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Calcutta Electric Supply Corporation Ltd. v. Calcutta Electric Supply Workers' Union And Others
Factual and Procedural Background
The appeal challenges an award dated 5 February 1993 rendered by the Third Industrial Tribunal, Calcutta. The appellant-employer had, through four separate notices (30 March 1964, 19 June 1968, 13 November 1975 and 10 August 1976), unilaterally withdrawn a set of medical benefits that had previously formed part of the employees’ service conditions. None of these notices complied with Form ‘E’ or the service requirements prescribed by Rule 34 of the Industrial Disputes (Central) Rules, 1957. The Tribunal held that (i) the withdrawal violated Section 9-A of the Industrial Disputes Act, 1947 and (ii) the employer lacked authority to discontinue the benefits after the Employees’ State Insurance Act, 1948 became applicable. The employer appealed against both findings.
Legal Issues Presented
- Whether the employer’s withdrawal of medical benefits contravened Section 9-A of the Industrial Disputes Act, 1947 due to non-issuance of a proper notice in Form ‘E’.
- Whether, upon the Employees’ State Insurance Act, 1948 becoming operative, the employer was entitled to discontinue existing medical benefits previously extended to employees.
Arguments of the Parties
Appellant Employer
- The medical benefits under the Employees’ State Insurance Act (ESI Act) are allegedly more generous and comprehensive than those earlier provided by the employer.
- Because the employer is statutorily required to contribute under the ESI Act, continuing its own parallel scheme is both financially burdensome and redundant.
- Consequently, the withdrawal of benefits was not prejudicial to employees, making a Section 9-A notice unnecessary.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Bareilly Holdings Ltd. v. Their Workmen (1979) 3 SCC 257; (1979) 3 SCR 236 | Benefits forming part of service conditions cannot be withdrawn merely because employees come under the ESI Act, except to the limited extent allowed by Regulation 97. | Used as supporting authority for the conclusion that existing contractual benefits survive ESI coverage unless expressly permitted to be reduced. |
Court's Reasoning and Analysis
1. Requirement of Section 9-A Notice: The court affirmed that withdrawal of medical benefits is a change “prejudicial to the employees”; therefore, a notice in the prescribed Form ‘E’ was mandatory. None was served on either the Union or statutory authorities, rendering the change illegal.
2. Comparison of Benefit Schemes: The court rejected the employer’s claim that ESI benefits were more generous. As an illustration, private nursing-home hospitalisation and reimbursement—available under the employer’s scheme—are not generally available under the ESI Act unless specific conditions are met.
3. Statutory Bar under Section 72 ESI Act: Section 72 expressly forbids an employer from discontinuing or reducing benefits “similar to the benefits conferred by this Act” merely because of its contribution liability. The only permissible reductions are those enumerated in Regulation 97, confined to certain leave and maternity benefits. Medical benefits at large cannot be withdrawn.
4. Interpretation of Section 72: The employer’s argument that the section bars only monetary benefits was dismissed as misconceived. The statute contains no affirmative authority allowing unilateral alteration of other service conditions; absence of such authority cannot be construed as permission.
5. Precedential Support: The ruling in Bareilly Holdings reinforced the view that contractual medical benefits endure alongside ESI coverage, barring explicit statutory sanction to the contrary.
Holding and Implications
Appeal Dismissed; Tribunal’s Award Upheld. Costs awarded to the respondent Union of Workmen and to the Employees’ State Insurance Corporation in two separate sets.
Implications: The decision affirms that employers cannot unilaterally withdraw existing medical or other service-condition benefits simply because employees come under the ESI Act. Any alteration must comply with Section 9-A of the Industrial Disputes Act and is constrained by Section 72 and Regulation 97 of the ESI framework. The ruling reinforces employee protection without creating new precedent beyond existing statutory interpretation.
Order
1. These are appeals against the award dated 5-2-1993 made by the Third Industrial Tribunal, Calcutta, West Bengal. Two questions arose for consideration before the Tribunal, viz., (1) whether the change effected by the appellant employer was in contravention of Section 9-A of the Industrial Disputes Act, 1947 (the ‘Act’); and (2) whether the employer was entitled to withdraw the medical benefits which were already given by it to the employees prior to the coming into force of the Employees' State Insurance Act, 1948 (the ‘ESI Act’).
2. On both questions, the Tribunal held against the appellant employer and hence the present appeals. To withdraw the said benefits, the employer served as many as four notices dated 30-3-1964, 19-6-1968, 13-11-1975 and 10-8-1976. It is not disputed that none of the notices in question was in Form ‘E’ prescribed under Rule 34 of the Industrial Disputes (Central) Rules, 1957. Nor is it disputed that none of them was served either on the respondent Union of workers as required by Rule 34 and Form ‘E’ or on the authorities mentioned in Form ‘E’. In fact, it was the case of the employer that there was no change in the service conditions prejudicial to the workers and hence no notice under Section 9-A of the Act was necessary. The Tribunal held that the withdrawal of the medical benefits was prejudicial to the workers and therefore, the notice was necessary and since no such notice was given, the withdrawal of the benefits, was illegal. We are in agreement with the said finding for the reasons given below. That takes us to the main controversy, viz., whether after coming into force of the ESI Act, the employer was justified in withdrawing the said benefits.
