STATE INSURANCE CORPORATION BOMBAY Vs. BHARAT BARREL AND DRUM MANUFACTURING CO PRIVATE LTD

JUDGEMENT

(1.) THIS reference has been made under Section 81 of the Employees' State Insurance Act, 1948 by the Employees' Insurance Court, Bombay, for the decision of two questions of law. The questions submitted by the Employees' Insurance Court are:

(2.) THE circumstances which have led to these questions are very simple The Employees' State Insurance Corporation (hereinafter referred to as the Corporation) filed an application) in the Employees' Insurance Court , Bombay, against the Opponents who are a manufacturing company for the recovery of the employees' contributions payable under Employees' State Insurance Act, 1948 for the period from 1st September 1957 to 31st July 1963. The application was filed on 7th October 1963. Rule 17 of the Bombay Employees' Insurance Courts Rules, 1959 made by the Government of Bombay in exercise of the powers conferred by section 96 (1) of the said Act purports to prescribe, a period of limitation for every application which may be filed in the Employees' Insurance Courts. Rule 17 is in these terms:

(3.) IN order to appreciate the arguments advanced before us it is necessary to notice some aspects of the scheme of the Employees' State Insurance Act, 1948 (hereinafter referred to as the Act ). The object of the Act, as stated in its preamble, is "to provide for certain benefits to employees in case of sickness, maternity and employment injury". It will be recalled that much before this Act provisions had been made for the protection of female employees in cases of maternity by the Maternity Benefits Acts passed by various provincial legislatures, and provision had also been made for granting compensation for employment injury by the Workmen's Compensation Act. The purpose of the present Act was to insure employees against sickness for the first time and to include in the same scheme appropriate provisions for ensuring them in respect of maternity and employment injury. In the three contingencies covered by the Act - sickness, maternity and employment injury the Act confers two benefits on the insured persons, one of periodical cash payments and the other of medical treatment. The periodical cash payments are described as sickness benefit, maternity benefit, and the medical treatment is described as medicial benefit (Section 46 ). Section 1 (3) empowers the Central Government to bring into force different parts of the Act on different dates in different parts of the country. When brought into force the Act applies, in the first instance, to all factories other than seasonal factories, but the Act can be extended to other establishments, industrial, commercial, agricultural or otherwise (sub-sections 4 and 5 of Section 1 ). Section 2 (14) defines an "insured person" as " a person who is or was an employee in respect of whom contributions are or were payable under this Act and who is, by reason thereof, entitled to any of the benefits provided by this Act. " section 3 provides for the establishment and incorporation of the Employees' State Insurance Corporation. Section 26 (1) lays down that all contributions paid under the Act and all other moneys received on behalf of the Corporation shall be paid into a fund called the Employees' State Insurance Fund which shall be held and administered by the Corporation for the purposes of the Act, Contributions payable under the Act are the main source of the fund, and these contributions are of the employers as well as the employees in certain proportions. No employee's contribution however, is payable by or on behalf of an employee whose average daily wages are below one rupee (Section 42 (1) ). Section 40 provides that the principal employer is to pay in respect of every employee, whether directly employed by him or by or through an immediate employer, both the employer's contribution as well as the employee's contribution. He is, however, entitled to deduct from the wages of an employee the amount of the employee's contribution payable in respect of the wage period. Sub-section (4) of Section 40 lays down that any sum deducted by the principal employer from wages under this Act shall be deemed to have be entrusted to him by the employee for the purpose of paying contribution in respect of which it was deducted. Section 44 requires employers to furnish returns and maintain registers and Section 45 empowers the Corporation to appoint Inspectors for the purpose of inquiring into the correctness of particulars stated in any return referred to in Section 44 or for the purpose of Ascertaining whether any of the provisions of the Act has not been complied with. Sections 46 to 59 read with Schedules I and II, make elaborate provisions in respect of the cash payments and the medical treatment to which the insured persons are entitled. Chapter VI of the Act, which comprises of Sections 74 to 83, deals with "adjudication of disputes and claims". Section 74 empowers State Governments to constitute Employees' Insurance Courts for different local areas. Sub-sections (1) and (2) of Section 75 enumerate the questions and claims which are to be decided by the Employees' Insurance Courts and sub-section (3) of that section lays down that no Civil Court shall have jurisdiction to decide or deal with any question or dispute or to adjudicate on any liability which by or under this Act is to be decided by an Employees' Insurance Court. Section 76 deals with the territorial jurisdiction of Employees' Insurance Courts. Sub-section (1) of Section says that the proceedings before an Employees' Insurance Court shall be commenced by application, and sub-section (2) of that Section lays down that the form and particulars of such application and the free to be paid there for shall be such as may be prescribed by rules made by the State Governments. Sections 78 deal with the powers of Employees' Insurance Courts, and in particular sub-section (2) of that section says that the Court "shall follow such procedure as may be prescribed by rules made by the State Government". Section 80 lays down that the Court shall not direct the payment of any benefit to a person "unless he has made a claim for such benefit in accordance with the regulations madd in that behalf, within twelve months after the claim became due". A proviso to that section, however, empowers the Court to condone in appropriate cases the delay in making a claim. Section 94 provides that the amount due inrespect of any contribution or any other amount payable under the Act shall have priority over other debts in insolvency and liquidation proceedings. Sections 95 and 96 define the rule making powers of the Central Government and the State Governments respectively, while Section 97 specifies t he power of the Corporation to make regulations under the Act. Sub-section of Section 95 confers on the Central Government general powers to make rules for the purpose of giving effect to the provisions of the Act, and sub-section (2) gives a list, without prejudice to the generality of the foregoing power of the specific matters on which rules may be made by the Central Government. Under Section 96, however, the rule making powers of the State Government are not of a general nature. They are confined to the matters specified in Clauses (1) to (h) of sub-section (1) of Section 96. Clause (b) of Section 96 (1) is material to the present reference, for the impugned rule is claimed to be covered by the rule making power of the State Government under that clause. Clause (b) of Section 96 (1) runs as follows:-