E.S.I. CORPORATION, QUILON Vs. SOUTH INDIA CORPORATION (TRAVANCORE) P. LTD., QUILON
LAWS(KER)-1974-10-18
HIGH COURT OF KERALA
Decided on October 16,1974

E.S.I. Corporation, Quilon Appellant
VERSUS
South India Corporation (Travancore) P. Ltd., Quilon Respondents

JUDGEMENT

P.SUBRAMONIAN POTI,J. - (1.) THE Employees ™State Insurance Corporation(in short,˜the Corporation ™) moved an appli­cation in the Employees ™Insurance Court as I.C.129 of 1966 under section 75(2)of the Employees ™State Insurance Act,1948(hereinafter referred to as the Act)against M/s South India Corporation(Travancore)Private Limited,Quilon(hereinafter referred to as the ˜employer ™) for recovery of Rs.47,965.16 being the contribution for the period from 1st January 1959 to 15th September 1963.This appli­cation was tried along with another application I.C.127 of 1966 filed by the employer against the Corporation under sections 75 and 77 of the Act.That application had been disposed of earlier on a preliminary issue as to limitation.That had come up in appeal to this court in A.S.178 of 1969,and this court in the decision in South India Corporation(Travancore)Private Limited v.E.S.I.Corporation 1973 held that there was no limitation for the Corporation.
(2.) THE present appeal is by the Corporation against the judgment of the Insurance Court on its application I.C.129 of 1966.The question is one of quantum of contribution recoverable.The total amount claimed by the Corporation was Rs.47,965.16.That this amount is due for the period under the Act is not disputed.But what is contended is that during the relevant period namely 1st January 1959 to 15th September 1963 the employer had to meet commitments under the Maternity Benefit Act,1957,by way of payment to its employees under that Act,amounting to a sum of Rs.35,710.19,a commitment which was really that of the Corporation and therefore what could be recovered is only the balance after the adjustment of the amount paid under the Maternity Benefit Act.This plea has evidently found favour with the court and necessarily therefore,by the judgment,the Corporation has been allowed to recover from the employer only the balance. The question for decision is quite simple.Whether any payment made by the employer by way of Maternity Benefit at a time when the Employees ™State Insurance Act was in force could be sought to be adjusted towards the demand for contribution is the question for decision.There was a controversy earlier as to whether Chapters IV and V of the Act applied to the employer's factory from 1st January 1959.That,it may be said,has been set at rest and the position is that Chapter V -A applied to the said factory from 24th November 1951 until the said chapter was repealed with effect from 1st July 1973.According to counsel for the Corporation Chapters IV and V came into force with regard to the employer's factory on 16th September 1959,but by virtue of an exemption it was inope­rative up to 1st January 1959 so much so the provisions of Chapters IV and V were operative only from 1st January 1959 and earlier Chapter V -A was applicable.Section 73A which relates to the special contribution payable was therefore operative all along while sections 38,39 and 40 were appli­cable only from 1st January 1959.Though it was so applicable demand was made by the Corporation for pay­ment only in 1961 and the employer's complaint is that since prior to that no attempt had been made to enforce the right to seek contribution it was assumed that the employer was liable to pay the maternity benefit to its workmen and such payments were made.It is therefore said that the employer has a right to demand adjustment of such payment towards the amount claimed as contribution under the Act.That such payment has been made is not seriously disputed.But it is said that even if such payment has been made that will not enable the employer to claim either recovery or adjust­ment as against the Corporation.Reference is made in this context to sections 38,39 and 40 of the Act.These deal with the obligation to insure all employees in factories or establish­ments to which the Act applies and to pay contribution,that being the employer's and the employees ™contribution,to the Corporation and further the liability of the principal employer to pay employer's contribution as well as employees ™contribution.It is said that section 50 of the Act confers on an insured woman the claim against the Corporation for maternity benefit for a confinement occurring or expected to occur in a benefit period.Section 53 debars an insured person or his dependents from claiming to be entitled to receive or recover,whether from the employer of the insured person or from any other person,any com­pensation or damages under the Workmen's Compensation Act,1923 or any other law for the time being in force or otherwise,in respect of an employment injury sustained by the insured person as an employee under the Act.Section 61 similarly debars a person entitled to any of the benefits provided by the Act from seeking to be entitled to receive any similar benefit admissible under the provisions of any other enactment.These provisions indicate that where there is an obligation in the Corporation to meet commitments in regard to benefits covered by the Act to the workmen,corresponding obligation of the employers cease.They can