Statement of objections by respondent
No.3-Insurance Regulatory and Development
Authority (IRDA)
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i. It is stated that the ESI Act and IRDA have
different purposes, the ESI Act being focused on social
security and medical benefits for employees and IRDA
Act regulating insurance companies, it is stated that
IRDA's role does not extend to administering the affairs
of the ESI Act, which operates under the ESI Act.
ii. The provisions of the Insurance Act, 1938 and
IRDA Act, do not apply to the ESI Act.
iii. Taking a specific stand that the provisions of
Insurance Act, 1938 or the IRDA Act, cannot be made
applicable in the case of ESI Scheme, as in terms of the
ESI Act, it is not contractual, but statutory in nature, as
such, they do not fall within the purview of "Health
Insurance Business" as defined vide Section 2(6c) of
the Insurance Act, 1938.
6. Heard Sri S.P. Shankar, learned senior counsel for
Smt. Mamata G. Kulkarni, learned counsel for the petitioner
and Sri Aravind Kamat, learned ASG for respondent No.1,
Smt. Geethadevi M.P., learned counsel for respondent No.2
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and Sri Sriranga, learned senior counsel for Smt. Sumana
Naganand, learned counsel for respondent No.3.
7. Learned Senior counsel for the petitioner would
urge the following grounds:
i. Sections 57 and 59 of the ESI Act impose
unreasonable and arbitrary restrictions on insured
employees' choice of healthcare providers, thereby
violating their fundamental rights under Articles 14,
19(1)(g), and 21 of the Constitution of India.
ii. That the restriction of healthcare choices for
ESI beneficiaries creates an unfair and irrational
classification between insured and non-insured persons.
The insured employees are unjustly deprived of the
freedom to choose medical care from private healthcare
providers, while individuals who are not part of the ESI
scheme enjoy that right.
iii. The mandatory provision to receive treatment
only from ESI Corporation-approved hospitals infringes
upon the Insured employee's right to have the right of
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hospital of their choice, as it curtails their right to
choose a healthcare provider or access better or
specialized treatment elsewhere.
iv. That the right to health is an integral part of
the right to life. Denying insured employees the right to
choose their healthcare provider violates their right to
receive adequate, quality medical care and hampers
their access to timely and effective treatment.
v. That the ESI Act, particularly its provisions
concerning restricted healthcare access, is outdated in
the current context of India's rapidly evolving
healthcare sector. Private hospitals and specialized care
centers offer superior and more modern treatment
options compared to the hospitals within the ESI
Corporation network.
vi. That the ESI Corporation network may not be
equipped with the latest medical technologies or
specialized care, which limits the choice and quality of
healthcare available to insured employees.
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vii. That an insured person, like any individual
purchasing health insurance, should have the right to
select the healthcare provider based on their needs.
The restriction of healthcare provider options goes
against the fundamental principles of freedom of choice
and the policyholder's autonomy.
viii. Arguing that health insurance is meant to
protect individuals by giving them the freedom to select
healthcare providers that best meet their needs.
ix. That the provisions of the ESI Act contradict
modern Insurance law principles, particularly those
under the Insurance Act, 1938 and the IRDA Act, which
allows policyholders the liberty to choose healthcare
providers.
x. As a statutory body, ESI Corporation must align
its policies with general insurance law and practices,
which uphold the policyholder's right to choose
providers within their insurance network.
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xi. The ESI corporation's existing system, by limiting
access to treatment only within the network, hampers
the ability of employees to receive the most effective
medical care available. This restriction not only
undermines the quality of healthcare services but also
raises concerns about the efficiency of the public health
system.
xii. Reliance is placed on the following decisions:
a. Deep Chand Vs. The State of Uttar Pradesh
and others1 (Deep Chand)
b. The State of West Bengal Vs. Anwar Ali
Sarkar2 (Anwar Ali Sarkar)
c. Bharat Heavy Electricals Ltd. Vs. M.
