THE EMPLOYEES STATE INSURANCE CORPORATION & ORS. versus M/S KEY DEE COLD STORAGE PVT. LTD. on 19 May 2022

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SUPREME COURT REPORTS

[2022] 3 S.C.R.

ATHE EMPLOYEES STATE INSURANCECORPORATION & ORS.

v.

M/S KEY DEE COLD STORAGE PVT. LTD.

(Civil Appeal No. 4159 Of 2022)

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MAY 19, 2022

[K. M. JOSEPH AND HRISHIKESH ROY, JJ.]

Employees’ State Insurance Act, 1948: s. 1(3) – Issuance ofnotification dated 21.07.1999 under – Interpretation of –CEstablishment of the respondent situated at Tarapur, if covered withinthe area as notified vide notification dated 21.07.1999 – Held:Respondent’s establishment covered under the purview of the ESIAct – Notification dated 21.7.1999 issued by the Central Governmentspecifies the areas to which the ESI Act is made applicable andDsignificantly, apart from stating that it applies to areas under theSilchar Municipal Corporation, it specifically names additionalareas/villages, including the village of Tarapur where the factoryof the respondent located – Thus, the notification would extend toareas well beyond the limits of the Silchar Municipal Corporation– If the area of coverage of the ESI Act was intended to be restrictive,Ethere was no need to mention other areas by name in the saidnotification – Name of Tarapur village is mentioned twice in thenotification – Word “including” in the Notification, is used as aword of enlargement, so as to make the territorial application ofthe ESI Act extensive – Notification is not confined to “only theFarea under the Silchar Municipal Board”, but includes various areasmentioned therein, in addition to the areas under the SilcharMunicipal Board – High Court erred in holding that since the VillageTarapur, where the factory of the Respondent is situated, falls outsidethe municipal limits of Silchar, the establishment of the respondentis not covered by the notification, thus, the decision of High CourtGset aside.

Interpretation of Statutes: Notification issued u/s. 1(3) of theEmployees’ State Insurance Act, 1948 – Principles of interpretation– Held: Notification being a statutory notification, the principles ofinterpretation of subordinate legislation are applicable – If the wordsH

used are unambiguous, the cardinal principle of interpretation isthat effect has to be given to every word in the subject notification.

Allowing the appeal, the Court

HELD: 1.1 The 21.7.1999 notification issued by the centralgovernment specifies the areas to which the Employees’ StateInsurance Act, 1948 is made applicable and significantly, apartfrom stating that it applies to areas under the Silchar MunicipalCorporation, it goes on to specifically name additional areas/villages, including the village of tarapur. It is therefore not difficultto comprehend that the notification would extend to areas wellbeyond the limits of the Silchar Municipal Corporation. If thearea of coverage of the ESI Act was intended to be restrictive,there was no need to mention other areas by name in the saidnotification. The logical interpretation would then be that theentire village area of Tarapur is notified for coverage as the nameof Tarapur village is mentioned twice in the notification. Thesignificance of this must be given due weightage. [Para 15][852-D-F]

1.2 The notification issued under Section 1(3) of the ESIAct is a statutory notification and the same should be treated asa part of the statute, both for the purposes of construction andalso for the obligations arising therefrom, as if, they are containedin the Act. The principles of interpretation of subordinatelegislation are applicable for interpretation of such statutorynotification. If the words used are unambiguous, the cardinalprinciple of interpretation is that effect has to be given to everyword in the subject notification. An interpretation that thestatutory notification was intended to cover only those areas fallingwithin the jurisdiction of the Silchar Municipal Board as wasdecided in the impugned judgment, would mean that all the otherareas specifically mentioned in the notification, which areotherwise beyond the limits of the Silchar Municipal Corporation,would be excluded from the purview of the statutory notification.If this is accepted, there would be departure from the cardinalprinciple of interpretation of giving full effect to every word ofthe notification. [Paras 16, 17][852-F-H]

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ASouth Central Railway Employees Cooperative CreditSociety Employees’ Union, Secunderabad v. Registrarof Cooperative Societies and Ors. (1998) 2 SCC 580 :[1998] 1 SCR 85; National Highways Authority of Indiav. Pandarinathan Govindarajulu and Anr. (2021) 6SCC 693 – referred to.B

