Muthu Rathina Arangam Matriculation School and Others vs The Government of Pondicherry and Others

K. Chandru, J.—Except in W.P. No. 30509 of 2007 filed by Sri Lakshmi Narayana Institute of Medical Sciences, in all other writ petitions,

the challenge is to the order passed by the Lieutenant Governor of Union Territory of Puducherry u/s 1(5) of the Employees'' State Insurance Act,

1948 (for short ESI Act) in notifying the educational institutions including public, private, aided or partially aided employees run by individuals,

trustees, societies or other organizations, wherein 20 or more persons are employed or were employed for wages on any day of the preceding

twelve months to be covered by the provisions of the ESI Act by a notification, dated 24.6.2005.

Before issuance of the said notification, they issued a preliminary notification, dated 24.9.2004. The preliminary notification dated 24.9.2004

reads as follows:

GOVERNMENT OF PONDICHERRY

Labour Department

No. 6563/Lab./K/2004

Pondicherry, the 24th September, 2004.

NOTIFICATION

In exercise of the powers conferred by Sub-section (5) of Section 1 of the Employees State Insurance Act, 1948, the Lieutenant-Governor,

Pondicherry in consultation with the Employees State Insurance Corporation and with the approval of the Central Government, is hereby pleased

to notify his intention to extend the provisions of the said Act to the classes of establishments specified in the schedule annexed hereunder, on

expiry of 6 months from the date of publication of this notification in the official gazette of Pondicherry, namely:

SCHEDULE

--------------------------------------------------------------------------------------

Description of Area in which the

establishments establish mints are situated

(1) (2)

--------------------------------------------------------------------------------------

Educational institutions (including The whole or the Union

public, private, aided or partially Territory of Pondicherry.

aided) run by individuals, trustees,

societies or other organizations,

wherein 20 or more persons are

employed or were employed on

any day of the preceding twelve months.

--------------------------------------------------------------------------------------

(By order of the Lieutenant-Governor)

(Emphasis added)

Subsequently, the Lieutenant Governor of Union Territory of Puducherry issued a final notification, dated 24.6.2005, which reads as follows:

GOVERNMENT OF PONDICHERRY

Labour Department

No. 6563/Lab./K/2004

Pondicherry, the 24th September, 2005.

NOTIFICATION

In exercise of the powers conferred by Sub-section (5) of Section 1 of the Employees'' State Insurance Act, 1948 (Central Act 34 of 1948), the

Lieutenant-Governor, Pondicherry, having already given six months'' notice as required there under vide Notification No. 6563/Lab./K/2004,

dated 24-9-2004 of the Labour Department, Pondicherry and published in the Official Gazette No. 41, dated 12.10.2004, hereby appoints the

date of publication of this notification in the official gazette as the date on which all the provisions of the said Act shall extent to the establishments

specified under column (1) of the Schedule below and within the area specified under column (2) of the said Schedule, namely:

SCHEDULE

--------------------------------------------------------------------------------------

Description of Area in which the

establishments establish mints are situated

(1) (2)

--------------------------------------------------------------------------------------

Educational institutions (including The whole or the Union

public, private, aided or partially Territory of Pondicherry.

aided) run by individuals, trustees,

societies or other organizations,

wherein 20 or more persons are

employed or were employed on

any day of the preceding twelve months.

--------------------------------------------------------------------------------------

(By order of the Lieutenant-Governor)

(Emphasis added)

After the issuance of the notification, the Respondent ESI sent notices to the Petitioners and directed them to cover their employees under the

Act. In many cases, after show cause notices, order u/s 45A came to be issued. In some cases, prosecution notices were issued to the Petitioners.

In some of the cases, they were threatened with levy of damages u/s 85-B of the ESI Act. Some of them have also paid the amounts either fully or

partially. On one case, it was stated that they had approached the ESI Court challenging the amounts demanded. None of the Petitioners have

moved the machinery provided under the Act to dispute either their liability or coverage in terms of Section 75 of the ESI Act before the

appropriate ESI Court. On the other hand, long after the notification, dated 24.6.2005 and after protracted correspondence, they moved this

Court impugning the notification, dated 24.06.2005 only in the year 2007. The delay in moving the court was not explained in any of the affidavit

filed by the Petitioners.

In W.P. Nos. 24350, 24351 and 24352 of 2008, not only the final notification was under challenge, but even the preliminary notification, dated

24.9.2004 is also under challenge.

In W.P. No. 30509 of 2007, the Petitioner is a private medical college. They have challenged the preliminary notification issued in respect of

private medical institutions, dated 27.1.2006. The said notification reads as follows:

GOVERNMENT OF PONDICHERRY

Labour Department

No. 4894/Lab/K/2005

Pondicherry

27th September 2006.

NOTIFICATION

In exercise of the powers conferred by Sub-section (5) of Section 1 of the Employees State Insurance Act, 1948, the Lieutenant Governor,

Pondicherry in constitution with the Employees State Insurance Corporation and with the approval of the Central Government, is hereby pleased

to notify his intention to extend the provisions of the said Act to the classes of establishments specified in the Schedule below, on expiry of 6

months from the date of publication of this notification in the official gazette of Pondicherry, namely:

SCHEDULE

--------------------------------------------------------------------------------------

Description of Area in which the

establishments establish mints are situated

(1) (2)

--------------------------------------------------------------------------------------

Educational institutions (including The whole or the Union

public, private, aided or partially Territory of Pondicherry.

aided) run by individuals, trustees,

societies or other organizations,

wherein 20 or more persons are

employed or were employed on

any day of the preceding twelve months.

--------------------------------------------------------------------------------------

(By order of the Lieutenant-Governor)

(Emphasis added)

It is also not the case of the Petitioner medical college in that writ petition that they have sent any objection regarding the coverage under the

Act. Notice regarding admission was given on 20.9.2007 and an interim stay was granted. Therefore, the Respondents have not published any

final notification since last three years due to pendency of the said writ petition.

In all writ petitions, the main contentions raised by the Petitioners were twofold. One was that the Lieutenant Government of Union Territory of

Puducherry lacks legislative sanction for the issuance of the notification u/s 1(5) of the ESI Act. According to the Petitioners, it is only the Central

Government which can issue such a notification. The second contention was that an educational institution cannot be covered by the provisions of

the ESI Act as it is not an ""establishment"" within the meaning of Section 1(5). The term ""otherwise"" found in Section 1(5) after the words industrial,

commercial and agricultural should have the same meaning as that of the previous words and that the concept of ""ejusdem generis"" will apply.

