Carbon and Chemicals I.E. Association vs Union of India (UOI)

T.V. Ramakrishnan, J.—Appellant is the petitioner in O.P. 1762 of 1997. It is a registered trade union of employees working in the fifth respondent Company namely, Carbon and Chemicals India Ltd. (for short ''the Company'').

Appellant challenged the constitutional validity of Ext.P-1 notification dated December 23, 1996 amending the Employees'' State Insurance Rules, 1950 (for short ''the Rules'') making the Employees'' State Insurance Scheme (for short ''the Scheme'') applicable to employees drawing a salary of Rs.6,500/- per month and other consequential changes in the Scheme. Appellant submitted that the employees employed by the Company are receiving a salary of more than Rs.3,000/- per month. Appellant-union and the other unions of employees and the Company had, after negotiation, entered into an agreement to provide better facilities than those provided under the Scheme and the employees are thus getting better benefits under such settlements at present. If the amended provisions of the Rules are to be applied to the company, the employees of the Company will lose such better facilities and advantages provided under the terms of the existing settlements. In the circumstances, the appellant, while challenging the validity of the notification, has challenged the provisions contained in Section 2(9)(b) of the Employees'' State Insurance Act (for short ''the Act'') also as unconstitutional on the ground that it is a provision conferring unguided power or discretion on the Central Government in the matter of fixation of wage limit, for the application of the Scheme under the Act. The wage limit can be fixed arbitrarily at a very high or low figure in an uncontrolled manner for purposes other than conferment of benefits on the employees like raising of funds for other governmental purposes. Such conferment of unguided discretion on the executive will amount to unconstitutional delegation of legislative power and is violative of Article 14 of the Constitution of India. It was also contended that the provision in the notification fixing Rs.6,500/- per month as the ceiling for the application of the Scheme under the Act is arbitrary and discriminatory and as such unconstitutional. The learned Judge has dismissed the Original Petition along with two other OPs finding that the petitioners have not raised any sufficient ground in the OPs to declare that Section 2(9)(b) of the Act: is unconstitutional, illegal and unenforceable in law.

Arguing the appeal, learned senior counsel for the appellant, Sri. P.Balagangadhara Menon, has stressed only one point to the effect that Section 2(9)(b) of the Act is unconstitutional inasmuch as it is a provision conferring unguided or unbridled discretion on the executive in the matter of fixing ceiling limit on wages for the purpose of application of the scheme under the Act It was submitted that government is left free either to reduce or enhance the limit of wages arbitrarily as they like. A provision conferring such uncanalised and arbitrary powers on the executive is constitutionally bad for excessive legislation. As such, the application of the scheme to the Company and its employees by issuing the impugned notification is illegal.

We have heard learned Senior Counsel for the appellant and learned Additional Central Government Standing Counsel, Sri. T. P. M. Ibrahimkhan, for the Union Government.

Ext.P-1 is a notification issued in exercise of the powers conferred by Sec. 95 of the Act by the Central Government after consultation with the E.S.I. Corporation for the purpose of further amending the 1950 Rules. The purpose of the notification is to bring into force the Employees'' State Insurance (Central) Second Amendment Rules, 1966 with effect from January 1, 1997. There is a statement in Ext.P-2 itself that the Rules brought into force were published in the form of a draft as required by Section 95(1) of the Act in the Gazette of India inviting suggestions and objections from all persons likely to be affected thereby within a period of 45 days from the date on which the copies of the Gazette in which the draft notification was published were made available to the public. There is a further statement that the copies of the Gazette containing the draft rules were made available to the public on November 1, 1996 and the Central Government has considered the suggestions and objections received in this regard before finalising the Rules published as per the notification. The Additional Central Government Standing Counsel has submitted that the Rules have been duly placed before the Parliament before issuing Ext.P-1 notification.

As per Section 2(9)(b) of the Act, the Legislature has empowered the Central Government to prescribe the wage limit for the application of the Scheme. The Central Government has accordingly fixed the wage limit from time to time by framing Rules as provided in Section 95(1) of the Act. The present enhancement of the limit has also been effected by way of an amendment of the Rules. The legislature has constituted the Central Government itself as the rule making authority realising the importance of the matter. Further, the legislature has prescribed the manner in which and the conditions subject to which the Rules have to be framed by the Central Government. Above all, the legislature has directed the Rules framed to be placed before the supreme legislative body, namely, the Parliament for its consideration and approval. It is subject to all the above safeguards that the legislature has empowered the Central Government to prescribe the wage limit for the application of the Act and the Scheme. The rule making power is thus given to the highest executive authority. That authority should be presumed to act in the interest of the public. It may not be possible for a legislature to envisage in detail all future contingencies and requirements and make provisions for them. This is especially so in a case like the one on hand where taking note of the requirements of the changed conditions in the society, wage limit has to be fixed from time to time for the benefit of the employees. So, the Legislature is forced to leave the rule making authorities with ample discretion or power to act in accordance with the indications given in the Act and the general object and purpose of the legislation. So long as the legislature indicates the subject in which the delegated authority can frame rule, it is difficult to find the vice of excessive delegation to strike down a provision like the one on hand taking note of the nature of the subject on which rule making authority has been given discretion. Delegation of legislative power has been upheld by the Supreme Court on varied and diverse grounds realising the inability of the legislature to for see all future events. In the circumstances, it is difficult to accept the contention of the learned Senior Counsel that there is conferment of un-guided or unbridled or uncanalised power to the executive in the matter of fixation of wage limit as per Section 2(9)(b) of the Act and as such the above provision is constitutionally bad for excessive delegation.

In the instant case, as is evident from the statements contained in the notification, the Central Government has fixed the limit of wages only after consulting all the affected parties and after due deliberations. After finalisation, the Rule has been placed before the Parliament also. The statutory requirement u/s 95(1) of the Act of placing the Rules before the Parliament before bringing the same into force will cut at the very root of the argument that there is excessive delegation of legislative power. Though the Government is given full discretion to fix the limit of wages as per Section 2(9)(b) of the Act, the Statute itself has provided for an ultimate parliamentary scrutiny after the formulation of the Rules and before bringing such rules into force. In the circumstances, we do not find any force in the submissions by learned Senior Counsel in support of his contention that the provisions contained in Section 2(9)(b) of the Act is unconstitutional on the ground of excessive delegation of legislative power to the executive.

Further, it is relevant to note that there are specific provisions in the Act itself such as Sections 87 & 88 which enable any factory or establishment or any person or persons to claim exemption from the application of all or any of the provisions of the Act from the appropriate Government. It may be open to the appellant union also to claim, exemption and if granted, there may not be any necessity for it to challenge the validity of the provisions of the Act and the notification as has been done in this case.

In the circumstances, we do not find any reason to admit this appeal. Accordingly, we would dismiss the appeal in limine.

. *A reproduction from ILR (Kerala Series)