THE EMPLOYEES STATE INSURANCE CORPORATION & ORS.versusM/S KEY DEE COLD STORAGE PVT. LTD.

842                      [2022]REPORTS
               SUPREME COURT    3 S.C.R. 842                 [2022] 3 S.C.R.


A                  THE EMPLOYEES STATE INSURANCE
                        CORPORATION & ORS.
                                         v.
                 M/S KEY DEE COLD STORAGE PVT. LTD.
B                        (Civil Appeal No. 4159 Of 2022)
                                  MAY 19, 2022
              [K. M. JOSEPH AND HRISHIKESH ROY, JJ.]
             Employees’ State Insurance Act, 1948: s. 1(3) – Issuance of
      notification dated 21.07.1999 under – Interpretation of –
C
      Establishment of the respondent situated at Tarapur, if covered within
      the area as notified vide notification dated 21.07.1999 – Held:
      Respondent’s establishment covered under the purview of the ESI
      Act – Notification dated 21.7.1999 issued by the Central Government
      specifies the areas to which the ESI Act is made applicable and
D     significantly, apart from stating that it applies to areas under the
      Silchar Municipal Corporation, it specifically names additional
      areas/villages, including the village of Tarapur where the factory
      of the respondent located – Thus, the notification would extend to
      areas well beyond the limits of the Silchar Municipal Corporation
      – If the area of coverage of the ESI Act was intended to be restrictive,
E
      there was no need to mention other areas by name in the said
      notification – Name of Tarapur village is mentioned twice in the
      notification – Word “including” in the Notification, is used as a
      word of enlargement, so as to make the territorial application of
      the ESI Act extensive – Notification is not confined to “only the
F     area under the Silchar Municipal Board”, but includes various areas
      mentioned therein, in addition to the areas under the Silchar
      Municipal Board – High Court erred in holding that since the Village
      Tarapur, where the factory of the Respondent is situated, falls outside
      the municipal limits of Silchar, the establishment of the respondent
      is not covered by the notification, thus, the decision of High Court
G
      set aside.
            Interpretation of Statutes: Notification issued u/s. 1(3) of the
      Employees’ State Insurance Act, 1948 – Principles of interpretation
      – Held: Notification being a statutory notification, the principles of
      interpretation of subordinate legislation are applicable – If the words
H
                                        842
 THE EMPLOYEES STATE INSURANCE CORPORATION & ORS. v.                        843
         M/S KEY DEE COLD STORAGE PVT. LTD.

used are unambiguous, the cardinal principle of interpretation is           A
that effect has to be given to every word in the subject notification.
      Allowing the appeal, the Court
       HELD: 1.1 The 21.7.1999 notification issued by the central
government specifies the areas to which the Employees’ State                B
Insurance Act, 1948 is made applicable and significantly, apart
from stating that it applies to areas under the Silchar Municipal
Corporation, it goes on to specifically name additional areas/
villages, including the village of tarapur. It is therefore not difficult
to comprehend that the notification would extend to areas well
beyond the limits of the Silchar Municipal Corporation. If the              C
area of coverage of the ESI Act was intended to be restrictive,
there was no need to mention other areas by name in the said
notification. The logical interpretation would then be that the
entire village area of Tarapur is notified for coverage as the name
of Tarapur village is mentioned twice in the notification. The              D
significance of this must be given due weightage. [Para 15][852-
D-F]
       1.2 The notification issued under Section 1(3) of the ESI
Act is a statutory notification and the same should be treated as
a part of the statute, both for the purposes of construction and            E
also for the obligations arising therefrom, as if, they are contained
in the Act. The principles of interpretation of subordinate
legislation are applicable for interpretation of such statutory
notification. If the words used are unambiguous, the cardinal
principle of interpretation is that effect has to be given to every
word in the subject notification. An interpretation that the                F
statutory notification was intended to cover only those areas falling
within the jurisdiction of the Silchar Municipal Board as was
decided in the impugned judgment, would mean that all the other
areas specifically mentioned in the notification, which are
otherwise beyond the limits of the Silchar Municipal Corporation,           G
would be excluded from the purview of the statutory notification.
If this is accepted, there would be departure from the cardinal
principle of interpretation of giving full effect to every word of
the notification. [Paras 16, 17][852-F-H]

                                                                            H
844            SUPREME COURT REPORTS                       [2022] 3 S.C.R.