There was also a minor contention, i.e. before issuing the final notification, the Lieutenant Governor must separately express his mind to cover the

Act and only thereafter, a final notification can be issued.

In W.P. No. 30509 of 2007, the contention was that no other State had covered the private medical colleges and hence it is discriminatory. It is

also stated that the hospital run by them is a teaching hospital covered by the provisions of the MCI Act. Hence it cannot be covered by the ESI

Act.

This Court had admitted most of the writ petitions and also granted interim stay of the impugned order either with condition or without

conditions. On notices from this Court, the Respondents have filed counter affidavits, justifying the impugned notification. In addition to justification

of the impugned notifications, the Respondent ESI also contended that the Petitioners having been served with orders u/s 45A or Section 85-B,

their recourse can only be by raising a dispute u/s 75 and not to challenge those proceedings under Article 226 of the Constitution.

W.P. Nos. 2471, 3234 and 30509 of 2007, 17326 and 24350 to 24352 of 2008, 6287 and 19395 of 2009, 10028 and 21034 of 2010

were heard on 15.12.2010, W.P. Nos. 16273 of 2007 and 10131 of 2008 were heard on 16.12.2010 and W.P. No. 24691 of 2010 were heard

on 20.12.2010.

As noted already, the impugned notification issued by the Union Territory of Puducherry is mainly challenged on the following two grounds.

They are as follows:

(a)The Union Territory of Puducherry is not the ""appropriate Government"" for making the notification u/s 1(5) of the ESI Act. The Union Territory

of Puducherry cannot be called as a State Government as found u/s 2(1) of the ESI Act. If it is not a State Government within the meaning of the

said provision, then the appropriate Government in respect of any institution in the Union Territory of Puducherry is only the Central Government.

Therefore, the impugned notification is invalid.

(b)The Petitioners are running educational institutions and it cannot be called as an establishment within the meaning of proviso to Section 1(5) of

the ESI Act.

Before proceeding to deal with these issues, it is necessary to refer to Section 2(1) of the ESI Act which reads as follows:

Definitions.-In this Act, unless there is anything repugnant in the subject or context,-

(1)""appropriate Government"" means, in respect of establishments under the control of the Central Government or [a railway administration] or a

major port or a mine or oil-field, the Central Government, and in all other cases, the [State] Government;

In order to establish that the Union Territory of Puducherry is not the State Government, the counsel for the Petitioners placed heavy reliance

upon a judgment of the Supreme Court in Goa Sampling Employees'' Association Vs. General Superintendence Co. of India Pvt. Ltd. and Others,

. In that case, the Supreme Court while dealing with the term ""appropriate Government"" found u/s 2(a) of the Industrial Disputes Act, 1947 held

that the Administrator of the Union Territory cannot be called as the State Government. In respect of the industrial dispute, a reference can be

made u/s 10(1) only by the Central Government as the Central Government alone is an appropriate Government in respect of the industries located

in an Union Territory. Therefore, it was argued that the said ratio rendered under the Industrial Disputes act will automatically apply to application

of ESI Act in the Union Territory. The said judgment has been quoted out of context to support their arguments by the counsel for the Petitioners.

In that case, before the Supreme Court, the question came up for consideration was whether the reference given by the Central Government in

respect of an industrial dispute relating to an employee engaged by the Iron Ore Sampling companies was valid or not? On behalf of the

employers, preliminary objections were raised before the industrial tribunal. The matter finally reached the Supreme Court. The Supreme Court

after construing the Constitutional provision enshrined under Article 239(1) of the Constitution of India held that an Union Territory cannot be

called as a State Government and constitutionally speaking, it is some thing other than a State. To understand the ratio of the Supreme Court, it is

necessary to extract the following passages found in paragraphs 16, 17 and 18, which are as follows:

It was then pointed out that the definition of the expression ""appropriate Government"" in Section 2(a)(i) of the Act unless it is shown in relation

to any industrial dispute concerning any industry carried on by or under the authority of the Central Government or the enumerated industries or a

banking or an insurance company, a mine, an oilfield, a Cantonment Board, or a major port, the appropriate Government will be the Central

Government and in any other case a State Government. It was therefore, submitted that unless it is shown that in relation to the industrial dispute

raised by the Association, the appropriate Government would be the Central Government, the case would fall under the residuary provision,

namely, that in relation to any other industrial dispute, the appropriate Government would be the State Government. The submission does not

commend to us because before one can say that the appropriate Government is the State Government in relation to an industrial dispute, there has

to be some State Government in which power must be located for making the reference. If there is no State Government but there is some other

Government called the Administration of Union Territory, the question would arise whether in such a situation the Administration of Union Territory

should be described as State Government for the purpose of Section 2(a)(i) read with Section 10(1) ?

The High Court clearly fell into an error when it observed that the inclusive definition of the expression ""State Government"" does not

necessarily enlarge the scope of the expression, but may occasionally point to the contrary. Let us assume it to be so without deciding it. But where

the High Court fell into the error was when it held that the President representing the Central Government and the Administrator, and appointee of

the President and subject to all orders of the President constitute two different Governments for a Union Territory. The position, the power, the

duties and functions of the Administrator in relation to the President have been overlooked. On a conspectus of the relevant provisions of the

Constitution and the 1963 Act, it clearly transpires that the concept of State Government is foreign to the administration of Union Territory and

Article 239 provides that every Union Territory is to be administered by the President. The President may act through an Administrator appointed

by him. Administrator is thus the delegate of the President. His position is wholly different from that of a Governor of a State. Administrator can

differ with his Minister and he must then obtain the orders of the President meaning thereby of the Central Government. Therefore, at any rate the

Administrator of Union Territory does not qualify for the description of a State Government. Therefore, the Central Government is the ""appropriate

Government"".

If the Central Government as the appropriate Government has made the reference, the High Court was clearly in error in quashing the

reference.

It is only in this context, the reference made by the Central Government was upheld by the Supreme Court. It is not clear as to how this

judgment is of any assistance to the Petitioners. On the contrary, if Article 239(1) is correctly understood, then it could only mean that the Union

Territory is to be administered by the President acting to such an extent as he things fit through the Administrator to be appointed by him with such

designation as he may specify.

