The Employees' State Insurance Act should be given a liberal construction so that social security can be provided to the employees, the Supreme Court division bench led by Justices M R Shah and C T Ravikumar stated on January 20.

"The ESI Act being a social welfare legislation, any interpretation which would lean in favour of the beneficiary should be given. The object and purpose of the ESI Act has been elaborately considered by this Court in the case of Bangalore Turf Club Limited (supra). After considering catena of earlier decisions under the ESI Act, it is observed and held that ESI Act should be given liberal interpretation and should be interpreted in such a manner so that social security can be given to the employees"

The High Court erred in allowing the appeal and in setting aside the demand notices even for the period following 20.10.1989, the bench stated. The High Court also erred in holding that the said provision is applied retrospectively to demand notices for the period following the insertion of Sub-section (6) of Section 1.

The court held that Subsection (6) of Section 1 shall be applicable even to establishments that were created before 31.03.1989/20.10.1989 and that the ESI Act shall be applicable regardless of the number of employees or regardless of the fact that the number of employees at any time falls below the limit imposed by or under the ESI Act.

The ESI Court rejected M/s Radhika Theatre's appeal of the demand notice sent by the ESI Corporation. After granting their writ petition, the Telangana High Court ruled that Section 1's newly added subsection (6), which went into effect on October 20, 1989, could not be applied retroactively or to any establishments that had been in operation before that date or on March 31, 1989.

Case Title: ESI Corporation vs Radhika Theatre 
Citation: CA 312 OF 2023

Appearances of the advocates:-

For Appellant(s)

Mr. Mahesh Srivastava, Adv.
Mr. Vaibhav Manu Srivastava, AOR
Ms. Niharika Gupta, Adv.
Mr. Abhishek Gupta, Adv.