Thursday, March 17, 2011

Educational institutions too covered by ESI Act: court

The Madras High Court has dismissed petitions challenging a Tamil Nadu G.O. of November 2010 and an order of the Employees' State Insurance Corporation of January 4 this year covering educational institutions employing 20 or more persons under the provisions of the ESI Act.

In the common order, Justice K. Chandru said that in the light of the factual matrix and legal precedents, there was no case made out by the writ petitioners.

Non commercial

The petitioners, Maharaja College of Arts and Science, Arasur, Coimbatore, and others contended that educational institutions could not be covered by the ESI Act as they were not commercial or industrial enterprises. Mr. Justice Chandru said as held by the Allahabad and Kerala High Courts, the term ‘establishment' under the ESI Act would include every establishment which need not have the characteristics of industrial, commercial or agricultural establishments.

Any establishment could be validly notified by the appropriate government to be covered by the ESI Act. Therefore, the contentions made in this regard should fail. Even assuming that, as held in T.M.A. Pai's case, carrying on educational institution was an ‘occupation' covered by Article 19 (1) (g) of the Constitution.

Article 19 (6) did not prevent the State from making any law in the interest of general public and impose reasonable restrictions on the exercise of the right conferred by the sub-clause.

Providing health care and disablement benefits to employees engaged by private entrepreneur was the concern of the government. It could not be said to be an unreasonable restriction on the right of the employer to carry on his trade or occupation.

Mr. Justice Chandru said the fact that contributions payable towards ESI were not conceived while the fixing fee structure in respect of private educational institutions and therefore the present notification imposed unreasonable burden on them could not be accepted as any legal plea.

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