The Employees' State Insurance Corpn. Vs. Fariyaz Hotels Pvt. Ltd. (29.10.1987 - BOMHC) - Court Judgment

Excerpt:
employees' state insurance act (act xxxiv of 1948), sections 1(5), 1(3) - scope and ambit of section 1(5)--notification under section 1(5) of govt. of maharashtra, dated september 18, 1978, extending all provisions of act to hotels and restaurants situated only within limits of municipal corporation of greater bombay and of specified five talukas in thane district whether discriminatory and violative of article 14 of constitution--expression 'any other establishment or class of establishments' in section 1(5)--connotation of--expression 'class of establishments' whether limited only to nature of activities and with exclusion in regard to area--approval to notice of intention by central govt. under section 1(5) whether can be obtained even before publication of notice of intention--constitution of india, article 14.;a perusal of section 1(5) of the employees' state insurance act, 1948 makes it clear that the state government could extend the provisions of the act or any of them to any other establishments or class of establishments. the expression 'any other establishment or class of establishments' in section 1(5) clearly indicates that the extension need not be to each and every establishment in the state but can be restricted to the class of establishments but the class must be distinct and separate. hotels and restaurants are the establishments to which the state government could extend the provisions of the e.s.i. act or any of them and it is open for the state government to make the provisions applicable to a class of hotels, for illustration, five star hotels and need not be made applicable to each and every hotel or restaurant. as the state government has power to extend the provisions to a class of establishments, it is difficult to appreciate why it is not open for the state government to prescribe that the class of establishments is that which are situated within certain geographical area.;a perusal of the benefits available under chapter v of the e.s.i. act, 1948 leaves no manner of doubt that the employees' state insurance corporation has to set up a machinery to provide for the medical benefits. the e.s.i. corporation has got constraints, financial as well as of availability of capable medical practitioners in every part of the state. the e.s.i. corporation has, therefore, to implement the scheme and cover the establishments provided minimum facilities are available for discharging the obligations under the provisions of the e.s.i. act. the state government has also to bear in mind that each and every establishment of a particular class cannot be simultaneously covered by extension of the provisions of the e.s.i. act: because in a backward region of the state, the establishment may not be able to bear the brunt of the additional liability to make contribution. it is impossible to suggest that the beneficial scheme should be applied simultaneously to all the areas to which the provisions of the e.s.i. act have been extended under section 1(5) of the e.s.i. act at one stroke and it is not permissible to extend the provisions of the e.s.i. act to different areas in a phased manner.;it is not possible to accept the submission that the expression 'class of establishments' in section 1(5) of the e.s.i. act, 1948 must be limited to the nature of the activities and with exclusion in regard to the area. the scheme of the e.s.i. act, 1948 does not provide that the provisions should be made applicable to all the areas and all the establishments at one stroke or none. where the e.s.i. act, 1948, has been extended to a particular area under section 1(5), the exclusion of certain areas while extending the provisions to other establishments would not defeat the purpose of the e.s.i. act, 1948 and would not amount to encroachment on the powers of the central government under section 1(5) of the employees' state insurance act, 1948.;regional director e.s.i.c. v. k.j. rao [1979] a.i.r. karnataka 146 (d.b.) agreed with.;basant kumar sarkar v. eagle rolling mills ltd. [1964] a.i.r. s.c. 1260 applied.;k.t. appannah v. state of mysore [1962] a.i.r. mys. 157, anandmal v. state of rajasthan [1962] a.i.r. raj. 218 distinguished.;a plain reading of section 1(5) of the e.s.i. act, 1948 does not indicate that the approval must be sought from the central government only after expiry of the period cumstances to indicate that such approval must be secured before hand. the proper cumstances to indicate that such opproval must be secured before hand. the proper construction of section 1(5) establishes that the approval of the central government can be obtained even before publication of notice of intention.;section 1(5) of the employees' state insurance act, 1948 enables the state government to extend the scheme to any establishment or class of establishments and the expression 'class of establishments' clearly indicates that the state government can differentiate between establishments and also between those situated in different areas. the object of the e.s.i. act is to extend certain benefits to the employees in case of sickness, maternity and employment injury and differentiation between the establishment and even on the basis of area as a rational nexus to secure the object of the e.s.i. act. it is settled law that in order to give effect to the policy of the government clearly indicated in the e.s.i. act, it is open to the executive authority to make a geographical classification so as to apply the law to selected areas with a view ultimately to cover the whole territory for which the law is enacted. it is necessary to classify on geographical basis for the purpose of enforcing the e.s.i. act by stages because otherwise the implementation of the e.s.i. act itself would become extremely difficult, if not impossible.;the impugned notification issued under section 1(5) of the e.s.i. act by the government of maharashtra dated september 18, 1978, extending all the provisions of the employees' state insurance act, 1948 to hotels and restaurants situated only within the limits of the municipal corporation of greater bombay and of the specified five talukas in thane district does not suffer from any infirmity and the challenge to it as being discriminatory and violative of article 14 of the constitution of india, must fail. - indian