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REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 5138-40/2007

ZUARI CEMENT LTD.         ..Appellant

Versus

REGIONAL DIRECTOR  E.S.I.C. HYDERABAD & ORS.   ..Respondents

J U D G M E N T

R. BANUMATHI, J  .

These appeals  are  preferred against  the judgment

dated  21.09.2007  passed  by  the  High  Court  of  Andhra

Pradesh   allowing  Civil  Miscellaneous  Appeals  and  thereby

setting aside the order of ESI Court granting exemption to the

appellant  from the  operation  of  Employees  State  Insurance

Act, 1948 (for short ‘the Act’).

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2. Brief facts which led to the filing of these appeals

are as under:-  The appellant  is  engaged in the business of

manufacture  and sale  of  cement  situated at  Yerraguntla  in

Cuddapah  District.  The  said  area  was  brought  under  the

purview  of  ESI  Scheme  with  effect  from  1.03.1986.  The

Government  of  Andhra  Pradesh  granted  exemption  to  the

appellant-cement  factory  from  the  operation  of  the  Act  by

various orders for the period from 1.03.1986 to 31.03.1993.

The  State  Government  rejected  appellant’s  application  for

exemption  for  the  period  from  1.04.1993  to  31.03.2001.

Following  rejection  of  claim  for  exemption,  the  Regional

Director,  ESI  Corporation,  issued  various  demand  notices

cumulatively  demanding  a  sum of  Rs.  65,38,537/-  towards

contributions  for  the  period  from 1.04.1993  to  31.03.1999.

Challenging the order of appropriate government rejecting its

claim for exemption and also challenging the demand notices,

the appellant filed number of  writ  petitions before the High

Court.  The High Court disposed of those writ petitions with

direction  to  the  appellant  to  approach  the  ESI  Court

constituted under Section 74 of the Act.  The appellant filed

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the review petition before the High Court, interalia, praying to

remit  the  matter  back  to  the  government  to  rehear  the

representation  of  the  appellant-company  pertaining  to  its

exemption of ESI Scheme under Section 87 of the Act for the

period from 01.04.1993 to 31.03.1999 by affording personal

hearing to the appellant.  The review petition was dismissed

observing that the appellant has an alternative remedy before

the ESI Court  constituted under  Section 74 of  the Act  and

therefore the question of  remanding the matter  back to the

State Government does not arise.   

3. The appellant again filed number of  writ petitions

before the High Court expressing apprehension that ESI Court

may not have the power to grant the relief of exemption from

the  scheme  of  the  Act  and  therefore  prayed  that  the

appropriate government be directed to consider the issue of

exemption  by  personal  hearing  to  the  appellant  and  by

conducting an inquiry.  However, vide order dated 11.10.2001

those writ petitions were disposed of holding that ESI Court

has  jurisdiction  to  decide  the  issue  and  all  questions

including  the applicability of the Act can be raised before the

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ESI  Court.  The  appellant  then  approached  the  ESI  Court,

Hyderabad under Section 75(1)(g)  of  the Act challenging the

demand  notice.  The  ESI  Court  appointed  an  Advocate

Commissioner to submit a report as to the medical benefits

made available to the workmen in the industry.  An affirmative

report  was  filed  by  the  Court  Commissioner  stating  that

appellant is providing all the due benefits.  On the basis of the

report, vide Order dated 18.10.2004, the petitions filed by the

appellant as well as by the workmen union were allowed and

the ESI Court granted future exemption to the appellant from

the coverage of  the ESI Scheme and the ESI Court also set

aside the  impugned demand notices for  the  period between

1993  to  2001  and  the  interest  thereon.  Assailing  the  said

order, the ESI Corporation filed appeal before the High Court

contending that ESI Court does not have power under Section

75 of the Act and it is only the appropriate government which

has  got  the  power  under  Section  87  of  the  Act  to  exempt

anyone  from the  application  of  the  Act.   By  the  impugned

judgment  dated  21.09.2007,  the  High  Court  allowed  the

appeals of  the Corporation holding that ESI Court does not

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have the power to grant exemption under Section 75(1)(g) of

the  Act.  In  these  appeals,  the  appellant  assails  the

correctness of the above judgment.