1.3 The Central Government notification makes referenceto several areas beyond the limits of the Silchar Municipal Board.This is discernible from the fact that reference to Tarapur is madetwice, firstly in reference to the Silchar Municipal Corporationand secondly with reference to Mouza-Barakpur. The referenceCto the Udharbond Revenue Circle (outside the limits of SilcharMunicipal Corporation) and likewise to Rajnagar, which is anotherrevenue unit, distinct from Barakpur (which comprises the SilcharTown), would suggest that the Central Government intended toextend the operation of the ESI Act to areas well beyond theDlimits of the Silchar Municipal Corporation. The concernedestablishment is located in Tarapur Part III falling withinBarakpur, which is otherwise outside the Silchar Municipal Area.Significantly, Mouza-Barakpur by name is mentioned in thenotification. The High Court’s constrictive interpretation of thenotification, for application of the ESI Act to the smaller areasEwithin the limits of Silchar Municipal Corporation, cannot beaccepted. [Para 18][853-D-F]

1.4 The notification which obviously could have been betterdrafted, is punctuated by several commas. This would suggestthat the areas mentioned after the punctuation marks should beFread disjunctively and should not be read in reference to theSilchar Municipal Corporation which is the first area mentionedin the notification. When this Court looks at the punctuationmarks in the notification dated 21.7.1999, and what followsthereafter, is that the notification intended to cover several areasGbeyond the areas within the Silchar Municipal Corporation. Thenotification issued under Section 1(3) of the ESI Act, after initiallyadverting to areas under Silchar Municipal Corporation fallingwithin Silchar Revenue Circles, significantly uses the word“including” which would suggest the intention of the writer ofthe notification, to enlarge the coverage area, well beyond theH

THE EMPLOYEES STATE INSURANCE CORPORATION & ORS. v.M/S KEY DEE COLD STORAGE PVT. LTD.

limits of the Silchar Municipal Corporation. The other areasspecifically mentioned after the word “including”, would suggestthat the area of coverage under the ESI Act, must not be restrictedto the territorial limits of the Silchar Municipal Corporation. TheHigh Court restricted the application of the statutory notificationto the limits of the Silchar Municipal Corporation, which wouldimply that all the other areas mentioned beyond “including” wouldbe taken out of the purview of the ESI Act. This could not havebeen the intention of the Union Government. [Para 19, 22][853-G-H; 854-B-D; 855-C-D]

Ramanlal Bhailal Patel and Ors. v. State of Gujarat(2008) 5 SCC 449 : [2008] 2 SCR 468; Union of Indiaand Anr. v. Hansoli Devi and Ors. (2002) 7 SCC 273 :[2002] 2 Suppl. SCR 324; Dr. M.K Salpekar v. SunilKumar Shamsunder Chaudhari and Ors. (1988) 4 SCC21 – referred to.

1.5 The respondent while challenging the show cause noticein the EI Court, failed to implead the factory’s employees eitherindividually or in representative capacity. Even the Union of Indiawhich issued the notification under Section 1(3) of the ESI Actexpanding coverage of the beneficial legislation to the area wherethe factory of the respondent is located, was not arrayed as aparty in the proceeding. The plea that for non-joinder of necessaryparties, the proceeding at the instance of the respondent wouldnot be legally maintainable, was specifically raised by theappellants before the High Court but this was rejected with theobservation that the issue ought to have been raised before thetrial court. In this context, it is necessary to keep in mind thatthe Employees’ State Insurance Corporation’s case was renderedon 17.9.2009 whereas the judgment in favour of the appellantswas rendered by the EI Court much earlier on 21.6.2006.Therefore, for the appellants, it would have been impossible torely on the ratio in the subsequent judgment of the SupremeCourt to argue on the non-maintainability of the respondent’sproceeding, for non-impleadment of the concerned employees.[Paras 24, 27][855-F-G; 857-G-H; 858-A-B]

Employees’ State Insurance Corporation v. Bhakra BeasManagement Board and Anr. (2009)10 SCC 671 :

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846SUPREME COURT REPORTS

A[2009] 14 SCR 656; Fertilizers and ChemicalsTravancore Ltd. vs. Regional Director, Employees’ StateInsurance Corporation and Ors. (2009) 9 SCC 485 :[2009] 13 SCR 437 – referred to.

