LEGAL ISSUE: Whether the Dynamic Assured Career Progression (DACP) Scheme or the Employees’ State Insurance Corporation (ESIC) Recruitment Regulations should govern promotions for teaching faculty at ESIC.

CASE TYPE: Service Law

Case Name: The Employees’ State Insurance Corporation vs. Union of India & Ors.

[Judgment Date]: 20 January 2022

Introduction

Date of the Judgment: 20 January 2022

Citation: 2022 INSC 60

Judges: Dr Dhananjaya Y Chandrachud, J and A S Bopanna, J

Can a government body’s internal regulations override a central government scheme for employee promotions? The Supreme Court of India recently addressed this question in a case involving the Employees’ State Insurance Corporation (ESIC) and its teaching faculty. This case clarifies the hierarchy between statutory regulations and executive orders, particularly concerning service conditions and promotions. The judgment was delivered by a two-judge bench comprising Dr. Dhananjaya Y Chandrachud, J and A S Bopanna, J. The majority opinion was authored by Dr. Dhananjaya Y Chandrachud, J.

Case Background

The Employees’ State Insurance Corporation (ESIC) is a statutory body responsible for providing medical benefits to employees. The case involves a dispute over the promotion of Assistant Professors at ESIC Model Hospital, Rajajinagar, Bengaluru, to the post of Associate Professor. The contesting respondents, who were Assistant Professors, sought promotion under the Dynamic Assured Career Progression (DACP) Scheme, which allows for promotion after two years of service. ESIC, however, contended that its own recruitment regulations, which require five years of service for promotion to Associate Professor, should apply. The dispute arose because the contesting respondents joined ESIC between 2012 and 2014, before the implementation of the 2015 ESIC Recruitment Regulations, which stipulated a five-year service requirement for promotion.

Timeline

Date Event
7 February 2012 – 26 June 2014 Contesting respondents joined ESIC as Assistant Professors.
29 October 2008 Central Government issued Office Memorandum for DACP Scheme.
2 May 2009 ESIC Recruitment Regulations 2008 came into effect, stipulating four years of qualifying service for promotion.
23 September 2014 Joint Director of ESIC mentioned the implementation of the DACP Scheme to the Medical Officer Cadres.
5 July 2015 ESIC Recruitment Regulations 2015 came into effect, stipulating five years of qualifying service for promotion.
2 February 2017 Contesting respondents sought promotion under the DACP Scheme.
7 February 2018 Central Administrative Tribunal (CAT) directed ESIC to consider promotions under the DACP Scheme.
5 September 2019 Karnataka High Court dismissed ESIC’s petition, upholding the CAT order.
20 January 2022 Supreme Court allowed the appeal and set aside the High Court order.

Legal Framework

The primary legal provisions at the heart of this case are Section 17 and Section 97 of the Employees’ State Insurance Act, 1948.

  • Section 17 of the ESI Act: This section deals with the staff of the ESIC.

    • Section 17(2)(a) states that the method of recruitment, salary, allowances, discipline, and other conditions of service of ESIC staff shall be as specified in the regulations made by the Corporation, in accordance with the rules and orders applicable to Central Government employees. However, the ESIC can depart from these rules with the prior approval of the Central Government.
  • Section 97 of the ESI Act: This section empowers the ESIC to make regulations for the administration of its affairs.

    • Section 97(3) states that regulations made by the ESIC shall have effect as if enacted in the Act itself.

The Court also considered the Dynamic Assured Career Progression (DACP) Scheme, which was introduced by the Central Government through an Office Memorandum dated 29 October 2008. This scheme allowed for promotions of medical professionals in Central Government services after two years of service.

Arguments

The arguments presented by both sides are summarized below:

Appellant (ESIC) Contesting Respondents
  • ESIC is an autonomous statutory corporation with the power to frame its own regulations under Section 97 of the ESI Act.
  • The ESIC Recruitment Regulations 2015 stipulate a minimum of five years of qualifying service as Assistant Professor for promotion as Associate Professor.
  • The DACP Scheme applies to employees of Central Government Ministries and Departments, not statutory bodies like ESIC.
  • Section 17(2) allows ESIC to depart from Central Government service conditions with prior approval.
  • The ESIC Recruitment Regulations 2008, which were in effect when the respondents joined, required four years of service for promotion.
  • The ESIC Recruitment Regulations 2015 were made with the approval of the Central Government.
  • An incorrect concession by counsel before the CAT does not create an estoppel against statutory regulations.
  • Advertisements inconsistent with recruitment rules do not override the rules.
  • The DACP scheme is not applicable to the teaching staff of ESIC.
  • The DACP Scheme, as per the Office Memorandum dated 29 August 2008, extends to all medical doctors, including those holding isolated posts.
  • The ESIC Recruitment Regulations 2008 were issued without the approval of the Central Government.
  • ESIC advertisements stated that promotional avenues were available under the DACP guidelines.
  • The ESIC had acknowledged that the DACP scheme was under consideration for revision.
  • The ESIC Recruitment Regulations 2015 were issued without obtaining prior approval from the Central Government.
  • ESIC admitted before the CAT that the DACP Scheme is applicable to its employees.
  • The DACP Scheme has statutory force under Section 17 of the ESI Act and was made before the ESIC Recruitment Regulations 2008.
  • The ESIC is estopped from denying the applicability of the DACP scheme due to representations in recruitment advertisements.
  • The contesting respondents had completed two years of service before the ESIC Recruitment Regulations 2015 came into effect.
  • The doctors and medical teaching staff in the Central Government are being promoted in accordance with the DACP Scheme.
  • The ESIC has taken the stance in other legal proceedings that the DACP scheme is applicable to its employees with effect from 01 March 2008.
See also  Supreme Court Upholds Attempt to Murder Conviction: State of Madhya Pradesh vs. Harjeet Singh (2019)

Issues Framed by the Supreme Court

The Supreme Court framed the following key issue for consideration:

  1. Whether the Dynamic Assured Career Progression (DACP) Scheme or the Employees’ State Insurance Corporation (ESIC) Recruitment Regulations should govern promotions for teaching faculty at ESIC.

Treatment of the Issue by the Court

Issue Court’s Decision
Whether the DACP Scheme or ESIC Regulations govern promotions? The Supreme Court held that the ESIC Recruitment Regulations, specifically the 2015 regulations, would govern the promotions of the teaching staff at ESIC. The Court reasoned that the ESIC regulations have statutory force under Section 97(3) of the ESI Act and would take precedence over the DACP scheme, which was implemented through an Office Memorandum.

Authorities

The Supreme Court relied on the following authorities:

Authority Court How it was used
Sukhdev Singh v. Bhagatram Sardar Singh Raghuvanshi, (1975) 1 SCC 421 Supreme Court of India The court relied on this case to establish that regulations framed by statutory authorities have the force of law.
Pepsu Road Transport Corporation, Patiala v. Mangal Singh and Others, (2011) 11 SCC 702 Supreme Court of India The court cited this case to reiterate that regulations made under a statute have the force of law.
Sant Ram Sharma v. State of Rajasthan, AIR 1967 SC 1910 Supreme Court of India This case was used to establish that administrative instructions cannot override statutory rules.
Union of India v. Ashok Kumar Aggarwal, (2013) 16 SCC 147 Supreme Court of India The court cited this case to reiterate that office memorandums cannot contravene statutory rules.
P D Aggarwal v. State of U.P., (1987) 3 SCC 622 Supreme Court of India This case was used to emphasize that an office memorandum cannot amend statutory rules.
Union of India v. Majji Jangamayya, (1977) 1 SCC 606 Supreme Court of India The court referred to this case to distinguish between statutory orders and administrative instructions.
Malik Mazhar Sultan v. U.P. Public Service Commission, (2006) 9 SCC 507 Supreme Court of India This case was cited to highlight that an erroneous advertisement cannot override statutory rules.
Ashish Kumar v. State of Uttar Pradesh, (2018) 3 SCC 55 Supreme Court of India The court followed this case to emphasize that statutory rules take precedence over an erroneous advertisement.
Rajasthan Public Service Commission v. Chanan Ram, (1998) 4 SCC 202 Supreme Court of India This case was used to show that a subsequent amendment to service rules would override the conditions in an earlier advertisement.
Nedunuri Kameswaramma v. Sampati Subba Rao, AIR 1963 SC 884 Supreme Court of India The court cited this case to establish that there can be no estoppel against a statute.
Himalayan Coop. Group Housing Society v. Balwan Singh, (2015) 7 SCC 373 Supreme Court of India This case was used to clarify that a client is not bound by a lawyer’s statements on matters of law.
Director of Elementary Education, Odisha v. Pramod Kumar Sahoo, (2019) 10 SCC 674 Supreme Court of India The court followed this case to state that a concession on a question of law concerning service rules would not bind the State.
See also  Supreme Court Upholds Villa Possession, Rejects Delay Condonation in Property Dispute: Sanjay Singh vs. Central Himalayan Land Development Co. Ltd. (21 February 2019)

Judgment

How each submission made by the Parties was treated by the Court?