It is also necessary to refer to the definition of the terms ""Central Government"", ""State Government"" and ""Union Territory"" as found under the

General Clauses Act, 1897 (omitting the words not relevant for the present purpose), which reads as follows:

(8) ''Central Government'' shall-

(a)

* * *

(b) in relation to anything done or to be done after the commencement of the Constitution, mean the President; and shall include

(i)-(ii)

* * *

(iii) in relation to the administration of a Union Territory, the Administrator thereof acting within the scope of the authority given to him under Article

239 of the Constitution.

The expression ""State Government"" is defined in Section 3(60) (omitting the words not necessary for the present purpose) as under:

(60) ''State Government'',-

(a)-(b)

* * *

(c) as respects anything done or to be done after the commencement of the Constitution (Seventh Amendment) Act, 1956, shall mean, in a State,

the Governor, and in a Union Territory, the Central Government;

The expression ""Union Territory"" is defined in Section 3(62-A) to mean ""Union Territory specified in the First Schedule to the Constitution and

shall include any other territory comprised within the territory of India but not specified in that Schedule.

It is necessary to refer to certain decisions of the Supreme Court interpreting the scope of Article 239 of the Constitution and also the powers

of an Administrator of an Union Territory. In The State of Bombay Vs. Salat Pragji Karamsi, , the Supreme Court held that the Chief

Commissioner of the Union Territory acting under the orders of the President can issue statutory notifications under the powers vested in any

statute. In paragraphs 14 and 15 of the judgment, the Supreme Court observed as follows:

Article 239 of the Constitution relates to administration of Part C States and provides: ""Subject to the other provisions of this Part, a State

specified in Part C of the First Schedule shall be administered by the President acting, to such extent as he thinks fit, through a Chief Commissioner

or a Lieutenant-Governor to be appointed by him....

This Article has been relied upon for urging that in a Part C State, the administration had to be carried on by the President acting through a

Chief Commissioner. But this does not take away the powers of the Chief Commissioner given to him under another Statute or Order. The Chief

Commissioner of Kutch u/s 1 of the Bombay Act, had the power to issue notifications making that Act operative in Kutch or any part of Kutch

and those powers were not affected by Article 239 of the Constitution particularly because of Clause 15 of the Adaptation of Laws Order,1950,

which preserved these powers of the Chief Commissioner. Therefore, the notification issued by the Chief Commissioner on November 28, 1950

was valid and issued under legal authority; and the Act came into force in the parts to which the notification made it so applicable. We have

therefore, come to the conclusion that the learned Judge was in error in holding that the notification was not a valid one and insofar as that was the

basis of the acquittal of the accused, the judgment under appeal must be set aside.

While dealing with the notification issued by the Lieutenant Governor of the Union Territory of Delhi, the Supreme Court in its judgment in Om

Prakash Vs. Union of India (UOI) and Others, held that the Lieutenant Governor exercises his power validly only subject to the control and further

orders of the President. In paragraph 12, the Supreme Court observed as follows:

...Granting that the 1957 Act desired to empower the Central Government to acquire lands in Delhi for the purposes of the said Act and even

granting that such power has to be exercised through the Lt. Governor because of the notification under Article 239(1), such power can also stand

side by side with the wider power of the Lt. Governor to acquire lands for a public purpose. There is nothing in the 1957 Act which prohibits the

Lt. Governor taking such steps as he desires, under the powers available to him, to carry out the planned development of Delhi in consonance with

the plans approved or finalized under the 1957 Act. Viewed in this light, the powers of the Lt. Governor u/s 4 of the Land Acquisition Act can be

read as additional to the powers of the Central Government under the Delhi Development Act. The 1957 Act does not destroy but only

supplements the 1894 Act. This is the view taken by the High Court and we agree with it.

The Supreme Court had an occasion to consider the legislative power of the Puducherry Legislature and its competence to enact laws vide its

judgment in Mahe Beach Trading Co. and Others Vs. Union Territory of Pondicherry and Others, . In paragraphs 16 to 19, the Supreme Court

held as follows:

Before dealing with the second contention raised by the learned Counsel for the Appellant, it would be more appropriate to deal with the third

contention. It was submitted that the Pondicherry Legislature had no plenary powers as the same vested only in Parliament. The submission was

that the Pondicherry Legislature could not make retrospective laws, or laws contrary to the laws made by Parliament, under Articles 239 and 239-

A of the Constitution. Elaborating further it was submitted that the Pondicherry Legislature did not have the power to pass the Validation Act

which had the effect of re-enacting and imposing restrictions on diesel and petrol with retrospective effect.

Article 239-A of the Constitution provides for Parliament creating, by law, for the Union Territory of Pondicherry, a body to function as a

legislature with such constitution, powers and functions as may be specified in the law. It was in pursuance of this that [The] Government of Union

Territories Act, 1963 was passed by Parliament and the said Act was made applicable to the Union Territory of Pondicherry from 1-7-1963. This

Act provided for the setting up of Legislative Assemblies and Council of Ministers for the Union Territories and it was under this Act that the

Legislative Assembly for the Pondicherry Union Territory was constituted. Section 18 of [The] Government of Union Territories Act, 1963 deals

with the extent of the legislature''s power and it reads as follows:

Extent of legislative powers.-(1) Subject to the provisions of this Act, the Legislative Assembly of a Union Territory may make laws for the whole

or any part of the Union Territory with respect to any of the matters enumerated in the State List or the Concurrent List in the Seventh Schedule to

the Constitution insofar as any such matter is applicable in relation to Union Territories.

(2) Nothing in Sub-section (1) shall derogate from the powers conferred on Parliament by the Constitution to make laws with respect to any

matter for a Union Territory or any part thereof.

Reading Article 239-A and Section 18 of [The] Government of Union Territories Act, 1963 together, it is clear that the Pondicherry Assembly

had the power to make laws for the whole or part of Pondicherry with respect to any of the matters enumerated in the State List or the Concurrent

List. Levy of sales tax would undoubtedly be within its legislative competence by virtue of Entry 54 of List II of the Seventh Schedule. The effect of

Validation Act being promulgated was that the levy on diesel and petrol would no longer be regarded as one being made under municipal decree

of 1880 by the Municipal Council but, in law, will have to be regarded as being a levy made by a competent legislature exercising its powers by

virtue of Section 18 of [The] Government of Union Territories Act, 1963 read with Article 239-A of the Constitution.

