Employees’ State Insurance Act, 1948: s. 1(3) – Issuance of notification dated 21.07.1999 under – Interpretation of – Establishment of the respondent situated at Tarapur, if covered within the area as notified vide notification dated 21.07.1999 – Held: Respondent’s establishment covered under the purview of the ESI Act – Notification dated 21.7.1999 issued by the Central Government specifies the areas to which the ESI Act is made applicable and significantly, apart from stating that it applies to areas under the Silchar Municipal Corporation, it specifically names additional areas/villages, including the village of Tarapur where the factory of the respondent located – Thus, the notification would extend to areas well beyond the limits of the Silchar Municipal Corporation – If the area of coverage of the ESI Act was intended to be restrictive, there was no need to mention other areas by name in the said notification – Name of Tarapur village is mentioned twice in the notification – Word “including” in the Notification, is used as a word of enlargement, so as to make the territorial application of the ESI Act extensive – Notification is not confined to “only the area under the Silchar Municipal Board”, but includes various areas mentioned therein, in addition to the areas under the Silchar Municipal Board – High Court erred in holding that since the Village Tarapur, where the factory of the Respondent is situated, falls outside the municipal limits of Silchar, the establishment of the respondent is not covered by the notification, thus, the decision of High Court set aside.
Interpretation of Statutes: Notification issued u/s. 1(3) of the Employees’ State Insurance Act, 1948 – Principles of interpretation – Held: Notification being a statutory notification, the principles of interpretation of subordinate legislation are applicable – If the words used are unambiguous, the cardinal principle of interpretation is that effect has to be given to every word in the subject notification.
Allowing the appeal, the Court
HELD: 1.1 The 21.7.1999 notification issued by the central government specifies the areas to which the Employees’ State Insurance Act, 1948 is made applicable and significantly, apart from stating that it applies to areas under the Silchar Municipal Corporation, it goes on to specifically name additional areas/villages, including the village of tarapur. It is therefore not difficult to comprehend that the notification would extend to areas well beyond the limits of the Silchar Municipal Corporation. If the area of coverage of the ESI Act was intended to be restrictive, there was no need to mention other areas by name in the said notification. The logical interpretation would then be that the entire village area of Tarapur is notified for coverage as the name of Tarapur village is mentioned twice in the notification. The significance of this must be given due weightage. [Para 15][852D-F]
1.2 The notification issued under Section 1(3) of the ESI Act is a statutory notification and the same should be treated as a part of the statute, both for the purposes of construction and also for the obligations arising therefrom, as if, they are contained in the Act. The principles of interpretation of subordinate legislation are applicable for interpretation of such statutory notification. If the words used are unambiguous, the cardinal principle of interpretation is that effect has to be given to every word in the subject notification. An interpretation that the statutory notification was intended to cover only those areas falling within the jurisdiction of the Silchar Municipal Board as was decided in the impugned judgment, would mean that all the other areas specifically mentioned in the notification, which are otherwise beyond the limits of the Silchar Municipal Corporation, would be excluded from the purview of the statutory notification. If this is accepted, there would be departure from the cardinal principle of interpretation of giving full effect to every word of the notification. [Paras 16, 17][852-F-H]
South Central Railway Employees Cooperative Credit Society Employees’ Union, Secunderabad v. Registrar of Cooperative Societies and Ors. (1998) 2 SCC 580 : [1998] 1 SCR 85; National Highways Authority of India v. Pandarinathan Govindarajulu and Anr. (2021) 6 SCC 693 – referred to.
1.3 The Central Government notification makes reference to several areas beyond the limits of the Silchar Municipal Board. This is discernible from the fact that reference to Tarapur is made twice, firstly in reference to the Silchar Municipal Corporation and secondly with reference to Mouza-Barakpur. The reference to the Udharbond Revenue Circle (outside the limits of Silchar Municipal Corporation) and likewise to Rajnagar, which is another revenue unit, distinct from Barakpur (which comprises the Silchar Town), would suggest that the Central Government intended to extend the operation of the ESI Act to areas well beyond the limits of the Silchar Municipal Corporation. The concerned establishment is located in Tarapur Part III falling within Barakpur, which is otherwise outside the Silchar Municipal Area. Significantly, Mouza-Barakpur by name is mentioned in the notification. The High Court’s constrictive interpretation of the notification, for application of the ESI Act to the smaller areas within the limits of Silchar Municipal Corporation, cannot be accepted. [Para 18][853-D-F]
1.4 The notification which obviously could have been better drafted, is punctuated by several commas. This would suggest that the areas mentioned after the punctuation marks should be read disjunctively and should not be read in reference to the Silchar Municipal Corporation which is the first area mentioned in the notification. When this Court looks at the punctuation marks in the notification dated 21.7.1999, and what follows thereafter, is that the notification intended to cover several areas beyond the areas within the Silchar Municipal Corporation. The notification issued under Section 1(3) of the ESI Act, after initially adverting to areas under Silchar Municipal Corporation falling within Silchar Revenue Circles, significantly uses the word “including” which would suggest the intention of the writer of the notification, to enlarge the coverage area, well beyond the limits of the Silchar Municipal Corporation. The other areas specifically mentioned after the word “including”, would suggest that the area of coverage under the ESI Act, must not be restricted to the territorial limits of the Silchar Municipal Corporation. The High Court restricted the application of the statutory notification to the limits of the Silchar Municipal Corporation, which would imply that all the other areas mentioned beyond “including” would be taken out of the purview of the ESI Act. This could not have been the intention of the Union Government. [Para 19, 22][853G-H; 854-B-D; 855-C-D]
Ramanlal Bhailal Patel and Ors. v. State of Gujarat (2008) 5 SCC 449 : [2008] 2 SCR 468; Union of India and Anr. v. Hansoli Devi and Ors. (2002) 7 SCC 273 : [2002] 2 Suppl. SCR 324; Dr. M.K Salpekar v. Sunil Kumar Shamsunder Chaudhari and Ors. (1988) 4 SCC
21 – referred to.