Submission Court’s Treatment
ESIC’s argument that its regulations should prevail. The Court agreed with ESIC, holding that the ESIC Recruitment Regulations, particularly the 2015 regulations, have statutory force and override the DACP scheme.
Contesting respondents’ argument that the DACP scheme should apply. The Court rejected this argument, stating that the DACP scheme, implemented through an Office Memorandum, cannot override statutory regulations.
Contesting respondents’ argument that ESIC is estopped from denying the applicability of the DACP Scheme due to representations in recruitment advertisements. The Court rejected this argument, stating that there can be no estoppel against statutory regulations.
Contesting respondents’ argument that the ESIC Recruitment Regulations 2015 were issued without prior approval. The Court rejected this argument, stating that the preamble to the ESIC Recruitment Regulations 2015 explicitly states that the regulations were made after approval of the Central Government.
ESIC’s counsel’s concession before the CAT that the ESIC Recruitment Regulations 2015 would not govern the matter. The Court held that this incorrect concession does not amount to estoppel against statutory regulation.

How each authority was viewed by the Court?

  • Sukhdev Singh v. Bhagatram Sardar Singh Raghuvanshi [CITATION]: The court relied on this case to establish that regulations framed by statutory authorities have the force of law.
  • Pepsu Road Transport Corporation, Patiala v. Mangal Singh and Others [CITATION]: The court cited this case to reiterate that regulations made under a statute have the force of law.
  • Sant Ram Sharma v. State of Rajasthan [CITATION]: This case was used to establish that administrative instructions cannot override statutory rules.
  • Union of India v. Ashok Kumar Aggarwal [CITATION]: The court cited this case to reiterate that office memorandums cannot contravene statutory rules.
  • P D Aggarwal v. State of U.P. [CITATION]: This case was used to emphasize that an office memorandum cannot amend statutory rules.
  • Union of India v. Majji Jangamayya [CITATION]: The court referred to this case to distinguish between statutory orders and administrative instructions.
  • Malik Mazhar Sultan v. U.P. Public Service Commission [CITATION]: This case was cited to highlight that an erroneous advertisement cannot override statutory rules.
  • Ashish Kumar v. State of Uttar Pradesh [CITATION]: The court followed this case to emphasize that statutory rules take precedence over an erroneous advertisement.
  • Rajasthan Public Service Commission v. Chanan Ram [CITATION]: This case was used to show that a subsequent amendment to service rules would override the conditions in an earlier advertisement.
  • Nedunuri Kameswaramma v. Sampati Subba Rao [CITATION]: The court cited this case to establish that there can be no estoppel against a statute.
  • Himalayan Coop. Group Housing Society v. Balwan Singh [CITATION]: This case was used to clarify that a client is not bound by a lawyer’s statements on matters of law.
  • Director of Elementary Education, Odisha v. Pramod Kumar Sahoo [CITATION]: The court followed this case to state that a concession on a question of law concerning service rules would not bind the State.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the following factors:

  • Statutory Force of Regulations: The court emphasized that the ESIC Recruitment Regulations, particularly the 2015 regulations, have statutory force under Section 97(3) of the ESI Act. This meant that they had the same effect as if they were part of the Act itself.
  • Hierarchy of Legal Instruments: The court reiterated the principle that statutory regulations take precedence over executive instructions or office memorandums. The DACP scheme, being an office memorandum, could not override the ESIC’s statutory regulations.
  • No Estoppel Against Statute: The court clarified that the ESIC could not be estopped from applying its regulations, even if its counsel had made a concession before the CAT, as there can be no estoppel against a statute.
  • Validity of ESIC Regulations: The court noted that the preamble of the ESIC Recruitment Regulations 2015 explicitly stated that the regulations were made with the approval of the Central Government, thus addressing the respondent’s argument that they were issued without prior approval.
  • Precedence of Rules over Advertisements: The court emphasized that if there is a conflict between an advertisement and statutory service rules, the rules would prevail.

Sentiment Analysis of Reasons

Reason Percentage
Statutory Force of Regulations 40%
Hierarchy of Legal Instruments 30%
No Estoppel Against Statute 15%
Validity of ESIC Regulations 10%
Precedence of Rules over Advertisements 5%

Fact:Law Ratio

Category Percentage
Fact 30%
Law 70%

The court’s reasoning was primarily based on legal principles and the interpretation of statutory provisions, with less emphasis on the factual aspects of the case.

