Tag Archives: ESIC

Labour Code: The fine art of poor-bashing ! – Part 1

“In short, there are myriad things you can to challenge poor-bashing. Every time you do it, you’re working on cutting edge of a larger movement that’s struggling for justice for people who are poor”

– Jean Swanson – Page 184 –
Poor bashing: The politics of exclusion


First World War took place, because of the ignorance of the rulers of various nations of the world of the importance of taking care of the legitimate needs of the working population around the world. The political rulers went after money-bags and ran the nations to suit the requirements of the businessmen, obviously for the quid pro quo. The gap between the rich and poor widened so greatly that the simmering anger provided the base for social and political unrest.

The result was the World War I. Nothing further is needed to testify to this basic reason for the WW I, than the very Charter of the International Labour Organisation (The preamble of the Constitution of the ILO) founded in 1919.

The Charter declares to the world, that “universal and lasting peace can be established only if it is based upon social justice”. It reiterates that “the peace and harmony of the world are imperilled when the conditions of labour exist involving such injustice, hardship and privation to large numbers of people”. Proper labour laws alone would secure the “permanent peace of the world”, as identified by the ILO.

ILO Charter

1% cornered 53% nation’s wealth 

But, the Indian politicians do not care. They are unabashedly placing the entire government machinery at the feet of the ultra-rich businessmen. These politicians do not care to explain to the people, nor do they care to ponder over for themselves, how and why the top 1% of the  richest own, as on 14.10.2015, 53% of the country’s wealth. These politicians do not also care how the share of “the poorer half of the population” in the nation’s wealth declined to 4.1% from 5.3% during 2000 and 2015.

The Indian politicians are controlled and managed (or, to put it better, employed) by the ultra-rich businessmen to do their biddings. And, the politicians are happy to be so, happy to remain the slaves of those masters in business.  Corporate financing is all about the eagerness of the politicians to be in politics in India. We do not see David Cameroons shifting their own personal effects, after being in power as Prime Minister. Our politicians do not care for the pains of the poor.

Cameroon vacating

David Cameroon

These politicians believe that the masses do not count for anything and that they can fool the masses, at any time, and poll their votes. And, in order to aid such politicians in fooling the people, large business firms have ventured into the media business too, even through “hostile take-overs” of visual and print media. These ultra-rich businessmen use their media-power to manipulate public opinion to promote the image of their slaves in politics. The politicians and the b


Ernest Bevin

usinessmen are happy with this kind of reciprocal arrangement between themselves. And that is the cause of all the troubles of the poor. But, the sufferings of the poor is immaterial for these two players who go about their single-minded pursuit only of profit and money for themselves.

In the aftermath of the World War II, Ernest Bevin, the UK Labour Minister stressed, while addressing businessmen, on the need for providing basic economic security to create fairer conditions of living for the working population also. “If profit can be the only motive, the natural corollary is economic disorder, and economic disorder will bring you back to the same position you are in now, ever recurring, and future generations will again pay, in the same form or another, the bitter price we are paying now…” he said.

In the year 1944, the in its 26th session, the ILO which met at Philadelphia had examined the issue and reiterated the same fact. The ILO  warned the entire world against exploitation of the poor by the rich.

Labour CodeThe Declaration of Philadelphia had also said that the principles set forth in that declaration was “fully applicable to all people everywhere” and its observance or otherwise in any nation is “a matter of concern to the whole civilised world”.

The present Labour Code brought out by the Government of India is totally loaded against the poor. It, simply, treats labour as a commodity and helps only the ultra-rich to exploit whatever money the poor do have.

Some of the apparent defects of the Code are:

1. It drastically reduces the disablement benefits.
2. It confers unfettered power on the Executive to decide the quantum of Sickness Benefits.
3. The Extended Medical Benefit and Extended Sickness Benefit, for which the ESIC is famous for, has been removed from the Social Security scene in toto. ESIC pays  While the ESIC gives medical benefit and pays cash benefit too, for about two years and 309 days respectively after the contribution ceases to be payable for the insured persons suffering from various long term diseases as per Reg. 103-A, the proposed Code is totally silent on the issue.
4. Representation of the employers and employees in the decision-making bodies has been so reduced that it makes a mockery of the Council which is projected to be a tripartite body.
5. In the name of extending the facility to homeworkers, the Code makes every householder an employer, who will be subjected to inspection and also prosecution.
6. Enabling politicians in power to exempt almost any and every entity from coverage, by removing the word “substantially” from Sec. 94 of the Code.
7. Enabling the politicians in power to prescribe for themselves the power to impose penalty on the employers.
8. Entertaining notions to hand over the social security arena to private money bags and attempting to reduce the benefits payable and paid to the workforce by the ESI Act, at present.
9. etc., etc.,

 “India performed poorly in social security” – ILO

Already, the ILO has, in November 2010, had blasted India for its notorious informal labour practices. “India has performed poorly in providing social security protection to its people until recently with ‘very high vulnerability’ to poverty and informal labour practices in the world, according to a report released by the International Labour Office (ILO) today” Times of India – 16.11.2010. In its first comprehensive ‘World Social Security Report’, the ILO has suggested that India has not done enough in the arena of social security protection, which is reckoned as the “human face of globalisation, in line with its fiscal status”.
In fact,  the only thing that the proposed Labour Code can be made use of is to use it to demonstrate before the world how a Welfare Law should not be made.

ESI Act, gives effect to Universal Declaration of Human Rights

Art. 22 of the Universal Declaration of Human Rights says, “Everyone, as a member of society, has the right to social security”. The High Court of Madras has said, “the object of the (ESI) Act is … to give effect to Art. 1 of the Universal Declaration of Human Rights, 1948, which assures human sensitivity of moral  responsibility of every State that all human beings are born free and equal in dignity and rights” (C. Indira Vs. Senthil & Co. – 2009 (2) LLN. 302).  The same court has said of the ESI Act, that “the object of the legislation is to protect the weaker section with a view to do social justice” (Chandramathi Vs. ESIC – 2003 (4) LLN. 1143).

ESI Act, for a new social order with corrective and distributive justice.

