Judgment:
S.M. Dadu, J.
1. This petition challenges the vires of notification dated 18th September 1978 issued by the 1st Respondent under section 1(5) and section 1(4) of the Employees State Insurance Act, 1948 hereinafter referred to as 'the Act'.
2. The Act has been passed 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. Being an enactment of the Union Government, the Act was made applicable in the first instance to all factories other than seasonal factories. Having regard to the sheer size and diversity of employments in the country, it was left to the appropriate Government to extend the provisions of the Act or any of them to 'any other establishment or class of establishments, industrial commercial, agricultural or otherwise'. The expression 'appropriate Government' was to mean (i) the Central Government in respect of establishment under it control or a railway administration or a major port or a mine or oilfield, (ii) the State Government in all other cases. Section 1(5) provides for consultation with the 'Corporation' and approval of the Central Government, where the State Government extends the Act vide section (5). 'Corporation' means the E.S.I. Corporation set up under the Act and in this petition is represented by its Regional Director, the 3rd respondent. Respondent No. 1 after the required consultation and approval on September 18, 1978 issued the assailed notification. Briefly stated, the notification took within its sweep the establishments etc. specified therein and made all the provisions of the Act applicable to them. The territory covered was the area within the limits of the municipal Corporation of Bombay and certain talukas of Thane District. The other division was in regard to establishments and others as under :-
(i) Establishments carrying on a manufacturing process with the aid of power with a work force ranging between 10 to 20 employees.
(ii) Establishments carrying on a manufacturing process without the aid of power with a work force of 20 or more employees.
(iii) Hotels, Restaurants, shops, cinemas including preview theatres and newspapers establishments of a particular description---provided the workers employed therein numbered 20 or more.
3. Petitioner No. 1 a trade union registered under the Trade unions Act, 1926, claims to have on its rolls a large number of workers employed in shops, commercial establishments, small workshop and printing presses in Greater Bombay. The notification deprives this unorganised and worst-oppressed section of the toiling masses of the basic health care and benefits available under the Act. This is done through the medium of the impugned notification. The said is ultra-vires the Act inasmuch as section 1(5) does not permit classification on the basis of number of employees engaged in an establishment. Assuming that it does, the notification as also section 1(4) are violative of Article 14 of the Constitution in that they deny the promise of equal protection of laws to the most deserving section of workmen. The restriction specified in the notification be voided and the State Government be directed to extend the benefits of the Act to all establishments irrespective of the size of the work force and use or otherwise of power.
4. The only respondent to file a return is the Corporation i.e. Regional Director through his deputy. The stand taken is that application of the Act depends on a variety of factors which if excluded from application would render the enactment a toothless measure. Rendition of medical aid requires elaborate arrangements in the shape of hospitals, dispensaries, equipment and drugs. The Act has left the extension of its provisions to the appropriate Government purposely. This Government alone has the machinery to ascertain when, where and to what extent its provisions wholly or in part should be made applicable. The Act requires administration which entails collection of dues and monitoring of its observance and breach etc. etc. For these reasons the Act's extension has been gradual and in stages. An important constraint is finance. The notification is neither violative of section 1(5) nor of Article 14. No. part of section 1 violatives the said article.
5. The first issue is in relation to the vires of the Notification vis-a-vis section 1(5) of the Act. Mr. Deshmukh argues that the sub-section permits classifications of a very limited nature i.e. into the enumerated species industrial commercial, agricultural. Once a class from any of these species is picked out for treatment under the act, the said class as a whole has to receive the benefit. In the present case the State Government has picked out commercial establishments for extension of the Act. All commercial establishments within the demarcated territory must be covered by the notification. There cannot be a further split and that too on the basis of number of occurring in the sub-section have to be read ejusdem generis. Recourse to this principle of construction requires some caution and the same is best stated in the words of Mr. Justice Venkatachaliah in M/s. Siddeshwari Cotton Mills v. Union of India A.I.R. 1989 S.C. 1091 :
'The expression ejusdem generis 'of the same kind or nature' signifies a principle of construction whereby words in a statute which are otherwise wide but are associated in the text with more limited words are, by implication, given a restricted operation and are limited to a matters of the same class or genus as proceedings them. If a list or string or family of genus-describing terms are followed by wider or residuary or sweeping-up words, then the verbal context and the linguistic implications of the preceding words limits the scope of such words.......