claim protection under the provisions of the Act from liability to answer the claim of the workmen in regard to matters for which the Corporation is responsible.That being the case,for the period during which there is coverage under the Act there is no obligation on the part of the employer to meet the commitments which are really that of the Corporation.If,nevertheless they meet such commit­ments it cannot be said that they are obliged to do so.They are entitled to recover this from the Corporation.Apart from this even assuming that the circumstances justify the employer meeting the obligations under the Maternity Benefit Act,that is no answer to a claim by the Corporation for contribution under the Act so long as there is no provision in the Act for adjustment and set off of any amount spent by the employer for meeting any obligation that may be of the Corporation under the provisions of the Act.Liability to pay contribution being statutory the Corporation is entitled to enforce it and no plea will be answer to such claim if it is not one based on the provisions of the Act or any other law for the time being in force.No rule of quid pro quo or natural justice would come into play as the Insurance Court has presumed.There is no scope for invoking any such rule when applying the provisions of a Statute.
(3.) COUNSEL for the employer contends that the contribution under section 73A is really in the nature of a fee and so long as no services are rendered there could be no quid pro quo for the levy of the fee with the result that any demand for recovery of such fee should be considered as illegal.The inspiration for this plea evidently comes from two decisions that of the Andhra Pradesh High Court in Foods Fats and Fertilizers Limited ,v. The Regional Director,Employees 'State Insurance Corporation I.L.R.1972 A.P.1103 and that of the Orissa High Court in Hindustan Aeronautics Limited v. Regional Director 1974(2)L.L.J.115.Both these,it may be noticed,are cases wherein challenge was made to this validity of section 73A of the Act.The said section was attacked as unconstitutional.One of the grounds of attack was that what was sought to be recovered as special contribution under section 73A was really a fee and since it was well settled that a fee cannot be supported without an adequate return,in cases where Chapters IV and V had come into operation the fee should be held to be bad,for,admittedly when no services are rendered.Section 73A occurring in Chapter V -A of the Act,it may be noticed,is a transitory provision and was introduced in the Act in the year 1951.The proposal was to apply the Act to various parts of India in stages and there was opposition to this on the ground that in areas where the Act would apply from time to time the cost of production may go up and competition with other parts of the country may become difficult.In order to lighten the burden on those factories and establishments to which the Act was being extended from time to time it was proposed to extend the obligation to contribute,though not in the same scale,on all factories irrespective of the question whether it was extended to that area or not and that was the reason why section 73A was introduced in 1951.There­fore a special contribution had to be paid irrespective of the contribution under Chapter IV of the Act and irrespective of the question whether the benefit under Chapters IV and V were available to the workmen in the factory which had to pay the special contribution.In regard to the factories to which Chapters IV and V applied the obligation was to pay not only special contribution but also the regular contribution under Chapter IV.That being the case,what was contended in the Andhra Pradesh and Orissa High Courts was that where admittedly Chapters IV and V had not come into operation it cannot be disputed that no services were rendered and if special contribution was considered as a fee there is no return and consequently there could be no quid pro quo for the levy of the fee.It is seen that before the Orissa High Court it was conceded that the contribution was really a fee and not a tax.It is also seen that in both cases the complaint was that Chapters IV and V had not come into operation.It is not necessary to examine these decisions for the purpose of this case.Had it been necessary,we would have to consider conflicting views on this question,for,this court in Chandrasekharan Nair v .The Regional Director 1972 K.L.J.243 held that the special contribution under section 73A is not a fee but is a tax and the same view has been expressed by the High Court of Assam in the decision in K.C.Sarnia v.Regional Director,E.S.I.Corpora­tion A.I.R.1962 Assam 120.If it is a tax and not a fee no other question arises.Even if it is a fee,the contention raised before the Andhra Pradesh and Orissa High Courts is not available in this case for the reason that for the relevant period,i.e.from 1st January 1959 Chapters IV and V were in force in so far as the employer's factory was concerned and if so it cannot be said that section 73 A is bad for want of return by way of services.That apart,all these questions may be relevant when the section itself is challenged and not when this court is hearing an appeal against the decision of the Employees ™Insurance Court.;


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