4. Mr. Debal Kumar Banerji,  learned Senior Counsel

for  the  appellant  contended  that  the  appellant  approached

the ESI Court pursuant to the directions of  the High Court

issued in different writ petitions that the ESI Court has the

jurisdiction to decide the issue of exemption and in the second

round of litigation, the High Court was not right in saying that

ESI Court has no jurisdiction.  Learned Senior Counsel for the

appellant  further  contended that  Section 75(1)(g)  of  the  Act

specifically  empowers  the  ESI  Court  to  decide  the  matter

which is in dispute between the  principal employer  and the

Corporation in respect of  any contribution or benefit or other

dues payable or recoverable under the  Act and thus ESI Court

has been conferred wide jurisdiction under Section 75(1)(g) of

the Act to adjudicate  any dispute  under the Act and while so,

the High Court  erred in observing  that ESI Court  has no

jurisdiction.  It was  interalia urged that the appellant has a

full-fledged  hospital  with  medical  officers  and  para  medical

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staffs  and  has  spent  around  4.09  crores  towards

establishment of hospital and the appellant is providing better

medical and other benefits to the workers than available under

the  Act  and  considering  those  aspects,  ESI  Court  rightly

directed grant of exemption and set aside the demand notices

and the High Court erred in reversing the order of  the ESI

Court.   

5. Mr.  M.N.  Krishnamai,  learned  Senior  Counsel

appearing for the respondent-Corporation contended that as

per Section 87 of the Act, only the appropriate government can

grant exemption under the Act and under Section 75 of the

Act,  ESI  Court  has  no  jurisdiction  to  grant  exemption  and

since ESI Court has acted beyond its jurisdiction, High Court

rightly reversed the said order of ESI Court.  It was contended

that the jurisdiction can be conferred only in accordance with

the statute and neither the order of the High Court nor the

consent of the parties can confer the jurisdiction in the ESI

Court.   

6. We have carefully considered the rival contentions

and  perused  the  impugned  judgment  and  also  the  order

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passed by the ESI Court and the material placed on record.

The  appellant  actually  is  paying  the  ESI  contribution  from

1.04.1999.  The dispute in these appeals, therefore, pertains

only to the period from 1.04.1993 to 31.03.1999.     

7. Before adverting to the contention put forth by the

learned  counsel  appearing  for  the  parties,  it  would  be

appropriate to refer to Section 87 and Section 75(1)(g) of the

Act which are relevant  for considering the various contentious

points  urged.   The power  to  grant  exemption is  specifically

dealt with under Section 87 of the Act.  Section 87 of the Act

reads as follows:-

“87.  Exemption  of  a factory or establishment or class of factories  or  establishments.—The  appropriate  Government may by notification in the Official  Gazette  and subject  to such  conditions   as  may  be  specified  in  the  notification, exempt  any factory or establishment or class of factories  or establishment in any specified area from the operation of this Act  for a period not exceeding one year  and may from time to time by like  notification renew any such exemption for periods not exceeding one year at a time.”        

A close perusal of Chapter VIII of the ESI Act i.e. Sections 87

to  91A  of  the  Act  will  show  that  only  the  appropriate

government  has  been  empowered  to  exempt  any  factory  or

establishment or class of  factories or establishments in any

specified area from the operation of the Act for a period not

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exceeding one year  and may from time to time renew such

exemption  for  a  period  not  exceeding  one  year  at  a  time.

Under Section 89, the appropriate Government shall not grant

exemption under Section 87 or Section 88 unless a reasonable

opportunity has been given to the Corporation to make any

representation it may wish to make in this regard. A combined

reading of Sections 87, 88 and 89 would go to show that it is a

two tier consideration, namely, a factory or establishment as

the case may be, submits an application seeking exemption

and  the  appropriate  government  would  scrutinize  the

application and afford an opportunity to the Corporation and

then grant an order of  exemption or reject the same as the

case may be.  

8. Section 75 of the Act deals with the matters to be

decided by the ESI Court constituted under Section 74 and

the relevant provision of Section 75(1)(g) of the Act reads as

under:-

“75.  Matters  to  be  decided  by  the  Employees’ Insurance Court. – (1) If  any question or dispute arises as to – (a) to (ee)……… g) any other matter which is in dispute between a principal employer  and  the  Corporation,  or  between  a  principal employer and an immediate employer, or between a person

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and the Corporation or between an employee  and a principal or  immediate  employer,  in  respect  of  any  contribution  or benefit or other dues payable or recoverable under this Act, or any other matter required to be or which may be decided by  the  Employees’  Insurance  Court  under  this  Act.  Such question or dispute subject to the provisions of sub-section (2A) shall be decided by the Employees’ Insurance Court in accordance with the provisions of this Act.”

