Executive Powers of the Chairman, Standing Committee of ESIC


The ESI Corporation had constructed a hospital and staff quarters at Rajkot in Gujarat in the year 1991. The Rajkot Municipal Corporation wanted an area of land admeasuring 394.8 sq. mts. from the abovesaid land at Rajkot for widening the road for public purpose.

The Director General accorded permission to transfer the land subject to the following conditions:

  1. The Rajkot Municipal Corporation will pay compensation for the transferred land at the existing value.
  2. The ESI Corporation will not pay any demolition charges for demolition of the boundary wall.
  3. The Rajkot Municipal Corporation will undertake to reconstruct the boundary wall with the same specifications as in the existing wall.

But, the Municipal Corporation did not agree to these terms. The ESI Corporation, therefore, referred the matter for legal opinion from the Government Pleader which ran as under:

  • The ESI Corporation must demand compensation before handing over possession of the land to the Municipal Corporation.
  • The boundary wall has to be demolished as well as reconstructed only at the cost of the ESI Corporation.
  • The ESIC can ask for alternate land / F.S.I. but it is for the Municipal Corporation to consider whether to give alternative land / F.S.I or not.

The matter was, therefore, placed before the Standing Committee and then to the ESIC on 21.02.2006 to hand over possession of the land without prejudice to the right of the Corporation to raise objection and claim compensation in the appropriate legal forum.


The ESI Corporation had constructed a hospital and staff quarters at Sanat Nagar in Hyderabad in the year 1964 on a land admeasuring more than 33 acres. The Hyderabad Municipal Corporation wanted land admeasuring 1260.66 sq. yards from the above land at Sanat Nagar for widening the road public purpose. They had started demolishing the Boundary wall too.

Since acquisition of land was for a public purpose, the Director General had accorded permission to transfer the land of 1260.66 sq.yards to the Hyderabad Municipal Corporation, but, subject to the following conditions and also subject to the approval of the Standing Committee:

  1. The Hyderabad Municipal Corporation will pay compensation for the transferred land at existing value;
  2. The Corporation will not pay any charges to the Municipal Corporation for demolishing the boundary wall;
  3. The Hyderabad Municipal Corporation should reconstruct the boundary wall before taking over the transferred land with the same specification as in the existing boundary wall.

The ex-post facto approval of the Standing Committee was sought during the meeting of the Standing Committee on 6.12.2006 as the Standing Committee alone was empowered to transfer the land belonging to the Corporation under Rule 26 of the ESI (Central) Rules, 1950.


Proposal is made by the ESI Corporation to construct Medical College Building at Ayanavaram. The Municipal Corporation of Chennai insists on the gift of land admeasuring around 1100 sq. mts. for public purpose, i.e., to widen the road. The matter is decided at the level of the Chairman, Standing Committee who was the Secretary, Ministry of Labour. He takes decision in the capacity of the Chairman, Standing Committee.

No such decision can, lawfully, be taken by him as no executive power is vested in him. Moreover, no compensation is claimed unlike the cases of Rajkot or Hyderabad.

Besides, a simple assurance by the ESIC that it would give land to the Municipality when such situation arises would have satisfied the requirement of the Municipal Corporation/ CMDA. Now, as things stand, whether the Medical College comes into existence or not, the land has already been ceded to the Corporation, in spite of the fact that the landowners on either side have not given their land for road widening. Such road widening may or may not even become a reality.

Moreover, the land was just gifted away in a hurry. And, the then existing and occupied residential accommodation meant for the Medical Superintendent of the ESI Hospital, situated in the land gifted away, was also undertaken to be demolished at the cost of the ESI Corporation. In addition, the ESIC had also undertaken to relocate, at the cost of the ESIC, the EB transformer far away from the re-aligned boundary wall, losing thereby substantial portion of the ESIC land.

All this, in spite of the fact, that there is a well-set precedent in Chennai that the State Highways Department used to pay considerable amount of compensation when they acquired the land for road-widening purposes. Such compensations, including the cost of reconstruction of realigned compound walls, had been paid when the land of the ESIS Dispensary at Pallavaram and Tambaram were acquired for road widening.

The unseemly hurry shown on the part of the ESIC in this regard raised a lot of eyebrows.

The Analysis:

In the first two cases of Rajkot and Hyderabad, approval was given by the Director General, the head of office, and ratification was obtained later from the Standing Committee/ ESIC.

In the third case pertaining to Chennai, the Standing Committee’s Chairman approves it first and the matter goes to the SC later.

In the first two cases the ESI Corporation insisted on claiming compensation. In the third case, no compensation was claimed. Such a decision was taken at the lower level itself and not at the level of the ESI Corporation.

