Category Archives: For Trainees

To all those who want to know the concepts of the ESI Scheme.

July 5, 2013 · 2:31 am

ESIC: A review in Heavens! – Episode 1

It so happened that we had a chance, recently, to visit the Heavens,  and come back too. What we saw and heard there were found to be worth-sharing. Hence this attempt. 

When we were wandering ‘lonely as a cloud’ in the Heaven, we came across a person sitting under a tree in a pensive mood for a long time. How could there be a man so sad when he was in Heaven? We went nearer to see who he was. What a pleasant surprise! The unpleasant person was Prof. B.P. Adharkar, the Father of Social Security in India. We were just watching him, without his being aware of our presence. All of a sudden, there was a flash in his eyes when he looked in a particular direction. We could then see  the reason for his lit up eyes. He got up and cheerfully welcomed the person who came near him and shook hands. He was Sir William Beveridge.

“Good Morning, Mr. Beveridge! How are you? Happy to see you here.”

“Good Morning, Mr. Adharkar! I wanted to meet you for a long time. I could make it only today. I saw you sitting as if you were lost in thoughts. What is on in your mind?  May I know that?”

“Oh, sure! I was just thinking about the way the Social Security system is functioning at present in India. How marvellous the scheme was, when you prepared the blue print for it!”

“It is okay! All of us had done our bit for the society. But what made you to be lost so much  in your thoughts today?”

“A lot, A LOT!. I do not know how to describe or where to start from. But, the only positive thing is that the present CEO of the ESI Corporation really wants to bring the organisation back on rails. But, there are many vested interests working against that objective. I do not know what the future holds for the ESIC. It is the backbone of the nation’s economy. But, people do not seem to realise its importance.Things had gone awry for quite some time. The after-effects are felt, still. The organisation must recover from those effects.”

“Oh, no! What do you say? It was you who were instrumental in preparing the ESI Act. It was prepared on the basis of the report given by you on 15.08.1944. Was there anything wrong in your report?”

“I do not know! I just prepared the report as per the standards of the 1940s. I did not know that things would move this way.”

“Can you please elaborate?”

“That is what I said. I do not know where to start. There are so many things that we have to discuss. I am just flabbergasted at the way things had gone astray for some time that it has become a Herculean task for the present day Administrators to clean the Augean Stable.”

“Mr. Adharkar, you are just increasing my anxiety and worry with all these statements. You please start from somewhere, anywhere. We are not writing a book here to narrate things in an orderly fashion. Do share what comes to your mind, and whatever you feel like saying. We can revisit the same issue again and again during our discussion, and there is no statutory bar of any kind to it.”

“Yeah, that’s true! Mr. Beveridge. Let me tell you about the Standing Committee and the ESI Corporation. I conceived of them as autonomous bodies consisting of people who would exhibit real and sincere interest in the welfare of the working population. I thought these bodies would function like brain-storming centres and decisions would be taken after no-holds-barred discussion. But, contrary became the reality. Discussions were managed. You can see the article “Executive Powers of the Chairman, Standing Committee” published in the website ‘flourishingesic.info’ in this regard.  Except a very few, the other members are not evincing keen interest and involvement in the state of affairs. Take for example, the officers who are on these Bodies as members representing their respective State Governments. Do they take part in any discussion on important matters? Do they, at least, want to get things clarified, when information that affects the System, is made available to them? No!”

“But, why? After all, they are there in these Elected Bodies as representatives of their State Governments. If there is nothing to represent for their States, why should they speak?”

“No, the meetings of these Bodies are not like the meetings of Chief Ministers for allocation of funds, where they need not bother themselves about anyone except their own States and where they do not really know much about the area of the others. These members in the Standing Committee and the ESI Corporation have voting rights. The resolutions passed by these Bodies are shown to have been passed with their approval too. Their silence gives room to declare that every resolution was passed with majority support. Nobody has barred them from voicing their opinion as members of the Standing Committee or ESIC  on any issue placed before them on the Agenda. Yet, they maintain silence, presuming that it was courtesy. But, it is really indifference. Likewise, many representatives of  employers and employees too do not bestow adequate attention to details. The Bureaucrats Vs. Political leaders episodes of the serial ‘Yes, Minister’ are re-enacted on many occasions.”