By virtue of [The] Government of Union Territories Act, 1963, the Pondicherry Legislature was given the powers which any other State

Legislature had to enact laws with respect to the matters enumerated in the State List or the Concurrent List. Of course, Sub-section (2) of Section

18 provides that the powers conferred under Sub-section (1) shall not derogate from the powers conferred on Parliament by the Constitution to

make laws with respect to any matter for the Union Territory. But, there is no such law relating to the imposition of sales tax on diesel and petrol

which has been enacted by Parliament, while the Validation Act has imposed such a tax. It is not in dispute, and now it is well settled, that the State

Legislature as well as Parliament has the power to legislate with retrospective effect and also to pass a Validation Act. This being so, and the

powers of the legislature of Pondicherry being coextensive with the powers of a State Assembly, by virtue of Section 18 of [The] Government of

Union Territories Act, 1963, there is no reason for this Court to hold that the Pondicherry Legislature could not enact a law with retrospective

effect. In other words, by virtue of Section 18 of [The] Government of Union Territories Act, 1963, Parliament vested with the Pondicherry

Legislature the plenary powers to legislate with respect to the matters in List II and List III of the Seventh Schedule and the said power has been

validly exercised with the enactment of the Validation Act.

The Supreme Court by the above observations recognized the right of the Puducherry Legislature to enact law on par with a State assembly by

virtue of delegation of powers granted by the Parliament under the Union Territories Act, 1963.

21.A similar question regarding the power of the President vis-a-viz Union Territory and the position of an Administrator of an Union Territory

came to be considered by the Supreme Court in Government of NCT Delhi and Others Vs. All India Central Civil Accounts, JAO''s Association

and Others, . In paragraphs 2 and 8, the Supreme Court observed as follows:

...The administration of the Union Territories is carried on by the Union, through an Administrator. As stated by this Court in New Delhi

Municipal Council v. State of Punjab1 the President, who is the executive head of a Union Territory does not function as the head of the Central

Government, but as the head of the Union Territory under powers specially vested in him under Article 239 of the Constitution thereby occupying

a position analogous to that of a Governor in a State. Though the Union Territories are centrally administered under the provisions of Article 239

they do not become merged with the Central Government as has been stated by this Court in Satya Dev Bushahri v. Padam Dev2. However, the

Administrator is competent to exercise all powers vested in him by the Government of National Capital Territory of Delhi Act, 1991 (1 of 1992)

(hereinafter referred to as ""the Act""). The Administrator functions as a delegate of the President and will have to act under the orders of the

President, that is, the Central Government.

...The position in law is clear that though the Union Territories are centrally administered under the provisions of Article 239 of the Constitution,

they do not become merged with the Central Government and they form part of no State and yet are the territories of the Union, as has been held

by this Court in Satya Dev Bushahri v. Padam Dev2 and NDMC v. State of Punjab1. Thus, it must be held that the Union Territory does not

entirely lose its existence as an entity though large control is exercised by the Union of India....

Once again, similar view was reiterated by the Supreme court in Chandigarh Administration and Another Vs. Surinder Kumar and Others, . In

paragraph 1, it was observed as follows:

...Under Article 239 of the Constitution of India the Union Territories are administered by the President of India acting through an administrator to

be appointed by him. But this does not mean that the Union Territories become merged with the Central Government. They are centrally

administered but they retain their independent entity....

The power of the Lieutenant Governor of the Union Territory in sanctioning prosecution u/s 50 of the Prevention of Terrorism Act, 2002 came

to be considered by the Supreme Court vide its judgment in State (N.C.T. of Delhi) Vs. Navjot Sandhu @ Afsan Guru, . The court dealt with the

ratio of the Goa Sampling Employees'' Association case (cited supra) and upheld the power of the Lieutenant Governor in granting sanction for

prosecution by holding that he possesses a specific statutory delegation. It is necessary to refer to the following passage found in paragraph 10,

which reads as follows:

...The reliance sought to be placed on Goa Sampling Employees'' Assn. v. General Superintendence Co. of India (P) Ltd.2 is rather

misconceived. That case turned on the interpretation of the expression ""appropriate Government"" occurring in Section 10 of the Industrial Disputes

Act, 1947. The industrial dispute pertained to the workmen employed at Mormogao Port which is located in the then Union Territory of Goa,

Daman and Diu. It was contended by the employer that the Central Government was not competent to refer the dispute to the Tribunal for

adjudication. This contention found favour with the High Court of Bombay which held that the Administrator appointed under Article 239 of the

Constitution is the State Government for the Union Territory of Goa and is the appropriate Government within the meaning of Section 2(a) of the

Industrial Disputes Act. The judgment of the High Court was reversed by this Court after referring to Articles 239 and 239A and the provisions of

the Government of Union Territories Act, 1963 and the definitions of the General Clauses Act and observed thus: (SCC p.217, para 17)

nspectus of the relevant provisions of the Constitution and the 1963 Act, it clearly transpires that the concept of State Government is foreign to the

administration of Union Territory and Article 239 provides that every Union Territory is to be administered by the President. The President may

act through an administrator appointed by him. Administrator is thus the delegate of the President. His position is wholly different from that of a

Governor of a State. Administrator can differ with his Minister and he must then obtain the orders of the President meaning thereby of the Central

Government. Therefore, at any rate the administrator of Union Territory does not qualify for the description of a State Government. Therefore, the

Central Government is the ''appropriate Government''.

That decision, in our view, has no relevance. This Court was not called upon to consider a specific provision like Section 50 or Section 2(1)(h) of

POTA. We are, therefore, of the view that by virtue of specific statutory delegation in favour of the Administrator who is constitutionally

designated as the Lieutenant Governor as well, the sanction accorded by the said authority is a valid sanction u/s 50 of POTA....

The Supreme Court in its judgment in Sushil Flour Dal & Oil Mills v.

Chief Commissioner reported in (2000) 10 SCC 593 held that the Administrator of the Union Territory is a delegate of the President and the

notification issued by him is valid in law. In paragraphs 2 to 4, the Supreme Court observed as follows:

The Appellants filed a writ petition in the High Court of Punjab and Haryana challenging notifications fixing the rate u/s 5(1) of the Punjab

General Sales Tax Act in relation to the Union Territory of Chandigarh. The notifications were issued by the Administrator (Chief Commissioner)

of the territory. The challenge was upheld by the learned Single Judge but it failed in appeal. It is the judgment under appeal which is questioned

before us.