Distributive justice which is essential to achieve social and economic democracy has been made available to the citizens of all the civilized nations only through social security schemes. It is only the nations, which implement the social security schemes, which top the list of International Human Development Index.  Hon’ble Supreme Court has, in Samatha Vs. State of Andhra Pradesh (1997) 8 SCC 191 (Para 75), observed that “The core constitutional objective of ‘social and economic democracy’ in other words, just social order, cannot be established without removing the inequalities in income and making endeavour to eliminate inequalities in status through the rule of law. The mandate for social and economic retransformation requires that the material resources or their ownership and control should be so distributed as to subserve the common good. A new social order, therefore, would emerge, out of the old unequal or hierarchical social order. The legislative or executive measures, therefore, should be necessary for the reconstruction of the unequal social order by corrective and distributive justice through the rule of law”.

Let the rulers heed to Art. 41 and Art. 42

Art. 41 of the Constitution of India says that “The State shall, within the limits of its economic capacity and development, make effective provision for securing the right ….. to public assistance in cases of unemployment, old age, sickness and disablement, and in other cases of undeserved want”. The Constitution thus, gives direction to the State that in cases of Sickness, disablement and in other cases of undeserved want, the State is to provide “public assistance”. The State cannot, therefore, make provisions for “private assistance” and absolve itself of its Constitutional responsibility.

Inequalty costA BBC study revealed that inequality is the basis of so many social problems. ESIC is an effective instrument in the hands of governments in India to prevent the problems that arise due to inequality.  Let the rulers listen to the sage advice of  Prof. Adharkar, the Father of Social Security in India, and follow the 8 Fundamental Principles laid down by him and fulfil his 4 Assumptions to make Social Security in India real and really beneficial..




Filed under Labour Code 2017

Labour Code: Plea for publicising Draft Rules, Regulations, Schemes & License !



The CPIO (Labour Law Reforms),

Ministry of Labour & Employment,

New Delhi – 110001

Sub: Application under RTI Act – Draft Labour Code on Social Security & Welfare – copies of Rules, Regulatios and Schemes – requested.
Ref: Memo No. No. Z-13025/ 13 /2015-LRC dated 16.03.2017 of the Ministry of Labour & Employment.


I invite your kind attention to the reference cited in which the Draft Labour Code on Social Security & Welfare was put on public domain on 16.03.2017,  in the website of  the Ministry of Labour and Employment, Government of India, New Delhi. The Draft Labour Code published is not an all-inclusive document and there are many grey areas. As the nature and the quantum of various benefits (except the Disablement Benefits and Dependants Benefits) have not been specified in the Code/ Act itself, the relevant subordinate legislations (the Schemes, Rules and Regulations including licenses and essential formats) should be put in the public domain along with the Code. But, it has not been done so.

  1. I, therefore, request you to kindly furnish the following information under Sec. 6 of the Right to Information Act, 2005 or put them in public domain in the website of the Ministry along with the Draft Labour Code concerned.
  • Kindly supply the copies of the format of the proposed License (containing the Terms and conditions imposed by the Government on the agencies) referred to in Sec. 88 and 89 of the said Draft Labour Code on Social Security & Welfare;
  • Kindly supply the copies of the proposesd Regulations and the Schemes referred to in Sec. 24 of the said Draft Labour Code on Social Security & Welfare.
  1. I have to state that although it is not necessary to provide, the reason why a citizen asks for certain information as per the RTI Act, 2995, I feel that the facts narrated in the Appendix would facilitate the authorities to supply the information requested for besides highlighting the extent of public interest involved in making the contents of the aforesaid documents public.
  2. I send herewith Postal Order for Rs. 10 being the fee payable under the RTI Act, drawn in favour of the PAO(MS), Ministry of Labour & Employment, New Delhi.

Yours faithfully,

Encl: Appendix and Postal Order



Facts that necessitate seeking information regarding the proposed Subordinate Legislations, the Rules, the Regulations (including the license formats) and the Schemes

The Act of 1948 Vs. The Code of 2017:

1. When the ESI Act was enacted in the year 1948, it was venturing into a new area. So, the Act itself assured the people, through its Sec. 46, of the five major kinds of benefits and also the quantum of those benefits that would be made available through the enactment. It was later, in the year 1989, that the quantum of benefits, quantum of contribution and wage limit  were taken to the Rules to facilitate easy revisions. When, the present piece of legislation, the proposed Labour Code, is intended to replace the existing social security machinery, people become apprehensive and want to know whether they stand to gain or lose by that new system.

2. The Executive, therefore, cannot bring in a truncated version of the proposed system in the form of Code and ask the MPs to vote. But, that, exactly, is what the bureaucracy has, exactly, done through this Draft Labour Code. Sec. 24.5 of the Code enumerates the nomenclature of the benefits that would be made available to the workforce. But, the quantum of benefits and the nature of machinery through which such benefits would be provided have not been made known. These issues have been kept reserved for the Executive to make Subordinate Legislations later.

3. But, in all probability, the draft subordinate legislations, (a) the Rules, (b) the Regulations including the termns of conditions of license and (c) the Schemes would, already, have been prepared and kept in the Ministry. The non-publication of those drafts along with the Draft Code, for public debate gives the bona fide impression that the forces which are behind  this move, want to hide many vital aspects of the proposed social security system away from public knowledge until they get the Code passed by the Parliament and acquire power to do whatever they want through Subordinate Legislation. Or, i.e., if they have not yet prepared those draft Rules, draft Regulations, draft Schemes and draft licences, it would imply that these forces want to destabilise the present social security structure and bring in something which is not known even to themselves.

A service organisation is converted into business organisation:

4. I submit that the ESI Corporation is not a business organisation preparing profit and loss account. It is a service organisation preparing income and expenditure statement. But, the very wordings of Sections 2.58, 2.68, 2.101, 2.109, 2.123 and Sec. 88. show that the intention behind the Code is to handover the operative side of the scheme to private businessmen who enter into the field with profit motive.

5. Sec. 88.1 of the Code says that the “Director General may, by granting a License under this Code, permit any organization or person to act as an intermediate agency for all or any of the purposes” mentioned against each of the six agencies enumerated therein. Those agencies are: (a) Fund Manager Agency, (b) Point of Presence Agency, (c) Service Delivery Agency, (d) Benefit Disbursement Agency, (e) Record Keeping Agency and (f) Facilitation Agencies.