Chandrasekhar Reddy and Others3 (Chandrasekhar
Reddy)
d. Joginder Kumar Vs. State of Uttar Pradesh
and Others4 (Joginder Kumar)
1
AIR 1959 SC 648
2
AIR 1952 SC 75
3
2005 (28) AIC 793
4
AIR 1994 SC 1349
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8. Learned counsel for the respondents would urge
the following grounds:
i. The writ petition is not maintainable as the
petitioner, who is registered under the ESI Act, in the
guise of challenging the constitutional validity has
obtained the interim order against the recovery of the
contribution as per the order passed under Section 45A
of the ESI Act, there is an alternative efficacious
remedy, which is a statutory remedy under Section
45AA and Section 75 of the ESI Act and the petitioner
has successfully coverage to its employees under the
ESI Act for the past ten years and in the process, the
eligible insured employees are denied of protection and
benefits that are available under the ESI Act.
ii. The petitioner has no locus-standi to file this
petition as the petitioner is not an insured employee or
the beneficiary under the ESI Act and the writ petition
needs to be dismissed on the ground of locus-standi as
well.
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iii. The petitioner has not included the insured
employees who would be affected by this order and the
writ petition is not maintainable on this ground as well.
iv. That Sections 57 and 59 of the ESI Act are
constitutionally valid, as they are enacted with the
objective of providing comprehensive healthcare
benefits to insured employees within a controlled and
regulated framework. The restrictions on healthcare
provider choices are a necessary and legitimate means
to ensure that it is affordable, standardized, and quality
healthcare to employees under the ESI scheme.
v. The legislative intent behind these provisions is to
maintain a uniform system of healthcare that benefits
all insured employees across the country, irrespective
of their location or financial status. The limitation of
choices to ESI-approved hospitals ensures that there is
no exploitation of the insurance scheme by private
providers, who may offer services at inflated costs.
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vi. The ESI scheme was designed to safeguard the
well-being of low-income workers by providing medical
benefits, including hospital treatment and other
healthcare services. The restrictions are in place to
ensure the efficient utilization of public funds and to
avoid fraudulent or unnecessary claims.
vii. The ESI Act's purpose is to provide healthcare
that is economically feasible and equitable for all
insured employees. By controlling the network of
healthcare providers, the ESI Corporation is able to
ensure consistency in the quality and cost of medical
treatment, which protects the collective interests of the
insured population.
viii. The ESI Act, as it stands, ensures insured
employees' right to health under Article 21 of the
Constitution by guaranteeing access to necessary
medical services through ESI Corporation-approved
hospitals. The healthcare services provided by ESI
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Corporation-approved hospitals are well-structured,
systematic, and cost-effective.
ix. The right to health does not extend to the right
to choose any healthcare provider. The provision of
healthcare through a network of approved hospitals is
consistent with the social welfare nature of the ESI
scheme, designed to provide affordable healthcare to a
large section of the population.
x. That limiting access to ESI-approved hospitals
allows for better control over the quality of healthcare
provided. This ensures that healthcare providers comply
with ESI standards for medical treatment, equipment,
and personnel. It also helps to avoid over utilization of
services, misuse of medical insurance benefits, and
ensures that insured employees receive treatment at
rates regulated by ESI Corporation.
xi. That not all private hospitals may be equipped
to provide the level of medical care required under the
ESI scheme. ESI-approved hospitals are vetted to meet
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the necessary standards of care, ensuring that insured
employees are treated by qualified medical
professionals.
xii. That the ESI system relies on careful financial
management to ensure its sustainability. Allowing
insured persons unrestricted access to private
healthcare providers could lead to an increase in the
overall cost of the scheme, burdening the system and
potentially making it unsustainable in the long run. The
restrictions ensure that the scheme remains financially
viable for all employees covered under the Act.