“I am simply surprised. How does it happen?”

“I am also puzzled. But, they do happen. Please take the issue of I.T. Roll-out. Every department that wants to computerise its activities starts it only as a pilot project in a small area. That way the trials and errors would not affect the routine of the organisation even for  a single day. Take for example, the Railways.  Did they stop any train even for a single day, to computerise their activities? But, in the ESIC the inspection work and the work in many other areas came to a standstill for long, even for the preparation and supply of Identity Card. Did anyone assess the cost-benefit ratio of this kind of approach, as this work was done simultaneously throughout the nation. So many wrong orders were issued affecting not only the office work but also the insured persons and their family members for the photo sessions. Yet,these ID cards have not become fully functional. These cards must prevent duplication, in the ideal situation. But, that ideal situation has not yet come, in spite of the passage of more than four years. The finger prints and the other bio-metric data are not used for de-duplication process. Employers and Employees have found various methods to circumvent the System. The mounds and mounds of ID cards returned undelivered speak volumes of the flaw in the planning. If only there had been pilot project, the damage would have been limited only to a small area. You know, I have, so far, told you only about the ID card matter. I have not told you anything about the defect in the System in preparing Payment Dockets in the Branch Offices or processing the Inspection Report in the Insurance Branches, or others.”

“Mr. Adharkar, you, surely, have reason to feel worried. But, it does not matter much, I think. After all, you can dump the I.T. Roll-Out and go back to the time-tested manner in which your Scheme was functioning earlier with pen and paper. Take heart! Not much has been lost.”

“I agree with you Mr. Beveridge. The Airforce of the USA provides a precedent in this regard. I saw one article titled ‘BOOTS or COTS’ in this regard in the website ‘flourishingesic.info’.’ But, the white elephants, the ESIC Medical Colleges worry me so much. The way the construction work was started even before the Parliament amended the Act, the way Deans were appointed, the way money was spent, the way some projects were abandoned midway, the way the authorities have been left to wonder now, how to make use of the buildings constructed for the abandoned Medical Colleges are really making me apprehensive.”

Mr. Adharkar continued. “While formulating the ESI Scheme, I had, very consciously, specified eleven Fundamental Principles. They are, in fact, sound directive principles to be kept in view by the Government not only for any social security measure to be introduced through the ESI Scheme but also on any labour-welfare related matter. One of the Fundamental Principles is that the proposed scheme “must not be too ambitious in the beginning”. But, this fundamental thing has not been examined on record before starting I.T.Roll-Out all over the nation or before starting construction work for so many medical colleges.”

“I do understand. …(Looking off into the distance)  Oh, you see there comes the trio, Mr. Wagner, Mr.Murray and Mr.Dingell, the architects of the Social Security Scheme in the USA. Let us hear them too.”

These three gentlemen arrive on the scene. They join the discussion after exchange of courtesies.

“It is not just these things”, continues Mr. Adharkar, “The way the Ministers wanted to interfere in the day-to-day administration of the autonomous body by influencing the transfers of officers is more worrisome. The evil effects of such interferences had been felt in the past and had been narrated in detail in the agenda for the Standing Committee in the year 2004. It was only Mr. Chandrasekar Rao who allowed the Rule of Law to prevail in the matter of transfer of officers. His period as Chairman of the ESI Corporation was short. But, it had a telling effect in establishing Rule of Law in the matters of transfer of officers. He said in the open meeting of the ESI Corporation that there would be no interference from the Minister or Ministry in the matter of transfer of officers and the Director General would, as the Team Leader, be free to decide the issues. The Transfer Policy assuring equality for all, was enforced thenceforth. But, as I said, his tenure was short. Again interference in the matter of transfers started. There became so many power-centres de facto. Such interference by the Ministers and other power-centres would sink the organisation and we can discuss about it in detail later”.