1.6 The submission of the respondent is that since penalBconsequences are provided under the ESI Act, strictinterpretation of the notification on the applicability of the Act tothe respondent’s establishment, must be made. The name ofvillage ‘T’ is mentioned twice in the 21.7.1999 notification andtherefore a strained interpretation is not at all necessary to bringCthe establishment of the respondent, within the ambit of coverageof the ESI Act. The respondent’s failure to conform to therequirement of the ESI Act may perhaps invite penal actionenvisaged by the legislation. But this by itself does not persuadeto interpret the statutory notification in a particular manner, tosuit the purpose of the respondent. [Para 29][858-D-F]

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1.7 The High Court erred in holding that since the VillageTarapur, where the factory of the Respondent is situated, fallsoutside the municipal limits of Silchar, the establishment of therespondent is not covered by the notification (21.07.1999). Suchfaulty interpretation adopted by the High Court cannot beEaccepted. The word “including” in the Notification, is used as aword of enlargement, so as to make the territorial application ofthe ESI Act extensive. The notification is certainly not confinedto “only the area under the Silchar Municipal Board”, but includesvarious areas mentioned therein, in addition to the areas underFthe Silchar Municipal Board. That being the case, the respondent’sestablishment, is found to be covered under the purview of theESI Act. [Para 30][858-F-H; 859-A]

1.8 The terms of the notification cannot be any clearer andthe language used admits no exceptions of the kind submitted byGthe respondents. There is definite and unambiguous referenceto the areas beyond the territorial limits of the Silchar MunicipalBoard. Furthermore, the village Tarapur where the factory of therespondent is situated, is mentioned a second time. The wordsused are not surplusage and emphatically proclaim the drafter’s H

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intention to include wider areas within the purview of thenotification and thereby the ESI Act. The plain language of thenotification settles the issue against the respondent. Thus, theimpugned decision is set aside. [Paras 31, 32][859-A-C]

Quebec Railway, Light, Heat & Power Co. v. VandryAIR 1920 PC 181; Khetrabasi Biswal v. Ajaya KumarBaral and Ors. (2004) 1 SCC 317 : [2003] 6 Suppl.SCR 8; Delhi Gymkhana Club Limited v. Employees’State Insurance Corporation (2015) 1 SCC 142 : [2014]14 SCR 1082 – referred to.

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Case Law Reference

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4159of 2022.

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From the Judgment and Order dated 01.12.2016 of the High Courtof Assam at Guahati in Regular First Appeal No. 82 of 2006.

Santosh Krishnan, Yakesh Anand, Ms. Sonam Anand, Advs. forthe Appellants.

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Parthiv K. Goswami, Rahul Pratap, Ankit Agarwal, PrateekBhardwaj, Advs. for the Respondent.

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AThe Judgment of the Court was delivered by HRISHIKESH ROY, J.

1. Leave granted.

2. Heard Mr. Santosh Krishnan, the learned counsel appearingBfor the appellants. The respondent is represented by Mr. Parthiv K.Goswami, the learned counsel.

3. The challenge in this appeal is to the judgment and order dated1.12.2016 in the RFA No. 82/2006 whereby the Guwahati High Courthas allowed the appeal of the respondent and set aside the order datedC28.4.2006 passed in favour of the appellants by the Employees InsuranceCourt. Under the impugned judgment, it has been held that VillageTarapur, where the factory of the respondent is located, falls outside themunicipal limits of Silchar and is therefore not covered under thenotification dated 21.7.1999 (Annexure P-I) issued by the appellantsunder sub-Section (3) of Section 1 of the Employees’ State InsuranceDAct, 1948 (hereinafter referred to as the “ESI Act”). The other findingof the High Court to the effect that the business of cold storage run bythe respondent is covered within the meaning of ‘manufacturing process’as defined under Section 2(14AA,) is however not challenged in thisappeal by the appellants.

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E4. The issue to be decided here is whether the High Court wascorrect in its interpretation of the notification dated 21.7.1999 and holdingthat the notification covers only the areas within the Silchar MunicipalBoard, although the notification additionally mentions names of otherareas/villages including the Village of Tarapur, where the respondent’sFfactory is located.

5. The Village Tarapur is subdivided into many segments and partof the village area falls within the Silchar Municipal Corporation andother parts, within the Silchar Revenue Circle. The respondent companyset up its cold storage factory at Ramnagar, Village Tarapur.

