Financial Daily from THE HINDU group of publications
Friday, Nov 05, 2004
Money & Banking - General Insurance
Industry & Economy - Health
Seven-year long legal battle over ESI cover before apex court
New Delhi , Nov. 4
EVEN as the Government is making efforts to strengthen the Employees' State Insurance Corporation (ESIC), employees of a large number of big corporates as well as a few public sector enterprises (PSEs) want to opt out of its health scheme cover.
These companies include Jardine Henderson, Philips Telecom, Tractors India, Dunlop, Supreme Paper Mills, Reckitt & Colman, Foseco India, Otis Elevators, etc.
These employees have been fighting a prolonged legal battle since 1997, the year when the salary ceiling for ESI cover was raised from Rs 3,000 to Rs 6,500 per month to bring more employees under the ambit of the health scheme.
The trade unions of these companies have been fighting in the courts to avail themselves of their company benefits instead of the ESI cover in accordance with the agreements with the employers. After winning the case against ESIC in the Calcutta High Court, the trade unions lost the case when the Corporation appealed to the Division Bench of the Calcutta High Court.
Now, the ESIC has filed a special leave petition (SLP) in the Supreme Court, which is to come up for hearing on Friday.
The ESIC has moved the apex court for recovery of its dues. Although the exact amount could not be ascertained, rough estimates made by the lawyers handling the case put the figure at more than Rs 100 crore. The Corporation, according to the lawyers, has moved the Supreme Court following discrimination among employees arising out of the order of the Division Bench of the Calcutta High Court.
In its order, the Division Bench, while upholding the ESIC stand that all employees whose earnings were within the prescribed limits of the ESI ceiling must get ESI benefits, stated that the order would be applicable with prospective effect. On the contrary, the ESIC wants it to be with retrospective effect.
Such a change would enable the Corporation to recover its dues applicable for the period from January 1, 1997 the date on which the ESI notification on increasing the salary ceiling became effective till March 16, 2004, the date of the Division Bench order.
Interestingly, it may be mentioned that the medical benefits offered by the companies to their employees who are trying to opt out of the ESI coverage do not include a lot of benefits offered by the ESI scheme like maternity benefits and a few others.
According to lawyers handling the case, the bone of contention is that if the Division Bench order is upheld with retrospective effect, the concerned companies will have to pay substantially larger amounts for the period between 1997 and 2004, which they will not be able to recover from their employees. This apart, the employees' liabilities too, would devolve upon the companies.
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