A           South Central Railway Employees Cooperative Credit
            Society Employees’ Union, Secunderabad v. Registrar
            of Cooperative Societies and Ors. (1998) 2 SCC 580 :
            [1998] 1 SCR 85; National Highways Authority of India
            v. Pandarinathan Govindarajulu and Anr. (2021) 6
            SCC 693 – referred to.
B
             1.3 The Central Government notification makes reference
      to several areas beyond the limits of the Silchar Municipal Board.
      This is discernible from the fact that reference to Tarapur is made
      twice, firstly in reference to the Silchar Municipal Corporation
      and secondly with reference to Mouza-Barakpur. The reference
C     to the Udharbond Revenue Circle (outside the limits of Silchar
      Municipal Corporation) and likewise to Rajnagar, which is another
      revenue unit, distinct from Barakpur (which comprises the Silchar
      Town), would suggest that the Central Government intended to
      extend the operation of the ESI Act to areas well beyond the
D     limits of the Silchar Municipal Corporation. The concerned
      establishment is located in Tarapur Part III falling within
      Barakpur, which is otherwise outside the Silchar Municipal Area.
      Significantly, Mouza-Barakpur by name is mentioned in the
      notification. The High Court’s constrictive interpretation of the
      notification, for application of the ESI Act to the smaller areas
E     within the limits of Silchar Municipal Corporation, cannot be
      accepted. [Para 18][853-D-F]
             1.4 The notification which obviously could have been better
      drafted, is punctuated by several commas. This would suggest
      that the areas mentioned after the punctuation marks should be
F     read disjunctively and should not be read in reference to the
      Silchar Municipal Corporation which is the first area mentioned
      in the notification. When this Court looks at the punctuation
      marks in the notification dated 21.7.1999, and what follows
      thereafter, is that the notification intended to cover several areas
G     beyond the areas within the Silchar Municipal Corporation. The
      notification issued under Section 1(3) of the ESI Act, after initially
      adverting to areas under Silchar Municipal Corporation falling
      within Silchar Revenue Circles, significantly uses the word
      “including” which would suggest the intention of the writer of
      the notification, to enlarge the coverage area, well beyond the
H
 THE EMPLOYEES STATE INSURANCE CORPORATION & ORS. v.                  845
         M/S KEY DEE COLD STORAGE PVT. LTD.

limits of the Silchar Municipal Corporation. The other areas          A
specifically mentioned after the word “including”, would suggest
that the area of coverage under the ESI Act, must not be restricted
to the territorial limits of the Silchar Municipal Corporation. The
High Court restricted the application of the statutory notification
to the limits of the Silchar Municipal Corporation, which would
                                                                      B
imply that all the other areas mentioned beyond “including” would
be taken out of the purview of the ESI Act. This could not have
been the intention of the Union Government. [Para 19, 22][853-
G-H; 854-B-D; 855-C-D]
      Ramanlal Bhailal Patel and Ors. v. State of Gujarat
      (2008) 5 SCC 449 : [2008] 2 SCR 468; Union of India             C
      and Anr. v. Hansoli Devi and Ors. (2002) 7 SCC 273 :
      [2002] 2 Suppl. SCR 324; Dr. M.K Salpekar v. Sunil
      Kumar Shamsunder Chaudhari and Ors. (1988) 4 SCC
      21 – referred to.
       1.5 The respondent while challenging the show cause notice     D
in the EI Court, failed to implead the factory’s employees either
individually or in representative capacity. Even the Union of India
which issued the notification under Section 1(3) of the ESI Act
expanding coverage of the beneficial legislation to the area where
the factory of the respondent is located, was not arrayed as a        E
party in the proceeding. The plea that for non-joinder of necessary
parties, the proceeding at the instance of the respondent would
not be legally maintainable, was specifically raised by the
appellants before the High Court but this was rejected with the
observation that the issue ought to have been raised before the
trial court. In this context, it is necessary to keep in mind that    F
the Employees’ State Insurance Corporation’s case was rendered
on 17.9.2009 whereas the judgment in favour of the appellants
was rendered by the EI Court much earlier on 21.6.2006.
Therefore, for the appellants, it would have been impossible to
rely on the ratio in the subsequent judgment of the Supreme           G
Court to argue on the non-maintainability of the respondent’s
proceeding, for non-impleadment of the concerned employees.
[Paras 24, 27][855-F-G; 857-G-H; 858-A-B]
      Employees’ State Insurance Corporation v. Bhakra Beas
      Management Board and Anr. (2009)10 SCC 671 :                    H
846            SUPREME COURT REPORTS                      [2022] 3 S.C.R.