xiii. Places reliance on State of Punjab and
others Vs. Ram Lubhaya Bagga5 and Bandhua
Mukti Morcha Vs. Union of India and others6,
where the Court recognized the government's duty to
provide adequate and affordable healthcare within a
regulated system, without extending the right to
5
AIR 1998 SC 1703
6
1984 AIR 802
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absolute freedom of choice. Further reliance is placed
on the following decisions:
a. Kirlosker Brothers Ltd. Vs. Employees' State
Insurance Corporation7 (Kirlosker)
b. Bangalore Turf Club Limited Vs. Regional
Director, Employees' State Insurance
Corporation8 (Turf Club)
c. Transport Corporation of India Vs.
Employees' State Insurance Corporation and
another9 (Transport Corporation of India)
d. Buckingham and Carnatic Co. Ltd. Vs.
Venkataiah and another10 (Venkataiah)
e. Royal Talkies, Hyderabad and others Vs.
Employees State Insurance Corporation11 (Royal
Talkies)
7
(1996) 2 SCC 682
8
(2014) 9 SCC 657
9
(2000) 1 SCC 332
10
(1963) SCC Online SC 79
11
(1978) 4 SCC 204
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f. Regional Director E.S.I. Corporation and
another Vs. Francis De Costa and another12
(Francis De Costa)
g. C.E.S.C. Limited and others Vs. Subhash
Chandra Bose and others13 (Subhash Chandra Bose)
9. Having heard the learned counsel on both sides
the question that falls for consideration is;
"1. Whether the petitioner has locus-standi to
maintain the present writ petition ?
2. Whether sections 57 and 59 of the ESI Act
is unreasonable and violative of Articles 14,19 and 21
of the Constitution?"
3. Whether the petitioner has legal statutory
right under the statute to seek writ of mandamus
directing respondent Nos.1 and 3 to take control of
and administer the affairs of ESI Corporation?"
10. This Court has given thoughtful consideration to
the material on record and rival contentions.
12
1993 Supp (4) SCC 100
13
(1992) 1 SCC 441
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11. The statement of object of the ESI Act, reads as
under:
"The introduction of a scheme of Health
Insurance for Industrial Workers has been under the
consideration of the Government of India for a long
time. The necessity for such a scheme has become
more urgent in view of the conditions brought about
by war. The scheme envisaged is one of compulsory
State Insurance providing for certain benefits in the
event of sickness, maternity and employment injury to
workmen employed in or in connection with the work
in factories other than seasonal factories.
A scheme of this nature has to be planned on an
all-India basis and administered uniformly throughout
the country. With this object, the administration of the
scheme is proposed to be entrusted to a Corporation
constituted by central legislation.
The functions of the Corporation will be
performed by a Central Board constituted of
representatives of Central and Provincial
Governments, and of employers, workers and the
medical profession. The Board will also include certain
members elected by the Central Legislative Assembly.
A Standing Committee of the Board will act as the
Executive of the Board, and a Medical Benefit Council
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will also be set up to advise on matters relating to the
administration of medical benefit.
The insurance fund will be mainly derived from
contributions from employers and workmen. The
contributions payable in respect of each workman will
be based on his average wages and will be payable in
the first instance by the employer. The employer will
be entitled to recover the workman's share from the
wages of the workman concerned. Workmen whose
earnings do not exceed 10 annas a day will be totally
exempt from payment of any share of the
contribution, the entire contribution on account of
such workmen being met by employer. Provision has
been made for the preparation of proper budgets and
the audit of accounts.
The insured workman will be entitled to the
following benefits:-
(a) Sickness Cash Benefit.-A workman, if certified
sick and incapable of working will receive for a
period not exceeding 8 weeks in any continuous
12 monthly period a cash allowance equal
approximately to half average daily wages
during previous six months. He will also be
entitled to receive medical care and treatment at
such hospitals, dispensaries or there institutions
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to which the factory in which he is employed
may be allotted.
