What Everybody Should Know About

Employees' State Insurance Act & Scheme

 

(By Advocate H.L. Kumar)

 

The Employees' State Insurance Corporation has enhanced the wage ceiling for the purpose of coverage of employees under the ESI Scheme from the existing Rs.6,500 to Rs.7,500 per month. The new wage ceiling came into force from 1.4.2004.

 

The enhancement of wage ceiling follows the notification dated 4th March, 2004 by the Central Government subsequent to the decision taken by the Corporation at its meeting on December 16. The upward revision of the wage ceiling by Rs.1,000 is expected to recover over four lakh additional employees who had gone out of the social security net over the last few years. The existing wage ceiling of Rs.6,500 that had been in force since January 1. 1997.

 

The proposed decision of ESIC for widening the coverage of factories and the establishments with 10 employees has not been notified since it will be possible only when the Employees' State Insurance Act would be amended by the Parliament.

 

Steps to be taken by the Employers

 

•To submit a list of employees who become coverable alongwith their Declaration Forms (Form-1) to the Local/Branch Office of the ESI Corporation.

 

•To obtain the registration of those employees revalidated who had gone out of coverage with the crossing of wage limit, by submitting their necessary particulars and ESI identity cards and also apply for issuance of fresh family photo identity cards for them from the ESIC Branch Office concerned.

 

•To deduct ESI contribution @ 1.75% from the wages of such employees regularly from April, 2004 onward and deposit the same alongwith Employer's share of contribution (@ 4.75% of the wages) with the already specified Banks within 21 days of the month following in which the wages fall due.

 

Procefure for coverage of an eligible employee

 

The Employer shall submit Employees Declaration Form (Form 1) in respect of every individual employee separately for further necessary action by the ESIC Local Office/Regional Office ensuring that -

 

• All particulars in each column are legibly and properly filled.

 

•The details of family viz, name, age, relationship, mark of identification etc. should invariably be indicated to enable the members of family obtain medical care.

 

•The particulars of 'nominee' must be given in all the cases.

 

•The Declaration Form of female employee must be rubber stamped 'Female'.

 

•When the Declaration Form has been filled up and signed by an employee, it is to be countersigned by the employer and forwarded to an 'appropriate office' with a statement in duplicate known as the Return of Declaration Forms, separately for male and female employees.

 

•The Declaration Form must be submitted within 10 days of the date of entry of an employee into insurable employment.

 

•Two postcard size family photographs of every individual employee should be furnished along with the Declaration Form.

 

•The appropriate office of ESI will allot the Insurance No. and return one copy of Declaration Form indicating Insurance Numbers along with the Temporary Identification Certificates. The employer shall enter the Insurance Nos. in the register in Form 7 maintained under Regulation 32 of ESI (General) Regulations, 1950.

 

•On receipt of the documents mentioned above, the employer shall hand over the Temporary Identification Certificates to the employees to enable them to avail medical treatment from designated ESI dispensary or panel clinic, etc. This certificate would, however be, valid for three months and can be revalidated for a further period of three months by the appropriate office/employer, in case the Permanent Identity Card is not received within three months.

 

•On receipt of Permanent Identify Cards from the appropriate office, the employer will hand over the same to those employees continuing in employment for three months or more and obtain their signature/thumb impression on Identity Card in the space provided. The Temporary Identification Certificate/ Permanent Identity Card of a person who leaves service before three months should be returned to the local office of registration.

 

•If the Temporary Identification Certificate is also not received and any insured person or his/her family member needs medical treatment, Form ESIC-86 may be issued by the employer which also remains valid for three months.

 

IMPORTANT CLARIFICATIONS

 

Continuous Applicability of the Act

 

By an amendment of the ESI Act in 1989, it has been provided that a factory or an establishment shall continue to be governed by this Act notwithstanding that the number of persons employed therein at any time falls below the limit specified by or under this Act or the manufacturing process therein ceases to be carried on with the aid of power.

 

Advantages of employers on coverage under ESI

 

•The employers will be absolved of all their liabilities of providing medical facilities to employees and their dependants in kind or in the form of fixed cash allowance, reimbursement of actual expenses, lump sum grant or opting for any other medical insurance policy of limited scope unless it is a contractual obligation of the employer.

 

•There will be exemption from the applicability of the Maternity Benefit Act and the Workmen's Compensation Act in respect of employees covered under the ESI Scheme.

 

•The employers will absolved of any responsibility in times of physical distress of workers such as sickness, employment injury or physical disablement resulting in loss of wages, as the responsibility of paying cash benefits shifts to the Corporation in respect of insured employees.

 

•The sum paid by way of contribution is deducted in computing 'income' under the Income Tax Act.

 

Apprentices/Trainees

 

Under S.2(9) of the ESI Act inter alia providing that any person engaged as apprentice. not being an apprentice engaged under the Apprentices Act, 1961, or under the standing orders of the establishment will be covered under the Act.1 Even unpaid trainees provided with boarding and lodging will also be covered under the ESI.2

 

Clubbing of branches for coverage

 

The ESI Act will apply on all branches of an establishment when total number exceeds 203.

 

ESI Act will be applicable upon the employees working in sales depots and offices of The Bata India since its factory is covered the Act4.

 

Employees engaged by a contractor

 

The employees engaged by a contractor are squarely to be covered under ESI Act and the Scheme thereto. A Division Bench of the Bombay High Court has held that the employees of the contractors engaged for repairs, site clearing, construction of buildings, etc. are engaged in an activity which is essentially required for the running of the factory and is ancillary or incidental to and has relevance to or link with the object of the factory.

 

Kirloskar Pneumatic Company Ltd. v. Employees' State Insurance Corporation, 1987 ILLN  906 (Bom.HC).

 

Partner of a firm

 

The Supreme Court has held that a partner engaged for the work of the factory or establishment and being paid monthly will not come within the purview of an 'employee' as defined in S. 2(9) of the ESI Act

 

Employees' State Insurance Corporation v. Apex Engineering (P) Ltd., 1997 LLR 1097 (SC).

 

Managing Director

 

Managing Director of a Company will be covered under the Act if his salary is below prescribed ceiling.