The argument which found favour with the learned Single Judge was this: the impugned notifications, having been issued by a delegate of the

Central Government, were bad because the Central Government could not further delegate its power to the Administrator. The learned Single

Judge took the view that the Central Government having itself been delegated legislative power under the said Act, it could not further delegate it to

the Administrator.

The Division Bench was, in our view, right in pointing out that there was no delegation of power. Under Part VIII of the Constitution the power

to administer the Union Territories vested in the President and the President could exercise that power directly or through an Administrator

appointed by him. An Administrator so appointed was the medium through which the President exercised the function of administering the Union

Territories. Reliance was also placed by the Division Bench, and rightly, upon Section 3(8) of the General Clauses Act which provides that in

relation to the administration of the Union Territories, the Central Government means the Administrator thereof acting within the scope of the

authority given to him under Article 239 of the Constitution. No amplification of this position seems to be necessary.

While validating a reference made u/s 10(1) of the I.D. Act by the Respondent Union Territory of Puducherry, a learned Judge of this Court in

W.P.M.P. No. 30534 of 2004 and W.V.M.P. No. 1642 of 2004 in W.P. No. 25097 of 2004, dated 04.11.2004 in Sri Bharathi Mills, A unit of

National Textiles Corporation (TN &P) Ltd. v. The Commissioner of Labour, Government of Pondicherry, Pondicherry and others after referring

to Goa Sampling Employees'' Association case (cited supra), in paragraph 8 observed as follows:

Section 2-A of the Industrial Disputes Act, refers to the appropriate Government meaning one as Central Government and another as State

Government. If the Government of Pondicherry cannot be considered to be a State Government as it has been held by the Apex Court, Section

2(a)(ii) relating to any other dispute as to the competent authority viz., State Government is not applicable to this case and thereby, the only

appropriate authority, who is competent is the Central Government. u/s 2(a)(i) of the Act, as the Government of Pondicherry/Union Territory is

administered by the President of India under Article 239 of the Constitution of India and the exclusion of such union territory from the definition of

State Government, it must be held that the Government of Pondicherry is competent to exercise the power by virtue of definition u/s 2(a)(i) of the

I.D. Act.

Therefore, inasmuch as the Administrator had acted on behalf of the President of India in terms of Article 239 in having issued the notification,

no fault can be found. The impugned notifications do not suffer from want of legislative sanction by the ESI Act. Hence the first objection stands

overruled.

In respect of the second objection that the educational institutions cannot be covered by the provisions of the ESI Act and that the impugned

notification covers the educational institutions within the purview of the ESI Act, it was contended by the counsel for the Petitioners that the

educational institutions cannot be covered by the ESI Act as they were not commercial or industrial enterprises. Reliance was placed upon the

judgment of the Supreme Court in Haryana Unrecognised Schools Association Vs. State of Haryana, . In that case, the Supreme Court held that a

teacher in an educational institution is not employed to do any skilled or unskilled manual or clerical work and therefore, once he is not an

employee within the meaning of Section 2(i) of the Minimum Wages Act, the State Government by adding employments in educational institutions

into the schedule to the Minimum Wages Act by virtue of the power conferred u/s 27 was not valid and it was beyond its competence. Therefore,

insofar as the teacher of the educational institutions being covered by the provisions of the Minimum Wages Act was invalid. But in that case, the

only question that was considered was whether teachers in educational institutions can be brought within the purview of the Minimum Wages Act.

It was found that the definition of the term ""employee"" defined u/s 2(i) of the Minimum Wages Act was not covering the teachers. In fact, the said

definition more or less borrows the definition of term ""workman"" found u/s 2(s) of the Industrial Disputes Act. Therefore, the observation of the

Supreme Court in Miss A. Sundarambal Vs. Government of Goa, Daman and Diu and Others, was quoted with approval. In paragraphs 10 and

11, it was observed as follows:

...Since the teachers of an educational institution are not employed to do any skilled or unskilled or manual or clerical work and therefore could

not be held to be an employee u/s 2(i) of the Act, it is beyond the competence of the State Government to bring them under the purview of the Act

by adding the employment in educational institution in the Schedule in exercise of power u/s 27 of the Act. This Court while examining the question

whether the teachers employed in a school are workmen under the Industrial Disputes Act had observed in A. Sundarambal v. Govt. of Goa,

Daman & Diu3: (SCC p.48, para 10)

We are of the view that the teachers employed by educational institutions whether the said institutions are imparting primary, secondary, graduate

or postgraduate education cannot be called as ''workmen'' within the meaning of Section 2(s) of the Act. Imparting of education which is the main

function of teachers cannot be considered as skilled or unskilled manual work or supervisory work or technical work or clerical work. Imparting of

education is in the nature of a mission or a noble vocation. A teacher educates children, he moulds their character, builds up their personality and

makes them fit to become responsible citizens. Children grow under the care of teachers. The clerical work, if any they may do, is only incidental

to their principal work of teaching.

Applying the aforesaid dictum to the definition of employee u/s 2(i) of the Act it may be held that a teacher would not come within the said

definition. In the aforesaid premises we are of the considered opinion that the teachers of an educational institution cannot be brought within the

purview of the Act and the State Government in exercise of powers under the Act is not entitled to fix the minimum wage of such teachers. The

impugned notifications so far as the teachers of the educational institution are concerned are accordingly quashed. This appeal is allowed. Writ

petition filed succeeds to the extent mentioned above. There will be no order as to costs.

Thereafter, reliance was also placed upon a judgment of the Supreme Court in Ruth Siren v. Managing Committee, East I.S.S.D.A., reported

in (2001) 2 SCC 115 wherein the Supreme Court considered whether an educational institution is an establishment within the meaning of Bihar

Shops and Establishments Act, 1953. It was held that though it may be an industry within the meaning of Section 2(j) of the I.D. Act, it cannot be

an establishment within the meaning of Bihar Shops and Establishments Act. In that context, the Supreme Court in paragraphs 4 and 5 observed as

follows:

An ""establishment"" for the purposes of the Act means an establishment which carries on any business, trade or profession or any work in

connection with, or incidental or ancillary thereto. Concept of industry, as defined under the Industrial Disputes Act, would include any business,

trade, undertaking, manufacture or calling of employers and includes any calling service, employment, handicraft, or industrial occupation or

avocation of workmen. There is an organized activity between employers and employees to impart education. Such an activity, though may be

industry will not be a profession, trade or business for the purposes of Article 19(1)(g) of the Constitution, would not be one falling within the

scope of ""establishment"" under the Act. Therefore, the view taken by the Division Bench of the High Court is unexceptionable. The High Court did

appreciate that Unni Krishnan case1 itself made a distinction between what was stated in Bangalore Water Supply & Sewerage Board v. A.