6. On 21.7.1999, the notification was issued under sub-section (3)of Section 1 of the ESI Act, notifying 1.8.1999 as the date on whichcertain provisions of the ESI Act shall come into operation in the followingareas in the State of Assam namely :- G

“Areas under Silchar Municipal Corporation falling within SilcharRevenue Circles including the Revenue Village – Silchar Town, H

Ambicapur, Uttar Krishnapur, Kanakpur, Ukilbazar, Tarapur,Rangpur, Durganagar, Gosaipur, Srikona, Under Mouza-Barakpur,Tarapur, Ph-Barakpur, Rang Ph-Barakpur, Udharbond, Rajnagar.”

7. Thereafter, the Regional Director of the Employees StateInsurance Corporation informed the respondent about the notificationand that the provisions of the ESI Act are now made applicable, to allfactories situated within the notified areas and as such, the respondent’sfactory at Ramnagar, Village Tarapur would be covered under the ESIAct, with effect from 1.8.1999. Since the respondent failed to takenecessary steps for registration under the ESI Act and to pay the requisitecontribution for the employees in their establishment, a show cause noticewas issued to the respondent to remit contribution for the months ofApril to September, 2000, on ad hoc basis. This was followed by a noticeby the competent authority for recovery of Rs. 17,068 from therespondent.

8. The respondent then moved the Employees Insurance Court,Guwahati (hereinafter referred to as the “EI Court”) to challenge theshow cause notice and the consequent steps for recovery of contribution.The say of the respondent was that the area in which their factory islocated is not covered by the 21.7.1999 notification. The RegionalDirector of the ESI Corporation however contended that the 21.7.1999notification, extending the provisions of the ESI Act, also covers thearea where the factory of the respondent is located. The EI Courtconsidered the testimony of the witnesses and the documents relied uponby the parties and concluded that the notification extends to Tarapur andtherefore, the factory of the respondent, located in Tarapur, is broughtunder the coverage of the ESI Act. Accordingly, the respondent isrequired, under the ESI Act, to make the contribution, and the authoritieshad correctly assessed the quantum of contribution payable for theemployees in the establishment.

9. The relevant findings of the EI Court are extracted below:-“ **** **** **** ****

11. The Notification Ext. 2 issued by the Government of India on21.7.99 includes areas under Silchar Municipal Corporation fallingwithin Silchar revenue circles including the revenue village, SilcharTown, Ambicapur, Uttar Krishnapur, Kanakpur, Ukil bazar, AB

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ATarapur, Rongpur, Durganagar, Gosaipur, Srikona, under Mouza-Borakpur, Tarapur etc.

12. From evidence on record it is clear that Lamargram, Ramnagaris situated within the Tarapur Village in between Tarapur andSrikona. Several part villages are included in the Tarapur villagesBarea and Lamargram, Ramnagar is included in the Tarapur Village,in the Notification Tarapur has been included as a whole. Thisbeing so, I hold that M/s. Kay Dee Cold Storage Pvt. Ltd. – thepetitioner was included under the coverage of E.S.I. Act videNotification Ext. 2.

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10. An appeal was then preferred under Section 82 of the ESIAct before the Guwahati High Court to challenge the decision of the EICourt. In RFA 82/2006, the learned Judge framed, inter alia, the followingsubstantial question of law to be answered in the proceeding:-D“i. Whether the establishment of the appellant is covered withinthe area as notified vide notification dated 21[st] July, 1999 (Ext.2)?

11. In the impugned judgment, the High Court concluded that theestablishment of the respondent is not covered by the 21.7.1999 notificationand the RFA was accordingly allowed by setting aside the judgmentEdated 28.4.2006 of the E.I. Court. Answering the substantial questionNo. (i), the Court opined that “only the area under Silchar MunicipalBoard is the overall area sought to be covered by the notification,and therefore, only the areas falling within the Silchar RevenueCircle, inclusive of the areas mentioned therein that falls within theFjurisdiction of Silchar Municipal Board can be said to be coveredby the notification dated 21.7.1999”