“Yes, yes. What you told, so far, appears to be only an introduction of various things that had taken place. The burden on the shoulders of the well-meaning administrators of the present  to put things again in proper shape and perspective is just enormous.    But, I feel not only worried but also tired just by hearing these things. Anyway, what about the financial aspects, especially with so many medical colleges? There would be heavy running costs without any income from these medical colleges. Was that issue analysed on file before the proposals were submitted? What would be the long term effect?”, said Mr. Beveridge.

At this moment, Mr. Wagner chipped in. “Friends, have you heard of a scheme in the USA started by one Mr. P….?”

(Continued in Episode 2.)

3 Comments

Filed under Amendments 2010, Benefits, For Trainees, Transfers

June 7, 2013 · 9:41 am

Germany – From ‘Sick man’ to ‘Strongman’ through Social Security

DSC00125For more:

http://timesofindia.indiatimes.com/home/opinion/interviews/Ursula-von-der-Leyen-Social-security-and-skilled-workers-helped-German-economy/articleshow/20464910.cms?

Leave a comment

Filed under For Trainees

May 23, 2013 · 11:32 pm

Apprentices and the ESIC Revenue Manual.

The concept of Apprenticeship and the need for the Government to give encouragement to that concept can be seen from the Statement of Objects and Reasons of the Apprentices Act, 1961.

Coverage of Apprentices is not permitted under the ESI Act, 1948. For this purpose, the coverage of persons called as Apprentices required deeper examination. Industrial Employment (Standing Orders) Act, 1946 and the Industrial Disputes Act, 1947 refer to Apprentices. After the enactment of the Apprentices Act, 1961, also the ESI Act did not specifically refer to Apprentices. .But, that situation led to ambiguous interpretations and large-scale misuse. The Inspectors were to examine whether there was real training system in the factory, class room, etc., The employers argued that the learners, trainees were also excluded as they were apprentices too. The judgment of the Hon’ble Supreme Court in ESIC vs. Tata Engineering Co and others on October 8, 1975 would throw light on various issues pertaining to the Apprenticeship and the coverage of apprentices under the ESI Act.

“The Apprentices Act, 1850, defines an apprentice as a person who is undergoing apprenticeship training in a designated trade in pursuance of a contract of apprenticeship. Whenever the legislature intends to include an apprentice in the definition of a worker it has expressly done so, for instance, while defining a worker under s. 2 of the Industrial Disputes Act, 1947. The very next year while passing the Employees State Insurance Act, 1948, the Legislature did not choose to include apprentice while defining the word employee. Such a deliberate omission on the part of the Legislature can be only attributed to the well known concept of apprenticeship which the Legislature assumed and took note of for the purpose of the Act.”, said the Hon’ble Supreme Court of India. (http://www.indiankanoon.org/doc/1405877/)

The problems were being encountered in numerous cases at the time of inspections and hearing under Sec. 45. So, the ESI Amendment Act, 1989 addressed the issue and made it specific to exclude only the Apprentices who were covered by the Apprentices Act, 1961 and the Apprentices as per the Standing Orders of the factory (Industrial Establishment).

The ESIC authorities had, however, to examine deeply various aspects pertaining to the Standing Orders and the way in which the Certifying Authority exercised his power to approve those Standing Orders. The Amendment Act, 2010 has put an end to all these problems. Now, only the persons who are Apprentices as per the Apprentices Act, 1961 are excluded from coverage.

But, the ESIC Revenue Manual says something different. The details in this regard are given below for the benefit of readers. They are welcome to offer their views.

Apprentices Act, 1961:

Sec.18: “Apprentices are trainees and not workers –
Save as otherwise provided in the Act, –
(a) every apprentice undergoing apprenticeship training in a designated trade in an establishment shall be a trainee and not a worker; and
(b) the provisions of any law with respect to labour shall not apply to or in relation to such employee.”

