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Citation Codes
Equivalent Citations
citation codes
Case Number
Disposition
Attorney(S)
Judges
Acts
  • Chapter II of the Act
  • Chapter VII of the Act
  • Section 27 of the Minimum Wages Act, 1948 (11 of 1948)
  • Chapter V of the Act
  • Section 1(3) of the Employees' State Insurance Act, 1948 (34 of 1948)
  • Section 10 of the Industrial Disputes Act
  • Sections 74 and 75 of the Act
  • Chapter V-A of the Act
  • the relevant provisions of the Act
  • Chapter VIII of the Act
  • Section 3(1) of the Act
  • Chapter VI of the Act
  • the preamble to the Act
  • Chapter IV of the Act
  • Act 22 of 1869
  • Section 1(3) of the Act
  • Chapter III of the Act
  • Article 14 of the Constitution
  • Section 2(1) of the Employees' State Insurance Act
  • Article 226 of the Constitution
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Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Disposition
Attorney(S)
Judges
Acts
  • Chapter II of the Act
  • Chapter VII of the Act
  • Section 27 of the Minimum Wages Act, 1948 (11 of 1948)
  • Chapter V of the Act
  • Section 1(3) of the Employees' State Insurance Act, 1948 (34 of 1948)
  • Section 10 of the Industrial Disputes Act
  • Sections 74 and 75 of the Act
  • Chapter V-A of the Act
  • the relevant provisions of the Act
  • Chapter VIII of the Act
  • Section 3(1) of the Act
  • Chapter VI of the Act
  • the preamble to the Act
  • Chapter IV of the Act
  • Act 22 of 1869
  • Section 1(3) of the Act
  • Chapter III of the Act
  • Article 14 of the Constitution
  • Section 2(1) of the Employees' State Insurance Act
  • Article 226 of the Constitution
Smart Summary

Factual and Procedural Background

The appellants are workmen employed in three industrial concerns—Eagle Rolling Mills Ltd., Kumardhubi Engineering Works Ltd., and Kumardhubi Fire Clay and Silica Works Ltd.—all managed by Bird and Co. Ltd. These employers historically maintained a fully equipped 60-bed hospital that provided the appellants and their dependants with high-quality, free medical care.

On 22 August 1960, the Union of India issued a notification under Section 1(3) of the Employees' State Insurance Act, 1948 (“the Act”), bringing specified provisions of the Act into force in parts of Bihar that included the appellants’ workplaces. In anticipation of the appointed date, the Chief Executive Officer of each employer notified the workmen that their existing in-house medical facilities would be discontinued and that future benefits would be governed exclusively by the Act.

The appellants filed writ petitions in the Patna High Court challenging both (i) the constitutional validity of Section 1(3) and (ii) the employers’ notices curtailing existing medical benefits. The High Court dismissed the petitions, prompting the present, consolidated appeals to the Supreme Court of India.

Legal Issues Presented

  1. Whether Section 1(3) of the Employees' State Insurance Act, 1948 is unconstitutional for conferring “uncanalised and unguided” power on the Central Government, amounting to excessive delegation and violating Article 14 of the Constitution.
  2. Whether the employers’ notices discontinuing in-house medical facilities were legally valid—a matter raised but determined by the High Court to be outside the scope of writ jurisdiction under Article 226.

Arguments of the Parties

Appellants’ Arguments

  • Section 1(3) grants the Central Government absolute discretion to bring the Act into force in selected areas and factories without any legislatively prescribed standards, thereby constituting excessive delegation and infringing Article 14.
  • The employers’ notices unjustly curtailed superior medical benefits previously available, and the benefits under the Act were neither qualitatively nor quantitatively comparable.

