- (1.) In exercise of powers under sub-section (5) of Section 1 of the Employees' State Insurance Act, 1948 (Act No. 34 of 1948) hereinafter referred to as the Act, the State Government issued a notification dated 24-2-1981 extending the provisions of the Act to any premises including the precincts thereof whereon ten or more persons but in any case less than twenty persons, are employed or were employed for wages on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on with the aid of power or is ordinarily so carried on but excluding a mine subject to the operation of the Mines Act, 1952 (Act No. 35 of 1952), or a Railway running shed or an establishment which is exclusively engaged in any of the manufacturing processes specified in clause (12) of Section 2 of the Act. The petitioner challenges the vires of this notification extending the provisions of the Act to establishments of the nature mentioned therein other than factories in exercise of power under Section 1 (5) of the Act on the ground that it delegates an essential legislative function to the appropriate Governments. It is urged that the Act by its own force applies to factories the word 'factory' being defined in Section 2 (12) of the Act. The word 'establishment' is, on the other hand, left undefined yet Section 1 (5) without providing any guidelines empowers the appropriate Governments to make applicable the Act to such establishments as it might choose and is hence unconstitutional.
(2.) The preamble to the Act runs as follows: "An Act to provide for certain benefits to employees in case of sickness, maternity and 'employment injury' and to make provision for certain other matters in relation thereto." The Act extends to the whole of India except the State of Jammu and Kashmir. By subsection (4) of Section 1, the Act is made applicable 'in the first instance' to all factories (including factories belonging to the Government) other than seasonal factories. Section 1 (5) in exercise of powers under which the impugned notification has been issued is in the following terms: "The appropriate Government may, in consultation with the Corporation and (where the appropriate Government is a State Government, with the approval of the Central Government), after giving six months' notice of its intention of so doing by notification in the official Gazette, extend the provisions of this Act or any of them to any other establishment or class of establishments, industrial, commercial, agricultural or otherwise." The word 'establishment' has not been defined in the Act. Section 2 of the Act defines 'appropriate Government', 'benefit period', 'confinement', 'contribution', 'contribution period', 'corporation', 'duly appointed', 'employment injury', 'employee', 'exempted employee', 'family', 'factory', 'immediate employer', 'insured person', 'occupier', 'prescribed', 'principal employer', 'regulation', 'schedule', 'sickness', temporary disablement', 'wages', 'week', 'dependent', 'managing agent', 'occupational disease', 'partial disablement', and 'total disablement'. Section 3 empowers the Central Government by a notification in the official Gazette to appoint for the administration of the scheme of Employees' State Insurance in accordance with the provisions of the Act a Corporation to be known as Employees' State Insurance Corporation which shall be a body corporate by the name of Employees' State Insurance Corporation. Section 10 provides for the establishment of a Medical Benefit Council sponsored by the Central Government. Section 26 of the Act makes provisions for the creation of a Employees' State Insurance Fund. Section 28 sets out the purposes for which the fund may be expended. Inter alia, under section 28 the Employees' State Insurance Fund may be expended only for the purposes of payment of benefits and provision of medical treatment and attendance to insured persons and where the medical benefit is extended to their families, it has to be in accordance with the provisions of the Act. The Insurance Fund may further be expended for the purposes of establishment and maintenance of hospitals, dispensaries and other institutions and the provision of medical and other ancillary services for the benefit of insured persons and, where the medical benefit is extended to their families, their families and the defraying expenditure, within the limits prescribed, on measures for the improvement of the health and welfare of insured persons and for the rehabilitation and re-employment of insured persons who had been disabled or injured etc. Chapter IV of the Act provides for contributions to be made towards the Insurance Fund by the insured employees and employers. Chapter V of the Act provides for the benefits of maternity, disablement and sickness etc. to insured persons in the event of illness, maternity etc. Section 72 prohibits employers from reducing the wages of the employees, or except as provided by the regulations, discontinue or reduce benefits payable to him under the conditions of his service which are similar to the benefits conferred by the Act. Section 73 debars the employers to dismiss or punish employees during period of sickness etc.