penal code, 1860 [c.a. no. 45/1860].sections 124-a, 153-a, 153-b, 292, 293 & 295a; [f.i. rebello, smt v.k. tahilramani & a.s. oka, jj] declaration as to forfeiture of book held, the power can be exercised only if the government forms opinion that said publication contains matter which is an offence under either of sections 124-a, 153-a, 153-b, 292, 293, 295a of i.p.c., - 6. a committee on perspective planning for the employees' state insurance scheme was constituted and the committee recommended that the scheme should be implemented by the central and state governments having regard to the resources position and the manner and phasing of the programme. the recommendations of the committee were accepted in principle by the corporation at its meeting held on august 8, 1973. the labour ministers' conference at its session on december 17, 1973 also endorsed the principal recommendations of the perspective planning committee. the letter recites that the government is considering the issue of a notification announcing its intention to extend the scheme to classes of establishments as recommended by the committee on perspective planning and then sets out various additional establishments to be covered, employing 20 or more workers, including hotels and restaurants. the expression 'any other establishment or class of establishments' clearly indicates that the extension need not be to each and every establishment in the state but can be restricted to the class of establishments but the class must be distinct and separate. the corporation has got constraints, financial as well as of availability of capable medical practitioners in every part of the state. tulzapurkar placed strong reliance upon the decision of the division bench of karnataka high court in the case of the regional director, employees' state insurance corporation v. before extending to all establishments throughout the state, the corporation has to build the necessary infra-structure by providing the necessary funds, building hospitals and employing the necessary personnel to administer the act effectively. the provision of publication of notice of intention is like publication of notification under section 4 of the land acquisition act and in that case can it even be suggested that the acquiring authority has made up its mind to acquire the property and publication of notice under section 4 and inviting objections and consideration of the same under section 5a of the land acquisition act is a mere formality ? in our judgement, the proper construction of section 1(5) of the act establishes that the approval of the central government can be obtained even before publication of notice of intention. we are unable to see any merit in the contention because section 1(5) of the act enables the state government to extend the scheme to any establishment or class of establishments and the expression 'class of establishments' clearly indicates that the state government can differentiate between establishments and also between those situated in different areas. as pointed out by karnataka high court, similar submission was rejected by the supreme court observing that it was settled law that in order to give effect to the policy of the government clearly indicated in the statute in question, it is open to the executive authority to make a geographical classification so as to apply the law to selected areas with a view ultimately to cover the whole territory for which the law was enacted. the challenge to the notification under article 14 of the constitution of india, therefore, must fail.pendse, j.1. fariyaz hotels private limited are a private limited company registered under the provisions of the companies act, 1956 and one of its directors is hosang bamanshaw mistry. the company owns a hotel known as 'fariyaz hotels' situate at 25, off arthur bunder road, colaba, bombay and the hotel consists of a restaurant and two bars. about 175 persons are employed in the hotel, and in the kitchen which is situate on the first floor of the hotel, about 41 persons are working. on august 13, 1970, the regional director of the employees' state insurance corporation informed the company that the kitchen attached to the hotel and the restaurant stood covered under the provisions of the employees' state insurance act, 1948 (hereinafter referred to as 'the act') with effect from july 1, 1970 and the company should furnish the requisite information in the prescribed form. certain correspondence transpired between the company and the regional director, the company asserting that the kitchen is not covered by the provisions of the act, while the regional director insisted on the company registering the employees under the provisions of the act. in october 1977, the company filed miscellaneous petition no. 1520 of 1977 challenging the threatened action of the regional director of invoking the provisions of the act. the petition was dismissed, as also the appeal preferred before the division bench.2. the government of maharashtra by notification dated november 7, 1974 issued in exercise of powers conferred by section 1(5) of the act gave notice of intention to extend the provisions of the act to the classes of establishments specified in the schedule thereto on or after may 1, 1975. amongst the other establishments set out in the schedule are the hotels and restaurants. the schedule also sets out the establishments situated in the areas which would be covered and the areas were bombay, poona, nagpur, solapur, kolhapur, sangli, akola, nanded, aurangabad, dhulia, nasik, miraj, amalnar, pulgaon, hinganghat, jalgaon, ballarpur, barsi, ichalkaranji and chalisgaon. by a corrigendum notification dated february 1, 1975 instead of the areas set out in column 2 of the schedule to the notification dated november 7, 1974, the following was substituted :'all areas of the state where chapters iv and v of the employees' state insurance act, 1948 are in force.'by notification dated september 18, 1978, the government of maharashtra, in exercise of powers under section 1(5) of the act extended all the provisions of the act to the classes of establishments mentioned in column 1 of the schedule thereto in the areas specified in column 2 of the schedule with effect from november 12, 1978. amongst the other establishments were hotels and restaurants and the areas referred to in the schedule were the area within the