 

E.S.I. Corporation v. Apex Engineering (P) Ltd., 1997 LLR 1097 (SC).

 

Casual/Temporary Employee

 

Casual or temporary employees will be liable to be covered under the Act from the date of their joining the service.

 

Regional Director, E.S.I. Corporation v. Fashion Fabrics, 1991 LLR 324 (Ker. HC).

 

Professional Consultants

 

The professionals engaged are of regular nature and being paid monthly, hence they will be covered under the Scheme. However, the payment made to Labour Consultants, Lawyers, Engineers, Counsels, Chartered Accountants does not constitute wages and no contribution is payable on such amount.

 

Commission Agents

 

The commission agents are not coverable under the ESI Act. But they are employed as representatives and incurring other expenses besides commission, such persons are coverable under the provisions of ESI Act.

 

Loaders & Unloaders

 

Merely because the loaders & unloaders have not been able to get the benefit, it will not be a ground for non coverage under ESI Act.

 

E.K. Haj Mohamniadmeera Sahib and Sons v. Regional Director, Employees' State Insurance Corporation, 2003 LLR 308 (Mad. HC).

 

Availability of ESI benefits away from the place of work

 

If an insured person who is temporarily away on leave for a period of up to three months from his place of employment to another area where medical care under the Scheme is available, he can get medical treatment if he takes a certificate of temporary residence from his employer.

 

Procedure for availing sickness benefits

 

The employee is issued medical certificate from ESI Dispensary/Hospital. The medical certificate issued by the dispensary is deposited with the local office of the ESI Corporation from where the employee gets the payment.

 

Entitlement of sickness benefits

 

Entitlement to sickness benefit depends on the entry of the employee in a contribution period and subject to the payment of contribution for half the number of days in one contribution period and duration of sickness benefit is 91 days in two consequent benefit periods. The benefit periods corresponding to contribution periods are as follows :

 

Contribution Period                                  Benefit Period

April to September                                    January to June

October to March                                       July to December

 

Entitlement of medical benefit to family members

 

The Medical Benefits i.e. treatment in the dispensary and hospital is available and provided not only to the insured person but also to the family members of the insured person from the date of employment itself. However, sickness benefit is not provided to the members of the family as sickness benefits are cash benefits provided to the insured person for the loss of wages during sickness. For the purpose of obtaining medical treatment, the family consists of the following:

 

(a) A spouse

 

(b) Minor legitimate or adopted child dependent upon the insured person.

 

(c) Child who is wholly dependent on the earnings of insured person and who is

       (i) receiving education, till he or she attains the age of 21 years.

       (ii) an unmarried daughter.

 

(d) An infirm child - Physical, Mental or Accidental - so long as the infirmity lasts.

 

(e) Dependent parents.

 

Non availability of disability benefit

 

Benefit of disablement under ESI Act will not be available to an employee who has crossed the wage ceiling at the time of injury even though contributions for that period have been paid.

 

Employees' State Insurance Corporation (represented by Regional Director), Cliennai v. M. Ganesan, 2003 LLR 781:2003-11LLN 646:2003-11LLJ 895 (Mad. HC).

 

Availability of benefits - Even when contributions are not paid

 

Non-payment of contributions won't affect for availing of ESI benefits by an employee.

 

Bharaqgath Engineering v. R. Ranganayaki & Ann, 2003 LLR 227 (SC).

 

Medical benefit to superannuated employee

 

An insured person who leaves the insurable employment on attaining the age of superannuation would to entitled to medical benefit for himself and his spouse provided he pays the contribution at the rate Rs.10 per month in lump sum for one year. However, employee must have been member of ESI for 5 years before his superannuation to avail medical benefit after retirement.

 

Common Came v. Union of India & Ann, 1998 LLR 577:1998 (79) FLR 954 (Del. HC).

 

Liability for compensation - An accident to and fro of the premises

 

Entitlement of accident compensation to an employee to and fro of his place of work. ESI Corporation will not be liable to pay compensation to an injured employee in an accident of a distance of beyond one km. from the premises of the establishment.

 

Regional Director, ESI Corporation & Ann v. Francis De Costa & Anr., 1996 LLR 953 (SC).

 

Availability of benefits - When contributions are not paid

 

Non-payment of contributions won't affect for availing of ESI benefits by an employee.

 

Bharaqgath Engineering v. R. Ranganayaki & Anr., 2003 LLR 227 (SC).

 

On coverage - Sick leave can be discontinued

 

An employer can withdraw the sick leave being granted to the employees covered under ESI Scheme. However, in case the management so desire, they may continue this privilege as an additional incentive.

 

Voluntary coverage of an establishment

 

Unlike Employees' Provident Funds & MP Act, under ESI Scheme, there is no provision for voluntary coverage of an establishment.

 

Non-availability of funds - No excuse for non-payment of contribution

 

There is no provision to waive off the amount due on account of contribution, interest and damages. However, the damages can be waived off in relation to a factory or establishment which is declared as sick industrial company and in respect of which a rehabilitation scheme has been sanctioned by the board for industrial and financial reconstruction. The quantum of relief is mentioned in Regulation 31-C of ESIC (General) Regulation, 1950.

 

Continuation of coverage of employee - After his wages are above prescribe ceiling

 

In case the average wage for the month i.e. daily rate multiplied by 26 is more than Rs.7500 the employee is not coverable under the scheme but in case the employee is already covered under the scheme, he/she will continued to be covered till the end of contribution period.

 

Interest and damages for late deposit of contribution

 

The interest and damages are calculated after 21 days from the date of C-18 (demand notice) issued by the ESIC.

 

Period of delay in payment of contribution            Rate of damages on the amount due

i)Upto less than 2 months                                        5%

ii)2 months and above but less than 4 months    10%

iii)4 months and above but less than 6 months   15%

iv)6 months and above                                             25%

 

ESIC debarred in making claim after 5 years

 

The ESI Corporation will be debarred from making any claim after 5 years from the date on which it has arisen by virtue of S.77(la)(b) proviso. Hence, the Full Bench set aside the judgment of Division Bench in holding that by a legal fiction contained in proviso (b), the cause of action in respect of claim by the Corporation from the principal employer arises on the date on which the Corporation makes the claim for the First time.

