All Unaided Private Educational Institutions "Establishment" For The Purpose Of ESI Act: Madras HC [Read Judgment]

All private educational institutions will come under the purview of the ESI Act and will be treated as an 'establishment' for all purposes under it, the Madras High Court has ruled.The order was passed by an all-women bench of Justice Pushpa Sathyanarayana, Justice Anita Sumanth and Justice P T Asha, dismissing petitions moved by educational institutions, seeking to strike down a November 26, 2010 order of the Tamil Nadu government extending the provisions of ESI Act to the private educational institutions."Whether unaided private educational institutions can be treated to be an establishment within the meaning of Section 1(5) of the Employees State Insurance Act, 1948 and be capable of being governed by notifications issued under the 1948 Act as being an establishment being covered within the word 'otherwise'?", the full bench sought to answer.The High Court quoted Philosopher Aristotle as saying, "the one exclusive sign of thorough knowledge is the power of teaching. Teaching profession contributes to the elimination of poverty, significantly, through the provision of education. The teachers and their supporting staff in any educational institution should be given the utmost privileges in particular, any statutory benefit".There is no definition for the word "Establishment" in the ESI Act, noted the bench, observing that the ESI Act being a socio-economic welfare oriented legislation, it has brought with it the avowed objective of securing social and economic justice and upholding human dignity and that it is not a law regulating education.The bench proceeded to read section 1(5) of the Act, which stipulates that the appropriate Government may extend the provisions of this Act or any of them, to any other establishment, or class of establishments, industrial, commercial, agricultural or otherwise.Asserting that it is always the endeavour of the Courts that the social perspective must play upon the interpretative process, the bench opined that the ESI Act can treat the private educational institutions as 'establishments' coming within the meaning of the Act and the term 'otherwise' has clearly been placed to specify that genus of establishments is not restricted to those organisations, which are industrial, commercial or agricultural only, but also includes organisations like educational institutions.No overlap between the ESI and two State enactments occupying the field "Whether the State Government can extend the applicability of the ESI Act, a Central Act, to educational institutions, when the conditions of service in the field of education find place in two State enactments namely, the Tamil Nadu Recognised Private Schools Act, and the Tamil Nadu Private Colleges Regulation Act, 1976?", wondered the Court.Section 1(5) of the ESI Act enables the State Government to extend the scheme to any establishments or class of establishments unaided educational institutions being no exception, remarked the bench.As to whether the ESI Act, the 1973 Act and the 1976 Act are operating in the same field, the bench appreciated that the ESI Act is a pre-constitutional law enacted in exercise of powers vested on the Federal Legislature in terms of Entry 27 of List III (Part II) of Schedule VII prescribed under Section 100 of the Government of India Act, 1935. Schedule VII of the Constitution distributes powers between the State legislature and the Parliament. Under Section 100 of the 1935 Act, the power to legislate on the subject of insurance was vested with the Federal legislature in terms of Entry 37 of List I of Schedule VII. However, post framing of the Constitution, the power to legislate qua insurance is solely vested with the Parliament in terms of Entry 47 of List I of Schedule VII under Article 246. Whereas, Entry 25 of the Concurrent List deals with Education, while Entry 23 and 24 deal with "Social security and social insurance; employment and unemployment" and "Welfare of labour including conditions of work, provident funds, employers' liability, Workmen's Compensation, invalidity and old age pensions and maternity benefits" respectively. "Thus, it is clear that the ESI Act can be said to be a Central Act falling under Entries 23 and 24 of the Schedule VII", concluded the bench.It further observed that the 1973 Act is not intended to legislate the subjects covered under Entries 23 and 24, but only with respect to Entry 25, i.e., "education". In order to regulate the functioning of the private schools and the service conditions of teachers and other employees, it was enacted. It cannot be stated that it automatically excludes any other law covering the insurance under Entry 47 of List I or Entires 23 and 24 of List III, merely because Section 19 of the said Act refers to insurance. "The natural corollary of the above discussion would be that there is no repugnancy between the provisions of the ESI Act and the 1973 Act, as they entire operate in different fields", the court concluded.It is also stated that...

All Unaided Private Educational Institutions "Establishment" For The Purpose Of ESI Act: Madras HC [Read Judgment]

Mehal Jain

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