Position in the ESIC from 1989:

Sec. 2 (9) of the ESI Act, 1948 says that “employee means …… any person engaged as an apprentice, not being an apprentice engaged under the Apprentices Act, 1961 (52 of 1961), or under the standing orders of the establishment”.

Accordingly, all those appointed as Apprentices under the Standing Orders approved by the competent Certifying Authority as per Sec. 4 of the Industrial Establishment (Standing Orders) Act, 1946 were excluded. But, it was not that simple. The ESIC would see whether the Certifying Authority had really ensured that the Standing Orders were in accordance with the Model Standing Orders. There were cases where the period of training as per the approved Standing Orders was much more than what was permitted as per the Model Standing Orders, both for skilled and unskilled persons. In that event, the ESIC would seek confirmation from the Certifying Authority how he certified and whether he had, indeed, certified those Standing Orders which were produced before the ESIC authorities. In many cases, the Certifying Authorities chose to keep mum, as they had certified those standing orders in violation of the provisions of the Act concerned. In such cases, the ESIC would not accept those employees as Apprentices. The Certifying Authority cannot approve any Standing Order for any factory or establishment, if those Standing Orders are in deviation of the Model Standing Orders.

There were also cases where large number of employees were shown as Apprentices as per the Standing Orders and payment of ESI Contribution avoided. But, in regard to Tamilnadu Region, disproportionate number of employees in any cadre were not permitted to be shown as Apprentices. Contribution was claimed in respect of all persons exceeding 5% in every cadre as ruled by the Hon’ble High Court of Chennai in the Pallavan Transport Corporation Vs. Appellate Authority in the year 1979 . This case was with reference to the provisions of the Industrial Establishment (Standing Orders) Act, 1946. The decision is available in the Book of K.D. Srivastava on the said Act published by the Eastern Book Company.

(1979) 2 LLJ 262

(1979) 2 LLJ 262
Click on the image to have a larger view

Position in the ESIC from 01.06.2010:

Sec. 2 (9) of the ESI Act, 1948 says that “employee means ….any person engaged as an apprentice, not being an apprentice engaged under the Apprentices Act, 1961 (52 of 1961), and includes such person engaged as apprentice whose training period is extended to any length of time.”

The amendment of 2010 did away with the need to examine the contents of the Standing Orders. All those who are called as Apprentices by the employer are now coverable under the ESI Act, 1948 except only those who fall within the purview of the Apprentices Act, 1961.

What does the ESIC Revenue Manual say?

But, Para L.2.12 in Page 23 of the Revenue Manual published by the ESI Corporation in the year 2011 says as under:

“Exceptions: The following categories need not be counted for the purpose of coverage of the factory or for their own coverage.
…. c) An apprentice engaged under the Apprentice Act, 1961 excluding the Apprentice whose training period is extended to any length of time.”

This is again reiterated against Item 1 under the category “Exclusions” in Page 78 under the Para L.6.4 which reads as follows:

“Exclusions are:
(1) An Apprentice engaged under the Apprentice Act 1961. Consequent to the Amendment to the Act in 2010, only the Apprentices covered under Apprentice Act 1961 are not coverable as employees under the Act. Apprentices engaged under Apprentice Act whose training period is extended to any length of time and all other trainees working under the Standing Orders of the companies are coverable as employees.”

  1. Does it imply that the ESIC says that the Apprentices engaged under the Apprentices Act, 1961 are coverable, if their training period extends to any length of time?
  2. Does this not run contrary to what is, correctly, mentioned against Item 6 in Para L.2. 11 in Page 22?
  3. Is not Item (c)  under Para L.2.12 , then, in violation of Sec 18 (a) and (b) of the Apprentices Act, 1961?
  4. Can the ESI Act, 1948 supersede the Apprentice Act, 1961 on the core issue of the status of an Apprentice, when there is no specific provision in the ESI Act for such supersession?
  5. Is it not reasonable on the part of the employers to expect clarification from the ESIC authorities with reference to the aforesaid interpretations and discrepancies in the Revenue Manual?