limits of municipal corporation of greater bombay and following talukas of thane district : (a) thane, (b) kalyan, (c) bhiwandi, (d) bassein, and (e) ulhasnagar. in pursuance of this notification, the regional director called upon the company to furnish the requisite information in the prescribed form. the company with its director then filed miscellaneous petition no. 181 of 1979 in this court on january 12, 1979 under article 226 of the constitution of india for a writ of mandamus directing the government of maharashtra to withdraw or cancel the impugned notification dated september 18, 1978 and restraining the officers and servants of government of maharashtra and the employees' state insurance corporation from acting in furtherance or in implementation of the same.3. the petitioners claim that the state government has been given power under section 1(5) of the act to extend all or any of the provisions of the act to other establishments. according to the petitioners, state government can determine the establishment or class of establishments to which all or any of the provisions of the act should be extended but has no power to limit the operation of the provisions of the act to the same class of establishments situate in one area and exclude the same class of establishments situate in another area in which the act has already been brought into force by the central government. the petitioners also claim that the state government could exercise powers under section 1(5) of the act only after consultation with the employees' state insurance corporation and after taking approval of the central government and publishing a notice of intention to extend the provisions of the act. it was claimed that approval of the central government can be obtained only after the expiry of the period of notice of six months' duration and the state government published the impugned notification by securing the approval even before issuance of the notice of intention and thereby violated the mandatory provisions of section 1(5) of the act. it was also claimed that the approval given by the central government by letter dated october 1, 1974 is not with regard to the class of establishments, i.e., hotels within the limits of the municipal corporation of greater bombay, but with regard to the establishments, viz. hotels generally, and, therefore, it is not permissible for the state government to extend the provisions of the act only to the establishments of hotels situated within the limits of municipal corporation of greater bombay. the petitioners also claimed that the impugned notification was published by the state government without consultation with the employees' state insurance corporation and, therefore, the provisions of section 1(5) of the act are violated.the state of maharashtra was joined as respondent no. 1, while the employees' state insurance corporation as respondent no. 2 to the petition. on behalf of the corporation, mr. peruvanan vishwanath ramkrishna filed affidavit sworn on april 25, 1979 and on behalf of the state of maharashtra two affidavits dated march 23, 1982 and april 26, 1982 were filed by mr. shankar kashinath holkar, deputy secretary, traversing the contentions raised on behalf of the petitioners. the complaint that the impugned notification under section 1(5) of the act was published without complying with the requirement of consultation with the corporation and securing prior approval of the central government was denied and it was asserted that the corporation was duly consulted and the prior approval of the central government was secured before publishing notification declaring intention to extend the provisions of the act to other establishments. the challenge to the power of the state government to extend the provisions of the act to the class of establishments and only to the selected area in exclusion to the areas which were covered by the provisions of the act was traversed by claiming that it is necessary for the state government to make elaborate arrangements for giving medical aid to the persons to be covered under the act and, therefore, it is not possible to extend the provisions of the act to the establishments in all the areas at one stroke. it was claimed that the benefit has to be extended gradually and by stages and in different phases and the question of extending statutory benefits contemplated by the act has to be left to the discretion of the state government. it was pointed out that in accordance with the recommendation made by the various committees constituted for the purpose of extending the provisions of the act to various establishments, the extension could be made only in a phased manner to different area or areas.4. the learned single judge by judgement dated august 31, 1982 held that under section 1(5) of the act, the state government has power only to specify establishments or class of establishments to which the provisions of the act could be extended but it is not open for the state government to restrict the application of the provisions of the act to certain geographical areas. the learned judge held that the provisions of the act had already been brought into force in various areas of the state of maharashtra. sub-section (5) of section 1 of the act does not empower the state government expressly or impliedly to restrict the application of the provisions of the act to establishments within a part or parts of that area. the learned judge also held that the approval given by the central government to the extension of the act was in respect of the establishments of hotels employing 20 or more persons but not limited to the specific areas of the state and, therefore, it was not permissible for the state government to extend the provisions of the act to hotel establishments situated only within the area covered by the municipal corporation of greater bombay and some talukas of thane district. in view of this finding, the learned judge did not consider some other contentions argued on behalf of the company and the impugned notification dated september 18, 1978 was quashed and set aside.the state of maharashtra has preferred appeal no. 535 of 1982 and the employees' state insurance corporation has preferred appeal no. 585 of 1982 to challenge the legality of the order passed by the learned single judge. as both the appeals are directed against the common judgment, it is convenient to