'The preceding words in the statutory provisions which, under this particular rule of construction, control and limit the meaning of the subsequent words must represent a genus or a family which admits of a number of species or members. If there is only one species it cannot supply the idea of a genus.........'
It is in the light of the above exposition that Mr. Deshmukh's submission in regard to the two words has to be appraised.
6. To fortify his submission Mr. Deshmukh revers to the preamble of the Act. It is, says Counsel, an enactment to provide for certain benefits to employees-not a section of employees. The appropriate Government can classify establishments, but the permitted classification can be only within the 3 species. Once a class falling in the species is picked out, all employees of that class have to be covered by the Act. The words 'to otherwise' do not permit a greater leeway to the Government. Reference to the preamble is a permissible tool in the construction of statutes. However, it cannot outweigh the specific words used in the body of the instrument. Thus understood, it is clear that section 1 shows the caution of the lawmakers. Sub-section (3) indicates the discretion given to the Central Government to enforce the Act or different portions thereof on different dates in different states or even different parts thereof. Sub-section (4) shows the preference to factories in the matter of instant applicable. The reason for this is not far to seek. Factories were already subject to some sort of supervision by the Labour Department personnel of the Government by virtue of other legislation enacted for the protection and welfare of labour. Even so, seasonal factories were excluded. Sub-section (5) makes the spirit of graduation more explicit. The appropriate Governments were given the discretion to apply the provisions of the Act or any of them. Where the State Government was the appropriate government it had not only to consult the corporation an obligation imposed upon it in common with the Central Government but was further obliged to get the Central Government's approval to notifications it proposed to issue. The deducible inference is that the legislature was aware of the radical nature of the legislation and the need to proceed cautiously having regard to the limitations, which, though unstated, were obvious. In the face of the enthroned gradualism can it possibly be said that the discretion vested in the government vide sections (5) (sic) is as circumscribed as that canvassed on behalf of the petitioners? The government can extend the Act or any portion thereof. It can do so vide any other establishment (in contradistinction to factories other than seasonal factories) or class of establishments. The class contemplated may be industrial, commercial, agricultural or otherwise. That there can be establishments of a character other than industrial, commercial or agricultural cannot be disputed. An example of this is a travel agency. That being the position it will be erroneous to hold that the words 'or otherwise' are to be read in a restricted sense and take their colour from the three words preceding them. These preceding words cannot supply the idea of a genus. Indeed the genus lies in the words 'any other establishment or class of establishments'. The three words which follow each represent a specie. But the legislature did not want to restrict the operation of the Act to these 3 species and therefore, used the catch-all words 'or otherwise'.
7. For the purposes of this petition the real issue is different viz. whether having picked out a particular class i.e. industrial or commercial establishments, the government was precluded from excluding such establishments as employed numerically lesser force than that mentioned in the notification? Some of the meanings given to the word 'class' in the Chambers Twentieth Century Dictionary is 'a rank or order of persons or things', 'top arrange methodically'. Ranking or arranging can be by any criterion numbers not excluded. Classification of commercial establishments by the criteria of numbers working therein coupled with or without the use of power if the establishment be engaged in manufacture, would not be impermissible under sub-section (5) of section 1. After all the appropriate government has been empowered to pick out 'any other' establishment or class of establishments. Therefore, some but not all classes of commercial establishments could be picked out for being notified under the authority of section 1(5). The validity of the notification as measured against this sub-section, stands sustained.
