Orissa High Court
National Aluminium Company Ltd vs Employees' State Insurance on 30 January, 2023
IN THE HIGH COURT OF ORISSA AT CUTTACK
WP(C) No.20399 of 2016
(Through Hybrid mode)
National Aluminium Company Ltd. .... Petitioner
-Versus-
Employees' State Insurance .... Opposite Parties
Corporation and others
For Petitioner : Ms. Pami Rath, Advocate
For Opposite Parties : Mr. A. P. Ray, Advocate
Mr. N. D. Tripathy, Advocate
CORAM: JUSTICE ARINDAM SINHA
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Date of hearing and judgment: 30.01.2023
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1. Petitioner is a Government company. Employees' State
Insurance Corporation raised demand for payment of
contribution. Petitioner disputed the demand in the insurance
Court. It was required, for maintaining its dispute, to make pre-
deposit of 50% of the amount due as demanded by the
Corporation. It applied for waiver of the pre-condition. By
impugned order dated 14th September, 2016, the application for
waiver was rejected. Petitioner has challenged said order.
2. Ms. Rath, learned advocate appears on behalf of
petitioner and submits, proviso under sub-section (2-B) in
section 75 of Employees' State Insurance Act, 1948 gives
discretion to the Court, to exercise, on reasons to be recorded in
writing, to waive or reduce amount to be deposited under the
sub-section. Impugned order is one, by which the Court refused
to exercise discretion, on purported perception and without
reason. There should be interference because under the Act her
client, as principal employer, is entitled to apply for the waiver.
Omission to exercise the discretion provided in the statute must
also be on reason given.
3. She relies on judgment of the Supreme Court in L.
Hirday Narain v. I.T.O., Bareilly, reported in (1970) 2 SCC
355, paragraphs 13 to 15. She also relies on other judgments of
said Court, on exercise of discretion to be on reasons for, inter
alia, justice being seen to be done and to check arbitrariness.
They are Kranti Associates (P) Ltd. v. Masood Ahmed Khan,
reported in (2010) 9 SCC 496, paragraph 47 and Reliance
Airport Developers (P) Ltd. v. Airports Authority of India,
reported in (2006) 10 SCC 1, corrigenda paragraph-29.
4. Mr. Ray, learned advocate appears on behalf of the
Corporation and submits, no interference with impugned order is
warranted. Petitioner cannot claim hardship and, therefore, for
working out scheme of the Act to provide insurance cover to
factory workers, it must be compelled to put in the pre-deposit.
5. He relies on view taken by a Division Bench of Madhya
Pradesh High Court in Harshal Paper and Board Mill Ltd. v.
Union of India, reported in 2009 (120) FLR 77, paragraph 25 to
submit that the Bench confirmed requirement by sub-section
(2-B) to be intra vires the Constitution, as not offending article
14 therein. He submits, view taken was that the Parliament in its
wisdom has provided many measures to curb and control the
principal employer and to make them comply with provisions in
the Act. Impugned order was duly made in accordance with the
provision. He reiterates, there should not be interference.
6. He also relies on view taken by a Division Bench of
Allahabad High Court in M/s. Satyam Glass Works Industries
v. Employees' State Insurance, Kanpur, reported in 2007
LLR 750, paragraph-5. Passage relied upon in the paragraph is
extracted and reproduced below.
"5. xx xx xx On the contrary, the proviso
categorically says that the Court may, for the
reasons to be recorded in writing, waive or reduce
the amount to be deposited under this sub-section.
Therefore, reasons are compulsory statutory
requirement when waiver or reduction is allowed
but not when it is rejected. Therefore, order of
rejection is a discretionary power and cannot be
said to be substantial question of law. If it is
allowed, the weaker section of the people will be
affected. Therefore, Court is compelled to provide
with reasons of waiver or reduction being statutory
requirement otherwise such section of the people
Seem to be affected. There is no provision that
reasons are also to be given when such prayer is
rejected. First part of sub-section (2-B) of section
75 of the Act itself is qualifying section for
rejection."
(emphasis supplied)
7. Sub-section (2-B), with the proviso, is reproduced below.
"(2-B) No matter which is in dispute between a
principal employer and the Corporation in respect of
any contribution or any other dues shall be raised by
the principal employer in the Employees' Insurance
Court unless he has deposited with the Court fifty per
cent of the amount due from him as claimed by the
Corporation.
Provided that the Court may, for reasons to be
recorded in writing, waive or reduce the amount to be
deposited under this sub-section."
8. In Harshal Paper (supra) view taken was regarding
above provision not offending article 14 in the Constitution of
India. Contention before the Bench was that upon a demand
made and reference of it at first instance to the insurance Court,
there cannot be requirement of pre-deposit before first
adjudication. In that context, vires of the sub-section was
pronounced upon by the view taken.
9. In L. Hirday Narain (supra) the Supreme Court declared
the law on exercise of discretion and the decision can also be
relied upon for the law on refusal to exercise discretion. A
passage from paragraph 13 is extracted and reproduced below.