6. Sec, 88.3 of the Code says that “an intermediate agency shall function in accordance with the terms of its License and the Regulations”. Sec. 88.4 implies that the terms and conditions of such a license will be “in accordance with the provisions of this Code and the Regulations”.  Sec. 88. 5 says that the application for such a license will be in a specified form.

7. So, the public must be informed of the concept and intricacies of these Agencies-system, and the contents of the Schemes proposed on all the Social Security benefitis. Because, that alone would provide a holistic view of the ‘reforms’ proposed. Because, that alone would make the people know about the real and consequential effect of the proposed Code.

“Obamacare” was allowed threadbare discussion for three years:

8. There cannot be meaningful public debate when all the draft subordinate legislations are not placed before the public. In the USA, when the Obamacare was introdued in 2009 and made law on 23.03.2010, through the Patient Protection and Affordable Care Act (ACA), there had been extensive public debate over it for more than three years  (from 2009 to 2012) before it was enforced after the Supreme Court upheld it on June 28, 2012.

9. It is essential for the Executive to place in public domain a comprehensive Bill covering all aspects of the subject-matter, including the proposed Schemes, Rules  (that would be framed by the Government)  and the tentative Regulations  (that would be framed by the National Council) with reference to the aforesaid Sec. 24.5 to explain the quantum of benefits made available to the workforce and the manner in which the delivery machinery would function.

10. Please therefore, supply the information requested for in Para 2 of the Applicaton either individually to me or by hosting all of them in the website of the Ministry.

11. In the context, I think it appropriate to bring on record the observations of C.K. Allen, in his book Law and Order, (1945). He agrees with the universal fact that Subordinate legislations provide for convenience, flexibility and efficiency with respect to the delegation of such powers. But, he says, that all these arguments regarding convenience, flexibility and efficiency are “sound arguments for delegation within due limits, the kind, in fact, which has always been recognized as a practical and necessary part of our governmental system. But they become unsound and dangerous if they are used to justify the indefinite extension of executive powers. Speed and efficiency may be bought at too high a price, and indeed we should have learned from many examples that the State which makes efficiency its highest god is very apt to become an all-devouring monster.

Apparent defects indicative of unseemly hurry:

12. Apparent defects of various kinds in numerous places in the Bill show unseemly hurry on the part of the authorities to bring out this Draft Code. Besides, the fundamental flaw with this Draft Labour Code is that the Government of India, is trying to make provisions for “private assistance” and absolve itself of its Constitutional responsibility of providing “public assistance” as mandated as per Art. 41 of the Constitution of India.

13. ESI Act is a great provision aimed at rendering distributive justice to the people of the nation. But, that is attempted to be belittled by this Labour Code. Hon’ble High Court of Madras has, in ESIC Vs. S. Savithri 2003 (3) LLJ 250, observed that “The Scheme of the (ESI) Act, Rules and Regulations spelled out that the insurance covered under the Act is distinct and differs from the contract of insurance in general….The Division Bench of the Madras High Court observed that the Act in fact tries to attain the goal of socio-economic justice enshrined in the Directive Principles of State Policy”.

14. Even The Hindu conceded editorially on 01.01.2005 that “The package (of benefits provided by the ESIC) can rarely be matched by private employers on their own because of the heavy costs involved – not to mention the disinclination among employers, with honorable exceptions, to operate health care systems for their workforce”

Fundamental Principles laid down by Prof. Adharkar:

15. Prof.Adharkar, the Father of Social Security in India, had laid down the following as Fundamental Principles, when  a scheme on social security is introduced;

(a). The proposed scheme must not be too ambitious in the  beginning;

(b). It must be simple, clear and straightforward,

(c). It must be financially sound, economical in working and actuarially balanced;

(d). It must minimize disputes and litigation;

(e). It must be workable in the peculiar circumstances of Indian labour and industry;

But, the proposed Labour Code ignores all these principles, which necessitate one to go through the proposed Subordinate Legislations also before arriving at an opinion whether the proposed changes would be an all-encampassing one, workable really  and beneficial to the workforce.

ESI Act itself has the potential for coverage of even homeworkers:

16. The importance of the ESI Scheme to a nation would become evident from this observation. The Act provides security-net to the working population in the organised sector and its long-term goal, as spelt out in Sec. 1 (5) of the Act is to extend the security-net not only to the factories but also to the establishments, industrial, commercial, agricultural or otherwise.

Public Interest and the RTI Act:

17. I submit that I am asking only for the information to which I am entitle to ask as a citizen of the nation. This information asked for by me in para 2 supra is  required in public interest. Hon’ble High Court of Madras has observed, “Public Interest means an act beneficial to the general public. Means of concern or advantage to the public, should be the test. Public interest in relation to public administration, includes honest discharge of services of those engaged in public duty. To ensure proper discharge of public functions and the duties, and for the purpose of maintaining transparency, it is always open to a person interested to seek for information under the Right to Information Act, 2005” (The Registrar, Thiyagarajar College of Engineering, Madurai Vs. The Registrar, Tamilnadu Information Commission – 30.04.2013).

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Labour Code: The term “Substantial” left out of exemption provisions !


The CPIO- (Labour Law Reforms) RTI,

Ministry of Labour & Employment,

Room No. 14, Shram Shakti Bhavan,

New Delhi – 110001


Sub: Application under Sec. 6 of the RTI Act – Omission of the word ‘Substantial’ in Sec. 94.1 (h) of Draft Labour Code on Social Security & Welfare – information – requested.
Ref: Memo No. No. Z-13025/ 13 /2015-LRC dated 16.03.2017



I have to state that Sec. 94. 1 (h) of the Draft Labour Code made public on 16.03.2017, as per the reference cited, shows that the authorities who prepared the draft Code had taken a conscious, deliberate and calculated decision to drop the word “substantially” before the word “similar” appearing therein.


  1. This is in sharp contrast to the existing conditions imposed on the employers who seek exemption from coverage under the ESI Act, as could be seen from the proviso to Sec. 87 of the ESI Act, 1948, which is reproduced below:

“Provided that such exemptions may be granted only if the employees’ in such factories or establishments are otherwise in receipt of benefits substantially similar or superior to the benefits provided under this Act.”