A  reading  of  the  above  would  show  that  the  question  or

dispute can be adjudicated as is provided for in clauses (a) to

(ee) of sub-section (1) of Section 75.  Section 75(1) (g) of the Act

essentially deals with any other matter/dispute between the

employer and the Corporation or in respect of any contribution

or benefit payable or recoverable under the Act in respect of an

establishment covered by it.  Section 75(1)(g) of the Act does

not  speak  of  a  dispute  between  the  employer  and  the

appropriate government which only has got the plenary power

to consider the question of grant of exemption.     

9. As per the scheme of the Act,  the power to grant

exemption  is  a  plenary  power  given  to  an  appropriate

government.   It follows that the ESI Court constituted under

Section  74  of  the  Act  has  no  jurisdiction  to  take  up  the

question of grant of exemption.   The Court constituted under

Section 74 of the Act cannot decide such matters including the

validity of  an exemption notification.  The order granting or

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denying exemption is certainly open to judicial review under

Article 226 of the Constitution of India.  But the question of

exemption under Section 87 cannot be raised under Section

75 of the Act and the ESI Court constituted under Section 74

of the Act, cannot decide the legality or otherwise of an order

relating to exemption passed by the appropriate government.   

10. Learned  Senior  Counsel  for  the  appellant

vehemently contended that grant of exemption to a factory or

establishment from the operation of the Act falls within the

jurisdiction  of  ESI  Court  under  Section  75(1)(g)  of  the  Act

which  specifically  empowers  the  ESI  Court  to  decide  any

matter which is in dispute between  a principal employer and

the Corporation in respect of  any contribution or benefit  or

other  dues  payable  or  recoverable  under  the  Act.  It  was

submitted that only pursuant to the orders of the High Court,

the appellant approached the ESI Court and the ESI Court has

exercised  its  power  to  grant  exemption on the  basis  of  the

orders  of  the  Division  Bench  of  the  High  Court.  It  was

submitted  that  ESI  Corporation  submitted  itself  to  the

jurisdiction of ESI Court and while so, it cannot turn round

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and raise objection as to its jurisdiction to consider the issue

of exemption and in support of his contention, learned Senior

Counsel for the appellant placed reliance upon the decision of

this Court in Sohan Singh & Ors. vs. G.M. Ordnance Factory &

Ors., (1984) Supp. SCC 661.   

11. While  disposing  the  writ  petitions,  of  course,  the

High Court directed the appellant to approach the ESI Court

constituted under Section 74 of the Act for the relief which the

appellant had claimed in the writ petitions.  Notably, both the

appellant as well as the ESI Corporation did not challenge the

order  of  the  High  Court  but  subjected  themselves  to  the

jurisdiction of the ESI Court.  In our view, neither the order of

the High Court nor the act of Corporation subjecting itself to

the jurisdiction of ESI Court would confer jurisdiction upon

ESI Court to determine the question of  exemption from the

operation of the Act.  By consent, parties cannot agree to vest

jurisdiction in the Court to try the dispute when the Court

does not have the jurisdiction.

12. As discussed earlier, in terms of Section 87 of the

Act, only the appropriate government has the power to grant

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exemption to a factory or establishment or class of factories or

establishments  from the  operation  of  the  Act.   In  fact,  the

appellant-factory  itself  has  obtained  exemption  from  the

appropriate Government-State Government under Section 87

of  the  Act  for  the  period  from 1986 to  1993.  Likewise,  the

rejection of exemption was also under Section 87 of the Act.

While so, seeking the relief of declaration from the ESI Court

that the appellant is entitled to exemption from the operation

of  the Act  is  misconceived.   Contrary to  the  scheme of  the

statute, the High Court, in our view, cannot confer jurisdiction

upon the ESI Court to determine the issue of exemption.  ESI

Corporation,  of  course,  did  not  raise  any  objection  and

subjected  itself  to  the  jurisdiction  of  the  ESI  Court.  The

objection as to want of jurisdiction can be raised at any stage

when the  Court  lacks  jurisdiction,  the  fact  that  the  parties

earlier acquiesced in the proceedings is of no consequence.