12.1 Assailing the above, Mr. Santosh Krishnan, the learnedcounsel for the appellants, would contend that the 21.7.1999 notificationwhile setting out that it applies to areas under the Silchar MunicipalCorporation, also goes on to specifically name certain areas/villagesGincluding the Tarapur Village where the respondent’s factory is located.The village Tarapur is constituted by several parts and in the Para LamarGram of Tarapur Part III, the Cold factory Storage of the respondent issituated. The Village Tarapur partially falls under Silchar MunicipalCorporation and also under the Silchar Revenue Circle and since VillageHname is mentioned twice in the notification, the entire village area of

Tarapur would be covered by the notification dated 21.7.1999. Accordingto Mr. Santosh Krishnan, the learned counsel, on correct understandingof the areas covered by the 21.7.1999 notification, the area where thecold storage factory is located, could not have been excluded by theHigh Court by placing reliance on the Certificate dated 5.7.2004 (Ext.16), which had certified that the respondent’s factory at Ramnagar,Tarapur is situated outside the limits of Silchar Municipal Board.

12.2 As the respondent has not challenged the notification dated21.7.1999 issued under Section 1(3) of the ESI Act, the High Court,according to the appellants, fell into an error in giving a restrictiveinterpretation of the notification dated 21.7.1999.

12.3 The exclusion of the areas of Ramnagar, Tarapur from thepurview of the 21.7.1999 notification would, according to the appellant’scounsel, have far reaching consequences, inasmuch as others in thearea would then claim that they are outside the purview of the coverageunder the ESI Act, and this consequently will be detrimental to the interestsof the employees working in the establishments covered by the ESI Act.

12.4 The appellants also argue that in the proceedings before theE.I. Court, the respondent should have impleaded the factory’s workmenas also the Union of India, to facilitate participation of these necessarystakeholders and since this was not done, the finding in favour of therespondent is a nullity and it should be understood accordingly.

13.1 Per contra Mr. Parthiv K. Goswami, the learned counsel forthe respondent would point out that the factory of the respondent doesnot fall within the limits of the Silchar Municipal Corporation and theSilchar Revenue Circle but is located in Ramnagar Tarapur GramPanchayat, and therefore it is outside the coverage of the ESI Act, interms of the notification dated 21.7.1999.

13.2 According to Mr. Goswami, the learned counsel, since theauthority of the Silchar Municipal Board had issued the certificate on5.7.2004 (Ext. 16) certifying that the respondent’s cold storage factoryat Ramnagar Tarapur is outside the municipal limits, the coverage of thesaid factory under the ESI Act, is not warranted.

13.3 Adverting to the penal implications under the ESI Act,Mr. Goswami submits that the expanded interpretation of the notificationis not warranted and the High Court, according to the learned counsel, AB

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Ahas correctly interpreted the notification dated 21.7.1999 in favour ofthe respondent.

14. At this stage, it would be appropriate to identify the location ofthe respondent’s establishment. Silchar is one of the sub-divisions ofCachar District in Assam and it is comprised of five revenue circlesB(Tehsils) namely Silchar, Lakhipur, Sonai, Udharbond and Katigorah.There are 245 revenue villages within the jurisdiction of the Silchar SadarRevenue Circle. The records show that Part I to Part VIII segments ofTarapur and the Tarapur Part VIII “B” town segment are located withinBarakpur Pargana. The respondent’s cold storage factory is situated inTarapur III, Lamar Gram, Ramnagar and this segment is outside theClimits of the Silchar Municipal Corporation. Only Tarapur Part VII andTarapur Part VIII segments are partially within the Silchar MunicipalCorporation area. It can therefore be appreciated that one part of villageTarapur falls within the limits of Silchar Municipal Corporation and anothersegment of same village falls within the Silchar Revenue Circle.

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15. The 21.7.1999 notification issued by the Central Governmentspecifies the areas to which the ESI Act is made applicable andsignificantly, apart from stating that it applies to areas under the SilcharMunicipal Corporation, it goes on to specifically name additional areas/villages, including the village of Tarapur. It is therefore not difficult toEcomprehend that the notification would extend to areas well beyond thelimits of the Silchar Municipal Corporation. If the area of coverage ofthe ESI Act was intended to be restrictive, there was no need to mentionother areas by name in the said notification. The logical interpretationwould then be that the entire village area of Tarapur is notified forcoverage as the name of Tarapur village is mentioned twice in theFnotification. The significance of this must be given due weightage.