 

E.S.I. Corporation v. Excel Glasses Ltd., 2003 LLR 987:2003-IIILLN 1142 (Ken HC Full Bench)

 

Coverage of a Club

 

A Club may not be a 'shop', but for the coverage of ESI it would certainly be so.

 

The Bangalore Turf Club Limited v. Regional Director, ESI Corporation, 2003 LLR 178 : 2003-1LU 73 (Karn. HC).

 

Difference between Contribution & Benefit Period

 

Contribution Period                               Corresponding Benefit Period

April to September                                 January to June

October to March                                    July to December

 

For getting the Sickness Benefit, it is necessary that the insured person should have paid the contribution for half the number of days in one contribution period, only then the insured person will be eligible to get sickness benefit in the corresponding benefit period only and not earlier. Some other benefits like Disablement Benefit, Dependent Benefit, Medical Benefit and Funeral Benefit are available to the insured person from day one of his/her employment and the criteria of contribution period vis-a-vis benefit period is not applicable in these benefits. Similarly, an insured person is also eligible for vocational rehabilitation and physical rehabilitation from day one. For availing the Maternity Benefit, an insured woman must have paid contribution for a minimum of 80 days in one or two consecutive contribution periods.

 

Manufacturing process - Interpretation of

 

The term 'manufacturing process' is not restricted to an activity which may result into outcome of processed product or manufacturing any item hence a petrol pump will be covered under the ESI Act.

 

Qazi Noorul Hasan Hamid Hussain Petrol Pump & Ann v. Dy. Director, Employees' State Insurance Corporation, Kanpur, 2003 LLR 476 (AH. HC).

 

Aids to ESI record keeping

 

                                                        Rubber Stamps

(i).Rubber stamp of abour 1" size       For affixing in all correspondence, returns, forms

     for employer's Code Number          and documents

 

(ii).Rubber stamp showing the            To be affixed on the Declaration Forms, Temporary

     name and designation of the          Identification certificates Officer who has to

     the various documents                    countersign Return of declaration Forms, Return

                                                                  of Contributions, Accident Reports

 

(iii).Rubber stamp showing                  To be affixed on the Declaration Forms, Temporary

     name, address and Code                Identification Certificates, Return of Declaration

     No. of the employer                          Forms, Return of Contributions, Accident Reports,

                                                                  etc.

 

(iv).A rubber, stamp with                       For affixing on Declaration Forms Return of

     the word 'FEMALE'                           Declaration Forms and other documents

                                                                   in respect of female employees.

 

Procedure for availing maternity benefit

 

Maternity benefits are available under the provisions of ESI Act. Duration of maternity benefit is 12 weeks in case of normal delivery and 6 weeks in case of miscarriage. The period can be extended by 4 weeks on medical advice. Maternity benefit is available subject to the condition of payment of contribution for a minimum of 80 days in one or two consecutive contribution periods and the rate of payment is double the standard benefit rate i.e. approximate full wages. The benefits can be claimed on the basis of medical certificate issued by the dispensary which has to be deposited in local office and local office will make payment.

 

Principal employer - Who is

 

An occupier of the factory under the Factories Act need not necessarily be the principal employer under the ESI Act, who can be even an officer or the manager of the factory.

 

Regional Director, ESlC v. Fact Engineering Works & Ors., 2003 LLR 619:2003 (97)FLR 308(Ker. HC).

 

Deposit of ESI contribution does not depend on disbursement of wages

 

Timely payment of ESFs contributions is the responsibility of the employer and does not depend upon actual disbursement of wages and, as such, an employer cannot escape its obligation by taking the plea that the Company has become sick and the scheme for its rehabilitation has been sanctioned by BIFR.

 

Employees' State Insurance Corporation, Sub-Regional Office, Hubli v. A.P.S. Star Industries Ltd., Dliarwad, 2003 LLR 972:2003-l 11 LLJ 411:2003 (98) FLR 1207 (Karn. HC).

 

Maintenance of record

 

An employer is required to maintain -

 

(i) Attendance Register in respect of all the employees including employees engagedimmediate employer/contractor;

 

(ii) Wage Register;

 

(iii) Register under Regulation-32;

 

(iv) Accounts Book;

 

(v) Cash Book/Books of Account, Ledgers, petty cash book including bills and vouchers;

 

(vi) Other relevant records to show the labour charges paid to the labour engaged in

construction, repair & maintenance etc.;

 

(vii) Inspection Book.

 

Prosecution for violation of Act & Scheme

 

The Chairman and Director of a company being employer cannot escape prosecution for non-payment of ESI contributions5. However, when an accused in the capacity of the Director of a Company was not overall incharge, his prosecution for failure to pay EPF contributions will be quashed.6

 

Wages & Allowances for Contributions

 

The definition of 'wages' under Sub-s.22 of S.2 of the Act starts with the words 'all remuneration' and as such it has been attracting controversy more particularly when it does not clarify which of the allowances or perks will form the part of 'wages'. Although the definition is inclusive and exclusive both, yet this issue has repeatedly gone to courts for interpretation in innumerable cases.

 

In view of the above, it becomes imperative to know the implications of judicial interpretations of the term 'wages' besides clarification made by ESI Corporation.

 

 

To be deemed as wages                                   Not to be deemed as wages

• Basic Pay• Dearness allowance• • City           Contribution paid by the employer to any pension

compensatory allowance • Overtime                 /provident fund or under ESI Act . • Any travelling

wages (but not to be taken into account            allowance or the value of any travelling Concession

for determining the coverage of an                   conveyance allowance. ' Sum Paid to defray special

employee) • Payment for day of rest •               expenses entailed by the nature of employment Daily

Payment for any day/ period of                        allowance paid for the period spent on tour. • Benefits

Authorized leave • Bonus: other than                 paid under the ESI Scheme. •  Encashment of leave •

statutory bonus  • Payment for                         • Payment of ‘Inam’ which does not form part of the

unsubstituted  holidays • Meal /Food                terms of employment. • Washing allowance for livery

tea allowance if Paid •Payment for any             Meal /Food allowance in kind • Entertainment

• out/strike period of lock which is not               allowance • Contribution to saving scheme •

illegal • Children education allowance (not         Re-imbursible actual school fee.

being reimbursement for actual tuition fee)       

• Medical Allowance • Driver's. Allowance

• Interim Relief • Wages  for Gazetted

Holidays • Amount Paid as Compensation

at the closure of  business.