4 Comments

Filed under Amendments 2010, For Trainees, Inspections

May 16, 2013 · 12:39 pm

Respect people below you on the ladder!

The management principle recommended by Mr. Gordon M.Bethune, former Chief Executive of the Continental Airlines is to hear the subordinates. For, they know more about the work, they know more about the weak-spots.

He says, “I was a mechanic in the Navy. And mechanics in the Navy are like mechanics in airlines. You may have more stripes than I do, but you don’t know how to fix the airplane. You want me to fix it? You know how much faster I could fix the airplane when I wanted to, than when I didn’t want to? So I’ve always felt that if you treat me with respect, I’ll do more for you.”…”And we never lied. You don’t lie to your own doctor. You don’t lie to your own attorney, and you don’t lie to your employees.”

It is because the authorities did not hear the subordinates for long in the I.T. Roll Out work, the mechanisation process is full of complications. When the subordinates asked genuine questions, they were insulted or ignored or frightened.

The same is the reason for so many flaws in the Revenue Manual and the Recovery Manual.

The text of the interview by Mr. Godon M. Bethune is posted here for the benefit of the readers.

Respoect people below you

Please click on the image to have a larger view

For more, they may visit:

1 Comment

Filed under For Trainees

March 21, 2013 · 5:23 pm

Appellate Authority u/s 45 AA of the ESI Act – Part I

The following are excerpts from the application sent by Mr. P. Ramar on 10.10.2009 to the Ministry of Law on the amendment then proposed for having an Appellate Authority under the ESI Act:

  1. Sec. 74 of the Principal Act provides for a full-time domestic tribunal as part of the ESI Corporation exclusively for deciding the cases pertaining to the ESI Corporation. The expenditure pertaining to that Tribunal was intended to be met from the ESI Fund as per Sec. 28 (vii) of the ESI Act, 1948 which authorises that the ESI Fund shall be expended for “defraying the cost (including all expenses) of the Employees’ Insurance Courts set up under this Act”. Accordingly, full time E.I.Courts had been set-up and were functioning upto the mid-seventies, although the expenditure of such E.I.Courts had been met only by the concerned State Governments. At that time, the disposal of the cases was fast and the E.I.Courts functioned as specialized institutions on matters pertaining to the ESI Act.

2. Now, all of a sudden a provision is attempted to be made for having an Appellate Authority with reference to the orders issued under Sec. 45-A pertaining to Contribution. The Statement of Objects and Reasons for the Bill do not explain the problems, if any, faced by the organization for want of such an Appellate Authority and the necessity for such an amendment.

3. The Bill is totally silent with reference to Sec. 85-B under which the same ESI Authorities issue orders regarding Damages by exercising the same powers and extending the same opportunity to the employers as per the principles of natural justice.

4. The fact is that there is no need for an internal appellate authority under Sec. 45 and the present proposal as per Clause 9 is only intended to preclude the E.I.Courts from playing their legitimate role.

5. All that the ESIC has to do, under Sec. 74 is

  1. a)to ask the State Governments to make the E.I. Courts as full-time courts to attend only to the cases pertaining to the ESI matters;
  2. b)to ask the State Governments to nominate judges for these courts with reference to the EI Court rules already framed by them,
  3. c)to inform the State Governments that the ESI Corporation would meet the entire cost of running the courts from the ESI Fund.

6. But, the ESI Corporation had, over a period of time, simply left it to the concerned State Governments to do whatever they pleased. No money has been spent from the ESI Fund for running the E.I. Courts. So, the State Governments have, instead of appointing full-time EI Courts simply allotted the work to the Labour Courts. The judges of the Labour Courts, overloaded already with their main work, began to consider the ESI work as a part of their other works. Because of this overload, there is significant delay in the disposal of cases.

7. The prime factor for consideration is that the authors of the Principal Act had very wisely understood the need for having an appellate authority who will not be a civil court but in-house tribunal. But, later, because of the ignorance and inaction of the ESI Authorities of the nuances of the subject-matter, the State Governments had not been informed of the financial assistance available to them as per Sec. 28 (viii). As a result, the ESI Corporation had been suffering all along because of the delay in the disposal of cases.