  1. 90 of the ESI Act, which also deals with the concept of Exemptions, contains the phrase “substantially” similar”. Besides, the proviso to Sec.1(4) which deals with the exemption of the factories and establishments belonging to or under the control of the Government, also insists of the condition of the benefits being “substantially” similar or superior.
  2. The term “substantial” can have a qualitative meaning and be defined as “important” or “essential”, and can have a quantitative meaning and be defined as “considerable in quantity” or “significantly great” in amount. This word precludes invoking the ‘de minimis’ (Page 812 – Concise Law Dictionary – Wadhwa Publication).
  3. Yet, such an important word has, consciously, been left out in Sec. 94 of the Draft Labour Code in ‘Part L’ which deals with exemption. There must, therefore, have been strong justification recorded in writing by the officers or the committee of experts who had drafted this Sec. 94 of the Draft Labour Code concerned.
  4. I, therefore, request you to kindly supply the following information under Sec. 6 of the Right to Information Act, 2005:

Kindly supply the relevant pages of the ‘filenoting’ / ‘office note’ / ‘report of the committee of experts’ / ‘report of the of officers’ in which such an explanation justifying their suggestion to drop the word ‘substantial’ in Sec. 94 in ‘Part L’ of the Code is found recorded.

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Labour Code: Letter No. 7 – Drastic reduction in DB, PDB & TDB !

Quantum of Dependant’s Benefit has been drastically reduced in the Labour Code, when compared with what is available now under the ESI Act, 1948. [even after making allowances due to the definition of the term ‘benefit wage’ under Sec.2.12 of the Code with reference to the ‘Standard Benefit Rate’ as per Rule 2 (7-A) of the ESI (Central) Rules, 1950.] Likewise, the Permanent Disablement Benefit and Temporary Disablement Benefit  too.

This is unfair. This becomes unlawful too, when the solemn assurance given to the persons already covered under the ESI Act is snatched away and only the assurance of reduced benefit is attempted to be given, and that too, unnecessarily,  through the present Labour Code, in the event of death of the employees due to employment injury.

Please click on the image for more:

Letter 7 image

Letter 7


Filed under Labour Code 2017

Labour Code: Letter No. 6 – Insignificant representation of employers and employees in the National Council !

The proposed National Council deserves larger representation from a wider spectrum of the employers and employees throughout the nation permitted in the supreme body. It is, therefore, suggested that the draft Labour Code may be modified to facilitate inclusion of, at least, 15 representatives for employers and 15 for employees. Because, the proposed Code amalgamates so many government and government oriented-organisations, including the two major organisations, the ESIC and the EPFO, where ten representatives on either side were in the respective supreme governing bodies.

The parties in power at the Centre should not give the impression that they are afraid of facing the representatives of the people by reducing their representation in the proposed National Council. It is, therefore, proposed that the National Council may be made to have 15 employers’ representatives and 15 employees’ representatives.

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Letter 6 on Labour Code Page 2

Letter 6 

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Labour Code: Letter No. 5 – Rule-making power of the State Governments !

Powers of the State Governments must be listed in an independent Section just like Sec. 165 which deals with the Powers of Central Government to make Rules.

Secondly, all the areas with reference to which powers must be conferred on the State Government must be enumerated, in a thoroughly exhaustive manner in the Code / Act itself.

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Letter 5 for publishing

Letter 5 

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Validation Clause: An IP’s letter to the ESIC Members !

Excerpts from the letter sent by an Insured Person to the Members, who are Employers’ and Employees’ representatives in the ESI Corporation: 



1. Mr. Sudershan Sareen,

2. Mr. G.P. Srivastava,

3. Mr. B.C. Prabhakar,

4. Mr. Michael Dias,

5. Dr. U.D. Choubey

6. Mr. Rajinder Singh Maker

7. Mr. Vijay Kalantri

8. Mr. Rama Kant Bharadwaj

9. Mr. Badish Jindal

10. Mr. Bharat Mehta

11. Mr. Ram Kishore Tripathi

12 Mr. Prashanta Nandi Chowdhury

13. Mr. Gokulananda Jena,

14. Mr. V. Radhakrishnan,

15. Mr. Ajit Sripad Kulkarni,

16. Mr. Dilip Bhattacharya

17. Dr. G. Sanjeeva Reddy

18. Mr. Chandra Prakash Singh

19. Mr. K. Suresh Babu

20. Mrs. Amarjeet Kaur

Sub: Construction of buildings for Medical Institutions in the ESIC – Expenditure during the pre-amendment period – remaining as an unauthorized expenditure till date – false statement by the authorities of ESIC before Court.

Ref: 1. Para 8 of the Affidavit of the Petitioners in the W.P. 12953 of 2015 before the Hon’ble High Court.
2. Para 11 of the Counter-Affidavit filed by the ESI Corporation, the Respondents 2 & 3, therein, in the same W.P. 12953 of 2015.
3. Para 76 & 77 of the Report dated 04.12.2009 of the Parliamentary Standing Committee on Labour & Employment.


Sir/ Madam,

I invite your kind attention to the references cited and request you, one of the trustees of the ESI Corporation and the custodian of the ESI Fund, to kindly bestow your personal attention to the issues raised in this letter. This letter arises out of the pleadings of the parties in the W.P. 12953 of 2015 in the Hon’ble High Court of Chennai and explains the manner in which the officials of the Hqrs. Office had deliberately misled the Hon’ble High Court by submitting false statements, even when they were on oath, in the matter of construction of buildings for medical institutions and setting up medical colleges, nursing colleges and training institutes for para medical staff that involves massive expenditure of thousands of crores of rupees.

2. I request you to kindly recall the fact that the ESI Act was amended by the Parliament only on 03.05.2010 to insert Sec. 59-B therein, to empower the ESI authorities to set up medical institutions. The Bill for such amendment, tabled in the Parliament of India on 30.07.2009, contained the following as Clause 15:


Clause 15

The said clause was approved and passed by the Parliament of India as Sec. 59-B on 03.05.2010, the assent of the President obtained on 24.05.2010 and the amended provision became effective from 01.06.2010. as per the decision of the Ministry of Labour and Employment. Sec. 59-B which is in force as on date reads as under, in Clause 17 of the ESI (Amendment) Act, 2010:

Clause 17

It would thus become clear that the authorities of the ESIC did not have the authority to incur any expenditure to construct buildings for medical colleges or to incur expenditure to appoint Deans and Professors, or to spend money to engage even Consultants for setting up of medical colleges, at any time, before 01.06.2010, the pre-amendment period.