Rajappa2.

In Corpn. of City of Nagpur v. Employees4, LLJ at p.(540) this Court held the Education Department of the Corporation to be an industry. The

reason given is that imparting education amounts to service and can be done by a private person also. In University of Delhi v. Ram Nath5 this

Court held that imparting education is not an industry as the work of the University cannot be assimilated to the position of trade, calling, business

or service and hence cannot be an industry. The majority view in Bangalore Water Supply & Sewerage Board v. A. Rajappa2 a decision of

seven-Judge Bench, is that in the case of an educational institution, the nature of activity is ""exhypothesi"" and imparting education being service to

community is an industry. Various other activities of the institution such as printing press, transport department, clerical, etc. can be severed from

teaching activities and these operations either cumulatively or separately form an industry. Even so, the question for consideration is whether

educational institution falls within the definition of ""establishment"" carrying business, trade or profession or incidental activities thereto.

Establishment"", as defined under the Act, is not as wide as ""industry"" as defined under the Industrial Disputes Act. Hence reliance on Bangalore

Water Supply & Sewerage Board v. A. Rajappa2 for the Appellant is not of any help.

Therefore, it was contended that the educational institution also is not an establishment within the meaning of Section 1(5) of the ESI Act. But,

however unlike the Bihar Shops Act, which was considered by the Supreme Court, the term ""establishment"" was not defined in the ESI Act. On

the other hand, Section 1(5) of the ESI Act is couched in a language which can include establishments which necessarily need not have the

characteristics as industrial, commercial or agricultural establishments. They can even include the other types of establishments. Section 1(5) of the

ESI Act reads as follows:

1(5)The appropriate Government may, in consultation with the Corporation and [where the appropriate Government is a State Government, with

the approval of the Central Government], after giving six months'' notice of its intention of so doing by notification in the Official Gazette, extend the

provisions of this Act or any of them, to any other establishment, or class of establishments, industrial, commercial, agricultural or otherwise.

The term ""otherwise"" found in Section 1(5) came to be considered by the Allahabad High Court in Maharishi Shiksha Sansthan and Anr. v.

State of Uttar Pradesh and Anr. reported in 2009 (1) LLN 381. In paragraphs 9 and 10, it was observed as follows:

Learned Counsel for the Petitioner has argued that the word ""establishment"" must have some relation with factory and educational institution is

not even remotely connected with the activity, which is carried out in factories. This argument is not tenable for the reason that u/s 1(5), there is no

such restriction. Thereafter, learned Counsel for the Petitioner has argued that the aforesaid Sub-section suffers from the vice of excessive

delegation as the power to bring any establishment under the Act has been conferred upon the Government without providing any guidelines.

This argument is also not acceptable. The purpose of the Act is to confer certain benefits upon the employees and employees of any

establishment may deserve such benefits. This question has also been considered in the Supreme Court authority in Hindu Jea Band, Jaipur V.

Regional Director, Employees'' State Insurance Corporation, and others 1987 (1) L.L.N. 778 ..

The very same question also came to be considered by a division bench of the Kerala High Court in CBSE School Management''s Association

Vs. State of Kerala, . In paragraphs 17 and 18, the Kerala High Court observed as follows:

We hold that the notification u/s 1(5) of the ESI Act can cover an educational institution for two reasons:

Our first reason is that, the educational institutions like schools are industrial establishments, in view of the decision of the Apex Court in Bangalore

Water Supply and Sewerage Board''s case, (supra). Though a few Benches of lesser strength have expressed the necessity for reconsidering the

dictum in Bangalore Water Supply and Sewerage Board''s case, (supra), until such a reconsideration is done by a larger Bench, we are absolutely

bound by the decision of the Apex Court in Bangalore Water Supply and Sewerage Board''s case, (supra). If that be so, the only possible view

that could be taken in the face of the words contained in Section 1(5) of the ESI Act is that educational institutions are also covered by the

expression ''industrial establishment''. The main thrust of the argument of the writ Petitioners was that educational institution is not an industry. In

view of the binding precedent mentioned above, we cannot accept that contention. Further, the interpretation of the definition of ""industry"" in

Section 2(j) of the Industrial Disputes Act is applicable to the interpretation of the word ""industrial"" in Section 1(5) of the E.S.I. Act, in view of

Section 2(24) of the latter Act which reads as follows:

Definitions: xxx xxx xxx (24)all other words and expressions used but not defined in this Act and defined in the Industrial Disputes Act, 1947

(14 of 1947), shall have the meanings respectively assigned to them in that Act..

Our second reason is that, the words employed ''or otherwise'' should be given the widest possible meaning and therefore, they will cover the

educational institutions also. The Petitioners contend that the words ''or otherwise'' should be given a restricted meaning, following the principle of

ejusdem generis. Whether the words should be given a restricted meaning will depend upon the context in which they are used. There cannot be

any principle of universal application concerning this. The learned author, Sri.G.P. Singh, in his book, Principles of Statutory Interpretation, 10th

Edition, 2006, points out that the words ""or otherwise"" are not usually considered ejusdem generis. The learned author has stated as follows:

It also appears that the words ''or otherwise'' have not been usually considered ejusdem generis. They are words of wide import, but context may

limit their scope....

The learned author has stated the above principle, referring to various decisions of the Apex Court. The decisions cited by the learned Counsel for

the Petitioners to persuade this Court to give a restricted meaning, applying ejusdem generis cannot be upheld, having regard to the context in

which the words ""or otherwise"" are used. We are not referring to each and every decision cited by the Petitioners, but we would point out that

those are decisions which are rendered under various other enactments and do not lay down any binding precedent to be followed in this case.