A           [2009] 14 SCR 656; Fertilizers and Chemicals
            Travancore Ltd. vs. Regional Director, Employees’ State
            Insurance Corporation and Ors. (2009) 9 SCC 485 :
            [2009] 13 SCR 437 – referred to.
            1.6 The submission of the respondent is that since penal
B     consequences are provided under the ESI Act, strict
      interpretation of the notification on the applicability of the Act to
      the respondent’s establishment, must be made. The name of
      village ‘T’ is mentioned twice in the 21.7.1999 notification and
      therefore a strained interpretation is not at all necessary to bring
C     the establishment of the respondent, within the ambit of coverage
      of the ESI Act. The respondent’s failure to conform to the
      requirement of the ESI Act may perhaps invite penal action
      envisaged by the legislation. But this by itself does not persuade
      to interpret the statutory notification in a particular manner, to
      suit the purpose of the respondent. [Para 29][858-D-F]
D
             1.7 The High Court erred in holding that since the Village
      Tarapur, where the factory of the Respondent is situated, falls
      outside the municipal limits of Silchar, the establishment of the
      respondent is not covered by the notification (21.07.1999). Such
      faulty interpretation adopted by the High Court cannot be
E     accepted. The word “including” in the Notification, is used as a
      word of enlargement, so as to make the territorial application of
      the ESI Act extensive. The notification is certainly not confined
      to “only the area under the Silchar Municipal Board”, but includes
      various areas mentioned therein, in addition to the areas under
F     the Silchar Municipal Board. That being the case, the respondent’s
      establishment, is found to be covered under the purview of the
      ESI Act. [Para 30][858-F-H; 859-A]
            1.8 The terms of the notification cannot be any clearer and
      the language used admits no exceptions of the kind submitted by
G     the respondents. There is definite and unambiguous reference
      to the areas beyond the territorial limits of the Silchar Municipal
      Board. Furthermore, the village Tarapur where the factory of the
      respondent is situated, is mentioned a second time. The words
      used are not surplusage and emphatically proclaim the drafter’s

H
 THE EMPLOYEES STATE INSURANCE CORPORATION & ORS. v.                   847
         M/S KEY DEE COLD STORAGE PVT. LTD.

intention to include wider areas within the purview of the             A
notification and thereby the ESI Act. The plain language of the
notification settles the issue against the respondent. Thus, the
impugned decision is set aside. [Paras 31, 32][859-A-C]
      Quebec Railway, Light, Heat & Power Co. v. Vandry
      AIR 1920 PC 181; Khetrabasi Biswal v. Ajaya Kumar                B
      Baral and Ors. (2004) 1 SCC 317 : [2003] 6 Suppl.
      SCR 8; Delhi Gymkhana Club Limited v. Employees’
      State Insurance Corporation (2015) 1 SCC 142 : [2014]
      14 SCR 1082 – referred to.
                      Case Law Reference                               C

[1998] 1 SCR 85                 referred to           Para 16
(2021) 6 SCC 693                referred to           Para 16
[1988] 2 Suppl. SCR 339         referred to           Para 19          D
[2008] 2 SCR 468                referred to           Para 20
[2014] 14 SCR 1082              referred to           Para 23
[2009] 14 SCR 656               referred to           Para 24
                                                                       E
[2009] 13 SCR 437               referred to           Para 24
[2003] 6 Suppl. SCR 8           referred to           Para 28
      CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4159
of 2022.
                                                                       F
      From the Judgment and Order dated 01.12.2016 of the High Court
of Assam at Guahati in Regular First Appeal No. 82 of 2006.
      Santosh Krishnan, Yakesh Anand, Ms. Sonam Anand, Advs. for
the Appellants.
                                                                       G
     Parthiv K. Goswami, Rahul Pratap, Ankit Agarwal, Prateek
Bhardwaj, Advs. for the Respondent.



                                                                       H
848             SUPREME COURT REPORTS                            [2022] 3 S.C.R.


A           The Judgment of the Court was delivered by
            HRISHIKESH ROY, J.
            1. Leave granted.
             2. Heard Mr. Santosh Krishnan, the learned counsel appearing
B     for the appellants. The respondent is represented by Mr. Parthiv K.
      Goswami, the learned counsel.
             3. The challenge in this appeal is to the judgment and order dated
      1.12.2016 in the RFA No. 82/2006 whereby the Guwahati High Court
      has allowed the appeal of the respondent and set aside the order dated
C     28.4.2006 passed in favour of the appellants by the Employees Insurance
      Court. Under the impugned judgment, it has been held that Village
      Tarapur, where the factory of the respondent is located, falls outside the
      municipal limits of Silchar and is therefore not covered under the
      notification dated 21.7.1999 (Annexure P-I) issued by the appellants
      under sub-Section (3) of Section 1 of the Employees’ State Insurance
D     Act, 1948 (hereinafter referred to as the “ESI Act”). The other finding
      of the High Court to the effect that the business of cold storage run by
      the respondent is covered within the meaning of ‘manufacturing process’
      as defined under Section 2(14AA,) is however not challenged in this
      appeal by the appellants.
E            4. The issue to be decided here is whether the High Court was
      correct in its interpretation of the notification dated 21.7.1999 and holding
      that the notification covers only the areas within the Silchar Municipal
      Board, although the notification additionally mentions names of other
      areas/villages including the Village of Tarapur, where the respondent’s
F     factory is located.
             5. The Village Tarapur is subdivided into many segments and part
      of the village area falls within the Silchar Municipal Corporation and
      other parts, within the Silchar Revenue Circle. The respondent company
      set up its cold storage factory at Ramnagar, Village Tarapur.
G            6. On 21.7.1999, the notification was issued under sub-section (3)
      of Section 1 of the ESI Act, notifying 1.8.1999 as the date on which
      certain provisions of the ESI Act shall come into operation in the following
      areas in the State of Assam namely :-
            “Areas under Silchar Municipal Corporation falling within Silchar
H           Revenue Circles including the Revenue Village – Silchar Town,
 THE EMPLOYEES STATE INSURANCE CORPORATION & ORS. v.                          849
 M/S KEY DEE COLD STORAGE PVT. LTD. [HRISHIKESH ROY, J.]