8. Mr. Deshmukh impugns the constitutional validity of the notification and sub-section (4) of section 1 of the Act. In so far as these exclude the employees of establishments employing less than 10 or 2 workmen as the case may be (hereinafter to be referred to as small establishments), counsel submits these are the most deserving of protection. The employees find it difficult to resist the employer who represent a particularly rapacious specie. This class gets the best of both worlds for it evades taxes, duties and high rents which large establishments pay and also chest labour taken over the liability to pay for the medical care of the employees of these establishments, as it does in relation to some categories of employees of the covered establishments. Respondent No. 3's defence falls into two broad categories. First, the extension of the Act to the section espoused by the petitioners will require financial investment on a massive scale presently beyond the capacity of the State and next, the virtually insuperable obstacles in administering the Act if extended to small establishments. Petitioner's answer is that neither difficulty is insuperable and in any case cannot justify the denial of a basis need to the co-evals, if not, the more deserving, than those covered by the Act.
9. That there is something to be said for the view canvassed by Mr. Deshmukh is undeniable. Employees serving in small establishments are at the receiving end in every sense of the word for they do not have the basic material to forge a weapon to fight for their rights. This requirement is numbers and the employment market being what it is, the workmen are completely at the mercy of the employers. The letter may not be the Scrooges Mr. Deshmukh makes them out to be, but are certainly no angels of mercy. Employees is small establishments are as likely, if not more, than their more fortunate colleagues in larger establishments, to bouts of illnesses requiring diagnosis, medication and convalescence. It is an irony that the slightly better off and much better off should get these benefits, but not the more and most needy. But the danger of hard cases leading to a dubious interpretation of law should always be guarded against. This is all the more so when parts of a statute-whether plenary or conditional-are sought to be struck down as violating an entrenched right. Counsel relies on D.S. Nakara v. Union of India, : (1983)ILLJ104SC to support the argument that sub-section (4) and the notification violate Article 1. In that case the issue was as to the constitutional validity of a liberalised pension scheme restricting the benefit of the liberalisation to personnel retiring on the basis of a given date of retirement. The classification was held to be violative of the equality clause of the constitution. Mr. Deshmukh says that sub-section (4) and the notification embody a classic case of equals being treated unequally and therefore, deserving of affirmative action by the judicial process as was done in Nakara (supra). Counsel emphasises the words used to demonstrate the iniquitous character of the scheme. i.e..'The artificial division stares in the face and is unrelated to any principle and whatever principle, if there be any, has absolutely no nexus to the objects sought to be achieved by liberalising the pension scheme. In fact this arbitrary division has not only no nexus to the liberalised pension scheme but it is counter productive and runs counter to the whole gamut of pension scheme. The equal treatment guaranteed in Article 14 is wholly violated inasmuch as the pension rules being statutory in character, since the specified date, the rules accord differential and discriminatory treatment to equals in the matter of commutation of pension. A 48 hours difference in matter of retirement would have a traumatic effect. Division is thus both arbitrary and unprincipled. Therefore, the classification does not stand the test of Article 14.
Further the classification is wholly arbitrary because we do not find a single acceptable or persuasive reason for this division. This arbitrary action violated the guarantee of Article 14.
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The words 'who were in service on 31st March 1979 and retiring from service on or after that date' excluding the date for commencement of revision are words of limitation introducing the mischief and are vulnerable as denying equality and introducing an arbitrary fortuitous circumstance can be served without impairing the formula. Therefore, there is absolutely no difficulty in removing the arbitrary and discriminatory portion of the scheme and it can be easily severed.
There is nothing immutable about the choosing of an event as an eligibility criteria subsequent to a specified date. If the event is certain but its occurrence at a point of time is considered wholly irrelevant and arbitrarily selected having no rationale for selecting it and having an undersirable effect of dividing homogenous class and of introducing the discrimination, the same can be easily served and set aside. While examining the case under Article 14, the approach is not; 'either take it or leave it', the approach is removal of arbitrariness and if that can be brought about by severing the mischievous portion the Court ought to remove the discriminatory part retaining the beneficial portion.'
