ESIC’s Medical College Muddle – Part 4 : Sec. 59 (3) – Was the amendment legitimate ?

The issue discussed in this Post is a simple and straightforward one. An amendment proposed in a Bill is considered by the Parliamentary Standing Committee on Labour, and it refuses to endorse that proposal. Can the Parliament, thereafter, approve that amendment without assigning reasons why it differs from the decision of its own Standing Committee? The answer is that the Parliament cannot.

In the present case, the issue is even more serious. The Parliamentary Standing Committee on Labour examined the amendment proposed in the Bill No. 66 of 2009 to insert Sec. 59 (3) in the ESI Act to enable and empower the ESI authorities to run hospitals through third party participation. The Committee had, in Para 113 of its Report dated 09.12.2009, said, “there is no justification on the part of the Government for making such an enabling provision in the Bill for commissioning and running these hospitals through third party participation”.

Yet, the authorities placed the Bill before the Lok Sabha for approval without modifying or changing any sentence in the proposal to insert Sec. 59(3), which had been deprecated by the Standing Committee. The issue had not been taken up for discussion for two sessions. At last, on the last day of the winter session meant for Labour Department, i.e., on 03.05.2010, it was taken up, when there was pandemonium created by the opposition over the Sibu Soren issue. It was all of a sudden announced that the ESI Amendment Bill had been passed. The Minutes of the Lok Sabha proceedings show that the Bill had been read and passed, within nine minutes, amidst repeated interruptions, between 1420 and 1429 hours that day.

There was no information placed before the Hon’ble Members of Parliament, at the time of presenting the Bill, about the observations of the Parliamentary Standing Committee on Labour on that proposal to insert Sec. 59 (3) for third party participation. The Members were not made aware of the reprobation of the proposal by the Standing Committee, during the presentation of the Bill, by the Hon’ble Minister for Labour.

“The need for committees arises out of two factors – the first one being the need for vigilance on the part of the Legislature over the actions of the Executive, while the second one is that the modern Legislature these days is over-burdened with heavy volume of work with limited time at its disposal. It thus becomes impossible that every matter should be thoroughly and systematically scrutinized and considered on the floor of the House. If the work is to be done with reasonable care, some Parliamentary responsibility has to be entrusted to an agency in which the whole House has confidence. Entrusting certain functions of the House to the Committees has, therefore, become a normal practice. This has become all the more necessary, as a Committee provides the expertise on a matter which is referred to it”.

Again, as per Rule 331N of the Rules of Procedure and Conduct of Business in Lok Sabha, “The report of the Standing Committees shall have persuasive value and shall be treated as considered advice given by the Committees”.

Yet, no documents were placed before the Members to persuade them how the persuasion by the Standing Committee was not correct. No note of dissent was given by any Member of the said Standing Committee (nor by the Executive). No attempt had been made to explain the stand of the ESI Corporation that the “considered advice” of the Parliamentary Standing Committee were wrong and could be over-ruled by the Parliament. The pandemonium prevailing at that time was taken advantage and a Bill that contained the proposal to set up medical institutions, appointment of consultants by exercising sky-high powers, and other issues which were to cause far-reaching effect had been seen through.

In fact, the observations of the Parliamentary Standing Committee with reference to Sec. 59 (3) had been deliberately suppressed as could be seen from Pages 60, 61 & 62 of the Hansard dated 03.05.2010 of the Lok Sabha.

Now, the authorities who do not know what to do with the many white elephants (massive structures for unwanted medical colleges and hospitals), are

(1) toying with the idea of running the ESI Medical institutions on their own;

(2) making efforts to hand them over to the State Governments of the respective Regions.

(3) thinking of handing over the medical colleges to Third Parties under (Public Private Partnership) “PPP” arrangements.

(4) considering whether they could just “divest” the property.

This is evident from the Press Release issued by the Hqrs. Office of the ESI Corporation in E-15/15/ 02/ 2015-P.R. dated 23.03.2015.


PPP Press release 23 03 2015 Head

Extract from Page 2 of the Press Release:

PPP Press release 23 03 2015


The authorities believe that Sec. 59 (3) which had been inserted in the ESI Act, 1948 through the amendment of 2010 empowers them to think of the PPP options. The amended Sec. 59(3) is reproduced below:

Sec 59 3


But, the moot question is whether the Parliament of India consciously approved the amendment for inserting the aforesaid Sec. 59 (3) when its own Parliamentary Standing Committee on Labour had, in its report dated 09.12.2009, categorically refused to endorse the proposal for third party participation to run the ESI hospitals.