 

                                                                      

 

Further Clarification                                             Further Clarification

 

1.Conveyance Allowance                                     1Production/Incentive Bonus

Notification No.T-11/13/53 21.3.2002.                   Notification No.S-11/12/1/2002 However, the Kerala High

Regional Director ESIC, Madras                          Court has distinguished the Supreme Court

v., Sundram Clayton Ltd. & TVS.                        ruling in Whirlpool of India, LLR 431 (SC) wherein it was

Suzuki, Madras, 2004  (1) LLN 630                       Held that such payment beyond span of two months will

(Mad.HC-DB).                                                     not be wages. The High Court clarified that the

                                                                          periodicity for such payment will be immaterial. United

                                                                          Breweries Ltd. v. ESI Corpn. 2003 LLR 272 (Ker. HC)

 

2.Good work wages                                            2. Annual bonus

ModernThreads (1) Ltd. v. ESIC,

2003 LLR 861(Raj. HC)

 

3. Suspension Allowance/                                   3. Production Bonus

Subsistence Allowance                                       Instructions were issued vide letter4(2)/13/74 -lns.

                                                                                                  IV dated 2.9.1985.

 

4. Overtime Allowance Indian                               4. Canteen subsidies

Drugs & Pharmaceuticals Ltd. v.

Employees' State Insurance Corporation,

1997 LLR 1 (SC)

 

5. Layoff Compensation Vide                              5. Service Charges

instructions issued in 1968                                  Instructions Issued vide letter 4(2) 13/79- lns.

                                                                          Desk.1 dated 18.9.1979.

 

6. House Rent Allowance                                     6. Newspaper Allowance

Harihar Poly fibres v. Employees' State

Insurance Corpn., Bangalore,1984

 (49) FLR 371(SC).

 

7. Night Shift/Heat/Gas &                                    7. Saving Scheme

Dust Allowance                                                   issued vide letter No. P. 12/ 18.9.1979 . Instructions

Hariliar Pohfibres v. ESIC                                    issued Vide Memo No. P. 12/11/4/77- lns. lV

FLR 371 (SC).                                                     dated 15.1.1980

 

8. Wages and Dearness                                      8. Payment made to Rickshaw Pullers, Hathrairy Pullers

Allowance for                                                     and Truck Operators (IncludingLoading & Unloading

Unsubsiituted Holidays                                       Charges when the Loaders/Unloaders are the

                                                                          employees of the Truck Operators or Thelawalas

                                                                          supplying gas cylinder ESIC v. Technico

                                                                          , 2001 LLR358(Gau. HC)

 

9. Interim Relief                                                   9. Commission to Dealers/Agents

 

10. Attendance Bonus                                         10. Payment made to Labour Consultants, Lawyers,

                                                                          Engineers,Counsels, Chartered Accountants.

 

11 Life Insurance Premium

subsidy

 

12. Medical Allowance

Vide letter No.lns.5(5)/68-lns.III

& lns.ni /2(2)2/68 dated 24.6.1971

 

13. Bata Damoclaran v. Employees' State

Insurance Corpn., 2003 LLR 373 (Ker.HC).

 

14. Other Allowances which are                            11. Other Allowances which are not

deemed Wages:                                                 deemed wages-

(i) Matinee allowance which is being paid to         (i) Payment made on account of unavailed leave at the

employees in Cinema House,                              time of discharge.

 

 (ii) Shift allowance paid to employees who          (ii) Commission on advertisement secured for

work on shift duty at odd shifts,                          Newspapers, if not paid to the regular employee

 

(iii) Location allowance paid, In addition to           (iii) Fuel allowance/Petrol allowance

Dearness Allowance to meet the high

house rent.

 

(iv) Compensatory allowance                               (iv) Entertainment allowance

 

(v) Cash handling allowance paid to cashier         (v) Shoes allowance

 

(vi) Supervisory allowance                                   (vi) Payment made on account gratuity on discharge

                                                                                /retirement.

 

(vii) Additional pay paid to training staff               (vii) Payment made on encashment of leave.

 

viii) Charge allowance

 

(ix) Steno/Typist allowance

 

(x) Plant allowance,

 

(xi) Honorarium for looking after the hospital

/dispensary

 

(xii) Computer allowance

 

(xiii) Gestetner/Photocopier/Printer allowance

 

 (xiv) Personal/Special allowance

 

(xv) Machine allowance

 

(xvi) Convassing allowance

 

(xvii) First-aid allowance

 

(xviii) Personal allowance - Pay over and

above the basic wage and Dearness Allowance

for skill, efficiency or past good  records,

 

(xix) Area allowance - given to employees living

 in a particular area to meet the high cost of

living in that area

 

(xx) Ex-gratia payment if made within an interval 

of two monts.

 

_________________________________________________________________________________________________________________________

Food Note

1. Andhra Pradesh (P) Ltd., Hyderabad v. Employees' State Insurance Corporation, Hyderabad, 1996 LLR 827 (APHC).

2. Regional Director, ESIC, Mumbai v. Golden Gate Restaurant, 2002 LLR 341 : 2002 LIC 1570 : 2002 (92) FLR 1078 : 2002-I LLJ 972 : 2002-I LLN 957 (Bom.HC)

3. Dvent Fans (P) Ltd. v. Regional Director, ESI Corporation, Bangalore, 2001 LLR 783 (Karn. HC).

4. Bata India Ltd. Calcutta v. Employees' State Insurance Corporation & Ors., 2003 LLR 1018 : 2003-III LLJ 716 (Cal.HC)

5. Rama Kant sharma & Anr. Union of India through REGIO, 2003 LLR 166 : 2003 - 1 LLJ 689 (Pat.HC)

6. R. Dhandayuthapani v. C.R. Kaleel, 2004 LLR 369 (Mad.HC)

 

IS NO CONFIDENCE MOTION A RESOLUTION?