See also  Supreme Court Clarifies Premature Separation Withdrawal Rules for Air Force Officers in Service Law (29 January 2019)

Logical Reasoning

Issue: Applicability of DACP Scheme vs. ESIC Regulations for Promotions
↓
ESIC Regulations have statutory force under Section 97(3) of the ESI Act
↓
DACP Scheme is an office memorandum and cannot override statutory regulations
↓
No estoppel against a statute; ESIC not bound by counsel’s concession
↓
ESIC Recruitment Regulations 2015 made with prior approval of Central Government
↓
Statutory rules prevail over inconsistent advertisements
↓
Conclusion: ESIC Recruitment Regulations 2015 govern promotions

Key Takeaways

  • Statutory Regulations Prevail: Statutory regulations have precedence over executive instructions or office memorandums in matters of service conditions and promotions.
  • No Estoppel Against Statute: A government body cannot be estopped from applying its regulations, even if its counsel made a concession in court.
  • Advertisements vs. Rules: In case of conflict between an advertisement and service rules, the rules will prevail.
  • Importance of Prior Approval: Regulations made by statutory bodies must adhere to the procedures prescribed by law, including obtaining prior approval where necessary.
  • Impact on ESIC Employees: The judgment clarifies that promotions for teaching faculty at ESIC will be governed by the ESIC Recruitment Regulations 2015, which require five years of qualifying service for promotion to Associate Professor, and not by the DACP Scheme.

Directions

The Supreme Court directed that the revised seniority list of the Teaching Cadre at the ESIC should reflect the promotions of the contesting respondents in accordance with the ESIC Recruitment Regulations 2015 and not the DACP Scheme.

Development of Law

The ratio decidendi of this case is that statutory regulations made by a body like the ESIC have the force of law and will prevail over executive instructions or office memorandums. This judgment reinforces the established legal principle that statutory rules take precedence over administrative instructions and clarifies the hierarchy of legal instruments in service matters. There is no change in the previous position of law, but the judgment provides clarity on the application of these principles in the context of the ESIC and its employees.

Conclusion

The Supreme Court’s judgment in The Employees’ State Insurance Corporation vs. Union of India & Ors. clarifies that the ESIC Recruitment Regulations 2015, which require five years of qualifying service for promotion to Associate Professor, will govern the promotions of the teaching faculty at ESIC. The Court held that these regulations have statutory force and override the DACP Scheme, which was implemented through an office memorandum. The judgment reinforces the principle that statutory rules prevail over administrative instructions and that there can be no estoppel against a statute. This decision has significant implications for the service conditions of ESIC employees and sets a precedent for similar cases involving statutory bodies and their regulations.

Category

  • Service Law
    • Promotion
    • Statutory Regulations
    • Executive Instructions
    • Estoppel
    • Recruitment Rules
    • Service Conditions
  • Employees’ State Insurance Act, 1948
    • Section 17, Employees’ State Insurance Act, 1948
    • Section 97, Employees’ State Insurance Act, 1948

FAQ

Q: What was the main issue in this case?

A: The main issue was whether the Dynamic Assured Career Progression (DACP) Scheme or the Employees’ State Insurance Corporation (ESIC) Recruitment Regulations should govern promotions for teaching faculty at ESIC.

Q: What did the Supreme Court decide?

A: The Supreme Court decided that the ESIC Recruitment Regulations, particularly the 2015 regulations, would govern the promotions. These regulations have statutory force and override the DACP scheme, which was implemented through an office memorandum.

Q: What is the significance of this judgment?

A: This judgment clarifies the hierarchy between statutory regulations and executive orders. It reinforces the principle that statutory rules prevail over administrative instructions in service matters.

Q: What is the DACP Scheme?

A: The DACP Scheme is a central government scheme that allows for promotions of medical professionals in Central Government services after two years of service.

Q: What are the ESIC Recruitment Regulations?

A: The ESIC Recruitment Regulations are the rules framed by the Employees’ State Insurance Corporation for the recruitment and promotion of its staff. The 2015 regulations stipulate a minimum of five years of qualifying service as Assistant Professor for promotion as Associate Professor.

Q: Can a government body’s internal regulations override a central government scheme for employee promotions?

A: Yes, if the internal regulations are statutory in nature, as was the case with the ESIC Recruitment Regulations, they can override a central government scheme implemented through an office memorandum.

Q: What is the implication of this judgment for ESIC employees?

A: The judgment means that promotions for teaching faculty at ESIC will be governed by the ESIC Recruitment Regulations, which require five years of qualifying service for promotion to Associate Professor, and not by the DACP Scheme.

Source: DACP Scheme vs. ESIC Regulations in service matters