16. The notification issued under Section 1(3) of the ESI Act is astatutory notification and the same should be treated as a part of thestatute, both for the purposes of construction and also for the obligationsarising therefrom, as if, they are contained in the Act. The principles ofGinterpretation of subordinate legislation are applicable for interpretationof such statutory notification. If the words used are unambiguous, thecardinal principle of interpretation is that effect has to be given to everyword in the subject notification. [See. South Central Railway EmployeesCooperative Credit Society Employees’ Union, Secunderabad vs.

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Registrar of Cooperative Societies and Ors[1] and National HighwaysAuthority of India vs. Pandarinathan Govindarajulu and Anr.[2]]

17. Guided by the above, let us now examine whether the statutorynotification was intended to cover only those areas falling within thejurisdiction of the Silchar Municipal Board as was decided in the impugnedjudgment. Such an interpretation would mean that all the other areasspecifically mentioned in the notification, which are otherwise beyondthe limits of the Silchar Municipal Corporation, would be excluded fromthe purview of the statutory notification. If this is accepted, there will bedeparture from the cardinal principle of interpretation of giving full effectto every word of the notification. This would then be contrary to what isrepeatedly laid down by this Court, including in the case of South CentralRailway Employees Cooperative Credit Society Employees’ Union(supra) and National Highways Authority of India (supra).

18. The Central Government notification makes reference toseveral areas beyond the limits of the Silchar Municipal Board. This isdiscernible from the fact that reference to Tarapur is made twice, firstlyin reference to the Silchar Municipal Corporation and secondly withreference to Mouza-Barakpur. The reference to the Udharbond RevenueCircle (outside the limits of Silchar Municipal Corporation) and likewiseto Rajnagar, which is another revenue unit, distinct from Barakpur (whichcomprises the Silchar Town), would suggest that the Central Governmentintended to extend the operation of the ESI Act to areas well beyond thelimits of the Silchar Municipal Corporation. The concerned establishmentis located in Tarapur Part III falling within Barakpur, which is otherwiseoutside the Silchar Municipal Area. Significantly, Mouza-Barakpur byname is mentioned in the notification. Therefore, the High Court’sconstrictive interpretation of the 21.7.1999 notification, for applicationof the ESI Act to the smaller areas within the limits of Silchar MunicipalCorporation, cannot be countenanced by us.

19. That apart, the notification which obviously could have beenbetter drafted, is punctuated by several commas. This would suggestthat the areas mentioned after the punctuation marks should be readdisjunctively and should not be read in reference to the Silchar MunicipalCorporation which is the first area mentioned in the notification. Herewe may benefit by referring to Dr. M.K Salpekar Vs. Sunil Kumar1 (1998) 2 SCC 5802 (2021) 6 SCC 693

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AShamsunder Chaudhari and Ors.[3]In this case, Justice L.M Sharmawriting for the Division Bench, while adverting to the use of punctuation,opined that “punctuation “comma” in the sub-clause after “alternateaccommodation” and before the rest of the sentence indicates thatthe last part of the sub-clause, namely, “and does not reasonablyneed the house” governs only the second part of the sub-clause.”BWhen we look at the punctuation marks in the notification dated21.7.1999, and what follows thereafter, our finding is that the notificationintended to cover several areas beyond the areas within the SilcharMunicipal Corporation. The notification issued under Section 1(3) of theESI Act, after initially adverting to areas under Silchar MunicipalCCorporation falling within Silchar Revenue Circles, significantly uses theword “including” which would suggest the intention of the writer of thenotification, to enlarge the coverage area, well beyond the limits of theSilchar Municipal Corporation. The other areas specifically mentionedafter the word “including”, would suggest that the area of coverageunder the ESI Act, must not be restricted to the territorial limits of theDSilchar Municipal Corporation.