10. But the limitations of the judicial process have to be remembered. The Supreme Court in relation to the Act, though in a different context, had this to say:---
'We do not doubt that beneficial legalisation should have liberal construction with a view to implementing the legislative intent but where such beneficial legislation has a scheme of its own there is no warrant for the Court to travel beyond the scheme and extend the scope of the statute on the pretext of extending the statutory benefit to those who are not covered by the scheme.'
Regional Director, E.S.I.C. v. Ramanuja Match Industries, : (1985)ILLJ69SC . The cardinal feature of the Act is its stress on gradualism. The preamble did not proclaim a cradle-to-cretorium cover for employees. It only spoke of 'certain' benefits. Sub-section 1(3) vested in the Central Government discretion of the widest amplitude in regard to the enforcement of the Act. It could choose different dates to bring into effect the Act or different provisions thereof. The discretion to extend it to different States or for different parts thereof is absolute and unfettered. Sub-section (4) though questioned by the petitioners, can yet be appraised in the context of ascertaining the legislative intent. The Act's application had to be gradual for there existed a wide chasm between India of the late nineteen forties and the industrialised West. This India was not an oversized Manchester which latter had accepted, however unwillingly, the need for a National Health Service. The diversity it presented ranged from the most primitive to the most sophisticated in the means, mode and methodology of production as also distribution of wealth. The position has changed-mercifully so-but not to an extent where the Courts can substitute for the Central or the appropriate governments of the Act. The pick and choose feature of the 1st section's latter three sub-section has and explanation and that explanation negates the stigma of class legislation sought to be stamped on it by the petitioners.
11. Respondent No. 3's return speaks of the need to provide for extra hospitals, diagnostic centres etc. before the Act can be extended to small establishments. This factor is self-evident. Coverage of small establishments by the Act will bring in beneficiaries whose numbers will be many times more than what it is at present. This will not be a mere statistical phenomenon. The employees covered will be human beings suffering myriad ailments requiring an expansion of the existing facilities to mind boggling proportions. The contributions to be made by the employers and employees may cover recurring expenses. But the capital investment for exceting the infrastructure has to come first. Having regard to the condition of our public hospitals-phenomenal though their contribution to the maintenance of public health be the State just cannot presently be expected to be in a position to incur the required expenditure. And the erection of hospitals and clinics will not be the end of the matter. Medical practitioners, technicians, and administrators etc. will have to be appointed. Provision will have to be made for their residence, transport and what not. The small establishments to be covered will increase the paper and regulation work required to be done by the agency appointed to administer the Act. This will be an addition to the bureaucracy-not excluding provision for their minimal creature comforts. Small establishments may not be able to cope up with the red-tape, leave alone the financial burden imposed by the Act. This is not an insignificant reason for exempting them from the operation of the Act. Every enactment throws up its enforcers and a wise legislature tries to restrict their intrusions into the affairs of those who cannot comply with the small print that makes up the equipment of the bureaucrat trying to administer the law. The inability to cope with the financial burden will drive small business to bankruptcy. This will affect not only the owners of these businesses, but also the employment situation. As it is the number of those unemployed gives rise to alarm. Small business-men driven under the Act will join the already swollen ranks of the unemployed. All these are matters of importance which cannot be overlooked merely because of the heart-rending plight of those whom petitioner No. 1 represents. And regulating small establishments will pose difficulties of a magnitude which will either render the Act ineffective or lead to a Police state. The example of Nakara (supra) does not apply to the present case. There, indefensible discrimination was practised amongst pensioners and by the sheer accident of the date of retirement. That is not the position here. The present is not a case of that type. In fact the extension here is in bits and pieces, well within the intendment of the Act. Section 1(4) and the notification do not constitute a species of prohibited discrimination.
12. The petition fails and the rule is hereby discharged. In the circumstances, parties are left to bear their own costs.