(3.) An examination of the provisions of the Act discloses that it is a welfare legislation intended to provide for insurance in case of illness, disablement or maternity needs to linsured employees under the Act. The legislature has in detail laid down the policy, the purpose and the objects of the Act. In a Welfare State and a vast country such as ours, it is impossible for the legislature to pre-judge every situation which might require legislative intervention. As a matter of sheer necessity the legislature must leave it to the executive or to such other delegates as it might consider proper to apply the legislative provisions to others similarly situated where local conditions so require. Section 1 (5) merely leaves it to the appropriate Governments in situations where it is considered appropriate to extend to employees of establishment other than factories the benefits made available to factory workers by the Act. To our mind section 1 (5) can be more appropriately described as enabling "conditional legislation" and cannot be challenged on the ground that the legislature has failed to lay down the legislative policy and has left it to be determined by a delegate. A practically similar, though not identical, question came up for consideration before the Supreme Court in Edward Mills Co. Ltd. Beawer v. State of Ajmer, 1955 AIR(SC) 25). Section 2 (g) of the Minimum Wages Act 1948 defines "Scheduled employment" as "an employment specified in the schedule, or any process or branch of work forming part of such employment". The Schedule which formed part of the Act consisted of two parts. Under section 3 of the Minimum Wages Act the appropriate government is empowered to fix the minimum rates of wages payable to employees employed in an employment specified in part I of the schedule as well as employees specified in part II of the Schedule. Section 27 of this Act runs as follows: "The appropriate Government, after giving by notification in the Official Gazette not less than three months notice/of its intention so to do, may, by like notification, add to either part of the schedule any employment in respect of which it is of opinion that minimum rates of wages should be fixed under this Act, and thereupon the schedule shall in its application to the (State) be deemed to be amended accordingly. It would be noticed that the power under section 27 of the Minimum Wages Act was more or less identical with the power available to State Governments under section 1 (5) of the Act. In Edward Mills Co. Ltd. v. State of Ajmer it was urged that the preamble to the Minimum Wages Act as well as its title indicate clearly that the intention of the legislature was to provide for fixing minimum wages in certain employment only and that the legislature did not intend that all employments should be brought within the purview of the Act. The schedule attached to the Act give a list of the employments and it is in respect to the scheduled employments that the minimum wages are to be fixed. Under section 27 of this Act, however power has been given to the "appropriate Government" to add to either part of the schedule any employment in respect to which it is of opinion that minimum wages shall be fixed by issuing hotification in a particular manner, and thereupon the schedule shall, in its application to the State, be deemed to be amended accordingly. It was argued that the Act nowhere formulates a legislative policy according to which an employment shall be chosen for being included in the schedule. It was contended that since there are no principles prescribed and no standard laid down which could furnish an intelligent guidance to the administrative authority in making the selection and the matter was left entirely to the discretion of the "appropriate Government" which can amend the schedule in any way it likes such delegation of power virtually amounts to a surrender by the legislature of its essential legislative function and could not be held to be valid. The contention was repelled and B. K. Mukherjee, J. speaking for the Court held that: "There is undoubtedly an element of delegation implied in the provision of Section 27 of the Act, for the legislature, in a sense, authorises another body, specified by it, to do something which it might do itself. But such delegation if it can be so called at all does not, in the circumstances of the present case, appear to us to be unwarranted and unconstitutional." The following passage by O'Connor, J. of the High Court of Australia in the case of 'Baxter v. Ah. Way,1908 8 CalCriLR 626 at 637 (Aus) was quoted with approval by the Supreme Court: The aim of all legislatures is to project their minds as far as possible into the future, and to provide in terms as general as possible for all contingencies likely to arise in the application of the law. But it is not possible to provide specifically for all cases and therefore, legislation from the very earliest times, and particularly in modern times, has taken the form of conditional legislation, leaving it to some specified authority to determine the circumstances in which the law shall be applied, or to what its operation shall be extended, or the particular class of persons or goods to which it shall be applied." The Supreme Court found the facts of the Australian Case in material features striking resemblance to the one before it. While disposing of the contention, it was held that: "Whether a provision like this strictly comes within the description of what is called "conditional legislation" is not very material. The question is, whether it exceeds the limits of permissible delegation. As was said by O'Connor, J. himself in the above case, when a legislature is given plenary power to legislate on a particular subject there must also be an implied power to make laws incidental to the exercise of such power. It is a fundamental principle of constitutional law that everything necessary to the exercise of a power is included in the grant of the power. A legislature cannot certainly strip itself of its essential functions and vest the same on an extraneous authority. The primary duty of law making has to be discharged by the legislature itself but delegation may be resorted to as a subsidiary or an ancillary measure........ The legislature undoubtedly intended to apply this Act not to all industries but to those industries only where by reason of unorganized labour or want of proper arrangements for effective regulation of wages or for other causes the wages of labourers in a particular industry were very low. It is with an eye to these facts that the list of trades has been drawn up in the schedule attached to the Act but the list is not an exhaustive one and it is the policy of the legislature not to lay down at once and for all time, to which industries the Act should be applied. Conditions of labour vary under different circumstances and from State to State and the expediency of including a particular trade or industry within the schedule depends upon a variety of facts which are by no means uniform and which can best be ascertained by the person who is placed in charge of the administration of a particular State. It is to carry out effectively the purpose of this enactment that power has been given to the 'appropriate Government' to decide, with reference to local conditions, whether it is desirable that minimum wages should be fixed in regard to particular trade or industry which is not already included in the list. We do not think that in enacting Section 27 the legislature has in any way stripped itself of its essential powers or assigned to the administrative authority anything but an accessory or subordinate power which was deemed necessary to carry out the purpose and the policy of the Act." The reasoning of the decisioo of the Supreme Court in the case of Edward Mills Co. Ltd. (AIR 1955 S C 25) applies with full force to the case before us.;