      Ambicapur, Uttar Krishnapur, Kanakpur, Ukilbazar, Tarapur,              A
      Rangpur, Durganagar, Gosaipur, Srikona, Under Mouza-Barakpur,
      Tarapur, Ph-Barakpur, Rang Ph-Barakpur, Udharbond, Rajnagar.”
       7. Thereafter, the Regional Director of the Employees State
Insurance Corporation informed the respondent about the notification
and that the provisions of the ESI Act are now made applicable, to all        B
factories situated within the notified areas and as such, the respondent’s
factory at Ramnagar, Village Tarapur would be covered under the ESI
Act, with effect from 1.8.1999. Since the respondent failed to take
necessary steps for registration under the ESI Act and to pay the requisite
contribution for the employees in their establishment, a show cause notice
was issued to the respondent to remit contribution for the months of          C
April to September, 2000, on ad hoc basis. This was followed by a notice
by the competent authority for recovery of Rs. 17,068 from the
respondent.
       8. The respondent then moved the Employees Insurance Court,
Guwahati (hereinafter referred to as the “EI Court”) to challenge the         D
show cause notice and the consequent steps for recovery of contribution.
The say of the respondent was that the area in which their factory is
located is not covered by the 21.7.1999 notification. The Regional
Director of the ESI Corporation however contended that the 21.7.1999
notification, extending the provisions of the ESI Act, also covers the        E
area where the factory of the respondent is located. The EI Court
considered the testimony of the witnesses and the documents relied upon
by the parties and concluded that the notification extends to Tarapur and
therefore, the factory of the respondent, located in Tarapur, is brought
under the coverage of the ESI Act. Accordingly, the respondent is
required, under the ESI Act, to make the contribution, and the authorities    F
had correctly assessed the quantum of contribution payable for the
employees in the establishment.
      9. The relevant findings of the EI Court are extracted below:-
      “ ****      ****      ****      ****                                    G
      11. The Notification Ext. 2 issued by the Government of India on
      21.7.99 includes areas under Silchar Municipal Corporation falling
      within Silchar revenue circles including the revenue village, Silchar
      Town, Ambicapur, Uttar Krishnapur, Kanakpur, Ukil bazar,
                                                                              H
850             SUPREME COURT REPORTS                           [2022] 3 S.C.R.


A           Tarapur, Rongpur, Durganagar, Gosaipur, Srikona, under Mouza-
            Borakpur, Tarapur etc.
            12. From evidence on record it is clear that Lamargram, Ramnagar
            is situated within the Tarapur Village in between Tarapur and
            Srikona. Several part villages are included in the Tarapur villages
B           area and Lamargram, Ramnagar is included in the Tarapur Village,
            in the Notification Tarapur has been included as a whole. This
            being so, I hold that M/s. Kay Dee Cold Storage Pvt. Ltd. – the
            petitioner was included under the coverage of E.S.I. Act vide
            Notification Ext. 2.
C           ****                  ****           ****      ****”
            10. An appeal was then preferred under Section 82 of the ESI
      Act before the Guwahati High Court to challenge the decision of the EI
      Court. In RFA 82/2006, the learned Judge framed, inter alia, the following
      substantial question of law to be answered in the proceeding:-
D           “i. Whether the establishment of the appellant is covered within
            the area as notified vide notification dated 21 st July, 1999 (Ext.2)?
             11. In the impugned judgment, the High Court concluded that the
      establishment of the respondent is not covered by the 21.7.1999 notification
      and the RFA was accordingly allowed by setting aside the judgment
E     dated 28.4.2006 of the E.I. Court. Answering the substantial question
      No. (i), the Court opined that “only the area under Silchar Municipal
      Board is the overall area sought to be covered by the notification,
      and therefore, only the areas falling within the Silchar Revenue
      Circle, inclusive of the areas mentioned therein that falls within the
F     jurisdiction of Silchar Municipal Board can be said to be covered
      by the notification dated 21.7.1999”
             12.1 Assailing the above, Mr. Santosh Krishnan, the learned
      counsel for the appellants, would contend that the 21.7.1999 notification
      while setting out that it applies to areas under the Silchar Municipal
      Corporation, also goes on to specifically name certain areas/villages
G
      including the Tarapur Village where the respondent’s factory is located.
      The village Tarapur is constituted by several parts and in the Para Lamar
      Gram of Tarapur Part III, the Cold factory Storage of the respondent is
      situated. The Village Tarapur partially falls under Silchar Municipal
      Corporation and also under the Silchar Revenue Circle and since Village
H     name is mentioned twice in the notification, the entire village area of
 THE EMPLOYEES STATE INSURANCE CORPORATION & ORS. v.                            851
 M/S KEY DEE COLD STORAGE PVT. LTD. [HRISHIKESH ROY, J.]