  1. The SC Chairman has been vested with only one executive power, i.e., to act as the Appellate Authority as per the ESIC (S&CS) Regulations, 1959.
  2. Otherwise, the SC Chairman has control over only the Meetings of the Standing Committee. He can approve the Agenda points, decide who gets to speak during the meetings, and approve the minutes of the meetings of the Standing Committee.
  3. The Standing Committee Chairman does not have any other executive powers. No such powers have been specified anywhere in the ESI Act, 1948 or in the ESI (Central) Rules, 1950, unlike the powers of the Director General or the Financial Commissioner enumerated in the Central Rules.
  4. The Chairman of the Standing Committee cannot be equated with the whole Standing Committee. He cannot substitute himself in the place of the Standing Committee. Similarly, the Chairman of the ESI Corporation can also not be equated with the ESI Corporation.
  5. “Committees are essential to the effective operation of legislative bodies. Committee membership enables members to develop specialized knowledge of the matters under their jurisdiction. As ‘little legislatures’, committees monitor on-going governmental operations, identify issues suitable for legislative review, gather and evaluate information; and recommend courses of action to their parent body.” Thus, committees are necessarily different from the heads of those committees.
  6. Even all the members of the ESI Corporation or the Standing Committee cannot abdicate their responsibility to decide the matters in hand and pass a unanimous resolution delegating the powers of the Body to an individual who acts as the Chairman of that Body, on the issues in which that Body concerned has to take a decision in a formal meeting. If the Standing Committee delegates such a power , it would amount to sub-delegation and would become ultra vires and unlawful. 
  7. There is, therefore, no such administrative power vested in the Chairman of the Standing Committee to decide on the issue of transfer of land as a gift, as has been exercised in the case of the land at Ayanavaram to the Chennai Metropolitan Development Authority, Government of Tamil Nadu. There was no reason for the file to go to the Chairman, Standing Committee at that stage.

The Questions:

  • How did the Standing Committee approve this Chennai transaction later? Did it examine the issue in its entirety keeping in view the past precedents?
  • What was the differentiating issue between the Chennai transaction in which the land was gifted away and the earlier two transactions in which compensation was insisted upon by the SC/ ESIC?
  • When the Standing Committee cannot even pass resolutions vesting its powers on its Chairman, how can the administrative matter by decided at the level of the Secretary, Ministry of Labour in his capacity as the Chairman, Standing Committee?
  • Where is the power vested in him for that purpose? Under what provisions?

The relevant facts:

The Ministry of Labour has, in past, made many attempts to restrict the autonomy of the ESI Corporation by taking away the powers of the Director General in administrative matters and also by exercising powers not vested in the Chairman of the Standing Committee and in the Chairman of the ESI Corporation. These actions, were strictly, not lawful.

Just because of respect, courtesy or fear the ESI authorities yield to many a subtle pressure from the Ministry of Labour. But, there had been legitimate resistance too to such pressures in the past. The success of such efforts of the Ministry of Labour, therefore, depended upon the nature of reaction of the authorities of the ESIC. If the latter feels vulnerable for various reasons, such vulnerable feeling is taken advantage of by the Ministry of Labour and they extend their authority, without corresponding responsibility, to the administrative matters of the ESIC.

They want to treat the ESIC as part of their office by extending their authority thus, while at the same time denying the corresponding benefits that would accrue to the ESIC Officers and staff, as government servants belonging to the same Ministry.

Except for such overbearing attitude, there is no authority lawfully vested in the Ministry of Labour to overshadow the Director General in the day-to-day functioning of the ESI Corporation.

The core issues:

The main points now are

  • whether the Standing Committee and the ESI Corporation had, before ratifying the action of gifting away the land at Ayanavaram to the CMDA at Chennai without any compensation, examined the issue comprehensively and taken a conscious decision to forgo any compensation, keeping in view the earlier episodes of Rajkot and Hyderabad in which decisions had been taken to the contrary;
  • whether the Chairman, Standing Committee has executive powers to entertain a file from the Hqrs. Office of the ESI Corporation in the manner in which it has been done in Episode-3.
  • whether there was any need for the file to go the Chairman, Standing Committee for a decision in respect of Episode-3, when the files did not go, earlier, to him in respect of Episodes 1 & 2, in which cases, the decisions had been taken only at the level of the Director General, in a right way.

P.S: Another important dimension gets added to this episode, if  the unconfirmed information that the proposal to set up the Medical College at Ayanavaram has been dropped, is true. In that event, where was the need for gifting away the land and demolishing the building in it?


1 Comment

Filed under For Trainees

One response to “Executive Powers of the Chairman, Standing Committee of ESIC

  1. In this case, the ESIC has constructed the building but has shelved its proposal to start medical college at Ayanavaram while the land has already ben gifted away to the Corporation of Chennai.

You are welcome to offer your views!

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s