The opinion does not set out the respondents’ arguments in detail.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Queen v. Burah Distinction between conditional legislation and excessive delegation; power exercised under conditional statutes remains legislative. Used to characterise Section 1(3) as conditional legislation rather than delegated legislation.
Edward Mills Co. Ltd., Beawar v. State of Ajmer (1955) 1 SCR 735 Permissibility of conferring power on government to extend welfare statutes to additional employments. Cited to demonstrate that a similar grant of power in the Minimum Wages Act was upheld as not excessive.
Bhikusa Yamasa Kshatriya v. Sangamner Akola Taluka Bidi Kamgar Union, Civil Appeal No. 546 of 1961 Limits of permissible delegation in social-welfare legislation. Reinforced the view that legislative schemes may legitimately entrust the executive with phased implementation.
Bhikusa Yamasa Kshatriya (P) Ltd. v. Union of India, AIR 1963 SC 1591 Same principle as above—validity of executive discretion when supported by clear legislative policy. Further support for upholding Section 1(3).

Court's Reasoning and Analysis

1. The Court held that Section 1(3) exemplifies conditional legislation, not delegated legislation. The Act itself is a comprehensive code; the notification mechanism simply fixes the time, place, and scope of its operation once pre-defined legislative conditions are met.

2. Even assuming an element of delegation, the Court found ample legislative guidance in the Act’s preamble, detailed definitions, and structured chapters on administration, finance, contributions, and benefits. Phased implementation is inherent to large-scale welfare schemes, and leaving such details to the executive does not amount to “uncanalised” power.

3. Reliance was placed on earlier decisions, notably Queen v. Burah and Edward Mills, which recognise the legitimacy of entrusting the executive with conditional or incremental application of welfare statutes.

4. Regarding the employers’ notices, the Court agreed with the High Court that the grievance concerns an industrial dispute better addressed under Section 10 of the Industrial Disputes Act, 1947, or possibly under Sections 74 and 75 of the Employees' State Insurance Act. Article 226 is not the proper vehicle for such claims.

Holding and Implications

Appeals Dismissed. Section 1(3) of the Employees' State Insurance Act, 1948 is constitutionally valid, and the High Court’s refusal to quash the employers’ notices stands affirmed. No order as to costs.

Implications: The decision confirms the constitutional soundness of phased, executive-driven implementation mechanisms in welfare legislation. While maintaining the status quo for the parties, it sets no new legal precedent beyond reinforcing existing jurisprudence on conditional legislation and permissible delegation.

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    Basant Kumar Sarkar v. Eagle Rolling Mills Ltd.

    Gajendragadkar, C.J— The short question which arises in these appeals by special leave is whether Section 1(3) of the Employees' State Insurance Act, 1948 (34 of 1948) (hereinafter called “the Act”) is invalid. By their writ petitions filed before the Patna High Court, the appellants who are the workmen of the three respondent concerns, the Eagle Rolling Mills Ltd., the Kumardhubi Engineering Works Ltd., and Kumardhubi Fire Clay and Silica Works Ltd., respectively, alleged that the impugned section has contravened Article 14 of the Constitution, and suffers from the vice of excessive delegation, and as such is invalid. These employers were impleaded as Respondent 1 respectively in the three writ petitions. The High Court has rejected the plea and the writ petitions filed by the appellants have accordingly been dismissed. It is against this decision of the High Court that the appellants have come to this Court and have impleaded the three employers respectively. The three appeals proceed on similar facts and raise an identical question of law and have, therefore, been heard together.

    2. It appears that Respondents 1 in all the three appeals are under the management of Bird and Co. Ltd., through a General Manager, and the appellants are their workmen. As such workmen, the appellants were getting satisfactory medical benefits of a very high order free of any charge. Respondent 1 in each appeal maintained a well-furnished hospital with provision for 60 permanent beds for the workmen, their families and their dependants. The main grievance made by the appellants is that as a result of Section l(3) of the Act, the appellants have now to be content with medical benefits of a less satisfactory nature. That is why they challenged the validity of the impugned section and contest the propriety and legality of the notification issued under it. To these writ petitions as well as to the appeals, the Employees' State Insurance Corporation and the Union of India have been impleaded as Respondents 2 and 3 respectively.