 

(P.M. Benzir, Advocate, High Court of Kerala)

 

Motion and resolution are the two words which have been used interchangeably to mean when carried out becomes the decision of the house. Etymologically, perhaps, both these words may have comparable implications. However, in the legal, rather parliamentary context the terms motion and resolution have a subtle nuance. The infinitesimal distinction between the two is more of procedure than of content.

 

Motions may be classified as substantive motions and subsidiary motions. A substantive motion is a self-contained motion made in reference to a subject which the mover wishes to bring forward. It is an independent proposal submitted for the approval of the house and drafted in such a way as to be capable of expressing the decision of the house on the subject matter of the motion. A subsidiary motion relates to a substantive motion and is made use of to enable the house to dispose of it in the most appropriate manner. In other words a subsidiary motion relates to some other motion or follows up on some proceedings in the house. The motion for the adjournment of the debate is an example of a subsidiary motion.

 

A motion may be moved for the purpose of adjournment of a debate, for superseding questions or for the adjournment of the house itself. The issues of date and time of next session of the assembly, the duration of intervals, the person to preside over the house in the absence of the Chairman, the allotment of time to each members to speak on a particular topic etc. may be the subject matters to be decided by moving motions. Closure motion, ten o' clock business motion, dilatory motion, guillotine motion etc, are examples of motions practiced in the British parliamentary system.

 

However, a resolution is one of the important procedural devices to raise a discussion and obtain the opinion or decision of the house on a matter of general public interest. By its resolutions the house declares its own opinions and purposes. Resolution is an expression of the opinion of the house with reference to some subject or a declaration of its intention to do something. Hence, in broader words, all resolutions would fall under the category of substantive motions or it can be said that every resolution is a particular type of motion. Resolutions are generally moved before the house to put questions of policy matters having direct impact on the general public. The subject matter of the resolution should relate to a matter of general public interest and only to a matter which is primarily the concern of the Government.

 

In strict sense, a no confidence motion carried by the majority of members of a house cannot be treated as a resolution of the house since it is not an expression of an opinion or decision on a matter of general public interest. A no confidence motion is rather an inter se affair of the house. Different procedural formalities have been prescribed under the statute for moving no confidence motion and passing a resolution. A distinctive procedure called Statutory Resolution has been laid down by Direction 9B issued under the Rules of Procedure and Conduct of Business in Lok Sabha for moving resolutions in pursuance of the provisions of the Constitution for the impeachment of the President, removal of the Speaker, Dy. Chairman of Rajya Sabha etc.

 

Regarding the local authorities, apart from the provisions of Kerala Panchayat Raj (Procedure for Panchayat Meeting) Rules, 1995, S. 157 of the Kerala Panchayat Raj Act prescribes the distinctive procedure to be followed in removing the President/Vice President of the Panchayat through a motion of no confidence. Similarly S. 19 of the Kerala Municipality Act elaborately deals with the procedure for moving a no confidence motion against the Chairperson/ Deputy Chairperson of a municipality.

 

In Valsalam v. State of Kerala¹ the question for consideration before the Kerala High Court was that whether the State Government has the power to rescind a no confidence motion which has been successfully carried by the majority of members against the President of a Grama Panchayat, by invoking the power to cancel and suspend resolutions under S. 191 of the Kerala Panchayat Raj Act, 1994. Allowing the Writ Petition the Court in clear terms indicated that a no confidence motion cannot be considered as one coming within the purview of a resolution. It was held that a separate procedure had been contemplated under S.157 of the

 

Panchayat Raj Act for holding the meeting of the elected members for considering the no confidence motion. A decision or a resolution can be taken only in a meeting of the Panchayat. A meeting of the elected members convened by the representative of the Election Commission is not a meeting of the Panchayat. S. 191 would apply only when there is a decision taken or a resolution passed by the Panchayat and such a resolution or decision alone can be set aside or modified by the State invoking S.191 of the Kerala Panchayat Raj Act. The announcement of the voting result of the no confidence motion would not amount to the passing of a resolution or decision taken by the Panchayat.

 

Relying on the decision in Valsala's case the Kerala High Court in Kunhimon v. Block Development Officer², observed that the modalities prescribed by S. 157 on the Panchayat Raj Act are distinct and different from the matter of notice, conduct and quorum, and the general procedure spoken to by the Kerala Panchayat Raj (Procedure for Panchayat Meeting) Rules, 1995. It was also meaningfully noted that in respect of proceedings under S.157 what is tabled is not a resolution, but a motion.

 

Again, a no confidence motion is different from a censure motion. Whereas, a censure motion is moved for the specific purpose of ensuring the Government for certain policies and actions. For moving a censure motion it is necessary to set out the grounds or charge on which the motion is based. On the contrary a motion of no confidence need not set out any ground on which it is based. Even when grounds are mentioned in the notice and read out in the house, they do not form part of the no confidence motion. It is a simple single sentenced motion lined as

 

'this council expresses its want of confidence in the chairperson^’.

 

There is no legal bar to the passing of a motion of no confidence against an authority in the absence of any charge of impropriety or lapse on the part of that authority. The essential connotation of a no confidence motion is that the party against whom such motion is passed has ceased to enjoy the confidence of the requisite majority of members.

 

 

Foot Note

1.Valsalam v. State of Kerala, 2003 (1) KLT 858; 2003 (1) KLJ 583.

2. Kunhimon v. Block Development Officer, 2003 (3) KLT 664

 

M.C. Setalvad-- M.C. Mahajan - Some Reminiscences

 

(By A.S.P. Kurup, Advocate, Ernakulam)

 

Every person irrespective of the fact that he is great or small has some unforgetful moments in his past life. When that particular person makes an attempt to look back to the ever green memories of the past, he may find some solace in those unfading events of life. But as to the readers, the knowledge of such events, which are generally termed as anecdots, will give an opportunity to know something about such towering personalities. Thus a sound knowledge of such anecdotes enables the reader to believe that such persons are not destined to be extinct in the pool of oblivion.