Further, having regard to the words employed in the above Sub-section, the principle of ejusdem generis cannot be pressed into service. There is

nothing in common between industrial establishment and agricultural establishment. They do not belong to the same genus. The doctrine of ejusdem

generis is applied where the words of the same category are used, followed by general words. In that context, the meaning of the general words

can be read down to mean only something similar to the category mentioned preceding them. For the above reasons, the contentions of the writ

Petitioners that this Court should give a restricted meaning to the words ''or otherwise'' cannot be upheld.

Apart from the decisions of the Allahabad High Court and Kerala High Court, the issue can also be looked into in a different angle. The

Supreme Court in Bangalore Water Supply and Sewerage Board Vs. A. Rajappa and Others, [(which was distinguished by the Supreme Court in

the context of the term establishment found in Bihar Shops and Establishments Act, but followed by the Kerala High Court in the context of

Section 1(5) in CBSE School Management''s Association (cited supra))] considered the term ""educational institution"" as an industry within the

meaning of Section 2(j) of the I.D. Act. It was held that though majority of persons working in educational institutions are teachers, but that cannot

be a factor to decide the term ""industry"" found under the Industrial Disputes Act. On the other hand, even in respect of the educational institution, if

only few persons are employed as non teaching staff, they can be covered by the provisions of the Industrial Disputes Act. Therefore, Ruth

Soren''s case (cited supra), rendered in the context of Bihar Shops and Establishments Act cannot have any relevance to decide a matter under the

ESI Act.

Similarly, the decision of the Supreme Court in Haryana Unrecognized Schools'' Association (cited supra) in relation to the minimum Wages

Act has no application. The term ""otherwise"" found u/s 1(5) has got wider application as held by the Allahabad and Kerala High Courts. At this

stage, it is unnecessary to go into the question whether majority of persons employed in the Petitioners institutions will be covered by the ESI Act

pursuant to the impugned notification since the definition of employee found in Section 2(9) do not correspond with any other definition in any other

law. If ultimately the Petitioners want to dispute the coverage of a particular person being covered by the scheme, the Act itself provides disputes

to be raised u/s 75 of the ESI Act. Such issues need not be decided on an academic basis at this stage. It is also worthwhile to note that by

amendment to ESI Central Rules, 2010, dated 20.4.2010, the scheme only covers the employees who are drawing wages not exceeding Rest.

15000/-. Therefore, as to how many persons will be covered by the scheme itself has to be determined only if the Respondent ESI issues an

appropriate notice and determine the liability of the Petitioners u/s 45A of the ESI Act.

The Supreme Court in Osmania University Vs. Regional Director, Employees'' State Insurance Corpn., Andhra Pradesh and Others, held that

even if the printing press run by the University if it is otherwise covered by the ESI Act, the provisions of the Act can be made applicable and the

employees of the printing press must be covered by the ESI Scheme. Therefore, even if a part of the employees in an establishment are covered

the Act can be made applicable in respect of those persons.

In construing the definition of the term ""establishment"" found u/s 1(3)(b) of the Payment of Gratuity Act, the Supreme Court in its judgment in

State of Punjab Vs. Labour Court Jullunder and Others, has held that the term ""establishment"" need not be having any reference to the

establishments covered by the provisions of the Shops and Establishments Act and it should have a general meaning. It also held that if the term

establishment"" is defined in any other law, for the time being in force it will also be covered by the provisions of the Gratuity Act. The following

passage found in paragraph 3 of the said judgment may be extracted below:

In this appeal, the learned Additional Solicitor General contends on behalf of the Appellant that the Payment of Gratuity Act, 1972 cannot be

invoked by the Respondents because the Project does not fall within the scope of Section 1(3) of that Act. Section 1(3) provides that the Act will

apply to:

(a) every factory, mine, oilfield, plantation, port and railway company;

(b) every shop or establishment within the meaning of any law for the time being in force in relation to shops and establishments in a State, in which

ten or more persons are employed, or were employed, on any day of the preceding twelve months;

(c) such other establishments or class of establishments, in which ten or more employees are employed, or were employed, on any day of the

preceding twelve months, as the Central Government may, by notification, specify in this behalf.

According to the parties, it is Clause (b) alone which needs to be considered for deciding whether the Act applies to the Project. The Labour

Court has held that the Project is an establishment within the meaning of the Payment of Wages Act, Section 2(ii)(g) of which defines an ""industrial

establishment"" to mean any ""establishment in which any work relating to the construction development or maintenance of buildings, roads, bridges

or canals, relating to operations connected with navigation, irrigation or the supply of water, or relating to the generation, transmission and

distribution of electricity or any other form of power is being carried on"". It is urged for the Appellant that the Payment of Wages Act is not an

enactment contemplated by Section 1(3)(b) of the Payment of Gratuity Act. The Payment of Wages Act, it is pointed out, is a Central enactment

and Section 1(3)(b), it is said, refers to a law enacted by the State Legislature. We are unable to accept the contention. Section 1(3)(b) speaks of

any law for the time being in force in relation to shops and establishments in a State"". There can be no dispute that the Payment of Wages Act is in

force in the State of Punjab. Then, it is submitted, the Payment of Wages Act is not a law in relation to ""shops and establishments"". As to that, the

Payment of Wages Act is a statute which, while it may not relate to shops, relates to a class of establishments, that is to say, industrial

establishments. But, it is contended, the law referred to u/s 1(3)(b) must be a law which relates to both shops and establishments, such as the

Punjab Shops and Commercial Establishments Act, 1958. It is difficult to accept that contention because there is no warrant for so limiting the

meaning of the expression ""law"" in Section 1(3)(b). The expression is comprehensive in its scope, and can mean a law in relation to shops as well

as, separately, a law in relation to establishments, or a law in relation to shops and commercial establishments and a law in relation to non-

commercial establishments. Had Section 1(3)(b) intended to refer to a single enactment, surely the Appellant would have been able to point to

such a statute, that is to say, a statute relating to shops and establishments, both commercial and non-commercial. The Punjab Shops and

Commercial Establishments Act does not relate to all kinds of establishments. Besides shops, it relates to commercial establishments alone. Had

the intention of Parliament been, when enacting Section 1(3)(b), to refer to a law relating to commercial establishments, it would not have left the

expression ""establishments"" unqualified. We have carefully examined the various provisions of the Payment of Gratuity Act, and we are unable to

discern any reason for giving the limited meaning to Section 1(3)(b) urged before us on behalf of the Appellant. Section 1(3)(b) applies to every

establishment within the meaning of any law for the time being in force in relation to establishments in a State. Such an establishment would include

an industrial establishment within the meaning of Section 2(ii)(g) of the Payment of Wages Act. Accordingly, we are of opinion that the Payment of

