ESIC should not admit students again: AITUC in HC !

The Tamilnadu State Council of the AITUC has filed a case in the Hon’ble High Court of Chennai in W.P. No. 18773 of 2015 praying for quashing the decision communicated by the Hqrs. Office of the ESI Corporation on 18.03.2015 to admit students again in the ESIC-run medical institutions for the year 2015-16.Mr.T.M. Murthy, General Secretary of the Tamilnadu wing of the AITUC has moved the Hon’ble Court on this issue. Mr.P Gurusamy, the Counsel for the AITUC, said that the Hon’ble High Court admitted the case and permitted issue of private notice to the parties.

The argument of the AITUC is:

  1. The membership of the AITUC is 3.6 million. The unions affiliated to AITUC are from textile, engineering, coal, steel, road transport, electricity board and of unorganised sector such as beedi, construction and head-load workers, anganwadi, local bodies and handloom. The employees who are working in various factories and establishments in India are members of our trade union too and they have been covered under the provisions of the Employees’ State Insurance Act too. The ESI Corporation as a body, had taken decision on 05.01.2015 quit medical education, as the ESIC did not have the core competency to run the medical institutions. But, it had been reversed by the Director General on 18.03.2015 and decision taken to admit the students in the ESIC Medical institutions for the year 2015-16, without any justification, as his decision results in further wastage of the funds contributed by the members of our AITUC, who are working in various factories / establishments coverable under the ESI Scheme.
  2. The AITUC has submitted that the ESI scheme had been well managed at the macro level up to the year 2007. The article in the Economic Times on 05.02. 2003 commended the financial management of the ESIC in an article titled “ESI manages funds better than pvt units”. The article said, “Next time you grumble about the Employees’ State Insurance Scheme, you could get some solace from knowing that at least your money is being managed well.” The article goes on emphasing this aspect at length. This Central Autonomous Body had been accumulated funds little by little for about 55 years and kept them invested in government securities as per the advice of the Respondent-5 from time to time. And this made the organization financially strong.
  3. But, the decision taken all of a sudden on 14.07.2007 during the meeting of the ESI Corporation to establish 43 medical educational institutions in 17 states of India commenced the era of impedance in the functioning of the ESI Scheme. All of a sudden the ESIC started to enter into the field of medical education. And that too on a large scale at the initial stage itself without even testing waters through Pilot Project.
  4. The obvious intention was only to fritter away the corporation money on a large scale in construction of buildings rather than establishing medical colleges and running them successfully forever. That was the reason the Respondents ventured to start so many medical colleges at one go. They did not even do paper work to assess the initial cost and the perpetual running cost vis-à-vis the revenue earned in the form of contribution from the workers who are members of our AITUC too. The Ministry of Law and the Ministry of Finance had also been indifferent to the activities in the ESI Corporation and had cleared the proposal of the ESIC for amendment in the year 2010 without proper examination.
  5. The Director General had indulged in construction spree on an extensive scale and frittered away 15000 crores of rupees so far. Around 8 medical institutions have started functioning from the academic year 2011-12. The running cost is enormous and is affecting the routine and main work of the ESIC. Now, the Sub-Committee of the ESIC reports that the budget will be negative in 2016-17.
  6. In the circumstances, the decision taken by the Respondent-2 on 05.01.2015 to quit medical education and not to admit new batch of students is a correct one and it was intended to salvage whatever is left of the ESI Scheme and to prevent it from getting drowned.
  7. But, the decision taken on 18.03.2015 to admit new batch of students for the year 2015-16 is patently wrong and is in deviation of the decision communicated by the Respondent-2 earlier on 05.01.2015. When the ESIC had openly admitted in categorical and clear terms that it did “not have the core competency to run the medical institutions”, there should be no further attempt to spoil both the organization and the career of the new batch of students.
  8. Besides, this decision dated 18.03.2015 is ultra vires as it was in defiance of the earlier decision dated 05.12.2014 of the Apex body. The decision taken on 18.03.2015 was not only unlawful, its being ultra vires of the Respondent-2 but also unjustifiable ex facie. The order dated 18.03.2015, therefore, needs to be quashed in the interest of vast multitude of workers in the nation.

The AITUC has reiterated its case on the following Grounds:

A.   59-B of the ESI Act which lays down the provisions for “Medical and para-medical education” says, “The Corporation may establish medical colleges, nursing colleges and training institutes for its para-medical staff and other employees with a view to improve the quality of services provided under the Employees’ State Insurance Scheme.” However, four years later, the Respondent-2 found that the ESI Corporation did not have the core competency to run medical colleges and that “the objective of Section 59-B is unlikely to be met”. His earlier decision to enter into medical education has, thus, been proved to be wrong by the order dated 05.01.2015 issued by the Respondent-2 himself. The Respondent-2 ventures to commit another wrong now, through his subsequent order dated 18.03.2015, in spite of his realization of his own earlier mistake. He should, therefore, exit from the field of medical education at the earliest opportunity, as decided by him on 05.01.2015, without spoiling the career of the students who want to be taught by competent and willing institutions.

B.  The ESI Corporation, as a Body, decided, on 04.12.2014, that the ESIC should exit the field of medical education as that was not the core function of the organization. It was decided to phase out the existing four medical education and dental colleges in a phased manner or to close them down by apportioning the students among other colleges, “whichever is earlier”. But, all of a sudden, the Respondent-2, who is not empowered to act in violation of the decision of the Apex Body, does turn the decision upside down and issue a circular on 18.03.2015 directing the Deans and Medical Superintendents of the concerned Medical Colleges to initiate action to admit students for the next batch of the year 2015-16. It is not only ultra vires of the Respondent-2 to do so but also a deliberate misconduct on his part.

C.  It has been mentioned that this decision dated 18.03.2015 had been taken in the “interest of the students”. But, the unassailable fact is that the interest of the existing students in the MBBS/ BDS/ PG course do not get served by admitting new students. The reason given by the Respondents in the aforesaid Memo dated 18.03.2015 is false and is intended to mislead the public. An organization that wants to exit medical education for lack of core competency to run it, cannot protect the interests of any students and that too new batches. Their statements and actions are mutually contradictory and self-defeating. The Respondent-2 are not transparent in their activities and do not come out with facts which prompted them to act, unlawfully, in total defiance of the decision taken by the Apex body on 04.12.2014. Their statement that their mysterious decision dated 18.03.2015 was taken ‘in the interest of students’ is patently wrong a clear attempt to cover up their real and obviously questionable intention to waste the ESI funds even more. I respectfully submit that the Memo. dated 18.03. 2015 needs to be quashed on this score itself.

D.  The Respondent-2 had already incurred around Rs. 15000 crores to construct and run many medical colleges at one go. Now that he has admitted that he does not have the competency to run medical colleges, that the objective of Sec. 59-B of the Act is unlikely to be met and that running medical colleges is not the core activity of the ESIC, he must act as the man of ordinary prudence, as mandated very often in the General Financial Rules, 2005, and stop further admission of students to these five institutions. But, I feel aggrieved that the Respondent-2 ventures to misspend the funds contributed by me and on my behalf and other similarly-placed insured persons knowing full well that he does not have the competence to teach those newly admitted students too.

9.   The AITUC has, therefore, prayed that the Hon’ble High Court may be pleased to quash the Memo. dated 18.03.2015 and consequently direct the Respondents not to admit students for 2015-16 session in MBBS/BDS/PG courses and to pass further or other orders as deemed fit by the Hon’ble Court and, thus, render justice.



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