 

Mehr Chand Mahajan, former Chief Justice of India and Motilal Setalvad, former Attorney General for India are two luminaries in the legal galaxy. As monuments to the posterity we have got two autobiographies written by these two. The following are some anecdots taken from the books, 'Looking Back' by M.C. Mahajan and 'My Life Law and Other Things' by M.C. Setalvad.

 

Mehr Chand Mahajan was having an unforgetful experience with his first brief. On that day in the morning he was ready with his case by 10 a.m. but the court was not sitting as the Magistrate was busy in fishing. He waited and waited till it was 12 noon. Instead of the Magistrate returning, two men came carrying a huge 70 pound fish with a chit that it was for the Vakil Sahib who had come for the '366' case. Mahajan's Munshi was soon at it and prepared several nice dishes of the fish to which they treated everybody in the camp including themselves. By 3 P.M the Magistrate returned and the case was taken up at 3-30 p.m.

 

In another context Mr. Mahajan says that Mr. Hari Chand was a convicting Magistrate at Gurdaspur. He used to take pride that no one was ever let off from his court. He sentenced one Mr. Jat to 30 years imprisonment on several counts. The man was already 70 years old and told the Magistrate that he could stand only a few years imprisonment and asked the Judge, "Who will suffer the rest of the sentence after my death, your father?" This upset the Magistrate and he gave him an additional sentence for contempt also.

 

The memory of an argument runs like this. Mr. F.W. Skemp, a fine gentleman who was patient and courteous as a Judge used to sit in the High Court. On the High Court Bench he would often go to sleep. Suddenly he would wake up, consult his notes and ask the counsel to begin again from the stage where his last note had stopped. This was very annoying to his brother judges on the Bench who had reached the end of the case.

 

Once Mr. Mahajan appeared before an honorary Magistrate, in Kalanur, a more or less illiterate person but a fine gentleman otherwise. It was a criminal case and he was being opposed by Sheikh Chiragh Din. The Magistrate knew no English whatsoever and Chiragh Din knew the fact. To impress the Magistrate he cited about 100 English cases before him from various law reports, all irrelevant to the issue before the court. At that time Mr. Mahajan was a youngster and Chiragh Din thought he would outsmart in that way. When Mahajan's turn came he started citing Privy Council decisions which, he proclaimed, all decisions cited by Chiragh Din had been overruled. It was all hoax. Mr. Mahajan did not know any of those cases and had never read them. Just as Mr. Din had cited at random, he did the same. The Magistrate got perplexed and postponed the case immediately.

 

It is a fact that any moment in a person's life may turn out to be an important turning point. When Mr. Motilal Setalvad started his practice in his early days, he was staying along with his father and wife. He wanted, however, to earn his own living and cease being a burden on his father. He was greatly depressed at not being able to work and told his father, more than once, that he should leave the profession and get a job. But his father kept on telling him that 'at the Bar one had to wait'. Later, however, seeing his impatience, the affectionate father was making efforts to find a suitable part or full time job for him. Before these could fructify his fortune turned to a glorious direction.

 

A good instance of a legal clash between the father and the son created a lovely scene in the court room. A boundary dispute between the State of Cutch and Morvi had been brewing for some years and ultimately it was referred to Justice Rangnekar who was sitting as Commission in a bungalow on the Malabar Hill. Sir Ghimanlal Setalvad, the father, the Mr. Joshi appeared for Cutch and Motilal Setalvad appeared for the State of Morvi. The father and the son put different Interpretations on old Gujarati documents. One of the documents happened to be a will in Gujarati. When Motilal Setalvad objected to a construction put by his father, the angry father promptly interjected, 'The meaning is quite clear. I knew my Gujarati before my learned friend was born".

 

Even in an extremely serious atmosphere of arguments on complicated legal issues also, laughter springs up in courts, from the subtle wits of eminent lawyers. In 1951 State of Bombay had challenged in Supreme Court the decision of the High Court in the famous Fram Balsam case. The High Court had struck down certain provisions of the Bombay Prohibition Act. Mr. Setalvad appeared in the Supreme Court for the State. Mr. Daphtary who was the Advocate General of Bombay assisted him in the case. The matter concerned the alcoholic drinks and spirits and "pegs" with which Mr. Setalvad was not at all familiar. Justice Patanjali Sastri asked many questions when Mr. Setalvad was addressing the court as to what a "peg" was and what "liqeours" were, and so forth. Genuinely in distress, Mr. Setalvad told Justice Sastri that his learned junior Mr. Daphtary was fully familiar with all these matters and he would explain them completely to His Lordship's satisfaction. Mr. Daphtary rose to bis feet and succeeded in answering all questions put to him by Justice Sastri amidst laughter all round in the court house.

 

Mr. Setalvad has the unique moral strength of expressing his views about Judges also in a realistic way. Chief Justice Mahajan's treatment of counsel appearing before him was often extremely preemptory and at times discourteous, and created great dissatisfaction among the members of the Bar. Setalvad remembers an occasion in which Mr. Mahajan was asking a senior Punjab lawyer who was urging an argument after the Chief Justice had repeatedly rejected it "How many years you had been at the Bar? The lawyer replied with natural pride that he had been at the Bar for over thirty years. Quick came the Chief Justice's sharp retort: "You have wasted them all".

 

Former Chief Justice Das remembered Mr. Justice Mahajan as a Judge in this way. Chief Justice Mahajan had a direct approach of dealing with counsels. In an appeal a man alleged that he had been wrongfully dismissed. It was a case of a company in which there were two sets of directors and they were fighting and were at logger heads. This man who was the manager sided with one of the factions and ultimately the other faction came into power, they promptly dismissed him. The counsel for him, came from outside. He was going on arguing. There was nothing in the case. Then, the Chief Justice who was presiding, looked at him frowningly and said, "Why did you take sides?". Counsel replied : "What could I do? They were the men in power". Mr. Mahajan, Chief Justice looked at him and said, "so you believe in obeying the men in power?". The counsel said, "Yes, my Lord, what could I do? Quick came the reply: "I am the man in power here. You had better sit down". And the counsel did what he was told.