3. But what had actually happened was that the authorities of the ESIC had, during the pre-amendment period from 2008 to May, 2010, incurred thousands of crores of rupees and that exprenditure remains an irregular and unauthorized expenditure till date. They had spent such a huge sum of public money even before the Bill was tabled in the Parliament in July 2009.

4. This, in spite of the fact that Sec. 28 of the ESI Act, does not permit expenditure of ESI Fund for purposes which are not within the purview of the Act. The opening sentence of the said Sec. 28 makes it very clear that the ESI Fund can be expended “subject to the provisions of this Act”. The rules can be made by the Central Government to spend ESI Fund, only with reference to the purposes mentioned in the Act. Significantly, no provisions in the Act permitted setting up of medical institutions before 01.06.2010. Besides, no “Rules” have so far been framed by the Central Government to spend ESI Fund for the purpose of construction of buildings for medical colleges. Thus, even Sec. 28 (xii) of the Act cannot be used to justify the expenditure incurred during the aforesaid pre-amendment period. There was no authority for anyone in the ESIC to permit expenditure from the ESI Fund for any purposes relating to the setting up of medical institutions, before 01.06.2010. The expenditure incurred actually by the authorities of the ESIC, thus, during the abovementioned pre-amendment period, was, therefore, an unauthorized one.

5. This fact had been referred to in the pleadings before the Hon’ble High Court of Madras at Chennai in W.P. 12953 of 2015 which had been filed with reference to the issue of new-admission of students into the ESIC-run medical colleges for year 2015-16. Paragraphs 8  of the affidavit of the Insured Persons who filed in the said case read as under:

“8. But, overlooking the importance of the Scheme in the making of the nation, all of a sudden an administrative decision was taken in the year 2008 to set up more than 28 medical colleges throughout the nation. A Chief Engineer was also appointed in violation of the recruitment rules on the subject, in a hurry and hundreds of crores of rupees were sanctioned under his signature for constructing buildings for medical colleges. But, there was no provision at all, at that time, in the ESI Act authorizing the ESI Corporation to establish and run medical colleges. A Bill for amending the ESI Act to empower the ESI Corporation was introduced only later, in the year 2009, in Lok Sabha, as Bill No. 66-C of 2009. That Bill was got passed by the Lok Sabha only on 03.05.2010. The provisions of the Amended Act came into force only on 01.06.2010. These events would prove that the expenditure incurred for constructing buildings for so many medical colleges by the Respondent-2 before 01.06.2010 was, clearly, an unlawful and unauthorized expenditure. It is learnt that such expenditure sanctioned and incurred upto 31.05.2010 itself was around Rs. 10000 crores. The expenditure incurred from and after 01.06.2010 till date is not taken into account here and is said to be more than Rs. 15000 crores.

6. But, the ESIC had filed counter-affidavit stating that the expenditure thus during the pre-amendment period was regularized through the Validation Clause in the Amendment Act, 2010. Their reply in Para 11 of the Counter-Affidavit said, “The Validation Clause in the ESI (Amendment) Act of 2010 (18 of 2010) provides for all expenses incurred.” This statement regarding the Validation Clause, is a deliberate and conscious lie on the part of the officials of the Hqrs. Office of the ESI Corporation besides being blatant perjury in the sworn statement. The authorities had fearlessly made such stunningly false statements before the Hon’ble High Court itself. The said Para 11 is reproduced below:

“11. I submit that the contention of the Petitioners made in Para No. 8 of the Affidavit is misleading in that the decision to set up medical colleges across the country was taken with a view to improve medical care facility to IPs (Insured Persons) and their dependants. The Validation Clause in th ESI (Amendment) Act of 2010 (18 f 2010) provides for all expenses incurred. The expenditure incurred on 12 ongoing medical college projects including the medical education complex at Gulbarga till 30.09.2014 is around 5350 crores only.”

7. The fact is that the Validation Clause had not, at all, been inserted in the Bill 66 of 2009 to ratify the actions and inactions of the Respondents with reference to the expenditure incurred for setting up medical educations or for constructing buildings for medical colleges. In fact, the Parliament was not even made aware of the fact that the Respondents had already taken action (a) for construction of medical colleges, (b) for the payment of salary of Deans and Professors (without students) and (c) for payment of fee to the consultants. To be more precise, the Parliament was not aware that the ESIC authorities had spent thousands of crores of rupees even before the Bill for amendment was placed on the table of Lok Sabha on 30.07.2009.

Ordnance First Page

Ordnance First Page

8. The Validation Clause had, actually, been inserted only to ratify the action or inaction on the part of the Respondents with reference to the ESI (Amendment) Ordinance, 2008 which was promulgated on 3.7.2008 (Ord. 7 of 2008) for opening of facilities in ESI Hospitals to other beneficiaries on payment of user charges. The ESI (Amendment) Bill, 2008 (Bill No. 56 of 2008) which had been tabled in the Parliament on 29.09.2008 could not become Act and the Ordinance got lapsed in due course. It was in that context, the Validation Clause was inserted in the ESI (Amendment) Act, 2010 to regularize the action or inaction with reference to the aforesaid Ordinance, when it was in force. Para 76 & 77 of the Report of the Parliamentary Standing Committee on Labour, which examined the Bill No. 66 of 2009 as per the directions of the Hon’ble Speaker of Lok Sabha, would testify to this fact.

9. The observations of the Parliamentary Standing Committee on Labour regarding the need for Validation Clause are reproduced below:
“76. It is proposed to validate actions or measures taken during the period beginning on or after 3rd July, 2008 till the commencement of ESI (Amendment) Act, 2009.
77. The Ministry in their explanatory note stated as under:- “The ESI (Amendment) Ordinance, 2008 was promulgated on 3.7.2008 for opening of facilities in ESI Hospitals to other beneficiaries on payment of user charges. However, as the Bill to amend the Act to replace the Ordinance could not be taken up in the Parliament due to dissolution of 14th Lok Sabha, the Ordinance lapsed. Hence, it is proposed to validate any action taken based on the Ordinance. Grant of exemptions by the State Governments result in denial of social security benefits to workers as well as under-utilisation of infrastructure created for the insured persons of that area. It is therefore proposed that such exemptions may be granted judiciously only where benefits substantially similar or superior to the benefits provided under this Act are provided by the employers.”