20. Confronted with a situation where interpretation had to bemade on usage of the word “includes” in Ramanlal Bhailal Patel andOrs. vs. State of Gujarat[4], Justice R.V. Raveendran, speaking for theDivision Bench, had the following to say:-E

“23. The word “person” is defined in the Act, but it is an inclusivedefinition, that is, “a person includes a joint family”. Where thedefinition is an inclusive definition, the use of the word “includes”indicates an intention to enlarge the meaning of the word used inthe statute. Consequently, the word must be construed asFcomprehending not only such things which they signify accordingto their natural import, but also those things which the interpretationclause declares that they shall include. Thus, where a definitionuses the word “includes”, as contrasted from “means”, the worddefined not only bears its ordinary, popular and natural meaning,Gbut in addition also bears the extended statutory meaning (see S.K.Gupta v. K.P. Jain [(1979) 3 SCC 54 : AIR 1979 SC 734]following Dilworth v. Commr. of Stamps [1899 AC 99 : (1895- 3 (1988)4 SCC 21H4 (2008) 5 SCC 449

99) All ER Rep Ext 1576 : 79 LT 473] and Jobbins v. MiddlesexCountry Council [(1949) 1 KB 142 : (1948) 2 All ER 610 (CA)]).”

21. At this stage, it would also be apposite to refer to the opinionwritten for the Constitution Bench by Justice G.B. Pattanaik in Unionof India and Anr. vs. Hansoli Devi and Ors.[5], where it has beenrightly held that “it is not a sound principle of construction to brushaside words in a statute as being inapposite surplusage, if they canhave appropriate application in circumstances conceivably withinthe contemplation of the statute.” It must be remembered that “thelegislature is deemed not to waste its words or to say anything invain[6]’’and a construction which attributes redundancy to a statute cannotbe accepted except under compelling circumstances.

22. Proceeding with the above understanding, let us now examinethe impugned judgment. The High Court has restricted the application ofthe 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 havebeen the intention of the Union Government.

23. This Court in Delhi Gymkhana Club Limited vs. Employees’State Insurance Corporation[7], through the opinion of Justice R.Banumathi, noted that the object of the ESI Act is to provide benefits tothe employees and also to make provisions for certain other matters inrelation thereto. As the ESI Act is a beneficial piece of social welfarelegislation aimed at securing the well-being of the employees, a restrictiveinterpretation which will have the effect of defeating the objects of thebeneficial legislation, should be eschewed by the Court.

24. In the present matter, the respondent while challenging theshow cause notice in the EI Court, failed to implead the factory’semployees either individually or in representative capacity. Even the Unionof India which issued the notification under Section 1(3) of the ESI Actexpanding coverage of the beneficial legislation to the area where thefactory of the respondent is located, was not arrayed as a party in theproceeding. In such circumstances, the decision of this Court inEmployees’ State Insurance Corporation vs. Bhakra Beas 5 (2002) 7 SCC 273

6 Quebec Railway, Light, Heat & Power Co. V. Vandry, AIR 1920 PC 181

7 (2015) 1 SCC 142

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AManagement Board and Anr.[8]and Fertilizers and ChemicalsTravancore Ltd. vs. Regional Director, Employees’ State InsuranceCorporation and Ors.[9]would come into play.

25. In Employees’ State Insurance Corporation (supra) thenecessity of impleading the employees of the concerned establishmentBin a proceeding under the ESI Act was emphasized by this court in thefollowing opinion:- “4. This Court has recently held in Fertilizer & ChemicalsTravancore Ltd. v. ESI Corpn. [(2009) 9 SCC 485 : (2009) 2SCC (L&S) 693 : (2009) 11 Scale 766] as under: (SCC pp. 487-C88, paras 5-10)

“5. It may be noted that in its petition before the Employees’Insurance Court, the appellant herein only impleaded theEmployees’ State Insurance Corporation and the DistrictCollectors of Alleppey, Palaghat and Cannanore as theDrespondents but did not implead even a single workman as arespondent. Labour statutes are meant for the benefit of theworkmen. Hence, ordinarily in all cases under labour statutesthe workmen, or at least some of them in a representativecapacity, or the trade union representing the workmenconcerned must be made a party. Hence, in our opinion theEappellant (petitioner before the Employees’ Insurance Court)should have impleaded at least some of the persons concerned,as respondents.

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8. In our opinion, wherever any petition is filed by an employerunder Section 75 of the Act, the employer has not only to impleadESIC but has also to implead at least some of the workersconcerned (in a representative capacity if there are a largenumber of workers) or the trade union representing the saidworkers. If that is not done, and a decision is given in favour ofthe employer, the same will be in violation of the rules of naturaljustice. After all, the real parties concerned in labour matters G

8 (2009) 10 SCC 671H9 (2009) 9 SCC 485

are the employer and the workers. ESI Corporation will not bein any way affected if the demand notice sent by it underSections 45-A/45-B is quashed.”