Tarapur would be covered by the notification dated 21.7.1999. According         A
to Mr. Santosh Krishnan, the learned counsel, on correct understanding
of the areas covered by the 21.7.1999 notification, the area where the
cold storage factory is located, could not have been excluded by the
High Court by placing reliance on the Certificate dated 5.7.2004 (Ext.
16), which had certified that the respondent’s factory at Ramnagar,
                                                                                B
Tarapur is situated outside the limits of Silchar Municipal Board.
       12.2 As the respondent has not challenged the notification dated
21.7.1999 issued under Section 1(3) of the ESI Act, the High Court,
according to the appellants, fell into an error in giving a restrictive
interpretation of the notification dated 21.7.1999.
                                                                                C
       12.3 The exclusion of the areas of Ramnagar, Tarapur from the
purview of the 21.7.1999 notification would, according to the appellant’s
counsel, have far reaching consequences, inasmuch as others in the
area would then claim that they are outside the purview of the coverage
under the ESI Act, and this consequently will be detrimental to the interests
of the employees working in the establishments covered by the ESI Act.          D

       12.4 The appellants also argue that in the proceedings before the
E.I. Court, the respondent should have impleaded the factory’s workmen
as also the Union of India, to facilitate participation of these necessary
stakeholders and since this was not done, the finding in favour of the
respondent is a nullity and it should be understood accordingly.                E

       13.1 Per contra Mr. Parthiv K. Goswami, the learned counsel for
the respondent would point out that the factory of the respondent does
not fall within the limits of the Silchar Municipal Corporation and the
Silchar Revenue Circle but is located in Ramnagar Tarapur Gram
Panchayat, and therefore it is outside the coverage of the ESI Act, in          F
terms of the notification dated 21.7.1999.
       13.2 According to Mr. Goswami, the learned counsel, since the
authority of the Silchar Municipal Board had issued the certificate on
5.7.2004 (Ext. 16) certifying that the respondent’s cold storage factory
at Ramnagar Tarapur is outside the municipal limits, the coverage of the        G
said factory under the ESI Act, is not warranted.
       13.3 Adverting to the penal implications under the ESI Act,
Mr. Goswami submits that the expanded interpretation of the notification
is not warranted and the High Court, according to the learned counsel,
                                                                                H
852             SUPREME COURT REPORTS                            [2022] 3 S.C.R.


A     has correctly interpreted the notification dated 21.7.1999 in favour of
      the respondent.
             14. At this stage, it would be appropriate to identify the location of
      the respondent’s establishment. Silchar is one of the sub-divisions of
      Cachar District in Assam and it is comprised of five revenue circles
B     (Tehsils) namely Silchar, Lakhipur, Sonai, Udharbond and Katigorah.
      There are 245 revenue villages within the jurisdiction of the Silchar Sadar
      Revenue Circle. The records show that Part I to Part VIII segments of
      Tarapur and the Tarapur Part VIII “B” town segment are located within
      Barakpur Pargana. The respondent’s cold storage factory is situated in
      Tarapur III, Lamar Gram, Ramnagar and this segment is outside the
C     limits of the Silchar Municipal Corporation. Only Tarapur Part VII and
      Tarapur Part VIII segments are partially within the Silchar Municipal
      Corporation area. It can therefore be appreciated that one part of village
      Tarapur falls within the limits of Silchar Municipal Corporation and another
      segment of same village falls within the Silchar Revenue Circle.
D            15. The 21.7.1999 notification issued by the Central Government
      specifies the areas to which the ESI Act is made applicable and
      significantly, apart from stating that it applies to areas under the Silchar
      Municipal Corporation, it goes on to specifically name additional areas/
      villages, including the village of Tarapur. It is therefore not difficult to
E     comprehend that the notification would extend to areas well beyond the
      limits of the Silchar Municipal Corporation. If the area of coverage of
      the ESI Act was intended to be restrictive, there was no need to mention
      other areas by name in the said notification. The logical interpretation
      would then be that the entire village area of Tarapur is notified for
      coverage as the name of Tarapur village is mentioned twice in the
F     notification. The significance of this must be given due weightage.
             16. The notification issued under Section 1(3) of the ESI Act is a
      statutory notification and the same should be treated as a part of the
      statute, both for the purposes of construction and also for the obligations
      arising therefrom, as if, they are contained in the Act. The principles of
G     interpretation of subordinate legislation are applicable for interpretation
      of such statutory notification. If the words used are unambiguous, the
      cardinal principle of interpretation is that effect has to be given to every
      word in the subject notification. [See. South Central Railway Employees
      Cooperative Credit Society Employees’ Union, Secunderabad vs.
H
    THE EMPLOYEES STATE INSURANCE CORPORATION & ORS. v.                         853
    M/S KEY DEE COLD STORAGE PVT. LTD. [HRISHIKESH ROY, J.]