13. The  Employees  Insurance  Court  is  a  tribunal

specially  constituted  for  the  purpose  of  deciding  any

controversy  that  may  arise  on  the  matters  enumerated  in

Section 75 of the Act.  A reading of Section 75 of the Act would

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show that the ESI Court has full jurisdiction to decide all the

matters  arising  between  the  employer  and  the  Corporation

under the Act.  Section 75 of the Act sets out the matters to be

decided by the ESI Court.  As per  Section 75(1)(g) of the Act,

ESI  Court  is  empowered  to  decide  any  matter  which  is  in

dispute between the employer and the Corporation in respect

of   any  contribution  or  benefit  or  other  dues  payable  or

recoverable under the Act or any other matter required to be

or  which may be decided by the ESI Court under the Act and

such  question  or  dispute  subject  to  the  provisions  of

sub-section  (2-A)  shall  be  decided  by  the  ESI  Court  in

accordance with the provisions  of the Act.  When considered

in the light of clauses (a) to (d) in Section 75 (1) of the Act, the

expression “any other matter”  occurring in Section 75(1)  (g)

only  means  any  other  dispute  between  an  employer  and

corporation or  a  person and Corporation pertaining to  the

contribution or benefit or other dues payable under the Act or

any other matter required to be decided by ESI Court under

the provisions  of the Act.  Grant or refusal of exemption by

the  appropriate  government cannot  be said to be a  dispute

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between  the  employer  and  the  Corporation.  For  grant  or

refusal of exemption, a specific provision is prescribed under

the Act, it cannot be brought within the ambit of “any other

matter” required to be decided by the Employees’ Insurance

Court under this Act.  

14.  As  per  the  scheme  of  the  Act,  appropriate

government alone could grant or refuse exemption.  When the

statute  prescribed  the  procedure  for  grant  or  refusal  of

exemption from the operation of the Act, it is to be done in

that  manner  and  not  in  any  other  manner.   In  State  of

Jharkhand  and  Others  vs.  Ambay  Cements  and  Another,

(2005) 1 SCC 368, it was held that “It is the cardinal rule of

interpretation that where a statute provides that a particular

thing  should  be  done,  it  should  be  done  in  the  manner

prescribed and not in any other way”.  In Babu Verghese and

Others vs. Bar Council of Kerala and Others, (1999) 3 SCC 422,

it was held as under:

“31. It is the basic principle of law long settled that if the manner  of  doing  a  particular  act  is  prescribed  under  any statute, the act must be done in that manner or not at all. The origin of this rule is traceable to the decision in Taylor v. Taylor, (45 LJCH 373) which was followed by Lord Roche in Nazir Ahmad v. King Emperor, (AIR 1936 PC 253) who stated as under:

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“[W]here a power is given to do a certain thing in a certain way, the thing must be done in that way or not at all.”

32. This rule has since been approved by this Court in  Rao Shiv Bahadur Singh v.  State of V.P., (AIR 1954 SC 322 and again  in  Deep  Chand v.  State  of  Rajasthan (AIR  1961 SC 1527). These cases were considered by a three-Judge Bench of this Court in  State of U.P. v.  Singhara Singh (AIR 1964 SC 358) and the rule laid down in Nazir Ahmad case (AIR 1936 PC 253) was again upheld. This rule has since been applied to the  exercise  of  jurisdiction  by  courts  and  has  also  been recognised as a salutary principle of administrative law.”

15. Where there is want of jurisdiction, the order passed

by the court/tribunal is a nullity or non-est.  What is relevant

is whether the Court had the power to grant the relief asked

for.  ESI Court did not have the jurisdiction to consider the

question of grant of exemption, order passed by the ESI Court

granting  exemption  and  consequently  setting  aside  the

demand  notices  is  non-est.   The  High  Court,  in  our  view,

rightly  set  aside  the  order  of  ESI  Court  and the  impugned

judgment  does  not  suffer  from  any  infirmity  warranting

interference.     

16. Since  the  order  passed  by  the  ESI  Court  is  a

non-est,  which was rightly set aside by the High Court,  we are

not inclined to go into the  merits of the appellant’s contention

that they have a full-fledged hospital and are providing various

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medical facilities and better health schemes to its employees

and their family members.   

17. In the result, all the appeals are dismissed.  In the

facts and circumstances of the case, we make no order as to

costs.

.……………………J.     (T.S. THAKUR)

…………………….J. (R. BANUMATHI)  

New Delhi; July 2, 2015

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