(b) Maternity Benefit.-Women workers will be
entitled to receive a maternity benefit at 112
annas a day for 12 weeks. They will also be
entitled to medical aid at the aforesaid medical
institutions
(c) Disablement and Dependents' Benefit.-A
workman disabled by employment injury will
receive for the period of disablement of life
depending on whether the disablement is
temporary or full and permanent, as the case
may be a monthly pension equivalent to half his
average wages during the previous twelve
months, subject to a maximum and minimum.
Where disablement is partial, the pension will be
proportionately reduced. In case of death
resulting from employment injury the pension
will be payable to the widow or widows' minor
sons and minor and unmarried daughters or in
case there are no widow and legitimate children,
to other dependents of the deceased workman.
The workman will also be entitled to medical
care and treatment.
Medical care and treatment to insured workman
will be provided by Provincial Governments at such
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hospitals, dispensaries and other institutions as may
be prescribed for the purpose. The cost of the medical
benefit will be shared between the Provincial
Government and the Corporation in such proportions
as may be agreed upon between them. In case the
average incidence of sickness cash benefit in any
Province is in excess of the all-India average,
Provincial Government will also bear such share of the
cost of the excess incidence as may be agreed upon
between it and the Corporation."
(Emphasis supplied)
12. ESI Act is social welfare legislation. The scheme
envisaged is one of compulsory State Insurance providing for
certain benefits in the event of sickness, maternity and
employment injury to workmen employed in or in connection with
the work in factories other than seasonal factories. ESI Act is a
Pre-Constitutional Act but it's a post independent measure
giving effect to the Directive Principles of the State Policies,
Articles 38, 39, 41, 42, 43 and 43(A) of the Constitution of
India. This legislation comes directly under Entries 23 and 24
of List III of VII Schedule of the Constitution, i.e., social
security and social insurance, welfare of the labourer,
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conditions of work, PF, workmen compensation, old-age
benefits and maternity benefits.
13. Sections 57 and 59 of the ESI Act reads as under:
"57. Scale of medical benefit.-(1) An
insured person and (where such medical benefit is
extended to his family) his family shall be entitled to
receive medical benefit only of such kind and on such
scale as may be provided by the State Government or
by the Corporation, and an insured person or, where
such medical benefit is extended to his family, his
family shall not have a right to claim any medical
treatment except such as is provided by the
dispensary, hospital, clinic or other institution to which
he or his family is allotted, or as may be provided by
the regulations.
(2) Nothing in this Act shall entitle an insured
person and (where such medical benefit is extended to
his family) his family to claim reimbursement from the
Corporation of any expenses incurred in respect of any
medical treatment, except as may be provided by the
regulations.
x x x
59. Establishment and maintenance of
hospitals, etc., by Corporation.-(1) The
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Corporation may, with the approval of the State
Government, establish and maintain in a State such
hospitals, dispensaries and other medical and surgical
services as it may think fit for the benefit of insured
persons and (where such medical benefit is extended
to their families) their families.
(2) The Corporation may enter into agreement
with any local authority, private body or individual in
regard to the provision of medical treatment and
attendance for insured persons and (where such
medical benefit is extended to their families) their
families, in any area and sharing the cost thereof."
14. Section 57 provides for a situation where in an
insured person and his family members shall be entitled to
receive ESI medical benefit within framework of the ESI Act,
and they shall not have a right to claim any medical
treatment except as is provided by the dispensary, hospital,
clinic or other institution to which he or his family is allotted,
or as may be provided by the regulations. Section 57(2)
however meets the need for exigencies wherein, an insured
person and his family is entitled to claim reimbursement,
from the ESI Corporation, of any expenses incurred in
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respect of any medical treatment, as may be provided by the
regulations. Regulation 96A and 96 B of the Employees State
Insurance (General) Regulations, 1950 details down on
situations when and how the insured may claim
reimbursement of his medical treatments availed at non ESI
Corporation/ESI Scheme Hospitals.