    3. On 22nd August, 1960, Respondent 3 issued a notification under Section 1, sub-section (3) appointing the 28th August, 1960 as the date on which some provisions of the Act should come into force in certain areas of the State of Bihar. By this notification, the area in which the appellants are working come within the scope of the Act. In pursuance of the said notification, the Chief Executive Officer of Respondent l informed the appellants on 25th August, 1960 that the medical benefits including indoor and outdoor treatment up to the extent admissible under the Act will cease to be provided to insurable persons from the appointed day. A notice in that behalf was duly issued and published by the said Officer. Similar notices were issued indicating to the appellants that medical benefits would thereafter be governed by the relevant provisions of the Act and not by the arrangements which had been made earlier by Respondent l in that behalf. That, in brief, is the genesis of the present writ petitions and the nature of the dispute between the parties.

    4. The first point which Mr Chatterjee has raised before us is that Section l(3) of the Act suffers from excessive delegation and, is, therefore, invalid. In order to consider the validity of this argument, it is necessary to read Section 1, sub-section (3):

    “The Act shall come into force on such date or dates as the Central Government may, by notification in the Official Gazette, appoint, and different dates may be appointed for different provisions of this Act and for different States or for different parts thereof.”
    The argument is that the power given to the Central Government to apply the provisions of the Act by notification, confers on the Central Government absolute discretion, the exercise of which is not guided by any legislative provision and is, therefore, invalid. The Act does not prescribe any considerations in the light of which the Central Government can proceed to act under Section l(3) and such uncanalised power conferred on the Central Government must be treated as invalid. We are not impressed by this argument. Section 1(3) is really not an illustration of delegated legislation at all; it is what can be properly described as conditional legislation. The Act has prescribed a self-contained Code in regard to the insurance of the employees covered by it; several remedial measures which the legislature thought it necessary to enforce in regard to such workmen have been specifically dealt with and appropriate provisions have been made to carry out the policy of the Act as laid down in its relevant sections. Section 3(1) of the Act purports to authorise the Central Government to establish a Corporation for the administration of the scheme of Employees' State Insurance by a notification. In other words, when the notification should be issued and in respect of what factories it should be issued, has been left to the discretion of the Central Government and that is precisely what is usually done by conditional legislation. What Lord Selborne said about the powers conferred on the Lieutenant-Governor by virtue of the relevant provisions of Act 22 of 1869 in Queen v. Burah can be said with equal justification about the powers conferred on the Central Government by Section 1(3). Said Lord Selborne in that case:
    “Their Lordships think that it is a fallacy to speak of the powers thus conferred upon the Lieutenant-Governor (large as they undoubtedly are) as if, when they were exercised, the efficacy of the acts done under them would be due to any other legislative authority than that of the Governor-General-in-Council. Their whole operation is directly and immediately under and by virtue of this Act (22 of 1869) itself. The proper legislature has exercised its judgment as to place, person, laws, powers; and the result of that judgment has been to legislate conditionally as to all these things. The conditions having been fulfilled, the legislation is now absolute.”
    That is the first answer to the plea raised by Mr Chatterjee.

    5. Assuming that there is an element of delegation, the plea is equally unsustainable, because there is enough guidance given by the relevant provisions of the Act and the very scheme of the Act itself. The preamble to the Act shows that it was passed because the legislature thought it expedient to provide for certain benefits to employees in case of sickness, maternity and employment injury and to make provision for certain other matters in relation thereto. So, the policy of the Act is unambiguous and clear. The material definitions of “benefit period”, “employee”, “factory”, “insured person”, “sickness”, “wages” and other terms contained in Section 2 give a clear idea as to the nature of the factories to which the Act is intended to be applied, the class of persons for whose benefit it has been passed and the nature of the benefit which is intended to be conferred on them. Chapter II of the Act deals with the Corporation, Standing Committee and Medical Benefit Council and their constitution; Chapter III deals with the problem of finance and audit; Chapter IV makes provisions for contribution both by the employees and the employer, and Chapter V prescribes the benefits which have to be conferred on the workmen; it also gives general provisions in respect of those benefits. Chapter V-A deals with transitory provisions; Chapter VI deals with the adjudication of disputes and claims; and Chapter VII prescribes penalties. Chapter VIII which is the last Chapter, deals with miscellaneous matters. In the very nature of things, it would have been impossible for the legislature to decide in what areas and in respect of which factories the Employees' State Insurance Corporation should be established. It is obvious that a scheme of this kind, though very beneficent, could not be introduced in the whole of the country all at once. Such beneficial measures which need careful experimentation have some times to be adopted by stages and in different phases, and so, inevitably, the question of extending the statutory benefits contemplated by the Act has to be left to the discretion of the appropriate Government. “Appropriate Government” under Section 2(1) means in respect of establishments under the control of the Central Government or a railway administration or a major port or a mine or oilfield, the Central Government, and in all other cases, the State Government. Thus, it is clear that when extending the Act to different establishments, the relevant Government is given the power to constitute a Corporation for the administration of the scheme of Employees' State Insurance. The course adopted by modern legislatures in dealing with welfare scheme has uniformly confirmed to the same pattern. The legislature evolves a scheme of socio-economic welfare, makes elaborate provisions in respect of it and leaves it to the Government concerned to decide when, how and in what manner the scheme should be introduced. That, in our opinion, cannot amount to excessive delegation.