Registrar of Cooperative Societies and Ors1 and National Highways               A
Authority of India vs. Pandarinathan Govindarajulu and Anr.2]
       17. Guided by the above, let us now examine whether the statutory
notification was intended to cover only those areas falling within the
jurisdiction of the Silchar Municipal Board as was decided in the impugned
judgment. Such an interpretation would mean that all the other areas            B
specifically mentioned in the notification, which are otherwise beyond
the limits of the Silchar Municipal Corporation, would be excluded from
the purview of the statutory notification. If this is accepted, there will be
departure from the cardinal principle of interpretation of giving full effect
to every word of the notification. This would then be contrary to what is
repeatedly laid down by this Court, including in the case of South Central      C
Railway Employees Cooperative Credit Society Employees’ Union
(supra) and National Highways Authority of India (supra).
       18. The Central Government notification makes reference to
several areas beyond the limits of the Silchar Municipal Board. This is
discernible from the fact that reference to Tarapur is made twice, firstly      D
in reference to the Silchar Municipal Corporation and secondly with
reference to Mouza-Barakpur. The reference to the Udharbond Revenue
Circle (outside the limits of Silchar Municipal Corporation) and likewise
to Rajnagar, which is another revenue unit, distinct from Barakpur (which
comprises the Silchar Town), would suggest that the Central Government          E
intended to extend the operation of the ESI Act to areas well beyond the
limits of the Silchar Municipal Corporation. The concerned establishment
is located in Tarapur Part III falling within Barakpur, which is otherwise
outside the Silchar Municipal Area. Significantly, Mouza-Barakpur by
name is mentioned in the notification. Therefore, the High Court’s
constrictive interpretation of the 21.7.1999 notification, for application      F
of the ESI Act to the smaller areas within the limits of Silchar Municipal
Corporation, cannot be countenanced by us.
       19. That apart, the notification which obviously could have been
better drafted, is punctuated by several commas. This would suggest
that the areas mentioned after the punctuation marks should be read             G
disjunctively and should not be read in reference to the Silchar Municipal
Corporation which is the first area mentioned in the notification. Here
we may benefit by referring to Dr. M.K Salpekar Vs. Sunil Kumar
1
    (1998) 2 SCC 580
2
    (2021) 6 SCC 693                                                            H
854                SUPREME COURT REPORTS                           [2022] 3 S.C.R.


A     Shamsunder Chaudhari and Ors.3 In this case, Justice L.M Sharma
      writing for the Division Bench, while adverting to the use of punctuation,
      opined that “punctuation “comma” in the sub-clause after “alternate
      accommodation” and before the rest of the sentence indicates that
      the last part of the sub-clause, namely, “and does not reasonably
      need the house” governs only the second part of the sub-clause.”
B
      When we look at the punctuation marks in the notification dated
      21.7.1999, and what follows thereafter, our finding is that the notification
      intended to cover several areas beyond the areas within the Silchar
      Municipal Corporation. The notification issued under Section 1(3) of the
      ESI Act, after initially adverting to areas under Silchar Municipal
C     Corporation falling within Silchar Revenue Circles, significantly uses the
      word “including” which would suggest the intention of the writer of the
      notification, to enlarge the coverage area, well beyond the limits of the
      Silchar Municipal Corporation. The other areas specifically mentioned
      after the word “including”, would suggest that the area of coverage
      under the ESI Act, must not be restricted to the territorial limits of the
D
      Silchar Municipal Corporation.
            20. Confronted with a situation where interpretation had to be
      made on usage of the word “includes” in Ramanlal Bhailal Patel and
      Ors. vs. State of Gujarat4, Justice R.V. Raveendran, speaking for the
      Division Bench, had the following to say:-
E
               “23. The word “person” is defined in the Act, but it is an inclusive
               definition, that is, “a person includes a joint family”. Where the
               definition is an inclusive definition, the use of the word “includes”
               indicates an intention to enlarge the meaning of the word used in
               the statute. Consequently, the word must be construed as
F              comprehending not only such things which they signify according
               to their natural import, but also those things which the interpretation
               clause declares that they shall include. Thus, where a definition
               uses the word “includes”, as contrasted from “means”, the word
               defined not only bears its ordinary, popular and natural meaning,
G              but in addition also bears the extended statutory meaning (see S.K.
               Gupta v. K.P. Jain [(1979) 3 SCC 54 : AIR 1979 SC 734]
               following Dilworth v. Commr. of Stamps [1899 AC 99 : (1895-


      3
          (1988)4 SCC 21
H     4
          (2008) 5 SCC 449
    THE EMPLOYEES STATE INSURANCE CORPORATION & ORS. v.                          855
    M/S KEY DEE COLD STORAGE PVT. LTD. [HRISHIKESH ROY, J.]