dispose of both the appeals by this order. in these appeals, on behalf of the employees' state insurance corporation, affidavit of miss. d. j. mirchandani, deputy regional director of the corporation sworn on october 29, 1987 is filed with a view to set out in detail the time from when the provisions of the act under section 1(5) were made applicable to different areas of the state of maharashtra and the various dates on which the provisions were extended to establishments of hotels to these areas in accordance with section 1(5) of the act. this affidavit is taken on record by consent of parties and marked as 'x' in appeal.5. before adverting to the submission urged in support of the appeal, it is necessary to set out the relevant provisions of the act which were enacted 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 thereof. section 1(2) of the act prescribes that the act extends to the whole of india and section 1(3) provides that it shall come into force on such date or dates as the central government may, by notification in the official gazette, appoint, and different dates may be appointed for different provisions of this act and for different states or for different parts thereof. the plain reading of section 1(3) of the act makes it clear that it is for the central government to determine when the act or any part of the act would come into operation in a particular state or the part of the state. the perusal of ex. 'a' to the affidavit marked 'x' in appeal would indicate that the central government appointed different dates for different areas of state of maharashtra in which the provisions of the act came into force. chapter iv deals with the contributions to be made by the employees and the employers, while chapter v deals with the benefits conferred on the employees by application of the provisions of the act. chapters iv and v of the act are the crucial provisions and annexure to the affidavit filed in appeal sets out that these provisions were made applicable from october 3, 1954 onwards from time to time to various parts of the state. section 1(4) prescribes that the act shall apply, in the first instance, to all factories including factories belonging to the government, but not to the seasonal factories. in other words, as soon as the central government appoints date on which the act or some of the provisions of the act shall come into operation in the state or the part of the state, then automatically all the factories within that area are covered by the provisions of the act. sub-section (5) of section 1 reads as under :'the appropriate government may, in consultation with the corporation and where the appropriate government is a state government, with the approval of the central government, after giving six months' notice of its intention of so doing by notification in the official gazette, extend the provisions of this act or any of them, to any other establishment or class of establishments, industrial, commercial, agricultural or otherwise.'this sub-section confers power on the appropriate government to extend the provisions of the act or any of them to any other establishment or class of establishments. the expression 'appropriate government' has been defined under section 2(1) and means, in respect of establishments under control of the central government or a railway administration or a major port or a mine or oil field, the central government, and in all other cases, the state government. the hotels and restaurants are establishments and the appropriate government in respect of these establishments is the state government. the power to extend the provisions of the act to establishments other than factories can be exercised by the state government in consultation with the corporation and with the approval of the central government and after giving six months' notice of intention to do so. the expression 'corporation' under section 2(6) of the act means the employees' state insurance corporation set up under this act. with this background of the statutory provisions, we will refer to the exercise undertaken by the state government before extending the provisions of the act in exercise of powers under section 1(5) of the act to the establishment of hotels and restaurants.6. a committee on perspective planning for the employees' state insurance scheme was constituted and the committee recommended that the scheme should be implemented by the central and state governments having regard to the resources position and the manner and phasing of the programme. the recommendations of the committee were accepted in principle by the corporation at its meeting held on august 8, 1973. the labour ministers' conference at its session on december 17, 1973 also endorsed the principal recommendations of the perspective planning committee. the corporation thereafter addressed letter dated december 31, 1973 to the secretary to government of maharashtra, urban development, public health and housing department, the letter sets out that the extension programme should cover certain categories of establishments including hotels and restaurants. the letter further sets out the preliminary steps that will need to be taken before extending this programme. the corporation pointed out that the state government would require to undertake a survey which can be carried out in consultation with the corporation for formulating firm plans for phased coverage of the new sector of employment. depending on the facilities available, a beginning may have to be made with only one or two sectors of employment and that too in a limited number of centres. the state government would then require to publish a notification announcing the intention to extend the protective shield of social security to the new sectors of the employment in the state at any time after six months of the date of notification. after the expiry of the time schedule, a final notification can be published extending the provisions of the act to new establishments. the letter makes it clear that the final notification can be flexible and need not cover all the sectors of employment or all the areas simultaneously and the coverage can be piecemeal and separate notifications can be issued for different areas or for different categories of establishments. in pursuance of this letter from the corporation, a survey was undertaken and the survey report indicates that large