 

In expressing his views, Mr. Setalvad was very frank and clearly spoke out his mind, throughout the book. Here is an example when he speaks about the Judges of the International Court of Justice. In International Court of Justice rarely did a Judge ever ask any question. Nor did the Judges appear to take any notes. They sat almost impassively throughout the proceedings. Some of them even read books or appeared to sleep during the proceedings. Mr. Setalvad remembers Soskice, Counsel from Britan, once drawing his attention to a judge reading a book during the course of the counsel's arguments. He expressed strong resentments at counsel being" treated with such scant respect. Indeed, it was said about one Judge that he had finished reading a number of detective novels during the course of the hearing. At least three of the Judges wore dark glasses so that it was difficult to decide whether they attended to the proceedings or not. A Court undoubtedly it was; but as Mr. Setalvad said after his return to India while speaking about the court, it was "a dead court".

 

LOTTERIES AND THE LAW

 

(By Shri V. Bhaskaran Nambiar, Former Judge, High Court of Kerala)

 

I welcome the reintroduction of the Kerala State Lottery; I welcome the ban on on-line lotteries. But then, I do not understand why there were so many doubts, differences and difficulties in the regulation of lotteries in this State, especially when the Supreme Court, in several decisions of the Constitution Bench has settled the law on the subject.

 

What then is the settled law? What are the Constitutional and Statutory provisions?

 

Entry 40 of List I in the Seventh Schedule of the Constitution reads:-- 'Lotteries organised by the Government of India or the Government of a State'. Parliament has thus the exclusive power to enact a law on lotteries organised by the Government of India or the Government of a State. Accordingly, Parliament enacted the Lotteries (Regulation) Act, which came into force on 7.7.1998.

 

Gambling is a State subject under Entry 34 of List II reading 'Betting and gambling'. In the well-known R.M.D.C. case, AIR 1957 SC 699, a Constitution Bench held that lottery is a gamble, not trade or commerce and mere is no fundamental right to conduct lotteries.

 

Government of Maharashtra allowed the sale of Maharashtra State lottery tickets only, inside the State and banned the sale of lottery tickets organised outside the State. This was before the coming into force of the 1998 the Lotteries (Regulation) Act. A Constitution Bench in Anraj's case, (1984) 2 SCC 292, held thus:--

 

'Betting and Gambling includes and has always been understood to have included the conduct of lotteries. Quite obviously the subject lotteries organised by the Government of India or the Government of a State has been taken out of from the legislative field comprised by the expression Betting and Gambling and is reserved to be dealt with by Parliament. Since the lotteries organised by the Government of India or the Government of a State has been made a subject within the exclusive legislative competence of Parliament, it must follow in view of Art.246(l) and (3) that no Legislature of a State can make a law touching lotteries organised by the Government of India or the Government of a State. The Maharashtra Legislature has acknowledged the position, as indeed it must, in S.32 of the Bombay Lotteries (Control and Tax) and Prize Competitions Act, 1958. S.32 expressly provides that nothing in the Act shall apply to a lottery organised by the Central Government or the State Government. This as we said is but recognition of the prevailing situation under the Constitution. The constitutional position cannot be altered by an Act of the State Legislature'.

 

In view of this categorical decision, I am not able to understand how the Kerala State can make any law-affecting lotteries organised by the Government of India or the Government of a State. If therefore, the on line lottery is a lottery organised by any other State, it cannot be matter of State legislation by simply calling it as gambling.

 

Imposition of tax on outside lotteries by Tamilnadu and West Bengal compelled the Supreme Court in the second Anraj case (1986) 1 SCC 414, to hold that the tax on sale of lottery tickets was a tax on sale of goods. Even then the Apex Court held that there could not be two different rates of tax one for the 'inside lottery' and another for the 'outside lottery'. The Court struck down the exemption granted by the Tamilnadu State on the sale of Tamilnadu lottery tickets on the ground that it was discriminatory and affected the free flow of trade recognised under Art.301 and 304 of the Constitution. The Supreme Court said, 'Discriminatory treatment in the matter of levying the sales tax on imported tickets which are similar to the ones issued by the State Government so as to hamper the free flow of trade, commerce and intercourse is writ large on the face of the impugned notification'. Can the State therefore demand any higher tax or duty from the lotteries organised by other States.

 

Bearing these legal aspects, it is clear (1) that the Lotteries (Regulation) Act prevails all over the country (2) lotteries organised by the Centre and me Stales are bound by those provisions (3) that the State cannot discriminate between lotteries conducted by the State and outside lotteries for taxation purposes.

 

This takes to the question as to what are the lotteries organised by the Centre and the States coming within the ambit of the Lotteries (Regulation) Act.

 

S.4 of the Act stipulates the conditions for organising, promoting such lotteries.

 

Some of the main requisites are

 

(1) The State Government shall print the lottery tickets bearing the imprint and logo of the State in such manner that the authenticity of the lottery ticket is ensured.

 

(2) The State Government shall sell the tickets either itself or through distributors.

 

 (3) The proceeds of the sale of lottery tickets shall be credited in the public account of the State.

 

(4) No lottery shall have more than one draw a week.

 

(5) Prizes shall not be offered on any pre-announced numbers or on the basis of a single digit.

 

5.5 stipulates 'A State Government may, within the State prohibit the sale of lottery organised or conducted, promoted by very other State'. There is no reason why the State cannot have recourse to this provision instead of coming out with a new legislation.

 

The crux of the problem is whether on-line lotteries are organised by any other State. It is not the form of a rubber stamp of the State that gives authenticity to the lotteries, but it is the substance that the lottery is run by the State that matters. Lottery is 'an arrangement for the distribution of prize by chance among persons purchasing tickets'. Therefore the printing of tickets has to be the sole preserve of the State. This should necessarily mean that the tickets are printed and numbered and then distributed for sale. If the tickets have no numbers they are not lottery tickets. The State cannot issue blank slips bearing only the imprint and logo of the State and authorise its agents to allot numbers of their choice to the tickets. In that case it will not be tickets printed by the State. When a lottery ticket is printed by the State, it should have its number displayed. It cannot be a number printed by the seller/agent. These are aspects, which require to be borne in mind when dealing with lotteries conducted by the States.