1. While the authorities may cite only the Sec. 59 (3) and claim that it is “law” as on date, the insured persons can object to it, citing the observations of the Parliamentary Standing Committee on Labour and prove that the Legislature had been tricked on 03.05.2010 by the Executive, whose intention was only to observe the formality of getting the Bill declared by the Speaker as passed on the floor of the Lok Sabha.

2. The absence of any reason recorded by anyone to counter the argument of the Standing Committee on the proposed Sec. 59 (3) would help the insured persons to establish the fact that the Executive had not been sincere and honest in giving right and complete information to the Legislature on this issue before asking for its approval.

3. The Executive had, with mala fide intention, placed this Sec. 59(3) before the Parliament, in its original draft form, even after the Standing Committee had objected to the draft proposal. It is not the ‘end’ but the ‘means’ adopted by the Executive to make the said Sec. 59 (3) law, which makes that provision questionable and justiciable.

4. Even assuming, without admitting, that the present Sec. 59 (3) is valid, the ESI authorities cannot think of PPP in respect of medical institutions, as Sec. 59 (3) refers only to hospitals and not medical institutions. (Besides, the provision for setting up medical institutions comes later as Sec. 59-B).

5. Besides, the talk of “divesting” the property or handing them over as “gift” to the State Governments are not permissible, as the ESI Act, 1948 permits the ESI Corporation only to “accept grants, donations, gifts from the Central, or any State Government, Local authority, or any individual or body whether incorporated or not for all or any of the purposes of the ESI Act”. There is no provision to gift away the Corporation’s property.


No third party participation is possible in running the ESI Hospitals, in spite of the “managed-to-be-passed” Sec. 59 (3).

No third party participation is possible for running the ESI medical colleges, because even that Sec. 59 (3) talks only about hospitals and not about medical colleges.

It would, therefore, be just and proper, in the given circumstances, to make use of the massive infrastructure created for the medical colleges in such a manner that it brings annual revenue to the Corporation.


NB: The following is only for those who want to go deep into the issue:


Sec. 59 of the ESI Act, as it was in the year 2008,  when the authorities took steps to amend that Section: 



ESIC Sub-Committee’s proposal in the year 2008 to amend (i.e., by making addition to) Sec 59 (1) and Sec. 59 (2) for private participation :




Amendment proposed as per Clause 14 of the Bill No. 66 of 2009 to add Sec. 59 (3) to the ESI Act:

Sec 59 2 Bill Text

Report of the Parliamentary Standing Committee on Labour presented to the Lok Sabha on 09 .12. 2009 and laid in Rajya Sabha also on the same day (From pages 70 & 71):  

Para 113 page 70 PSC report




Page 71 of the PSC report


Sec. 59 (3) of the ESI Act after Amendment of 2010, in force, as on date:

Sec 59 3


Readers may please note that the text of he original Clause 14 in the Bill No. 66 of 2009 has been made to become law, without taking cognizance of the observations of the Parliamentary Standing Committee on Labour.


Now, what had actually happened in the Parliament in the nine minutes between 14.20 and 14.29 on 03.05.2010?

(One has to go through thePages from 58 to 69 of the Hansard) given in the following link:

Hansard showing how the Parliament passed the bill

It is significant to note that the Hon’ble Minister just lays on the table, on the advice of the Hon’ble Deputy Speaker, his statement about the observations of the Parliamentary Standing Committee. This portion of his speech was not, actually, spoken in the Lok Sabha.  Even in that ‘speech’ laid by the Hon’ble Minister, which is available in Pages 60, 61 & 62 of the Hansard, there was no reference to the objection of the Parliamentary Standing Committee to Sec. 59 (3) as per Para 113 of the Report.

Labour Minister on PSC report


Parliament passes Bill Page 61


Parliament passes Bill Page 62

Can anyone say that the MPs were aware of the observations of the Parliamentary Standing Committee on the proposed Sec. 59 (3) ?

Can anyone say that they were aware of the fact that the ESI authorities did not modify the Bill, in spite of the advice of  the said Committee in Para 113 of their Report? 



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