15. Section 59 empowers the ESI Corporation to
establish and maintain in a State, hospitals, dispensaries and
other medical and surgical services for the benefit of insured
persons. Sub-section (2) enables the Corporation to enter
into agreement with any local authority, private body or
individual in regard to the provision of medical treatment and
attendance for insured persons and their families, in any
area and sharing the cost thereof. Sub-section (3) enables
the Corporation to enter into agreement with any local
authority, local body or private body for commissioning and
running Employees' State Insurance hospitals through third
party participation for providing medical treatment and
attendance to insured persons and to their families. This
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section is an enabling provision which empowers the ESI
Corporation to create and maintain a network of hospitals,
dispensaries and multi-specialty medical units. This is the
very purpose for which ESI Corporation was incorporated
under the Act to regulate, monitor and implement the ESI
Scheme.
16. Petitioner is a private industry/establishment.
petitioner is not an insured employee or the beneficiary
under the ESI Act, the petitioner being one of the managing
director of the hospital, the duty is cast to ensure that they
cover their establishment and their employees benefits under
the ESI Act or made available to their employees by covering
the establishment and paying the requisite contribution
which the petitioner has not paid and successfully avoided
the coverage of his employees under the ESI Act for the past
ten years.
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17. The Apex Court in Kirloskar's case has mandated
that the Private establishment also has to ensure the safety
of the workers and at paragraph No.10 has held as under:
"10. In expanding economic activity in
liberalised economy Part IV of the Constitution enjoins
not only the State and its instrumentalities but even
private industries to ensure safety to the workman
and to provide facilities and opportunities for health
and vigour of the workman assured in relevant
provisions in part IV which are integral part of right to
equality under Article 14 and right to invigorated life
under Article 21 which are fundamental rights to the
workman. Interpretation of the provisions of the Act,
therefore, must be read in the light not only of the
objects of the Act but also the constitutional and
fundamental and human rights referred to
hereinbefore."
18. Relying upon the earlier Judgment in Subhash
Chandra Bose's case, the Apex Court at para No.33 has
held as under:
"The Act aims at relieving the employees from
health and occupational hazards. The interpretation
calls for in this case is of the meaning of the meanings
'supervision' and 'agent' in Section 2(9)(ii) of the Act.
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The legal interpretations is not an activity sui generis.
The purpose of the enactment is the touchstone of
interpretation and every effort would be to give effect
to it. The judge acts as a vehicle of communication
between the authors and the recipients. The end result
is to promote rule of law and to enliven social order
and humane relations."
19. The petitioner contends that provisions in Section
57 and 59 of the ESI Act are unreasonable and violate the
constitutional rights of the insured employees, by limiting the
choice of treatment providers to a network of hospitals or
doctors chosen by ESI Corporation, the employees
fundamental right to choose their health care provider is
restricted and according to the petitioner, it is an
infringement on their right to health under Article 21 as well
as their right to equality and freedom of occupation under
Articles 14 and 19. The ESI Act does not discriminate the
insured employee, every insured employee shall be given the
same benefit and treatment as and when the claim is made
and there is no discrimination whatsoever made by the
Corporation and thus, it is difficult to fathom how the
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provisions of the ESI Act are contravening the equality
provisions or right to privacy.
20. The settled principle is that the person who is
affected, can knock on the doors of the Court of justice. The
petitioner claims to be one of the three partners of the
hospital, alleging violation of the rights of the Hospital
employees, which clearly demonstrate his attempt to
espouse the cause of someone else. Neither the petitioner
has established that he has suffered any specific injury,
harm, or that he has direct interest in the present facts in
order to possess the Locus to initiate the writ proceedings.
The petitioner has not impleaded any insured employees of
their Institutions who would be affected. The rule of locus
standi cannot be relaxed in favor of the petitioner and the
petition is liable to be rejected on that count as well.