number of workers in four divisions i.e. bombay, pune, nagpur and the mofussil would be covered under different categories and several additional medical facilities would be required to be made available. the survey report sets out that most difficult part is to find accommodations for the additional dispensaries and also beds in the hospitals. it further sets out that though everybody desires progress, employees' state insurance scheme is not a scheme where things can be taken lightly as one has to deal with labour and unless minimum arrangements as required are available, action should not be taken. the survey report suggests that meeting should be held with the director of the corporation and state government authorities to consider whether the scheme should be extended to certain new sectors having smaller number of workers in the first phase and then to extend it to other areas as the available facilities increase. on receipt of this survey report and possibly after the joint meeting of the government authorities and the corporation authorities, on september 23, 1974, the secretary to the government of maharashtra, addressed letter to the secretary of the ministry of labour & employment, government of india, seeking approval under section 1(5) of the act to the extension of the scheme to classes of establishments other than factories. the letter recites that the government is considering the issue of a notification announcing its intention to extend the scheme to classes of establishments as recommended by the committee on perspective planning and then sets out various additional establishments to be covered, employing 20 or more workers, including hotels and restaurants. the letter then states :'the central government's approval under section 1(5) of the e.s.i. act, 1948 is solicited to the extension of the esi scheme to all or any of the areas in the state where chapters iv and v of the esi act, 1948 are in force.'the central government informed the government of maharashtra by letter dated october 1, 1974 that in accordance with the request made on september 23, 1974 the central government conveys the approval under section 1(5) of the act to the extension of the provisions of the act to hotels and restaurants employing 20 or more persons, apart from other establishments to which the approval was sought. after receipt of this approval, the government of maharashtra published the impugned notification dated september 18, 1978 and it was gazetted on october 5, 1978. by the impugned notification, the establishments of hotels and restaurants are covered but only those situated within the limits of municipal corporation of greater bombay and five talukas of thane district. as set out in ex. a to the affidavit filed in appeal, the establishments of hotels and restaurants situated in several other areas are also covered by different notification but it is not in dispute that the provisions of the act are not extended by the state government in respect of hotels and restaurants to all the areas to which the central governments has made the provisions of the act applicable under section 1(3) of the act.7. mr. tulzapurkar, learned counsel appearing on behalf of the corporation, and miss sikandar, learned counsel appearing on behalf of the state government, submitted that the learned single judge was in error in not properly appreciating the ambit of section 1(5) of the act and it was erroneously held that the state government lacks power to extend the provisions of the act to establishments which are situated in the part of the area to the exclusion of other areas to which the provisions of the act are already made applicable. we find considerable merit in the submission of the learned counsel. the perusal of section 1(5) of the act makes it clear that the state government could extend the provisions of the act or any of them to any other establishments or class of establishments. the expression 'any other establishment or class of establishments' clearly indicates that the extension need not be to each and every establishment in the state but can be restricted to the class of establishments but the class must be distinct and separate. hotels and restaurants are the establishments to which the state government could extend the provisions of the act or any of them and it is not even debated that it is open for the state government to make the provisions applicable to a class of hotels, for illustration, five star hotels and need not be made applicable to each and every hotel or restaurant. as the state government has power to extend the provisions to a class of establishments, it is difficult to appreciate why it is not open for the state government to prescribe that the class of establishment is that which are situated within certain geographical area. it is necessary to bear in mind that the extension of the provisions of the act require the employer and the employees to make contributions in accordance with chapter iv of the act. the contributions are to be paid at the rates specified in the first schedule to the act and section 39(2) of the act provides that such rates can be varied by the corporation when any factory or establishment is excluded from some of the benefits under the act. chapter v deals with the benefits which would accrue to the employees and section 46(i)(a) provides that the insured persons would be entitled to the medical treatment and attendance. periodical payments are to be made to the insured woman in case of confinement, or mis-carriage or sickness arising out of pregnancy. the monetary benefits are to be given to the insured person in case of sickness which is duly certified by a medical practitioner. the perusal of the benefits available under chapter v leaves no manner of doubt that the corporation has to set up a machinery to provide for the medical benefits. the corporation has got constraints, financial as well as of availability of capable medical practitioners in every part of the state. the corporation has, therefore, to implement the scheme and cover the establishments provided minimum facilities are available for discharging the obligations under the provisions of the act. the state government has also to bear in mind that each and every establishment of a particular class cannot be simultaneously covered by extension of the provisions of the act because in a backward region of the