8. Delay in the disposal of cases cannot, therefore, be a reason for moving an amendment as per Clause 9 of the ESI (Amendment) Bill, 2009. Proper understanding of the significance behind Sec. 74 and Sec. 28 would help set-up full-time EI Courts and clear the arrears. The present amendment is an attempt to make things chaotic without enforcing Sec. 28.

The Clause 9 of the ESI (Amendment) Bill, 2009 introduced in the Lok Sabha is reproduced below:
9. After section 45A of the principal Act, the following section shall be inserted, namely:—

“45AA. If an employer is not satisfied with the order referred to in section 45A, he may prefer an appeal to an appellate authority as may be provided by regulation, within sixty days of the date of such order after depositing twenty-five per cent. of the contribution so ordered or the contribution as per his own calculation, whichever is higher, with the Corporation:

Provided that if the employer finally succeeds in the appeal, the Corporation shall refund such deposit to the employer together with such interest as may be specified in the regulation.”.

Para 2 of the Memorandum Regarding Delegated Legislation is reproduced below:

2. Clause 9 of the Bill seeks to empower the Employees’ State Insurance Corporation to provide an appellate authority by regulation for hearing appeal from an employer against the determination of contribution payable in respect of employees and to specify the interest on the deposit made by the employer in case the employer is finally succeeds in the appeal.

Para 5 of the Memorandum Regarding Delegated Legislation is reproduced below:

5. The matters in respect of which the rules or regulations, as the case may be, to be made, are of administrative and procedural details and it is not practicable to provide for them in the Bill itself. The delegation of legislative power is, therefore, of a normal character.

9. There is no provision in the Bill to provide for a Section similar to Sec. 45 – A (2) to make the orders of the Appellate Authority enforceable.

10. Moreover, the Amendment Bill seeks to vest the power in the ESI Corporation to decide the (a) Constitution and appointment of Appellate Authority, (b) Powers and (c) procedure to be followed by the said authority. These matters have been left to the purview of delegated legislation.

11. If the ESI Authorities had moved the proposal by giving the impression that the EI Court is a Civil Court and that there is a requirement for an intra-departmental remedy for reviewing the orders issued under Sec. 45 A, their contention is wrong.

  1. a)“The E.I. Court is not a Civil Court but a domestic tribunal specially constituted for the purposes of deciding any controversy that may arise and the matters enumerable in Sec. 73 A”. (ESIC Vs. Zeckra 1969 (36) FJR 110.).
  2. b)Punjab High Court has held that the E.I. Court is not an ordinary civil court but a domestic tribunal specially constituted for the purpose of deciding any controversy that may arise in the matters enumerated in Sec. 75 of the Act.(ESIC Vs. Ram Lakhan, AIR 1960 Punj.559). The Bombay High Court has described the E.I.Court as a persona designate.
  3. c)In Virendra Kumar Vs. State of Punjab (AIR 1956 SC 153), the Supreme Court has made the following observations: “It is a familiar feature of modern legislation to set up bodies and tribunals and entrust them with the work of judicial character, but they are not courts in the accepted sense of that term though they may possess some of the trappings of a Court.”
  4. d)The mere fact that a judicial officer presiding over a Civil Court is appointed a judge would not, while he is performing his functions as a judge of the E.I. court, make him a civil court. “All the powers of a Civil Court cannot be exercised by an E.I. Court and only such power has been conferred by sub-section 1 of Section 78 upon it as are common with the powers of a civil court.” (ESIC vs. Shashi Kant Arc Khandi and another 1983 (47) FLR 269). There are only deeming premises made by Sec.78 (4) for the enforcement of orders of the EI Court in the same manner as done for the orders of Civil Court.

12. The “Commentaries on ESI Act, 1948” by M.R. Mallick published by the Eastern Law House, Kolkata in the year 1974 analyses the issue in depth and you could find more references in that book. It would thus become clear that the Principal Act has already placed a Domestic Tribunal for immediate remedy with reference to any issue that may arise between the employers and the ESI Corporation.