21. The petitioner is unable to highlight how and
which provision violates his rights. The decision relied on by
the petitioner pertains to the issues of discriminatory
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practices and action and no such acts are being carried out
by the Corporation for the petitioner to make the decisions
applicable to the facts and circumstances of this case. The
objectives of the ESI Act and the employees right to the best
medical care do not in any way establish as to how Article 14
has been violated while implementing the ESI Act.
22. Right to choice for medical services is no longer
res integra as this contention was considered by the Division
Bench of this Court in the case of Employees' State
Insurance Corporation and others Vs. The Workmen of
ITI Ltd. and others14 and at paragraph No.7.7 has held as
under:
"7.7. It is true that the workers are necessarily
to be provided with proper environment and working
conditions from the point of view of hygiene as also
proper medical care. But, to contend that the
workmen should have a right of medical aid of their
choice which is not there even under the existing
settlements, is to stretch this right to the extreme.
Even in Surjit Sing's case (supra) the employee was
held entitled to expenses that the Escort Heart
14
ILR 1997 KAR 1433
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Institute, New Delhi, would have charged, though he
had undergone operation abroad, for the reason that
the Escort Heart Institute was one of the hospitals
recognised by the employer. Even under the
settlements between the workmen and the
Managements, certain hospitals are specifically
referred to by name, and the workmen have the
choice of going to one or the other of the said
hospitals. It is true that now, by the amendments
concerned herein, they are covered by the services
rendered by the ESI hospitals. An awful picture of
the condition of medical aid that is being given in the
said ESI hospitals is presented in the course of
arguments. This submission of the Learned Counsel
for the workmen is in utter disregard to the very
services that are now being availed of by those
employees each of whose monthly wages do not
exceed Rs.3,000/-. The petitioners workmen have no
tears to shed for those poor workmen/employees
whose wages are low. If the argument of the
Learned Counsel for the workmen in those
proceedings with regard to the said workmen having
a right of choice of any hospital for medical care is to
be accepted, then such right would amount to be
recognised only in respect of those workmen of high-
bracketed incomes. While right to health and medical
care is recognised under Article 21 of the
Constitution, it cannot be stretched to the point of
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holding that the workmen have a choice of
approaching any hospital of their choice. The medical
services available in the ESI hospitals is as much
compliance with Article 21 as any other private
medical service. ESI Corporation is a statutory
authority. It is under obligation to provide efficient
medical service to the employees covered by the Act.
If the conditions in the ESI hospitals are awefully
bad, as submitted in course of arguments, there are
ways and means of forcing the said Corporation in
appropriate proceedings to make services in its
hospitals meaningful and effective and not to render
the right to medical care under Article 21 of the
Constitution an illusion. That is altogether a different
aspect of the matter. Sorry state of affairs in the ESI
hospitals by itself does not amount to deprivation of
the workmen's right under Article 21 of the
Constitution when they are brought under the
purview of the Act. This is in so far as the workmen's
complaint with regard to their fundamental right
under Article 21 of the Constitution is concerned."
23. The provisions of Sections 57 and 59, which
specifies that the treatment has to be taken in the facilities
provided by the ESI hospital or its referral hospitals is also
based on the financial means of the State. The facilities that
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are made available today are comparatively superior to those
facilities that were available when the Act came into force in
1948 as rightly contended by the respondents. The ESI
Corporation is making all its endeavour to make available all
super specialty treatment even in their hospitals to all
insured persons who are economically not so sound without
driving them to go to the private hospital which would be a
dent in their pocket. Thus, this requirement under Sections
57 and 59 are reasonable and such regulation is permissible
in law.
24. The claim of the Petitioner that the Petitioners
must be given a choice of their own cannot be sustained ,
which is a statutory right under the ESI Act vest with the
Insured employees, from the pleadings and arguments, it is
not stated which action and which provisions are unguided.
This contention is also not substantiated and also does not
arise in the present case.