Amendment Bill of 2008 that could not be passed because of the dissolution of the Lok Sabha.

Amendment Bill of 2008 that could not be passed because of the dissolution of the Lok Sabha. If this Bill had been passed in 2008, there would have been no Validation Clause in the ESIC (Amendment) Act of 2010. 

10. These observations of the Parliamentary Standing Committee would very clearly prove that the Validation Clause had no connection at all and had nothing to do with the colossal expenditure incurred by the ESIC authorities during the pre-amendment period upto and including May, 2010 for construction of buildings for medical institutions of the ESIC and other expenditure for this purpose.

11. The ESIC authorities are, therefore, …………………. in their pleadings, that irrelevant Validation Clause to justify the unlawful expenditure incurred by them to set up medical institutions, during the said pre-amendment period. Moreover, it is a fact that the ESI Funds had been siphoned away in the name of construction of medical institutions, from December 2007 onwards, immediately after a Chief Engineer was appointed unlawfully on 28.11.2007, while the Validation Clause talks of the events that had taken place, seven months later, only from 03.07.2008 (with reference to the lapsed ESI (Amendment) Ordinance, 2008).

12. The very fact that the ESIC authorities could not produce any evidence in …………..which was about Rs. 10000 crores, remains an unauthorized one till date.

13. I, therefore, request you to kindly ascertain all the facts pertaining to the incorporation of such a deliberate …………….

14. In the context, it would be helpful to you to understand the attitude of the authorities, if you know the fact that they are maintaining total and unlawful silence to the application of Mr. K. K….. under the RTI Act on 10.07.2015 (Copy enclosed). He had asked for the simple information regarding details of the so-claimed actions and inactions in the field of construction of buildings for and setting up of medical colleges which were proposed to be regularised by inserting that Validation Clause. But, no reply has been given under the RTI Act by the officials of the till date.

15. It would be appropriate, if you could use your good offices to place the issues raised in this representation as an Agenda point before the next meeting of the Standing Committee / ESI Corporation and request the authorities to explain their case to all the Members present in the meeting and get the details recorded in the Minutes thereof. It would be better if you could use your influence as a Member of the ESI Corporation and try to obtain the information even earlier to avoid wastage of time, in seeking legal remedy through Court of Law. It is proposed to seek the kind intersession of the Hon’ble High Court on this issue by filing a Writ in February, 2016.

16. A line in reply about the initiative taken by you, with reference to this representation would, therefore, help me to place the facts before the Judiciary besides convincing my co-beneficiaries of the ESI Scheme to repose faith in you and trust that you are acting in the interests of the ESI Corporation, safeguarding the ESI Fund and, thereby, protecting the interests of the insured persons, when the authorities of the ESI Corporation are indulging in the organised crime of mismanagement of public funds that runs into crores and crores of rupees.

Thanking you on behalf of millions of insured persons like me,
I remain,
Yours faithfully,

Statement of Objects and Reasons that accompanied the Amendment Bill of 2008

Statement of Objects and Reasons that accompanied the Amendment Bill of 2008

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Filed under Amendments 2010

The fine art of squeezing out the ESI Fund Account No. 1.


The ESI Corporation Minutes dated 17.07.2007 shows that the decision to open medical colleges had been taken in that meeting, in spite of the fact that there was no formal agenda on that subject and no discussion on that subject. The Sub-Committee that was constituted, later, in 2008 to formulate proposal for amendments on various issues, recommended setting up medical colleges on the condition that the “doctors and paramedical staff would be required to render such minimum service in ESI hospitals / dispensaries / institutions as may be decided by the Corporation”.

ESI Medical Bond


The Insured Persons whose money was to be spent for this purpose and the Parliamentarians who approved the amendment to insert Sec. 59-B had been given the impression that there was something for the Insured Persons in return for the money collected from them (whether it was proportionate or not is beside the matter).

As the intention was only to fritter away and misappropriate the surplus funds, the authorities did not wait for the essential procedure of formal amendment to the ESI Act, which actually came in the form of Sec. 59 B of the Act only in May 2010 effective from June 2010. They initiated the construction work for so many medical institutions throughout the nation, in a tearing hurry, in the year 2008 itself, and spent about Rs. 10000 crores even before the Act was amended. They did not exhibit ordinary prudence and caution by having a proper and objective in-depth study of the pros and cons of starting medical institutions by the ESI Corporation. They did not even try with a few pilot projects. They started constructing buildings, at one go, for large number of medical colleges including nursing colleges and colleges for para medical staff.

There was never any felt need for the ESIC to start medical colleges to recruit the MBBS-qualified doctors let alone nurses and para-medical staff to run their dispensaries and hospitals. The ESI Corporation had always been getting overwhelming response to its advertisements to recruit MBBS-qualified doctors, BDS qualified doctors, nurses and other para-medical staff. For instance, there had been 3000 applicants when the recruitment process was for 300 vacancies of MBBS-qualifed doctors. Yet, the authorities started constructing about 23 buildings throughout the nation and all of them have now become white elephants. Now, in the year 2014, their own Sub-Committee on Medical Services & Medical Education said that running the medical colleges would result in the budget becoming negative in the year 2016-17.

Hon’ble Minister for Labour Mr. Narendra Singh Tomar has said that “the decision to open medical colleges by the ESIC was a big mistake”.  

Calling the ESIC board’s decision to open medical colleges in 2008-09 a “big mistake”, labour and employment minister Narendra Singh Tomar said he will review the scheme.“The decision to open medical colleges by ESIC was a huge mistake and we will rectify it,” Tomar told reporters after a meeting of the ESIC board comprising representatives of workers, industry and government.

The Financial Commissioner said that the ESIC did not have the core competency:

“Medical education is not our core competency, and we would prefer to focus on our primary job—providing medical care services to industrial workers,” said S.K. Rahate, finance commissioner, ESIC. “We have learnt from experience over the last five years.”