Gratuity Act applies to an establishment in which any work relating to the construction, development or maintenance of buildings, roads, bridges or

canals, or relating to operations connected with navigation, irrigation or the supply of water, or relating to the generation, transmission and

distribution of electricity or any other form of power is being carried on. The Hydel Upper Bari Doab Construction Project is such an

establishment, and the Payment of Gratuity Act applies to it."" (Emphasis added) 36. Therefore, as correctly held by the Allahabad and Kerala High

Courts, the term ""establishment"" u/s 1(5) will include every establishment which need not have the characteristics of industrial, commercial or

agricultural establishments. Any Establishments can be validly notified by the appropriate Government to be covered by the provisions of the Act.

Therefore, the second contention must also fail.

In fact, in W.P No. 32284 of 2007 in Sri Venkateswara Medical College Hospital & Research Centre v. The Government of Pondicherry,

rep by Joint Secretary to Government (Labour), Labour Department, Puducherry and others, a learned Judge of this Court by an order, dated

8.10.2007 dismissed the writ petition by giving liberty to raise issues before the appropriate authority. In any event, since the issue regarding the

legality of the impugned notification as well as application of the Act cannot be determined by the ESI Court, this Court dealt with the two principal

contentions raised by the Petitioners and found against them.

With reference to the prosecution notices and the orders passed u/s 45A of the ESI Act as well as levy of damages u/s 85-B of the Act, the

Petitioners have got remedy by way of raising a dispute u/s 75 of the ESI Act before the ESI Court. The Supreme Court has held that in the

absence of a dispute raised challenging such notices, the authorities can invoke the execution machinery under the Act since the order would

become final. The position of law has been clarified by the Supreme Court in E.S.I.C. Vs. C.C. Santhakumar, . The following passages found in

paragraphs 17, 25, 28,30 and 31 may be usefully extracted below:

Prior to the incorporation of Section 45A under Act 44 of 1966, the only resort available to the Corporation was Section 75, for recovery of

contribution through the court. Since this procedure was found to be impracticable and delayed process involved, a special provision was

contemplated where under adjudication is to be made by the Corporation itself. By reason of incorporation of Section 45A with effect from 17-6-

1967, it became possible for the Corporation to have determination of the question, binding on the principal employer, without resorting to the ESI

Court. In regard to the order u/s 45A, the same is enforced, as envisaged u/s 45B, which was similarly brought into the Act, by which the

contribution may be recovered as arrears of land revenue. With regard to the decision reached by the ESI Court in the application u/s 75, the said

decision is enforced, as envisaged in Sub-section (4) of Section 75 as if it is a civil court. The mode of recovery u/s 45B of the Corporation and

the mode of recovery as per Section 75(4) by the ESI Court as the civil court are entirely different as both Sections 45 and 75 operate in different

spheres.

Section 45A of the Act contemplates a summary method to determine contribution in case of deliberate default on the part of the employer. By

Amendment Act 29 of 1989, Sections 45C to 45I were inserted in the Principal Act, for the purpose of effecting recovery of arrears by

attachment and sale of movable and immovable properties or establishment of the principal or immediate employer, without having recourse to law

or the ESI Court. Therefore, it cannot be said that a proceeding for recovery as arrears of land revenue by issuing a certificate could be equated to

either a suit, appeal or application in the court. u/s 68(2) and Sections 45C to 45I, after determination of contribution, recovery can be made

straightaway. If the employer disputes the correctness of the order u/s 45A, he could challenge the same u/s 75 of the Act before the ESI Court.

What Section 75(2) empowers is not only the recovery of the amounts due to the Corporation from the employer by recourse to the ESI

Court, but also the settlement of the dispute of a claim by the corporation against the employer. While this is so, there is no impediment for the

Corporation also to apply to the ESI Court to determine a dispute against an employer where it is satisfied that such a dispute exists. If there is no

dispute in the determination either u/s 45A(1) or u/s 68, the Corporation can straightaway go for recovery of the arrears.

The legislature has provided for a special remedy to deal with special cases. The determination of the claim is left to the Corporation, which is

based on the information available to it. It shows whether information is sufficient or not or the Corporation is able to get information from the

employer or not, on the available records, the Corporation could determine the arrears. So, the non-availability of the records after five years, as

per the

Regulations, would not debar the Corporation to determine the amount of arrears. Therefore, if the provisions of Section 45A are read with

Section 45B of the Act, then, the determination made by the Corporation is concerned. It may not be final so far as the employer is concerned, if

he chooses to challenge it by filing an application u/s 75 of the Act. If the employer fails to challenge the said determination u/s 75 of the Act before

the Court, then the determination u/s 45A becomes final against the employer as well. As such, there is no hurdle for recovery of the amount

determined u/s 45B of the Act, by invoking the mode of recovery, as contemplated in Sections 45C to 45I.

In ESI Corpn. v. F. Fibre Bangalore (P) Ltd. it was observed that it is not necessary for the Corporation to seek a resolution of the dispute

before the ESI Court, while the order was passed u/s 45A. Such a claim is recoverable as arrears of land revenue. If the employer disputes the

claim, it is for him to move the ESI Court for relief. In other cases, other than cases where determination of the amount of contributions u/s 45A is

made by the Corporation, if the claim is disputed by the employer, then, it may seek an adjudication of the dispute before the ESI Court, before

enforcing recovery.

Hence all the writ petitions must fail.

Mr. G. Masilamani, learned Senior Counsel appearing for some of the Petitioners pleaded that if ultimately this Court should hold if the

provisions of the ESI Act are applicable to the Petitioners, then the coverage should be made only from the date of the judgment and not from the

date of the notification issued u/s 1(5). However, this Court cannot grant any such relief, since passing such an order would amount to prevent the

Respondents from enforcing the provisions of a valid law. In a writ in the nature of mandamus, the High Court acting under Article 226 of the

Constitution of India cannot direct the authorities either to disobey the law or to act contrary to the provisions of the enactment.

In the light of the above, all the writ petitions will stand dismissed. No costs. Consequently, connected miscellaneous petitions stand closed.