13. There is, therefore, no need for an additional departmental authority to become an appellate authority to decide any issue that may arise between the employers and the ESI Corporation under Sec. 45A. Yet, the Ministry of Law has become a party to the decision to vest some arbitrary powers in the ESI authorities to nominate the Appellate Authorities even without examining the fact that the ESI Corporation is not utilizing the powers vested in it to establish a full-time Tribunal under Sec. 74 meeting the required expenditure for it under Sec. 28.

14. The present bill aims at obtaining the approval of the Hon’ble Members of the Parliament to appoint an Appellate Authority in the ESI Corporation for the purpose of revising and reconsidering the orders under Sec. 45-A without informing the Hon’ble Members the manner in which such Appellate Authority is going to be appointed. The Bill aims at delegating arbitrary power to the Corporation to do as it pleases in such an important quasi-judicial matter.

  1. 1.Please, therefore, intimate, with reference to your office records, the details of the difficulties faced by the ESI Corporation, at present, because of the absence of any departmental officer to function as an Appellate Authority.
  2. 2.Please intimate whether the Ministry of Law had actually examined beforehand the manner in which the ESI Corporation is going to frame the delegated legislation regarding the appointment and powers of the proposed Appellate Authority.
  3. 3.Please intimate whether an Appellate Authority can be appointed and vested with powers as per Delegated Legislation when the Inspector and the Quasi-Judicial Authority and the E.I. Courts are appointed under Sec. 45 and Sec. 74 respectively and are deriving powers as per the Principal Act.
  4. 4.Please intimate whether the Ministry of Law is aware that the same officers who pass the orders under Sec.45-A regarding contribution happen to pass orders under Sec. 85-B regarding damages also following the same principles of affording the opportunity of principles of natural justice. In that case, please intimate whether you had examined the reason behind the fact that the ESI Authorities did not bother themselves about having the same Appellate Machinery regarding the Damages ordered under Sec. 85-B of the ESI Act, 1948.
  1. 5.Please intimate whether the orders of the proposed Appellate Authority under Sec. 45 AA are enforceable without there being any provision under the said Sec. 45 AA, corresponding to the Sec. 45-A (2) available under Sec. 45 A.

A sum of Rs.10 towards fee under the Right to Information Act,2005 has been paid in the form of Indian Postal Order for Rs.10/- drawn in favour of Secretary, Ministry of Law payable at New Delhi the details of which are asunder:

 

2 Comments

Filed under Administration, Benefits, E I courts, For Trainees, Inspections

February 21, 2013 · 8:33 pm

Executive Powers of the Chairman, Standing Committee of ESIC

Episode-1:

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.

Episode-2:

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.

Episode-3:

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

December 6, 2012 · 12:30 pm

Defaulters: what the ESIC could do but did not.

Action had been taken once very effectively and enthusiastically by the ESIC Officers’ Federation in the year 1997 through a Member of the Standing Committee Mr. Gautam hailing from Mumbai, to streamline the work of follow-up with the defaulters by making it easier for the employers to pay the contribution. All the Regions were asked to give their opinion on it. And, all the Regions supported that proposal.

A recap of that proposal is appropriate.

  1. Every employer covered under the ESI Act would pay the contribution through a Cheque or Demand Draft in the Branch Office (then, Local Office) and get formal acknowledgment of the same.
  2. No payment would be received in cash by the Branch Office. The Branch Manager will arrange to deposit all the instruments  in the ESI Corporation’s Bank Account the next day by preparing a Broad Sheet for the same.
  3. By twenty second of every month, he would easily know which employer did not pay the Contribution for the previous month and issue notices to all those Partial Defaulters besides calling them over phone and remind them.
  4. In the case of Persistent Defaulters, he would issue Show Cause Notices after the six monthly Period of Contribution is over and send the notice as well as acknowledgment to the Regional Office for taking action for prosecution.
  5. He would, during the course of the month, obtain the Bank Reconciliation Statement and ensure that all the cheques and Demand Drafts presented by him were accounted for and no cheque was dishonoured.
  6. In the event of dishonour of any cheques, the Branch Manager would take further action of issuing notices in time as per law and send the papers to the Regional Office for further action.