3. Dr Shankar Ghosh, learned counsel appearing for the appellant employer contended that the benefits available under the ESI Act are more generous and comprehensive compared to the benefits extended by the employer. After coming into operation of the ESI Act, the employer is required to make contribution under that Act. In view of the said contribution, the continuation of the medical benefits by the employer at its own cost had become both burdensome and redundant. The employer was, therefore, not only justified but also entitled to withdraw the benefits. It is for this reason that notice under Section 9-A of the Act was not necessary since the withdrawal of the said benefits in the context of the availability of the more generous benefits was not prejudicial to the interests of the employees.
4. There is no doubt that both the said questions in a sense, are interlinked. If it is held that the benefits available under the ESI Act are more generous, it may be possible to argue that the notice under Section 9-A was not necessary. Hence the examination of the two schemes of benefits is necessary.
5. The medical benefits available to the employees under the employer have been enumerated in an annexure to the appeal-memo. It is not necessary to discuss each of the said benefits. It suffices to point out that one of the major benefits available to the employees is hospitalisation in a private nursing home in case of illness and reimbursement of the medical expenses incurred for such hospitalisation. There is no such benefit available under the ESI Act. A reference of the patient to a private nursing home is possible only if no facility for the treatment of the ailment is available at the hospitals run by the ESI Corporation and the Medical Officer concerned certifies to that effect. We have taken this instance only to point out that Dr Ghosh's contention that the benefits under the ESI Act are more generous or beneficial, is not borne out by facts.
6. This is apart from the question whether the availability of medical benefits as a part of the service conditions of the employees, is liable to be withdrawn unilaterally by the employer merely because the employees in question are also covered by the ESI Act. That question has to be answered in the negative for various reasons. In the first instance, there is nothing in the ESI Act which enables the employer to withdraw such benefits merely because the employees come to be covered by that Act. On the other hand, the provisions of Section 72 of that Act prohibit withdrawal of the benefits. The section reads as follows:
“72. Employer not to reduce wages etc.— No employer by reason only of his liability for any contributions payable under this Act shall, directly or indirectly reduce the wages of any employee, or except as provided by the regulations, discontinue or reduce benefits payable to him under the conditions of his service which are similar to the benefits conferred by this Act.”
(emphasis supplied)
The only regulation which permits discontinuance or reduction of benefits is Regulation 97 of the Employees' State Insurance (General) Regulations, 1950 which provides as follows:
“97. Discontinuation or reduction of benefits.— An employer may discontinue or reduce benefits payable to his employees under conditions of their service which are similar to the benefits conferred by the Act to the extent specified below, namely—
(a) from the date of the commencement of the first benefit period following the appointed day for his factory or establishment—
(i) sick leave on half pay to the full extent;
(ii) such proportion of any combined general purposes and sick leave on half pay as may be assigned as sick leave but in any case not exceeding 50 per cent of such combined leave;
(b) any maternity benefit granted to women employees to the extent to which such women employees may become entitled to the maternity benefit under the Act:
Provided that where an employee avails himself of any leave from the employer for sickness, maternity or temporary disablement, the employer shall be entitled to deduct from the leave salary of the employee the amount of benefit to which he may be entitled under the Act for the corresponding period.”
7. Dr Ghosh, however, contended that Section 72 of the ESI Act prohibits discontinuance or reduction only of the monetary benefits except as provided by the Regulations made under that Act. It does not prohibit discontinuance or reduction of the other benefits. We are afraid the contention begs the question. The correct reading of the provisions of Section 72 will show that the discontinuance or reduction of benefits permitted by the said section is only of the monetary benefits and no other benefits. There is no provision in that Act which permits tampering with the service conditions on account of the operation of the Act. Unless that Act or any other law permits the employer to effect a change in the service conditions of the employees, any change effected has to be held as illegal. To construe the provisions of the ESI Act and in particular of Section 72 of that Act as permitting discontinuance or reduction of the other benefits is to construe the absence of provisions in the Act enabling such discontinuance or reduction as a positive permission or licence to effect such discontinuance or reduction. Such construction of the statute to say the least, is unwarranted. What is further necessary to remember in this connection is that the payment of contribution by and on behalf of the employee does not compel the employee to avail of the benefits under the Act. It is up to the employee to avail of the benefits available to him under the service conditions or under the Act. The view which we are taking, viz., that the benefits which have become a part of the service conditions are not intended to be affected by the provisions of the ESI Act and its scheme except to the extent permitted by Regulation 97 and on the conditions mentioned therein, is supported by a decision of this Court in Bareilly Holdings Ltd. v. Workmen (1979) 3 SCC 257, (1979) 3 SCR 236.
8. In the result, we uphold the award of the Tribunal and dismiss the appeal with costs to be payable to the respondents, viz., the Union of Workmen and the ESI Corporation in two separate sets.
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