    6. The question of excessive delegation has been frequently considered by this Court and the approach to be adopted in dealing with it is no longer in doubt. In Edward Mills Co. Ltd., Beawar v. State of Ajmer (1955) 1 SCR 735 this Court repelled the challenge to the validity of Section 27 of the Minimum Wages Act, 1948 (11 of 1948), whereby power had been given to the appropriate Government to add to either part of the schedule any employment in respect of which it was of opinion that minimum wages shall be fixed by giving notification in a particular manner, and it was provided that on the issue of the notification, the scheme shall, in its application to the State, be deemed to be amended accordingly. In dealing with this problem, this Court observed that there was an element of delegation implied in the provisions of Section 27, for the legislature, in a sense, authorised another body specified by it to do something which it might do itself; but it was held that such delegation was not unwarranted and unconstitutional and it did not exceed the limits of permissible delegation. To the same effect are the recent decisions of this Court in Bhikusa Yamasa Kshatriya v. Sangamner Akola Taluka Bidi Kamgar Union Civil Appeal No. 546 of 1961, and Bhikusa Yamasa Kshatriya (P) Ltd. v. Union of India AIR 1963 SC 1591. Therefore, we must hold that the impugned Section 1(3) of the Act is not shown to be constitutionally invalid.

    7. Before we part with these appeals, there is one more point to which reference must be made. We have already mentioned that after the notification was issued under Section 1(3) by Respondent 3 appointing August 28, 1960 as the date on which some of the provisions of the Act should come into force in certain areas of the State of Bihar, the Chief Executive Officer of Respondent 1 issued notices giving effect to the State Government's notification and intimating to the appellants that by reason of the said notification, the medical benefits which were being given to them in the past would be received by them under the relevant provisions of the Act. It was urged by the appellants before the High Court that these notices were invalid and should be struck down. The argument which was urged in support of this contention was that Respondents 1 in all the three appeals were not entitled to curtail the benefits provided to the appellants by them and that the said benefits were not similar either qualitatively or quantitatively to the benefits under the Scheme which had been brought into force under the Act. The High Court has held that the question as to whether the notices and circulars issued by Respondents 1 were invalid, could not be considered under Article 226 of the Constitution; that is a matter which can be appropriately raised in the form of a dispute by the appellants under Section 10 of the Industrial Disputes Act. It is true that the powers conferred on the High Courts under Article 226 are very wide, but it is not suggested by Mr Chatterjee that even these powers can take in within their sweep industrial disputes of the kind which this contention seeks to raise. Therefore, without expressing any opinion on the merits of the contention, we would confirm the finding of the High Court that the proper remedy which is available to the appellants to ventilate their grievances in respect of the said notices and circulars is to take recourse to Section 10 of the Industrial Disputes Act, or seek relief, if possible, under Sections 74 and 75 of the Act.

    8. The result is, the appeals fail and are dismissed. There would be no order as to costs.

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    Comments

    Basant Kumar Sarkar v. Eagle Rolling Mills Ltd.
    (Feb 26, 1964)