 

The question is, did the State satisfy itself on the basis of the records made available or on the basis of independent enquiry that the conditions prescribed under S.4 were satisfied or not. If the applicants did not satisfy the conditions they may not be entitled to conduct on-line lotteries. The State is not bound to allow them to carry on that trade.

 

S.6 of the Central Act says, the Central Government may, by order published in the Official Gazette, prohibit a lottery organised, conducted or promoted in contravention of the provisions of S.4 or where tickets of such lottery are sold in contravention of S.4. The State is thus not helpless in banning on-line tickets.

 

Regarding 'play win' in the decision reported in 2000 (3) KLT 599 a learned Single Judge observed thus:

 

The much-hyped super lotto of the State of Sikkim is being run by a sole dealer and distributor, a private firm named 'play win'. This firm sells the tickets through retail terminals spread across the country. A punter goes to a retailer and selects six numbers from those mentioned in the play slip. The agent then inserts the play slip in the terminal and prints out the tickets on custom made papers with the name 'Play win' printed all over it with only a smudgy state logo appearing on it. This does not appear to comply with S.4(b) of the Act, requiring the State Government to print the lottery tickets bearing the imprint and logo of the State in such a manner that the authenticity of the lottery is ensured. As such, the device adopted by Play win does not appear to be fool proof against fraud and hence the sale of fake tickets cannot at all be ruled out".

 

Now, what has happened? In the wake of the interim orders of the Supreme Court, the State could not take any action against the outside lotteries. The State was anxious to stop those lotteries. The State should have then satisfied itself whether there was compliance with S.4 and move the Supreme Court for modification of the orders. But the State in a hasty move withdrew the State lotteries run by the Government. The result was the State lost huge revenue running to crores of rupees. Lacs of persons lost their only source of livelihood. Thus the State killed the goose that laid the golden eggs. It may be said that the administrative action, patently destructive in nature, issued in very great haste, by one stroke of the pen, was practically a challenge to the judiciary. Administrative ego bordering on challenge to judicial directive has thus resulted in some sort of chaos.

 

DENUDATION OF MANGALAVANAM

 

(By Justice K.P. Radhakrishna Menon)

 

The first report of the international commission by name 'The Brandts Commission', which had a distinguished Indian Mr. L.K. Jha as a member, had occasion to deal with the question relating to ecology and environment, raised a wonderful issue for the consideration of the world, "Are we to leave our successors a scorched planet of advancing deserts, impoverished landscapes and ailing environment?"

 

This issue, the Commission was compelled to pose, because, the destruction of the ecology, environment, and denudation of forests have started affecting the four principal biological system of Earth, namely, fisheries, forests, grasslands and croplands which form the foundation of the global economic system, resulting in the impairment of their productivity itself. Dr. Myers says, several species of life in the tropical forests are facing extinction as a result of this destruction. It is shuddering to note the remark made by Sri. James Speth, the President of the World Resources Institute: "We were saying that we are losing the forest at an acre a second, but it is much closer to an acre and a half to a second".

 

Taking note of this catastrophe, our Parliament amended the Constitution and incorporated Art.48(A) which reads "The State shall endeavour to protect and improve the environment and to safeguard the forests and wild life of the country". By the same Amendment Act (42nd Amendment of 1976) Part IVA prescribing the fundamental duties was incorporated in the Constitution. Clause (g) of Art.51(A) (fundamental duties) is relevant in the context. It mandates that it is the fundamental duty of every citizen to protect and improve the natural environment, including forests, lakes, rivers and wild life, and to have compassion for living creatures.

 

Reading the directive principles of state policy highlighted in Art.48(A) and the fundamental duty aforesaid together, it can be said without fear of contradiction that the Govt, is bound to enforce the directive principles and thus avert or avoid the destruction of the natural environment including forest, rivers and wild life. It shall be remembered that the directive principles of the State Policy is so basic as to say that it is fundamental in the governance of the country. The opinion expressed by Bhagavathy. J. in Minerva Mill Case, reproduced hereunder is relevant in the context: "A rule imposing an obligation or duty could not therefore cease to be a rule of law, because there is no regular judicial or quasi judicial machinery to enforce its command...... It is therefore, to my mind, clear beyond doubt that merely because the directive principles are not enforceable in a Court of law, it does not mean that they cannot create obligations or duties binding on the State". It is all the more so because both Art.48(A) and Art. 51(A)(g) are intended to promote a Welfare State, envisaged by the objective highlighted in the preamble to the Constitution.

 

The disturbing factors, noticed by the Government resulted in the policy decision of the Government directing preservation of the environment and safe guarding the forest and wild life of the State. This policy of the Govt, is reflected in the proceedings declaring 'Mangalavanam' as a protected area.

 

It is understood from the scribblings in the newspapers, that the State has decided to oblige the High Court by surrendering a portion of the "Mangalavanam" to be used as a parking ground. If the proposal matures into reality, I would unhesitatingly say that the State is failing in its duty to protect and preserve the welfare of the society.

 

Be that as it may: The citizens feel that the High Court shall take the initiative and direct the Government to put an end to the denudation of forests, which the Govt, are bound to protect. If no action is forthcoming in this regard the citizen who is duty bound to protect and improve the natural environment including forests, lakes, rivers and wild life, going by Art.51 (A) of the Constitution, is entitled to initiate proceedings before the Hon'ble High Court under Art.226 or before the Supreme Court under Art.32 of the Constitution, to compel the Government to withdraw the proposal, and salvage "Mangalavanam" which is also a bird sanctuary.

 

I conclude, quoting the words of Mr. Lester Brown, "we have not inherited this Earth from our forefathers; we have borrowed it from our children": and that is why Margaret Thatcher reminded the world, "No generation has a free hold on this earth. All we have is a life tenancy ~ with a full repairing lease".