HC stays recovery proceedings against private edu institutions

The Madras High Court on Thursday restrained the Employees State Insurance Corporation (ESIC) from initiating recovery proceedings against all private institutions in Tamil Nadu on the basis of a government order of 2010, extending the provisions of ESI Act to them.

The first bench comprising Chief Justice A P Sahi and Justice Subramonium Prasad passed the interim orders on a petition from All India Private Educational Institutions Association challenging the G.O issued on November 26, 2010.

The bench said the issue having been raised requires to be resolved after exchange of pleadings and the ESIC shall file their counter affidavit in the present writ petition within three weeks with the entire material on which they choose to rely for the purpose of raising defense in favour of the G.O.

 

"In the wake of the facts of the contentious issue which requires adjudication, we provide as an interim measure that until further orders of the Court, recovery proceedings against the members of the petitioner institutions shall remain stayed," it said.

The petitioners contended that the term establishment had not been defined under the ESI Act, and it doesn't cover the educational institution.

The teacher and staff can't be equated and brought within the definition of the word 'workman.'

The petitioners further submitted that unlike industrial and commercial establishments, educational institutions are barred from fixing fees as they were regulated and fixed only by the government with an object that educational institution should not be run for the sake of profit.

The association said it made a representation in 2018 to instruct officials concerned to refrain from taking any coercive steps against them.

However, the government authorities said they had obtained legal opinion and were going ahead with the implementation of the act against the institutions.

The authorities also directed the institutions to register with ESIC.

Hence, the petitioner moved the High Court seeking a stay on the government order and against the registration of educational institutions with ESIC besides recovery of the amount.