26. Likewise this court in Fertilizers and Chemicals TravancoreLtd. (supra), made the following pertinent observation on impleadmentof the employees:-

“10. In the present case the workmen concerned were not madeparties before the Employees’ Insurance Court, nor was noticeissued to them by the said court. Also, the order of the Employees’Insurance Court dated 4-2-1993, relevant portion of which wehave quoted, is not a very happy one as no proper determinationhas been made therein as to whether the workmen concernedare the employees of the appellant and whether they are entitledto the benefit of the Act.

12. In our opinion, the Employees’ Insurance Court should haveitself made a proper investigation of the facts after getting evidencefrom the parties, including the workmen concerned, and afterimpleading them as party in the petition, it should have determinedthe question as to whether the persons concerned were theemployees of the appellant or not.

14. Needless to say, the Employees’ Insurance Court will grantan opportunity to all the parties, including the alleged workmen, tolead documentary evidence or oral evidence and thereafterproceed in accordance with law. We make it clear that nothingstated hereinabove shall be construed as an expression of opinionon the merits of the controversy involved. All questions of lawand fact are left open for the parties to be raised before theInsurance Court.”

27. The above judgments suggest that for non-joinder of necessaryparties, the proceeding at the instance of the respondent would not belegally maintainable. Such a plea was specifically raised by the appellantsbefore the High Court but this was rejected with the observation that theissue ought to have been raised before the trial court. In this context, it isnecessary to keep in mind that the Supreme Court judgment i.e.

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AEmployees’ State Insurance Corporation (supra) was rendered on17.9.2009 whereas the judgment in favour of the appellants was renderedby the EI Court much earlier on 21.6.2006. Therefore, for the appellants,it would have been impossible to rely on the ratio in the subsequentjudgment of the Supreme Court to argue on the non-maintainability ofthe respondent’s proceeding, for non-impleadment of the concernedBemployees.

28. In any case, non-joinder of a necessary party goes to the rootof the matter and could also be fatal to a legal proceeding. For this wecan usefully read the opinion of this court in Khetrabasi Biswal vs.Ajaya Kumar Baral and Ors.[10]where it was held as follows:-C“6. The procedural law as well as the substantive law bothmandates that in the absence of a necessary party, the order passedis a nullity and does not have a binding effect.”

29. Let us now deal with the specific submission of the learnedDcounsel for the respondent. The argument is that since penalconsequences are provided under the ESI Act, strict interpretation ofthe notification on the applicability of the Act to the respondent’sestablishment, must be made. On this aspect, it needs to be said that thename of village Tarapur is mentioned twice in the 21.7.1999 notificationand therefore a strained interpretation is not at all necessary to bring theEestablishment of the respondent, within the ambit of coverage of the ESIAct. The respondent’s failure to conform to the requirement of the ESIAct may perhaps invite penal action envisaged by the legislation. Butthis by itself does not persuade us to interpret the statutory notification ina particular manner, to suit the purpose of the respondent.F

30. As we find, the High Court erred in holding that since theVillage Tarapur, where the factory of the Respondent is situated, fallsoutside the municipal limits of Silchar, the establishment of the respondentis not covered by the notification (21.07.1999). Such faulty interpretationadopted by the High Court cannot be countenanced. The word “including”Gin the Notification, is used as a word of enlargement, so as to make theterritorial application of the ESI Act extensive. The notification is certainlynot confined to “only the area under the Silchar Municipal Board”, butincludes various areas mentioned therein, in addition to the areas under the Silchar Municipal Board. That being the case, the respondent’sestablishment, is found to be covered under the purview of the ESI Act.

31. The terms of the notification cannot be any clearer and thelanguage used admits no exceptions of the kind argued by the respondents.There is definite and unambiguous reference to the areas beyond theterritorial limits of the Silchar Municipal Board. Furthermore, the villageTarapur (where the factory of the respondent is situated), is mentioneda second time. The words used are not surplusage and emphaticallyproclaim the drafter’s intention to include wider areas within the purviewof the notification and thereby the ESI Act. The plain language of thenotification settles the issue against the respondent.

32. In the result the impugned decision is set aside. The Appealaccordingly stands allowed without any order on costs.

Nidhi Jain

Appeal allowed.

(Assisted by : Tamana, LCRA)

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