state, the establishment may not be able to bear the brunt of the additional liability to make contribution. though the idea of extending the scheme is to confer the benefits on the employees, the state government cannot overlook that the extension should not destroy or ruin the establishments leading to their closure. the state government has, therefore, to examine whether all the establishments of hotels and restaurants in these areas of the state where the provisions of the act are made applicable by the central government under section 1(3) of the act to which extension should be granted under section 1(5) of the act or whether extension should be granted only to those establishments in the areas where sufficient medical facilities are available and where the employer and the employees can easily bear the burden of contribution. it is impossible to suggest that the beneficial scheme should be applied simultaneously to all the areas to which the provisions of the act have been extended under section 1(3) of the act at one stroke and it is not permissible to extend the provisions of the act to different areas in a phased manner.8. mr. chinoy, learned counsel appearing on behalf of the company, submitted that the state government has power only to specify other establishments or class of establishments with regard to the nature of their activities and not with regard to the areas or the situation. the learned counsel urged that the scheme of sub-sections (3), (4) and (5) of section 1 of the act indicates that the authority having power with regard to the application of the act to different areas is the central government under section 1(3), while the authority with regard to the nature or type of establishment is the appropriate government under section 1(5). it was urged that the concept of class of establishments is different from the concept of the areas in which the establishment is situated. it is not possible to accept the submission of the learned counsel that the expression 'class of establishments' must be limited to the nature of the activities and with exclusion in regard to the area. the supreme court, while examining the scope of section 1(3) of the act in the case of basant kumar sarkar and others v. the eagle rolling mills ltd. and others reported in : (1964)iillj105sc observed that the scheme of this kind, though very beneficent, could not be introduced in the whole of the country all at once. chief justice gajendragadkar speaking for the bench observed at p. 108 :'such beneficial measures which need careful experimentation have some times to be adopted by stages and in different phases, and so, inevitably, the question of extending the statutory benefits contemplated by the act has to be left to the discretion of the appropriate government. 'appropriate government' under section 2(1) means in respect of establishments under the control of the central government or a railway administration or a major port or a mine or oilfield, the central government, and in all other cases, the state government. thus, it is clear that when extending the act to different establishments, the relevant government is given the power to constitute a corporation for the administration of the scheme of employees' state insurance. the course adopted by modern legislatures in dealing with welfare scheme has uniformly conformed to the same pattern. the legislature evolves a scheme of socio-economic welfare, makes elaborate provisions in respect of it and leaves it to the government concerned to decide when, how and in what manner the scheme should be introduced.'the observations of the learned chief justice leaves no manner of doubt that the scheme of the act does not provide that the provisions should be made applicable to all the areas and all the establishments at one stroke or to none at all. the acceptance of the submission of mr. chinoy that the state government could extend the provisions of the act to the establishments of hotels and restaurants situated in all the areas covered under section 1(3) of the act at one stroke or not at all would defeat the beneficial scheme prescribed by the act. we are unable, therefore, to accede to the submission that where the act has been extended to a particular area under section 1(3), the exclusion of certain areas while extending the provisions to other establishments would defeat the purpose of the act and would amount to encroachment on the powers of the central government under section 1(5) of the act. the power conferred on the state government under section 1(5) of the act can be exercised only with the approval of the central government and, therefore, it is futile to suggest that the limit of extension only to certain areas out of the areas covered under section 1(3) of the act would amount to encroachment on the powers of the central government.9. mr. tulzapurkar placed strong reliance upon the decision of the division bench of karnataka high court in the case of the regional director, employees' state insurance corporation v. kidivoor janardhana rao and others reported in : air1979kant146 as the controversy in that case was identical to the present one. the state of karnataka published notification under section 1(5) of the act extending the provisions of the act to restaurants and hotels in dharwar and some other places in the state of karnataka, but the act was not extended to the hotels and restaurants situated in other parts of the state even though the act has been extended to those parts by notification issued from time to time under section 1(3) of the act. the notification was challenged on the ground that the state government was not authorised to extend the provisions of the act to class of establishments situated in a portion of a large area in which the act had already been brought into force by the central government. the learned single judge accepted the contention and quashed the notification. the division bench, in appeal set aside the order and mr. justice venkataramiah, as he then was, speaking for the bench, observed :'the expression 'any other establishment or class of establishments' to which the appropriate government intends to extend the act may be classified either on the basis of the nature of the establishments or on the basis of their geographical situation or on the basis of both of them. to put it in other words, if the state government proposes to