ESI Act Should Be Given Liberal Interpretation So That Social Security Can Be Given To Employees : Supreme Court

The Supreme Court observed that the Employees' State Insurance Act should be given liberal interpretation so that social security can be given to the employees.

M/s Radhika Theatre's challenge against the demand notice issued by the ESI Corporation was dismissed by the ESI Court. The Telangana High Court, allowing their writ petition, held that Subsection (6) of Section 1, which was inserted w.e.f. 20.10.1989 shall not be applicable retrospectively and the same shall not be made applicable to an establishment, established prior to 20.10.1989/31.03.1989.

Allowing the appeal filed by ESI Corporation, the Apex Court bench observed that ESI Act should be given liberal interpretation and should be interpreted in such a manner so that social security can be given to the employees. 

"The ESI Act being a social welfare legislation, any interpretation which would lean in favour of the beneficiary should be given. The object and purpose of the ESI Act has been elaborately considered by this Court in the case of Bangalore Turf Club Limited (supra). After considering catena of earlier decisions under the ESI Act, it is observed and held that ESI Act should be given liberal interpretation and should be interpreted in such a manner so that social security can be given to the employees"

The bench observed that the High Court has committed a very serious error in holding that even for the demand notices for the period subsequent 20.10.1989 i.e., subsequent to inserting Sub-section (6) of Section 1 the said provision is applied retrospectively and the High Court has erred in allowing the appeal and setting aside the demand notices even for the period subsequent to 20.10.1989

Sub-section (6) of Section 1 shall be applicable even with respect to those establishments, established prior to 31.03.1989/20.10.1989 and the ESI Act shall be applicable irrespective of the number of persons employed or notwithstanding that the number of persons employed at any time falls below the limit specified by or under the ESI Act, the court held.

Case details

ESI Corporation vs Radhika Theatre | 2022 LiveLaw (SC) 53 | CA 312 OF 2023 | 20 Jan 2023 | Justices M R Shah and C T Ravikumar

For Appellant(s) Mr. Mahesh Srivastava, Adv. Mr. Vaibhav Manu Srivastava, AOR Ms. Niharika Gupta, Adv. Mr. Abhishek Gupta, Adv.

Headnotes

Employees' State Insurance Act, 1948 - ESI Act should be given liberal interpretation and should be interpreted in such a manner so that social security can be given to the employees - Referred to Bangalore Turf Club Limited Vs. Regional Director, ESIC; (2014) 9 SCC 657. (Para 6,6.1)

Employees' State Insurance Act, 1948 ; Section 6(1) - Sub-section (6) of Section 1 shall be applicable even with respect to those establishments, established prior to 31.03.1989/20.10.1989 and the ESI Act shall be applicable irrespective of the number of persons employed or notwithstanding that the number of persons employed at any time falls below the limit specified by or under the ESI Act - Only in case of demand notice for the period prior to inserting Sub-section (6) of Section 1 of the Act, it can be said that the same provision has been applied retrospectively. (Para 7)

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