This process was suggested by the ESIC Officers’ Federation after a lot of deliberation with various Regional Units.

Continue reading →

3 Comments

Filed under For Trainees

Tagged as , ,

November 29, 2012 · 9:45 pm

Inspections: We want! No, we don’t want!

Inspections of factories are desired in some cases and disliked in some cases. (Readers may please click on the images to get full size  readable pictures.)

The first image is from the magazine Business India of the year 2001. The next one is from the Business Standard of November 2010. There are justifications on either side. But, what is important for the society as a whole must be made law. How to control the negative factors in inspection? The readers may please offer their opinion.

2 Comments

Filed under For Trainees

Tagged as ,

November 22, 2012 · 4:30 pm

ESIC Inspection Procedure and its Impact on Society

(Dear Readers,

We have seen the theory and practice in Administrative Procedure in the earlier Posts. We have seen the link between the internal administrative procedure of a department and its impact on public. The current Post deals with certain vital aspects of the administrative procedure evolved in the Revenue Wing of the ESI Corporation and the way it directly affects the insured persons, insurable persons, employers, Social Security Officers and the Revenue Branch Officers. All the instructions cited in the Post are available in public domain.)

The objective of the ESI Scheme is to provide a variety of benefits to the working population. The provisions for inspection mentioned in the statute are, therefore, intended only to further that objective.  Concealed employment can be detected only through proper inspection including Ledger Verification in a thorough manner. A simple visit by the Inspector or his going around the factory cannot help detecting such cases. Inspections alone can ensure that all the coverable employees have been covered without being left out, and that contribution is paid on their behalf on all items of wages. If contribution is not paid on all items of wages, the benefits payable would only be a pittance and would not help sustenance of the family of the insured persons during the periods of sickness, maternity, etc., The provision for inspection in the ESI Act is, therefore, intended, mainly, to safeguard the benefit provisions.

The ESI scheme pre-supposed mutual trust on the part of the Employers and the Corporation. It was presumed that the compliance would be honest and correct. That was why the Act did not make inspection mandatory. But, when the scheme was enforced, it was found that the reality in the field was different. The working population was denied coverage or was given benefit very very less as the wages on which the contribution was paid was very less.

Periodical and proper inspections alone could safeguard the interests of the working population by ensuring proper coverage and compliance, the authorities understood. As the saying goes, the ESIC did not get what it expected. It got only what it inspected.

Former Director General, Mr. T.C. Puri who was in charge of the ESIC during the period from 1967 to 1972 had done personal research on insurance matters and issued orders for  proper documentation of the behaviour of the employers so that the Inspection methods could be made more effective when dealing with recalcitrant employers. He ordered that such details available with the ESIC authorities must help them to ascertain which employer was ‘absolutely honest’ and ‘above board’ and which employer was ‘trying to cheat the ESI Corporation’. He said that such information must be readily available to the SSOs whenever they join a particular inspection division. Proper and necessary focus was there at that time on the inspection procedure. That set the trend of inspections for more than 24 years from 1968 to 1992.

Continue reading →

2 Comments

Filed under Amendments 2010, For Trainees

Tagged as , , , , ,

November 15, 2012 · 7:50 pm

Administrative Procedure: A Powerpoint Presentation

A powerpoint presentation that highlights the importance of Policy, Procedure, Law, Theory and Practice of Administrative Procedure, the direct connection between internal administrative procedure of a department and the interests of the society at large, the extent to which the administrative decisions must be treated as quasi judicial ones, etc., is the Post of this week.

Information culled out from various sources have been threaded together in the Presentation.

Readers are welcome to make use of it.

 Presentation on Administrative Procedure

Leave a comment

Filed under For Trainees, Powerpoints

Tagged as , ,