Live Mint reported:

“These are high cost projects causing a significant outflow of funds on both capital as well as revenue accounts. This will in near future cause the ESIC expenditure to be more than its revenue income,” said an internal note based on an ESIC sub-committee report. Mint has seen a copy of the note.”

That Note, the Report of the Sub-Committee  on Medical Services & Medical Eduction submitted in May 2014 discussed at length about the system of Bond that had to be obtained from the students who were given subsidised education from the ESI Funds. In Para XIII (6) in Page 51 of the Report, the Sub-Committee had observed that the ESIC could not subsidise the medical education, when the Bond was not for recovering the full recurring cost. The said para read as under:

“If full recurring cost is to be recovered from UG/PG students, it would require charging very high fees; or, the corresponding Bond amount would need to be very high. If the fees/Bond amount is to be reduced, it would require subsidy for medical education from the ESIC. This may be violative of the spirit of the ESI Act.”

Page 31 of subcommittee report on ME

In Para XIII (5) (e) of the Report, the Sub-Committee had said, “That there was no system of bond enforcement and without an effective enforcement of bonds, the availability of doctors to the Corporation would not be assured.”


Now, all of a sudden, the insured persons are informed that the so-called precautions taken by them, as narrated above, can be and have been thrown to wind. 

This announcement is made even before the first batch of undergraduate students is out and on the verge of their being out, by the summer of 2016. The ESIC does not say that there is no vacancy to accommodate the newcomers. The ESIC says that obtaining such bonds would be considered as anti-people move.

“Since ESIC has spent thousands of crores on medical colleges, it is unfair for students who get subsidized education and then join the private sector, a labour ministry official said. “So, the Rs.25 lakh bond plan was mooted, but in the current political environment, such a move has been put on the back-burner,” the official said, requesting anonymity.”  (http://www.livemint.com/Politics/yJigrCBGE3RY3oBhGp7A2H/Govt-scraps-planned-Rs25-lakh-bond-for-ESIC-medical-students.html)

This is not a correct decision. The reason publicly proclaimed does not appear to be the right one. The money of the Insured Persons cannot be frittered away by the politicians and bureaucrats thus.

Politicians and Officials


Such an awakening that the enforcement of Bond would be seen as an anti-people move did not come in 2007 or 2008, before venturing into the area of medical education. Besides, such Bond system is in vogue as per the CCS (Leave) Rules, 1972,  governing the sanction of even the Study Leave. Nobody has termed it as an anti-people move, during the past 43 years.

In the circumstances, some Insured Persons are already taking action to move the Hon’ble Court to seek its intersession, against this kind of arbitrary decision in the name of Policy Decision.

The copies of the Agenda and the Minutes of the meeting of the ESI Corporation in which such a decision has been taken have, therefore,  been sought for under the RTI Act. But, if any of the readers happen to have those documents, through the ESIC Members, they may kindly transmit the same to this website to facilitate early legal action, in the interest of the working population.

Readers may also evaluate for themselves the manner in which benefits made available to the Insured Persons have been reduced post 2010.

1). http://www.outlookindia.com/article/the-gurney-grinds-to-a-sad-halt/295143

2) https://flourishingesic.info/2012/09/27/enigmatic-amendment-2011-that-affect-the-benefits/

3). and the response of Ms. Nisha Parveen below the thread referred to supra.

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Filed under Medical College Bond

Mr. O. Abdul Hameed, former AC on ‘Clubbing different units together’ !

Mr. O. Abdul Hameed, former Additional Commissioner of the ESI Corporation, has written the following with reference to the post https://flourishingesic.info/2015/08/06/clubbing-different-units-together/  Considering the depth of the comment, the write-up is hosted here as a separate post:


At a time when the service of the scheme was poor or less known, the misuse was also less. As the medical service, particularly the superficiality facilities from non-ESI hospital became available and got publicity, misuse also started. I know of a case of a medium size hotel whose owner added his wife to the muster as a clerk to get herself operated in AIIMS within one month and MD of a company who got his domestic cook into muster when he needed a major operation. There is lots of potential for misuse.

Coming to the issue of clubbing the principle is “Geographical proximity is not essential but functional integrity should be established”. Was the peanut an item of the menu, was it sold inside the restaurant and billed among other items?

If you see section 2 (12), the emphasis is on” Premise” and it is the premises that is covered and include its precincts. There is no reference to ownership or unity of ownership., and manufacturing process need not be in all part of this premises or precinct but in any part of it. Thus the premise or precinct need not be under a particular ownership or singular ownership.

Those who drafted this very long back had brain, and clarity of purpose to be achieved and not, regret to say, those who drafted some of the recent amendment.

Coming to the example of power looms mentioned above there was practice of several loom in one big shed and one or more loom owned by single person. This was not always a ploy to avoid factory act and other legislation but at times, for genuine reasons as a commune like operation.. The ESI act would apply to the entire shed but Government of India, following industry pressure asked the ESIC not to cover them, a direction which the Government had no power to give but ESIC was perforce compelled to comply.

Two illustration that I dealt-

1. Three different manufacturing units within a city, each with distance of around 10 km from one another, one making the wooden part of sewing machine, another the metal and other parts and third where all these were brought together, assembled, packed and distributed, all three belonging to belonging to one family being brothers of a Hindu undivided family.. Though all had separate sheds, electric/water connection, etc I found that no single unit can exist alone and do not produce a marketable product and they essentialy complement one another and transaction among them were not sale but good transfer.

2. Two unit within a compound, both separate sheds nearbyd by with separate electric connection, both same owner. One is printing Unit and another a binding Unity. All the printed material were bound by the second unit. I did not club them because binding Unit was charging the printing unit in the book and its income were treated to tax separately and they were also taking up binding for others and charging and printing unit was also taking up printing work without binding, though where binding was needed it was done only in the binding unit. I felt there is no functional integrity and dependence though owner is same and premises (in its broader literal sense, having been not defined) was same. Held not covered.

There can be several examples. One of the factories that I worked as GGM, we had set up a sophisticated machine shop with latest imported machine three of which can be supervised by one person. The machine shop was some distance away in separate premises and had just eight person which included two helpers. I insisted on covering them though my GM in charge f Administration felt it need not be covered, though only two helpers were to to be covered. This was because our foundry products are sold and exported after machining only.