"xx xx xx The High Court observed that
under Section 35 of the Indian Income-tax Act, 1922,
the jurisdiction of the Income-tax Officer is
discretionary. If thereby it is intended that the
Income-tax Officer has discretion to exercise or not
to exercise the power to rectify, the view is in our
Judgment erroneous. Section 35 enacts that the
Commissioner or Appellate Assistant Commissioner
or the Income-tax Officer may rectify any mistake
apparent from the record. If a statute invests a
public officer with authority to do an act in a
specified set of circumstances, it is imperative upon
him to exercise his authority in a manner
appropriate to the case when a party interested and
having a right to apply moves in that behalf and
circumstances for exercise of authority are 'shown
to exist. Even if the words used in the statute are
prima facie enabling, the Courts will readily infer a
duty to exercise power which is invested in aid of
enforcement of a right - public or private - of a
citizen."
(emphasis supplied)
The Act by sub-section (2-B) in section 75 provides for
situation arising between the Corporation and principal
employers, in respect of insurance cover for the employees.
The Parliament providing for these two persons, in this case
both being juristic persons since both are corporations, thought
fit to insert the proviso regarding waiver or reduction of the
amount to be deposited under sub-section (2-B). Hence,
following L. Hirday Narain (supra) petitioner had right to
apply for waiver. Correspondingly the insurance Court having
power to adjudicate on the prayer made in the application, had to
do it in the manner specified by the sub-section, in the set of
circumstances presented by petitioner interested and having the
right to apply. As such, the power was invested in aid of
enforcement of the right to apply for waiver.
10. It appears from impugned order that contention of
petitioner was as would appear from a sentence, extracted
therefrom and reproduced below.
"It is contended on behalf of the petitioners
that the petitioner NALCO being a Government
of India owned enterprise having huge assets and
making substantial profit every year, there is no
chance of escaping from payment in case of
losing the litigation."
On query from Court it could not be shown that the contention
was dealt with in the order. Refusal to exercise discretion was
stated in the order as reproduced below.
"Thus, considering the rival contentions of
the parties and the legal position, I am of the
considered view that the petitioners being a
renowned Government of India Enterprise are
liable to make the statutory deposit. Accordingly,
the petitioners are directed to deposit fifty per cent
of the amount due from them, as claimed by the
ESI Corporation, within a fortnight hence, where
after the case will be admitted. In the event, the
petitioners fail to deposit the said amount, the case
would stand dismissed, which is lingering since
24.12.2012."
(emphasis supplied)
The insurance Court did not advert to contention of petitioner
that it would not escape payment in event adjudication went
against it, regarding the demand brought to the Court, for
adjudication.
11. Contention of petitioner stands recognized in the
procedure for suits, by Code of Civil Procedure, 1908. Rule 8-A
in Order XXVII is reproduced below.
"8-A. No security to be required from
Government or a public officer in certain cases.-
No such security as is mentioned in rules 5 and 6 of
Order XLI shall be required from the Government
or, where the Government has undertaken the
defence of the suit, from any public officer sued in
respect of an act alleged to be done by him in his
official capacity."
(emphasis supplied)
Rules 5 and 6 in Order XLI provide for security being put in
respectively for stay of decree and execution, by the appellate
Court. Where Government has suffered decree or has undertaken
defence of suit, provisions for putting in security provided by the
Code shall not be required from it. A better elucidation regarding
requirement of security cannot be had.
12. Reverting back to Harshal Paper (supra), the Division
Bench of Madhya Pradesh High Court had noticed that the
requirement of pre-deposit was at the first instance of seeking
adjudication on demand made but took view that it could not
be said to be offending article 14 in the Constitution with
regard to scheme of the Act. In other words, there was no
adjudication on the demand, determined by the authority, yet
the requirement of pre-deposit was upheld. The application for
waiver of pre-deposit was made in such a situation, on
contention that petitioner is a renowned Government of India
Enterprise and would not escape payment on adjudication
going against it. When there has been adjudication and decree
on a claim, followed by appeal preferred against such decree to
a superior Court/Forum, there is requirement of security.
Under the Act the Corporation can determine and demand. The
Supreme Court in Employees' State Insurance Corporation
v. F. Fibre Bangalore (P) Ltd., reported in (1997) 1 SCC 625
had also declared the law regarding, who is to approach the
insurance Court on there being a dispute regarding a demand.
Petitioner sought to raise a dispute on the demand. It wants
adjudication. The proviso allows petitioner to apply for waiver
of pre-deposit, for purpose of maintaining the dispute for
adjudication. In the circumstances, it was incumbent upon the
insurance Court to have dealt with the contention. More so
because by L. Hirday Narain (supra) the Supreme Court said,
it is imperative upon the public officer to exercise his
authority. A Court, it follows, must also do so, in exercising
the power of discretion judiciously. In refusing to exercise
discretionary power vested in it by the proviso, it was bound to
give reasons since also, there must be ready inference of a duty
to exercise the power. View taken in M/s. Satyam Glass
Works (supra), in humble opinion of this Bench, runs contrary
to L. Hirday Narain (supra) and this Bench is bound to
follow law declared by the Supreme Court.
13. Impugned order is set aside and quashed. The
application is restored to the insurance Court, to be dealt with
afresh, expeditiously.
14. The writ petition is allowed and disposed of.
(Arindam Sinha)
Judge
R.K.Sethi
