CALCUTTA ELECTRIC SUPPLY CORPORATION LIMITED 

v. CALCUTTA
ELECTRIC SUPPLY WORKERS' UNION & Ors.1

Before the Supreme Court of India

Decided: 1993, 26th August

Bench: Hon’ble Jst. P. B. Sawant and Hon’ble Jst. Yogeshwar Dayal (Division Bench)

FACTS OF THE CASE AND MAIN ISSUES

Appeals had been filed before the Hon'ble SC in opposition of the award made by Third
Industrial Tribunal of Kolkata in West Bengal. Two main questions of law had to be considered
by the Tribunal.2

Issues Raised before the Hon’ble SC

1) As to whether the change brought into effect by the employer who was the appellant was in
opposition of s. 9-A of the Industrial Disputes Act, 1947 (hereinafter referred to as IDA, 1947).

2) Whether the medical benefits could be withdrawn by the employer who had given the same to
the employees before the Employees' State Insurance Act, 1948 (hereinafter referred to as ESI
Act) came into effect.3

Procedural History

The aforementioned appeals had been filed before the Hon'ble SC since the Tribunal had held
both the questions of law against the appellant employer. For the withdrawal of the mentioned

1
1 (1979) 3 SCC 257.
2
Id. at Para. 1.
3
Id.
benefits, 4 notices had been served by the employer (30th March, 1964; 19th June, 1968; 13th
November, 1975 and 10th August, 1976). It was not a matter of dispute that the aforementioned
notices were not in conformity with Industrial Disputes (Central) Rules, Rule 34. Moreover, the
conformity to the same was not laid upon either of the respondents as required under Rule 34
Form E. As a matter of fact, there was no notice under section 9A of IDA and the same was not
necessary as not changing the working conditions of the employees was prejudicial upon the
same and was imperative upon the employer. It was laid down by the Tribunal that withdrawing
the medical benefits showed prejudice against the employees and hence, it was necessary that a
notice was served and since the same was not given, withdrawing of such benefits was deemed
illegal. The Tribunal agreed with the aforementioned findings and reasons. This draws the
attention to the main point of contention, as to whether post the effecting of the ESI Act,
withdrawing of such benefits by the employer was justifiable.4

RULING

It was held by the Hon'ble SC that the Tribunal's award was in all merit, to be upheld and the
present appeal had to be dismissed with necessary costs payable to the respondents, i.e. The
Workmen Union as well as the ESI Corpn. 5 The judiciary has opined the same without an iota of
doubt or contradiction. While both the questions of law were appropriately addressed in the
instant case, the same have been analyzed in detail below.

ANALYSIS

The point of contention in the instant case was that the benefits extended as per the ESI Act,
were more of a generous and comprehensive nature as compared to the ones served by the
employer. The employer has to contribute to the ESI Act sir the time it has been brought into
effect. In regards to the aforementioned view, continuing of giving medical benefits at the cost of
the employer was backed by burden and redundancy. Therefore, the employer was totally
justified as well as had the entitlement of getting the benefits withdrawn. The reason behind the
non necessity of notice under s. 9-A of the Act was that the more generous benefits being

4
Supra Note 1 at Para 2.
5
Supra Note 1 at Para 8.
available were not prejudicial towards the employees’ personal interests.6 Both questions in a
way were linked to each other and there was no conflict about the same. It is to stated that the
benefits under the ESI Act are of a generous nature, it is possibly arguable that notice under s. 9-
A is not necessary. Therefore it becomes necessary to examine the two schemes of benefits.7

It is to be analyzed that the judges considered that the medical benefits that an employee has an
entitlement over have been enumerated in a necessary manner. Discussing each and every benefit
is not necessary and possible at the same time. One has to necessarily point out that a major
benefit available to the employees is hospitalization in a private home of nursing in case a
worker is ill and the same will get reimbursed for getting hospitalized for such illness. A benefit
of this sort is not necessarily available under the ESI Act. A patient can be referred to a privately
run hospital or nursing home only when no adequate treatment for the particular ailment is given
at the hospitals which are run by ESI Corporation as well as the medical officers concerned with
certifying to that effect. The contention of the counsel on behalf of the appellants in regards to
the benefits being more generous as well as beneficial hold no merits when examined in
consonance with the set of facts.8 This particularly is away from the question whether the
medical benefits being available as a part of the conditions related to service of the employees, is
supposed to be withdrawn in a unilateral manner by the employer just because of the fact that the
employees concerned are also a part of ESI Act. The manner of answer for these particular
questions has to be in a negative and several reasons are there for the same. Firstly, ESI Act
gives absolute no set of situations and circumstances where the employer can withdraw these
benefits because of the fact that the employees are covered by the Act. Keeping this aside, on the
other hand, the statutory provisions pertaining to s. 72 of the Act, stipulates a prohibition upon
withdrawing such benefits.9