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Filed under For Trainees, Inspections

ESIC’s Medical College Muddle – Part 3 : Consolidated Fund Vs. ESI Fund !

Atifete 2


The report of the ESIC Sub-Committee on Medical Services and Medical Education dated 13.05.2014 said as under:

  1. “Setting up and running of Medical Colleges is a cost intensive proposition in respect of capital cost, recurring cost, loss of revenue, etc.,” (Para 6. g)   and
  2. “based on Current projections, the surplus funds of the ESI Corporation are likely to be negative by 2016-17”. (Para 6.h).

But, the Financial Memorandum that was part of the Bill No. 66 of 2009 placed before the Lok Sabha said, in Para 3, that “The Bill does not involve any expenditure whether recurring or non-recurring nature”.

Application under the RTI Act

One citizen, therefore, asked for the supply of the following information under the Right to Information Act, 2005:

“It has been mentioned in the Press Release dated  5.03.2014 that the ESIC was running 7 PG institutes, 4 ESIC Medical Collages, one Dental collage,  one Nursing College, and one Para Medical Institute all over the Nation. It shows that there are 14 ESIC medical institutions in all.

a. Kindly intimate the recurring expenditure incurred for running these fourteen (7+4+1+1+1) institutions  for the two financial years, i.e., for the year 2013-14 and also for the year 2014-15.

b. Kindly  intimate the anticipated recurring  expenditure (Running cost) for  running these  14 medical  Institutions  during  the year 2015-16 and also for the year 2016–17. It becomes clear from the report of the above mentioned Sub-Committee that you had already made the required calculation and assessment, for the year up to 2016-17.

c. Please also furnish following details for the year 2016 -17.

  1. Annual Income of the ESI Corporation  through contribution & other sources, as anticipated, for the year 2016 -17.
  2. Anticipated  total expenditure for the year 2016-17 including the running cost  of  all the  Medical institutions.
  3. Anticipated surplus / shortfall for the year 2016- 17.

This information can be collected easily form the particulars furnished by the Hqrs. Office of the ESI Corporation  to the above mentioned sub-committee that met on   as 13.05.2014.”

But, he has not received any reply, till date, from the CPIO of the ESIC. Why?

  • Is there anything wrong in the request of the citizen to ask for the above-narrated information?
  • Is not the supply of that information in public interest?
  • Shouldn’t the public know the truth?
  • Why are the authorities so indifferent?

Kosova adores informing the Public

World wide, even the newly formed nations like Kosova, adore freedom of the people and their right to information. But, the ESIC authorities choose to scoff at the provisions of the RTI Act, 2005. They do not care that any and every citizen has the right to know what had happened and happens in this public organisation. They do not want to provide any information. Their non-response is unlawful. Moreover, they know that, by such non-response, they are violating the Statutes. Yet, they do so, because they believe that the penal provisions would not be enforced against them.

If there is no penalty or if they can manage to escape penalty, they can violate any law, they have discerned. It was only this belief that encouraged them to consciously violate not only the provisions of the RTI Act but also many provisions of the ESI Act, specially, in the matter of setting up medical colleges in a large scale, even before the amendment came into force.

What Parliament was informed

One of the very important aspects to be kept in view, in the context, is that when the Bill No. 66 of 2009 was presented in the Lok Sabha in August 2009, the ESI authorities had already charged away more than Rs. 6000 crores for construction of medical colleges. They were, therefore, desperate to get the amendment passed by Lok Sabha somehow. The had ventured to mislead the Parliamentary Standing Committee on Labour also only because of such desperation. They did not want the Parliament to know the exact amount to be spent by the ESI Corporation to set up and run the medical institutions.  So, they chose to misinform the Parliament that there would be no recurring or non-recurring expenditure to set up the medical institutions. The Ministry of Finance also colluded with them and added the following sentence to the Financial Memorandum placed before the Lok Sabha along with the Bill: “The Bill does not involve any expenditure whether recurring or non-recurring nature”. 

Consolidated Fund of India Vs. Public Fund of the ESIC

The ESI Fund is, actually, a Public Fund although it is not part of the Consolidated Fund of India.The Annual Report of the ESI Corporation is placed before the Parliament for its scrutiny and approval every year, as per Sec. 36 of the ESI Act.

36. Budget, audited accounts and the annual report to be placed before Parliament. — The annual report, the audited accounts of the Corporation, together with the report of the Comptroller and Auditor-General of India thereon and the comments of the Corporation on such report under section 34 and the budget as finally adopted by the Corporation shall be placed before Parliament.

This Section makes it very clear that the Parliament is very earnestly concerned about the manner in which the officials of this autonomous body generate  the public funds and utilise them.

The Parliament is concerned about the financial position of the ESIC and has (a) the authority, (b) the right and (c ) the duty to feel so concerned.

The authorities of the ESIC or the authorities in the Ministry of Finance cannot, therefore, contend that the information they provided in the Bill was only about the Consolidated Fund of India and not about the Public Fund generated by the ESI Corporation.

Pulling wool over the Parliament’s eyes

Such an attempt would show that they chose to play clever with the Parliament, while attempting to get the Parliament’s nod for setting up medical colleges, to cover up their desperation to get such a nod, as they had already spent thousands of crores of rupees to construct buildings for medical colleges.

These authorities cannot take the stand that they were not required to inform the Parliament about the financial requirement of the ESIC to run such medical colleges and how they were going to meet it.

But, what actually happened was that the authorities of the Ministry of Finance had helped the authorities of the ESIC to effectively mislead and prevent the Parliament from knowing the financial requirement of the ESIC to run the medical colleges.

The result is that the Sub-Committee headed by the Secretary of the Ministry Labour in which the Director General and the Financial Commissioner of the ESIC were members, which analysed the impact of these ESIC run medical institutions found that the surplus would likely be in the negative by 2016-17, based on the current projections.

  • What would have happened had the Parliament been informed of the details of recurring and non-recurring expenditure from the ESI Fund?
  • Was such a calculation ever made, before the Bill was tabled in the Parliament, or, at least, before it became part of the Act?
  • What would have happened had, at least, the Parliamentary Standing Committee on Labour asked or been informed of the details of recurring and non-recurring expenditure from the ESI Fund?
  • What is the reason the ESIC authorities go to the extent of defying law so brazenly to deny information to the public?

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