Mansimran Kaur

New Delhi,  May 20, 2022: While observing that the cardinal principle of interpretation has to be applied to every word in the statutory notification if the words used therein are unambiguous, the Supreme Court has held that the word “including” stated in the impugned notification in the instant case was used as a word of enlargement, so as to make the territorial application of the Employees’ State Insurance Act,1948 extensive.

Allowing the present appeal instituted against the judgment of the Gauhati High Court whereby the High Court allowed the appeal of the respondent and set aside the order passed by the Employees Insurance Court in favor of the appellants, the Division Bench of Justice K.M. Joseph and Justice Hrishikesh Roy said, “The notification issued under Section 1(3) of the ESI Act is a statutory notification and the same should be treated as a part of the statute, both for the purposes of construction and also for the obligations arising therefrom, as if, they are contained in the Act.”

Facts in brief were that a notification was issued underSection 1(3) of the ESI Act, notifying August 1, 1999 as the date on which certain provisions of the ESI Act shall come into operation in certain areas in the State of Assam.  The respondent was apprised of the same and of the fact that the provisions of ESI would be applicable to all the factories situated within the notified areas including the factory area of the respondent. However, the respondent failed to take necessary steps for registration under the ESI Act and a show cause notice was issued to the respondent to remit contribution for the months of April to September, 2000, on ad hoc basis. 

Pursuant to the same, the respondent approached the Employees Insurance Court but the Court ruled that the factory of the respondent, located in Tarapur was under the coverage of the ESI Act. In view of the same an appeal was preferred against the order before the High Court which held that the establishment was not covered under the notification dated July 21, 1999. The subject matter to be decided before the present Court was whether the High Court was correct in construing the notification dated July 21, 1999 by holding that the notification only covers within the Silchar Municipal Board, however the notification additionally did mention names of other areas/ villages including the Village of Tarapur, where the respondent’s factory is located. 

This Court took into account the notification dated July 21, 1999 issued by the Central Government wherein the names of the additional/ villages were explicitly stated, including the village of Tarapur. In view of the same, the Court noted that it was not difficult to comprehend the territorial implication of notification in question. The Court further referred to its judgments in Ramanlal Bhailal Patel and Ors. vs. State of Gujarat, Delhi Gymkhana Club Limited vs. Employees’ State Insurance Corporation,  Khetrabasi Biswal vs. Ajaya Kumar Baral and Ors.

Reverting back to the impugned judgment of the High Court, the Court observed that the High Court restrained the application of the statutory notification to the limits of the Silchar Municipal Corporation, which would imply that all the other areas mentioned beyond “including” would be taken out of the purview of the ESI Act.  This could not be the intention of the Union Government, the Court noted.  The Bench further noted that the respondent in the instant case, while assailing the show cause notice in the EI Court failed to impleade the factory’s employee either individually or in  representative capacity. In addition to this the Court noted that even the Union of India was not impleaded as the party.  Thus, in pursuance of the same, the Court observed that non- joinder of the necessary parties makes the proceeding at the instance of the respondent as non- maintainable.  

The Court opined that the name of the village Tarapur was mentioned twice in the notification and thus strained interpretation was not at all necessary to bring the establishment of the respondent. At last, the Court observed that the word “including” in the notification, is used as a word of enlargement, so as to make the territorial application of the ESI Act extensive. The notification is certainly not confined to “only the area under the Silchar Municipal Board”, but includes various areas mentioned therein, in addition to the areas under the Silchar Municipal Board. Hence, the impugned judgments were set aside and the appeal was allowed. 

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