        99) All ER Rep Ext 1576 : 79 LT 473] and Jobbins v. Middlesex            A
        Country Council [(1949) 1 KB 142 : (1948) 2 All ER 610 (CA)]).”
       21. At this stage, it would also be apposite to refer to the opinion
written for the Constitution Bench by Justice G.B. Pattanaik in Union
of India and Anr. vs. Hansoli Devi and Ors. 5, where it has been
rightly held that “it is not a sound principle of construction to brush          B
aside words in a statute as being inapposite surplusage, if they can
have appropriate application in circumstances conceivably within
the contemplation of the statute.” It must be remembered that “the
legislature is deemed not to waste its words or to say anything in
vain6’’ and a construction which attributes redundancy to a statute cannot
be accepted except under compelling circumstances.                               C

        22. Proceeding with the above understanding, let us now examine
the impugned judgment. The High Court has restricted the application of
the statutory notification to the limits of the Silchar Municipal Corporation,
which would imply that all the other areas mentioned beyond “including”
would be taken out of the purview of the ESI Act. This could not have            D
been the intention of the Union Government.
       23. This Court in Delhi Gymkhana Club Limited vs. Employees’
State Insurance Corporation 7, through the opinion of Justice R.
Banumathi, noted that the object of the ESI Act is to provide benefits to
the employees and also to make provisions for certain other matters in           E
relation thereto. As the ESI Act is a beneficial piece of social welfare
legislation aimed at securing the well-being of the employees, a restrictive
interpretation which will have the effect of defeating the objects of the
beneficial legislation, should be eschewed by the Court.
       24. In the present matter, the respondent while challenging the           F
show cause notice in the EI Court, failed to implead the factory’s
employees either individually or in representative capacity. Even the Union
of India which issued the notification under Section 1(3) of the ESI Act
expanding coverage of the beneficial legislation to the area where the
factory of the respondent is located, was not arrayed as a party in the          G
proceeding. In such circumstances, the decision of this Court in
Employees’ State Insurance Corporation vs. Bhakra Beas

5
  (2002) 7 SCC 273
6
  Quebec Railway, Light, Heat & Power Co. V. Vandry, AIR 1920 PC 181
7
  (2015) 1 SCC 142                                                               H
856               SUPREME COURT REPORTS                              [2022] 3 S.C.R.


A     Management Board and Anr. 8 and Fertilizers and Chemicals
      Travancore Ltd. vs. Regional Director, Employees’ State Insurance
      Corporation and Ors.9 would come into play.
             25. In Employees’ State Insurance Corporation (supra) the
      necessity of impleading the employees of the concerned establishment
B     in a proceeding under the ESI Act was emphasized by this court in the
      following opinion:-
               “4. This Court has recently held in Fertilizer & Chemicals
               Travancore Ltd. v. ESI Corpn. [(2009) 9 SCC 485 : (2009) 2
               SCC (L&S) 693 : (2009) 11 Scale 766] as under: (SCC pp. 487-
C              88, paras 5-10)
                   “5. It may be noted that in its petition before the Employees’
                   Insurance Court, the appellant herein only impleaded the
                   Employees’ State Insurance Corporation and the District
                   Collectors of Alleppey, Palaghat and Cannanore as the
D                  respondents but did not implead even a single workman as a
                   respondent. Labour statutes are meant for the benefit of the
                   workmen. Hence, ordinarily in all cases under labour statutes
                   the workmen, or at least some of them in a representative
                   capacity, or the trade union representing the workmen
                   concerned must be made a party. Hence, in our opinion the
E                  appellant (petitioner before the Employees’ Insurance Court)
                   should have impleaded at least some of the persons concerned,
                   as respondents.
                          ****              ****              ****              ****

F                             ****          ****              ****              ****
                   8. In our opinion, wherever any petition is filed by an employer
                   under Section 75 of the Act, the employer has not only to implead
                   ESIC but has also to implead at least some of the workers
                   concerned (in a representative capacity if there are a large
                   number of workers) or the trade union representing the said
G
                   workers. If that is not done, and a decision is given in favour of
                   the employer, the same will be in violation of the rules of natural
                   justice. After all, the real parties concerned in labour matters

      8
          (2009) 10 SCC 671
      9
H         (2009) 9 SCC 485
 THE EMPLOYEES STATE INSURANCE CORPORATION & ORS. v.                             857
 M/S KEY DEE COLD STORAGE PVT. LTD. [HRISHIKESH ROY, J.]