extend the act to hotels and restaurants, it can extend to hotels and restaurants situated in all parts of the state to which the act has been extended under s. 1(3) or to hotels and restaurants situated in a specific part or parts of the state. a classification made on geographical basis would not fall outside the scope of the expression 'class of establishments'. while interpreting the act the courts should bear in mind the difficulties involved in extending the act simultaneously to all establishments situated throughout the state. before extending to all establishments throughout the state, the corporation has to build the necessary infra-structure by providing the necessary funds, building hospitals and employing the necessary personnel to administer the act effectively. it may not be possible to visualise before hand the financial and other implications involved before the corporation gains experience by enforcing the act in certain areas by treating them as pilot projects. after gaining such experience in administering the act as pilot projects in certain small areas, it would be possible for the appropriate government to extend it to other establishments situate in other geographical areas. it would be manifestly unreasonable to construe section 1(5) of the act as laying down that the appropriate government should either extend the act to all establishments of a specified nature throughout the state at the same time or not extend it to any such establishment at all. we are of the view that the expression 'class of establishments' occurring in s. 1(5) does clothe the appropriate government with the power to classify establishments to which the appropriate government wishes to extend the act on geographical basis also even though the act may have been brought into force throughout the state by notifications issued under s. 1(3) of the act.'we are in respectful agreement with the view propounded by the division bench of the karnataka high court. mr. chinoy submitted that the division bench of the karnataka high court did not assign any reason for holding that the expression 'class of establishment' in section 1(5) confers power upon the appropriate government to extend the act on geographical basis. we are unable to accede to the submission as the part of the judgement quoted above leaves no manner of doubt that all the relevant factors were taken into consideration. mr. chinoy invited our attention to the judgement delivered by learned single judge of the karnataka high court, but we are not inclined to examine the same because, in our judgement, it has been very rightly reversed by the division bench. the learned counsel referred to the decision in the case of k. t. appannah v. state of mysore by its chief secretary to government, and another reported in : (1962)iillj521kant and the decision in the case of anandmal & another v. state of rajasthan reported in , to urge that while construing the provisions of minimum wages act, 1948 which are on para-materia, these courts have held that power to extend the provisions of the act must be exercised with reference to the entire area and not to a sector. we are unable to find any merit in the submission because the provisions of some other statute cannot be imported for ascertaining true scope and ambit of section 1(5) of the act and it also cannot be overlooked that the object of the minimum wages act was different from the object of the employees' state insurance act.before concluding with this aspect of the matter, it is necessary to point out that the state government has issued notifications from time to time extending the provisions of the act to the establishments of hotels and restaurants in different areas of the state and perusal of ex. a to the affidavit filed in appeal would establish that several areas in the state are covered. our attention was also invited to notification dated july 15, 1981 issued by the state government giving notice of intention to extend the provisions of the act to some additional areas. the final notification was not published possibly because of the judgment of the learned single judge in the present case. we have no hesitation in concluding that the state government is desirous of extending the scheme to all the areas covered by the provisions of section 1(3) of the act and are taking steps to that effect from time to time.10. mr. chinoy then submitted that even assuming that the state government has power to extend the provisions of the act under section 1(5) of the act to the selected areas, still the learned single judge was right in striking down the impugned notification as the approval of the central government to the extension to the specific area was not obtained. we are unable to see any merit in the submission. as pointed out hereinabove, the state government forwarded request for grant of approval on september 23, 1974 and solicited extension of the scheme in all or any of the areas of the state where chapters iv and v of the act are enforced. the central government conveyed the approval sought in accordance with the letter dated september 23, 1974. mr. chinoy submits that the letter of approval does not specifically set out that extension of the scheme is permissible to any of the areas which the state government would deem fit and by excluding areas which are already covered under section 1(3) of the act. in our judgment, it is not necessary for the central government to grant such specific approval. the state government has sought approval for extension of the scheme to all or any of the areas where chapters iv and v of the act are enforced. the central government granted such approval and the mere fact that the letter conveying approval does not specifically set out that the approval is for extension of the scheme to all or any of the areas cannot lead to the conclusion that the approval is granted but not to extend the scheme only to selected areas and the state government is bound to extend to all the areas irrespective of the availability of medical facilities. in our judgment, it would be extremely hazardous and artificial to put such construction on the approval conveyed by the central government by letter october 1, 1974. it must be borne in mind that the central government was giving approval on the basis of recommendations made by the committee on perspective planning and the decision taken by the labour