1.5 The respondent while challenging the show cause notice in the EI Court, failed to implead the factory’s employees either individually or in representative capacity. Even the Union of India which issued the notification under Section 1(3) of the ESI Act expanding coverage of the beneficial legislation to the area where the factory of the respondent is located, was not arrayed as a party in the proceeding. The plea that for non-joinder of necessary parties, the proceeding at the instance of the respondent would not be legally maintainable, was specifically raised by the appellants before the High Court but this was rejected with the observation that the issue ought to have been raised before the trial court. In this context, it is necessary to keep in mind that the Employees’ State Insurance Corporation’s case was rendered on 17.9.2009 whereas the judgment in favour of the appellants was rendered by the EI Court much earlier on 21.6.2006. Therefore, for the appellants, it would have been impossible to rely on the ratio in the subsequent judgment of the Supreme Court to argue on the non-maintainability of the respondent’s proceeding, for non-impleadment of the concerned employees. [Paras 24, 27][855-F-G; 857-G-H; 858-A-B]
Employees’ State Insurance Corporation v. Bhakra Beas Management Board and Anr. (2009)10 SCC 671 :
[2009] 14 SCR 656; Fertilizers and Chemicals
Travancore Ltd. vs. Regional Director, Employees’ State Insurance Corporation and Ors. (2009) 9 SCC 485 : [2009] 13 SCR 437 – referred to.
1.6 The submission of the respondent is that since penal consequences are provided under the ESI Act, strict interpretation of the notification on the applicability of the Act to the respondent’s establishment, must be made. The name of village ‘T’ is mentioned twice in the 21.7.1999 notification and therefore a strained interpretation is not at all necessary to bring the establishment of the respondent, within the ambit of coverage of the ESI Act. The respondent’s failure to conform to the requirement of the ESI Act may perhaps invite penal action envisaged by the legislation. But this by itself does not persuade to interpret the statutory notification in a particular manner, to suit the purpose of the respondent. [Para 29][858-D-F]
1.7 The High Court erred in holding that since the Village Tarapur, where the factory of the Respondent is situated, falls outside the municipal limits of Silchar, the establishment of the respondent is not covered by the notification (21.07.1999). Such faulty interpretation adopted by the High Court cannot be accepted. The word “including” in the Notification, is used as a word of enlargement, so as to make the territorial application of the ESI Act extensive. The notification is certainly not confined to “only the area under the Silchar Municipal Board”, but includes various areas mentioned therein, in addition to the areas under the Silchar Municipal Board. That being the case, the respondent’s establishment, is found to be covered under the purview of the ESI Act. [Para 30][858-F-H; 859-A]
1.8 The terms of the notification cannot be any clearer and the language used admits no exceptions of the kind submitted by the respondents. There is definite and unambiguous reference to the areas beyond the territorial limits of the Silchar Municipal Board. Furthermore, the village Tarapur where the factory of the respondent is situated, is mentioned a second time. The words used are not surplusage and emphatically proclaim the drafter’s intention to include wider areas within the purview of the notification and thereby the ESI Act. The plain language of the notification settles the issue against the respondent. Thus, the impugned decision is set aside. [Paras 31, 32][859-A-C]
Quebec Railway, Light, Heat & Power Co. v. Vandry AIR 1920 PC 181; Khetrabasi Biswal v. Ajaya Kumar Baral and Ors. (2004) 1 SCC 317 : [2003] 6 Suppl. SCR 8; Delhi Gymkhana Club Limited v. Employees’ State Insurance Corporation (2015) 1 SCC 142 : [2014]
14 SCR 1082 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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