          are the employer and the workers. ESI Corporation will not be          A
          in any way affected if the demand notice sent by it under
          Sections 45-A/45-B is quashed.”
       26. Likewise this court in Fertilizers and Chemicals Travancore
Ltd. (supra), made the following pertinent observation on impleadment
of the employees:-                                                               B
       “10. In the present case the workmen concerned were not made
       parties before the Employees’ Insurance Court, nor was notice
       issued to them by the said court. Also, the order of the Employees’
       Insurance Court dated 4-2-1993, relevant portion of which we
       have quoted, is not a very happy one as no proper determination           C
       has been made therein as to whether the workmen concerned
       are the employees of the appellant and whether they are entitled
       to the benefit of the Act.
                  xxx      xxx      xxx      xxx      xxx
       12. In our opinion, the Employees’ Insurance Court should have            D
       itself made a proper investigation of the facts after getting evidence
       from the parties, including the workmen concerned, and after
       impleading them as party in the petition, it should have determined
       the question as to whether the persons concerned were the
       employees of the appellant or not.                                        E
                  xxx      xxx      xxx      xxx      xxx
       14. Needless to say, the Employees’ Insurance Court will grant
       an opportunity to all the parties, including the alleged workmen, to
       lead documentary evidence or oral evidence and thereafter
       proceed in accordance with law. We make it clear that nothing             F
       stated hereinabove shall be construed as an expression of opinion
       on the merits of the controversy involved. All questions of law
       and fact are left open for the parties to be raised before the
       Insurance Court.”
       27. The above judgments suggest that for non-joinder of necessary         G
parties, the proceeding at the instance of the respondent would not be
legally maintainable. Such a plea was specifically raised by the appellants
before the High Court but this was rejected with the observation that the
issue ought to have been raised before the trial court. In this context, it is
necessary to keep in mind that the Supreme Court judgment i.e.
                                                                                 H
858                SUPREME COURT REPORTS                          [2022] 3 S.C.R.


A     Employees’ State Insurance Corporation (supra) was rendered on
      17.9.2009 whereas the judgment in favour of the appellants was rendered
      by the EI Court much earlier on 21.6.2006. Therefore, for the appellants,
      it would have been impossible to rely on the ratio in the subsequent
      judgment of the Supreme Court to argue on the non-maintainability of
      the respondent’s proceeding, for non-impleadment of the concerned
B
      employees.
             28. In any case, non-joinder of a necessary party goes to the root
      of the matter and could also be fatal to a legal proceeding. For this we
      can usefully read the opinion of this court in Khetrabasi Biswal vs.
      Ajaya Kumar Baral and Ors.10 where it was held as follows:-
C
                “6. The procedural law as well as the substantive law both
                mandates that in the absence of a necessary party, the order passed
                is a nullity and does not have a binding effect.”
             29. Let us now deal with the specific submission of the learned
D     counsel for the respondent. The argument is that since penal
      consequences are provided under the ESI Act, strict interpretation of
      the notification on the applicability of the Act to the respondent’s
      establishment, must be made. On this aspect, it needs to be said that the
      name of village Tarapur is mentioned twice in the 21.7.1999 notification
      and therefore a strained interpretation is not at all necessary to bring the
E     establishment of the respondent, within the ambit of coverage of the ESI
      Act. The respondent’s failure to conform to the requirement of the ESI
      Act may perhaps invite penal action envisaged by the legislation. But
      this by itself does not persuade us to interpret the statutory notification in
      a particular manner, to suit the purpose of the respondent.
F             30. As we find, the High Court erred in holding that since the
      Village Tarapur, where the factory of the Respondent is situated, falls
      outside the municipal limits of Silchar, the establishment of the respondent
      is not covered by the notification (21.07.1999). Such faulty interpretation
      adopted by the High Court cannot be countenanced. The word “including”
G     in the Notification, is used as a word of enlargement, so as to make the
      territorial application of the ESI Act extensive. The notification is certainly
      not confined to “only the area under the Silchar Municipal Board”, but
      includes various areas mentioned therein, in addition to the areas under

      10
H          (2004) 1 SCC 317
 THE EMPLOYEES STATE INSURANCE CORPORATION & ORS. v.                           859
 M/S KEY DEE COLD STORAGE PVT. LTD. [HRISHIKESH ROY, J.]

the Silchar Municipal Board. That being the case, the respondent’s             A
establishment, is found to be covered under the purview of the ESI Act.
       31. The terms of the notification cannot be any clearer and the
language used admits no exceptions of the kind argued by the respondents.
There is definite and unambiguous reference to the areas beyond the
territorial limits of the Silchar Municipal Board. Furthermore, the village    B
Tarapur (where the factory of the respondent is situated), is mentioned
a second time. The words used are not surplusage and emphatically
proclaim the drafter’s intention to include wider areas within the purview
of the notification and thereby the ESI Act. The plain language of the
notification settles the issue against the respondent.
                                                                               C
      32. In the result the impugned decision is set aside. The Appeal
accordingly stands allowed without any order on costs.

Nidhi Jain                                                   Appeal allowed.
(Assisted by : Tamana, LCRA)
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