ministers' conference and on perusal of the correspondence which transpired between the corporation and the state government including the survey report prepared before seeking extension. viewed in this background, it is obvious that the letter of the central government must be read in its proper perspective and not divorced of what had transpired earlier. in our judgement, the contention that the approval given by the central government does not enable the state government to extend the scheme only to limited area deserves to be repelled.11. mr. chinoy then submitted that the approval of the central government must be secured before the notice of intention is published in the official gazette. the approval in the present case was conveyed by the central government by letter dated october 1, 1974 and the notice of intention was published on november 7, 1974. it was urged by the learned counsel that notice of intentions required to be published inviting objections and in case the state government secures approval even before publishing notice of intention, then such publication is empty formality because the state government has already made up its mind to extend the scheme and filing of objections serves no purpose. we are unable to find any merit in the submission. the plain reading of section 1(5) of the act does not indicate that the approval must be sought from the central government only after expiry of the period mentioned in notice of intention, but on the other hand, there are tell-tale circumstances to indicate that such approval must be secured before hand. section 1(5) of the act demands that the state government can extend the scheme provided central government gives approval and after consultation with the corporation. now, it is futile to suggest that the even consultation with the corporation should be after the publication of notice of intention to extend the scheme. indeed the state government takes steps to extend the scheme when the recommendation is received from the corporation. the state government seeks approval from the central government only after undertaking a survey and ascertaining whether the government would be able to provide for enough facilities to enable the corporation to discharge the obligations under the act. the notice of intention is published only thereafter and the submission of mr. chinoy that consultation with the corporation and the approval of the government should follow the publication of notice of intention would lead to very unusual results. the state government would undertake the exercise to ascertain the feasibility of extension of scheme and in case the approval is refused thereafter, then the entire exercise would be mere act of futility and that surely cannot be the intention of the legislature. the provision of publication of notice of intention is like publication of notification under section 4 of the land acquisition act and in that case can it even be suggested that the acquiring authority has made up its mind to acquire the property and publication of notice under section 4 and inviting objections and consideration of the same under section 5a of the land acquisition act is a mere formality in our judgement, the proper construction of section 1(5) of the act establishes that the approval of the central government can be obtained even before publication of notice of intention.it was also faintly urged by the learned counsel that the impugned notification was issued without consulting the corporation with regard to the extension of the act to the class of establishments to which it is extended, i.e. hotels within the limits of municipal corporation of greater bombay and some talukas of thane district. the submission is entirely misconceived because the corporation by letter dated december 31, 1973 advised the state government not to cover the establishments in all the areas simultaneously, but to do so in phases and by separate notification. in face of this correspondence, it is impossible to accede to the submission that exercise of consultation with the corporation was not undertaken.12. finally, mr. chinoy submitted that the notification is discriminative and violative of article 14 of the constitution of india. it was urged that the notification differentiates between the establishments referred to in the notification and those not referred to therein and also those situated in the areas mentioned in the notification and the areas not mentioned in the notification. it was contended that there is no rational nexus for such differentiation which could be related to the object of the act. we are unable to see any merit in the contention because section 1(5) of the act enables the state government to extend the scheme to any establishment or class of establishments and the expression 'class of establishments' clearly indicates that the state government can differentiate between establishments and also between those situated in different areas. the object of the act is to extend certain benefits to the employees in case of sickness, maternity and employment injury and differentiation between the establishments and even on the basis of area as a rational nexus to secure the object of the act. as pointed out by karnataka high court, similar submission was rejected by the supreme court observing that it was settled law that in order to give effect to the policy of the government clearly indicated in the statute in question, it is open to the executive authority to make a geographical classification so as to apply the law to selected areas with a view ultimately to cover the whole territory for which the law was enacted. in our judgement, it is necessary to classify on geographical basis for the purpose of enforcing the act by stages because otherwise the implementation of the act itself would become extremely difficult, if not impossible. the challenge to the notification under article 14 of the constitution of india, therefore, must fail. in our judgement, the impugned notification does not suffer from any infirmity and the company is not entitled to any relief.13. accordingly, both the appeals are allowed and the judgement dated august 31, 1982 delivered by the learned single judge in miscellaneous petition no. 181 of 1979 is set aside and the petition is dismissed. the company shall pay the costs of the state government and the employees' state insurance corporation.