S. 72 of the Act states that an employer cannot, in a direct or indirect manner, decrease an
employee's wages or, except as specified by the regulations, discontinue or reduce benefits

6
Supra Note 1 at Para 3.
7
Supra Note 1 at Para 4.
8
Supra Note 1 at Para 5.
9
Supra Note 1 at Para 6.
payable to him under the terms of his service that are equivalent to the benefits conferred by this
Act because of his responsibility for any contributions payable under this Act.10

Discontinuance or reducing of benefits are laid down only in regulation 97 of the Employees'
State Insurance (General) Regulations, 1950 and the same states that an employer can worked in
furtherance of discontinuing for reducing benefits that are to be paid to his employees under their
service conditions which are more or less in consonance with the provisions of the Act to the
extent it as specified herewith

a) from the date of starting of the first period of benefit following the day of appointment for his
factory or establishment-

i) sick leave to be paid half to the utmost extent;

ii) search proportion of any general purposes combined and sick leave to be paid half in any
circumstance not more than 50% of such combined leave.

b) women employees getting Maternity Benefit granted to the extent to which such women
employees have the entitlement over the maternity benefit under ESI Act.

The proviso to the same states that provided if an employee seeks a leave from his employer for
sickness, maternity or disablement temporarily, the employee is entitled for deducting the salary
in regards to the leave of the employee and the same would be the amount of benefit which he
has an entitlement over as per the Act for the corresponding period.

It was a point of contention that s. 72 of the ESI Act puts a prohibition over discontinuance or
reducing only of the benefits to the monetary level except for the ones that have been provided
by the regulations that are made in consonance with the Act. Discontinuance or reducing of the
Other benefits are not prohibited. One needs to be afraid of the point of contentions begging to
the question. If one appropriately reads the provisions of s. 72 he would be knowing the fact that
the aforementioned section signifies a Pawn discontinuing or reducing the benefits that are of a
monetary level and none of the other benefits have been covered within the ambit of the said
10
S. 72, The Employees’ State Insurance Act, 1948 (No. 34, Acts of Parliament), 1948.
provision. The Act is inclusive of no such provision which gives permission of tempering with
the conditions of service so that the Act could be properly operated. Unless it becomes
imperative upon the Act t or any other law for the employer to effectuate a change in service
conditions of an employee, any particular change that has been brought into effect has to be
considered illegal. For properly construing the statutory provisions of the ESI Act as well as s. 72
of the Act in particular, as giving permission to discontinuing or reducing of the Other benefits is
to construe the provisions in the Act which enable such discontinuance or reduction as a positive
permission or licence to effect such discontinuance or reduction as absent. It is unwarranted to
the statute in such a manner. One must necessarily remember in this particular regard is that
payment of contribution by the employee or on behalf of the same does not have a compelling
effect on the employee to avail the particular benefits under the Act. The rationale taken behind
this particular case by the Hon'ble Court that the benefits which are a part of the conditions of
service are not to be affected by the ESI Act's provisions as well as its scheme except to the
extent conformed by the Regulation 97 and on conditions provided in consonance with the same,
was backed by the same rationale undertaken by the Hon'ble SC in the case of Bareilly Holdings
Ltd. v. Workmen.11 This signifies that the prudence of the judicial minds had used an earlier case
to derive logic in the instant case and the same would be the case for this that the judiciary will
be open to using this case as a valid precedent for the deriving the opinion in another case in
future which involves and is based on similar lines of law.

CONCLUSION

It is concluded that the Hon'ble Supreme Court was totally justified in upholding the Tribunal's
award and dismissing the instant appeal with the relevant costs to be paid to the Union of
Workmen and ESI Corporation in two distinct sets. This particular case can be considered to be
of utmost pertinence for the simple fact that it involved issues which needed concrete solutions
with the relevant backing of the Hon'ble SC. The aforementioned two questions of law were
quite interlinked and the SC did an apt job in dealing with both in an intertwined manner. The
change in the instant case effected by the appellant employer was definitely in contravention
with s. 9-A of the IDA, 1947 as mentioned above in the analysis. Moreover the employer did not
have an entitlement over the withdrawal of medical benefits which had been already given by it

11
Bareilly Holdings Ltd v. Their Workmen, 1979 AIR 1211.
to the employees before the ESI Act, 1948 came into effect. It is pertinent to be stated that this
case is also relevant from the perspective of the fact that a mere codification of law which in this
case is the ESI Act, does not validate the scrapping of the other benefits which the employee has
an entitlement over otherwise as well. In totality this particular case can serve as necessary
precedent for the Hon'ble SC in the years to come if a question of law lies on the aforementioned
similar lines.