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25. The provisions of ESI Act are self-contained and
its implementation is directly under the supervision of the
Central Government and therefore, the argument that the
ESI has to be under the supervision of another agency under
the IRDA is liable to be rejected. The Parliament in its
wisdom has enacted Insurance Regulatory and Development
Authority (IRDA) and created a body to regulate and
supervise the functioning of the private agency which
provides Insurance services which are in the nature of the
contract unlike the Scheme under the ESI Act.
26. The ESI Corporation has adopted a flexible
approach in cases where treatment is taken under
emergency circumstances from medical institutions other
than those setup/recognized hospitals and the amount
incurred by the insured persons will be reimbursed at
government rate as per the provisions made under
regulation 96-A of the ESI Act.
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27. The Petitioner has attacked only the medical
facilities and on that ground the Petitioners want to avoid
coverage under the ESI Act. It may be pointed out here that
the ESI Act provides for benefits other than medical
treatment, which includes sickness benefits, maternity
benefits, disablement benefits, dependants benefits, funeral
expenses (Section 56-F) and medical benefits. The ESI Act
provides for medical benefits to their retired insured persons.
This Scheme envisages that the insured persons and its
members have taken care from the cradle to the grave and
also protects the employees against dismissal and
punishment during period of sickness. The benefits under the
ESI Scheme are comprehensive and more advantageous to
the employees.
28. The Scheme provided under the Act is a huge
proportion and is monitored by a statutory body. The
facilities under the ESI Act are adequate and infact, its
efficiency was clearly demonstrated during COVID-19
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pandemic where the ESI hospitals and dispensaries were
extended even to the general public.
29. The ESI Act, the Rules and Regulations framed
under the ESI Act are in itself a policy and a separate policy
is not required as contended by the Petitioner. These are
statutory rights and are legally enforceable, unlike the
private insurance, which is a contract that requires detailing
out the terms and conditions. Thus, the concept of indemnity
as claimed by the Petitioner is also not applicable for
claiming the right under the ESI Act.
30. The concept of qud pro quo does not apply to ESI
scheme. The contributions paid by the insured employees
goes to a Fund known as "ESIC Fund", which is utilized for
the benefits to be given to the employees under the Act. The
expenditure towards the benefits provided under the Act are
borne from this fund and not from the general revenue of the
State. The insured employee becomes eligible provided
under the Act immediately upon his enrolment but the
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benefit may be postponed as and when the need occurs.
Unlike in the individual contract, medical insurance, the
benefit is provided only to the person who is insured, as the
private insurance is a contract, whereas ESI Corporation is a
Scheme envisaged under the Act.
31. Petitioner who is registered under the ESI Act, in
the guise of challenging the constitutional validity, has
obtained an interim order against recovery of contributions
as per the order passed under Section 45 A of the ESI Act,
(Annexure-G). The ESI Act provides for a statutory remedy
under Section 45 AA and section 75 of the ESI Act. The
Petitioner is aware of the same and they make a reference to
appeal as provided under Section 45- AA of the ESI Act. The
Petitioner has successfully avoided coverage of his
employees under the ESI Act for the past 10 years. In the
process, the eligible Insured employees are thus denied
protection and benefits that are available under the ESI Act.
The petitioner has a statutory remedy under the ESI Act. The
Petitioner is not an insured employee or beneficiary under
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the Act, but one of the managing partners of the hospital and
their duty to ensure that they cover their establishment and
their employees benefits under the ESI Act are made
available to their employees by covering the establishment
and paying the requisite contributions, which they have not
done so far. The Petitioners are thus guilty of denying the
benefits for the insured employees and they have not come
to the Court with clean hands and the point framed for
consideration is answered accordingly.
32. For the foregoing reasons, this Court pass the
following:
ORDER
i. The petition is dismissed.
ii. It is needless to observe that the petitioner is at
liberty to avail the statutory remedy, if so advised,
in accordance with law.
Sd/-
________________________
JUSTICE K.S. HEMALEKHA
MBM
